WATCH: Sheikh defends PTI govt's 'tough' economic decision on assembly floor

Special Advisor to PM Imran Khan, Dr Abdul Hafeez Sheikh briefs National Assembly on Pakistan's economy situation

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Special Advisor to Prime Minister Imran Khan on Finance Dr Abdul Hafeez Sheikh on Wednesday defended the federal government’s economic policies and belt-tightening on the floor of the National Assembly.

Referring to his career in finance, the special advisor said he has been a part of the country’s administration on multiple occasions but had not seen any ruling party take tough economic decisions the way the Pakistan Tehreek-e-Insaf government has done in the past 18 months.

Economic turmoil

Sheikh emphasised the importance of unstable political situation in the country playing a part in destablising economy. “Unfortunately no premier has completed a five-year term,” he highlighted. “In 72 years, we have failed to convince the world to invest in Pakistan.”

“We have failed to establish a tax collection system in 72 years,” he told the NA. Sheikh said Pakistan depended on other countries to boost its finances and stressed on contemplating why the growth rate remained unstable.

“The economy is directly affecting the masses even though the government is working on maintaining financial stability.”

Sheikh added that invoking the past was discouraged but the debt situation inherited by the incumbent government had to be acknowledged. “We had to repay Rs5,000 billion in loans in FY2019-20.

Of loans and payments

Reflecting on the incumbent government’s measures to secure loans, Sheikh lamented the criticism over the International Monetary Fund (IMF) bailout package.  He reminded the MPs of previous governments knocking on the lending body’s door. “Nobody goes to the IMF out of choice. We are compelled due the nature of our economy.”

Sheikh said the fund was established to help pull developing countries out of economic turmoil.  “Our economic situation was so bad that nobody was ready to grant us loans,” he recalled.

He said the PTI government aimed to save the country from defaulting on payments.

Explaining the loans, Sheikh said the friendly nations helped with $8 billion in loan and another $3.2 billion in deferred payments on oil imports. He said the IMF bailout paved way for increased support from the World Bank and Asian Development Bank.

Sheikh also regretted  criticism faced by State Bank of Pakistan Governor Dr Reza Baqir. “We should be proud of Baqir and his accomplishments. IMF hires on merit not on source.”

Exports

Highlighting the depleting foreign reserves, the de-facto finance minister said: “We don’t have dollars – our loans and expenditure is in dollars." He added that the only way to escape the debt trap is by strengthening exports.

Sheikh claimed growth in exports during the past five years was ‘zero’ and accused the previous government of keeping the national currency at a stable value in a bid to boost imports. “Even toothpaste was being imported,” he lamented. “I don’t mean to criticise,” he continued. “But if we want economic growth, then the country needs to prioritise exports.”

Expanding on the steps taken to boost exports, Sheikh claimed the government had decided against imposing taxes on exporters and was offering electricity and gas on cheaper rates.

Stablising measures

Elaborating on the incumbent government’s economic measures, Sheikh said expenditures were reduced. “The army leadership backed our decision to reduce the defence budget,” he claimed. “Salaries of cabinet members, judges and secretaries also faced cuts.”

He said the government decided against taking loans from the central bank but has invested in programmes uplift the poor sector of the society.

He claimed that the measures resulted in current account deficit falling from $20 billion to $8 billion. Sheikh said the IMF target had been achieved while the WB has listed Pakistan as one of the top ten countries with improved ease of doing business.