ISLAMABAD: Advisor to Finance Minister on Economic and Financial Reforms, Khurram Schehzad said here on Monday that country’s economy has made remarkable improvement as indicated by economic indicators, including fiscal balance that swung into a surplus of Rs1.8 trillion in the first quarter.
The advisor, while addressing media here, said the country’s fiscal deficit has been transformed into a 1.5% surplus, a significant improvement from last year’s around 1% deficit during the same period. This achievement marks the first fiscal surplus in 24 years, the advisor added.
Shehzad attributed the turnaround to effective management of revenues and expenditures, saying that in the first quarter, the fiscal balance was in surplus, with revenues increasing and expenditures being controlled.
The advisor also highlighted the improvement in the current account balance during July-October of the current fiscal year, which has turned into a surplus of around $218 million during the first four months of the current fiscal year.
Khurram said exports have shown an 8% increase, reaching $13 billion in the July-October period, up from $12 billion during the same period last year.
He said, the primary surplus has also witnessed noticeable improvement in first quarter as compared to last year, adding the primary surplus was recorded at 2.6 percent of GDP compared to just 0.4 percent last year.
He also mentioned that the tax to GDP ratio has improved during the first quarter, from 2.1 percent last year to 2.2 percent, expressing the hope that with improved tax collections, compliance and enforcement would help further improve the tax to GDP ratio.
The advisor, the inflation has also slowed down to average 8.7 percent during the period against 29 percent last year.
He said, the government’s ability to borrowing has also improved and it can now borrow on its own conditions. He said, the cut in policy rate has benefited government by around Rs1.3 trillion in repaying debts. Earlier, it had to return around Rs9.45 trillion while it would be now paying back only around Rs.8.5 trillion.
Khurram said, rupee, which witnessed around double depreciation during past four years, appreciated by 4 percent during past one year, giving positive signals to creditors and investors.
Likewise, the country’s foreign exchange reserves (held by SBP) have also witnessed a significant increase of 57%, rising from $7.18 billion last year to $11.3 billion during the first four months of the current fiscal year.
The Pakistan Stock Exchange (PSX) has also shown positive developments, indicating a favorable outlook for the economy.
He said, keeping in view these positive development, the rating agencies including Moody’s and Fitch have also improved ratings of the country adding that Moody also improved Pakistan’s outlook from stable to positive, which indicates that economic outlook of Pakistan would remain positive in years to come.
