Economy on the mend

There have been distinct indicators that, slowly but surely, the economy is on the mend. Despite some persistent troubles, such as low growth in exports, the twin monsters of trade and fiscal deficit appear to have been largely reined in. According to a quarterly review of how the nation’s economy fared, the two indicators have shown improvement by approximately 35%. Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh told a press conference on Saturday that the trade deficit shrank 35% while the budget deficit shrivelled 36% during the first quarter of the current fiscal year (July-September) when compared to the corresponding period of last year. The ‘difficult decisions’ taken by the government have started showing positive results, he enthused, although he chose to conveniently gloss over the issue of inflation that has harried the people no end, and the constant decline in foreign direct investment (FDI).

The federal budget deficit that had been recorded at Rs738 billion or 1.9% of GDP in the first quarter of the last fiscal year, was brought down to Rs476 billion or 1.1% of GDP, said the finance adviser. As a result, the government has also met the International Monetary Fund (IMF) condition on the primary deficit. The IMF’s condition was that the primary deficit can be Rs102 billion in the first quarter, we actually have showed primary surplus of about Rs200 billion, beamed Finance Secretary Naveed Kamran Baloch.

The fiscal deficit narrowed down due to increase in revenues and reduction in expenditures, as the finance ministry did not issue any supplementary grant in the first quarter aimed at ensuring fiscal discipline, said Shaikh. The de facto finance minister went on to extol the surge in non-tax revenue as ‘one thing that we have really improved on’. He revealed that Rs406 billion had been collected in non-tax revenue which was a 140% increase over the previous year. He also told reporters that the exchange rate had been brought to a stable level over the past three months, as also the foreign exchange reserves.

Published in The Express Tribune, October 14^th, 2019.

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