Finance minister sees ‘some signs’ of economic recovery

Edevelop · Sep 15, 2023

Interim Finance Minister Shamshad Akhtar said on Friday there were “some signs” of economic recovery “even if they were just starting”.

Addressing a press conference in Islamabad alongside other federal ministers, she said that while the interim set-up had inherited a set of challenges after coming into power, it was not worried and was “dealing” with them.

Akhtar said that the government was trying to manage the country’s challenges prudently by controlling expenditures and enhancing revenue. “Through this, the situation will improve.”

“So if you review macroeconomic indictors, you will see some improvement. There are some signs of economic recovery even if its just starting.”

The minister said that the Consumer Price Index (CPI) had shown a decline from May figures, down from 38 per cent to 27pc. “This is a very important indicator that (shows) that we have come out of difficulty,” she said, hoping that there would be stability in prices going forward.

Akhtar said that the country’s productive sectors had also seen some improvement. “By productive sector, I mean the agriculture sector. In this agriculture sector, we hope that our results will be good: whether its got to do with major crops or minor crops. Improved agriculture results will also improve our growth prospects.”

She said that while some people complained about the difficulties being faced by industries, the government had examined the data which showed that there some improvement in some productive sectors.

“As activity is picking up, the situation of industries is also improving.”

The minister said that the services sector, which she described as being “vibrant” at the moment, was linked to all other sectors.

Talking about the central bank’s decision to maintain the key policy rate, Akhtar said that the move would also bring “improvement” as the cost of borrowing of industries would fall.

She said that the government had spoken to international donors. She said that she had spoken to the World Bank (WB) and the government was trying that the cumulative assistance comes up to $2 billion.

“Our focus is working on activities which will help our people and build confidence in Pakistan’s economy so that foreign direct investment comes into the country.”

She said that the government and the Special Investment Facilitation Council (SIFC) were taking certain steps in this regard. She said that the economy would enter “self-sustaining growth” if issues relating to foreign direct investment were removed.

She said that the country’s foreign exchange reserves were “stable” even if they weren’t very high. “According to our outflow and inflow, it is quite stable in my view.”

She also commented on the government’s crackdown against exchange companies, saying that it had resulted in the rupee stabilising to “some extent”.

“And this stability came without any intervention from banks,” she said, terming it to be a “positive” development. Akhtar said that the government was working tirelessly, the results of which would become apparent “in due course”.
Meanwhile, Power Minister Muhammad Ali said the government has decided to stagger quarterly adjustments — spread over three months — in power bills to provide relief to consumers. Similar relief measures would also be provided in the payment of the base electricity tariff in Karachi.

He also noted that the government’s crackdown on electricity theft across the country was yielding good results.

Earlier this month, the interim set-up launched a “full force” crackdown against electricity theft across the country to tame multiplying technical and commercial losses being faced by the power distribution companies.

The decision was taken after hundreds of people across the country took to the streets against inflated electricity bills.

During the press conference today, Ali said: “Billing has increased and we are seeing recovery as our collection has gotten better. This proves that power theft was prevalent in Pakistan over the past several years but attention wasn’t paid to it.”

He said the government crackdown would continue and a control room for this purpose had been established in the power division as well.

“We are working with all the law enforcement agencies on the district level and the pace of the process will be fastened,” the minister promised.

Along with theft, Ali highlighted, the government was also working on bringing improvement in the management and governance of electricity distribution companies. “We have started working on the boards and may even change their CEOs.”

Separately, the government was also exploring three options to improve the performance of discos. These included working with the World Bank for long-term concessions and privatising the companies.

“We are looking at all three options and we will work on the best one.”

Talking about the mounting circular debt, the minister highlighted that the power and gas sector in Pakistan was suffering losses worth billions and blamed the lack of management by the previous government for it.

However, Ali assured that the government was trying to come up with a solution, one of which was to extract fuel and gas inside the country. “We are changing policies so that our reliance on other countries is reduced,” he added.