ISLAMABAD: Meeting of the Monetary and Fiscal Policies Coordination Board was held here today under the chairmanship of the Adviser to the Prime Minister on Finance and Revenue, Dr. Abdul Hafeez Sheikh. The meeting was attended by the Adviser to the Prime Minister on Commerce, Textile, Industry & Production and Investment, Deputy Chairman, Planning Commission, Finance Secretary, Governor State Bank of Pakistan and two eminent economists Dr. Asad Zaman, ex-VC PIDE and Dr. Farrukh Iqbal, Director IBA Karachi.
The meeting reviewed the impact of Fiscal and Monetary Policies on economic growth, inflation, investment and external sector of the economy. While reviewing the Fiscal Policy, the Board observed that there is a need to narrow the fundamental revenue-expenditure gap and the export-import gap by ensuring prudent expenditure management and efficient resource mobilization strategy.
The key economic indicators and impact of stabilization policies were presented to the Board. The meeting also reviewed the fundamentals of economy and the performance of the government decisions like upward adjustment in gas and electricity prices, market based exchange rate adjustments, increase in interest rate etc. The Board also discussed the options to enhance the economic activities in potential areas of the economy with targeted policy interventions. The possible options were also deliberated to control price hike in the country.
It was informed that the pressure on the external sector has also been relieved with the first tranche of IMF Extended Fund Facility, activation of the Saudi oil facility and increase in exports. This has not only supported the balance of Payment but also strengthen the market confidence.
Furthermore, additional financial support from other development and bilateral partners will support the stability and inclusive growth. The current account balance has shown a sign of improvement due to decline in trade deficit and increase in inflows of workers’ remittances.
However, slower inflows of Foreign Direct Investment are a challenge. It was also highlighted that government is making best efforts to operationalized the Special Economic Zones and the Export Processing Zones to attract FDI at the earliest.
It was emphasized that Policy rate may be regulated in a way to confine external sector vulnerability by focusing and prioritizing the export oriented sectors to generate more exportable surplus and become more competitive. It was agreed that SMEs sector should be uplifted by providing access to finance that will contribute to generate export surplus and to create jobs. The unnecessary imports is required to be restricted that has eroded the competitive edge of domestic industry. This will enhance the inclusive economic activities and improve socio-economic condition of common man at large in the country.
Keeping in view, the increased debt serving, lesser resources for public services and tight monetary policy the need for consistent and deep-rooted structural reforms was emphasized. It was also agreed that appropriate policy measures will be adopted to curtail fiscal deficit during the current fiscal year.
While concluding the meeting, the Adviser to the Prime Minister on Finance and Revenue highlighted that this platform provides an opportunity to review the current economic situation for bringing consistency in monetary, fiscal and exchange rate policies. He also urged that Board needs to meet quarterly to have meaningful deliberations for a sustained and improved economy.
