In its report on the country’s economy, the State Bank has pointed out notable improvements in the key macroeconomic indicators during the first quarter of the current financial year. However, it also called for requisite steps to ensure sustainability of gains. The report says that economic activity seems to be gearing up as improvements are visible from the changes in key macroeconomic indicators during the first quarter due to noticeable increase in the large-scale manufacturing over the last year. The monetary easing initiated during the previous financial year continued during the first quarter of the current financial year because of the comfort from visible improvement in macroeconomic environment. The bank says that improvement in security conditions, betterment in energy management and persistently low global commodity prices will further improve economic performance. Besides, the current account deficit has narrowed due to higher financial inflows, the foreign exchange reserves have recorded all time high and inflation remained on low trajectory.
The report says that tax collections could not mark the required growth, therefore, there is a need to gear up efforts to enforce tax laws and widen tax net. To achieve this end, the Federal Board of Revenue has shown growth in tax collections by 16.8 percent in the first half of the current fiscal year. The report holds dwindling exports responsible for overall performance of the economy as exports have recorded a decline year-on-year for the third quarter in a row. There is a need to encourage foreign direct investment for sustainability of the external sector though direct investment from China could be increased due to progress on various infrastructure projects under the CPEC. The country also needs direct foreign investment in exportable sector. The report says that it is encouraging that the IMF programme has been completed successfully and several important reforms have been introduced, like independent statutory Monetary Policy Committee and Credit Bureaus Act. The slow process of privatization and persistent line losses in the power sector are a challenge for the government.
As a matter of fact, financial discipline is very important for stability of the economy. Concentrating only on witch-hunt of the business community to achieve tax target will further push the economy into chaos as it is going on in the current scenario. Various businessmen are weighing options to settle their businesses in Malaysia and UAE which offer attractive business environment. The country has already spent Rs 4 billion in the International Court of Justice for ensuring a success against a foreign company. How this money will be recovered is a big question mark.
