Macroeconomic stability restored, Hafeez Shaikh tells ADB Forum

ISLAMABAD: Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh on Monday said the government has restored macroeconomic stability in the country.

Addressing the inaugural session of ‘Pakistan Innovative Finance Forum’, arranged by the Asian Development Bank, Dr Abdul Hafeez Shaikh said the government had to do a lot of things over the last few months to try and restore macroeconomic stability due to a very difficult economic situation it inherited.

He said there was a current account and primary balance surplus for the first time in many years as well as country’s booming stock market, stabilised exchange rate and a renewed interest from international community in Pakistani market were clear signs of the recovery the economy had staged in recent months.

He said tough decisions had to be taken and after a series of steps including partnering with international institutions, cutting down government expenditure, restoring fiscal discipline, incentivising exporters, and narrowing the historically high current account deficit, the government was now in a situation where in the last four months of the ongoing fiscal year, the restoration of macroeconomic stability was becoming visible.

READ MORE: Exports in October increased by 9.6%: Hafeez Shaikh

The adviser pointed out that it was for the first time in many years that the country had a current account surplus as well as a surplus primary balance on the fiscal side.

He also referred to Pakistan’s stock market being rated amongst the best performing in the world and the stabilised exchange rate which was allowed to be determined by market forces allowing people to take longer-term decisions needed for development.

“We have a renewed interest from international community in the Pakistan market and in the last four months, investment in the Pakistani bonds from outside investors has touched US $ 1 billion while foreign direct investment in the same period has also increased by more than 200 per cent compared to the corresponding period last year,” he added.

ALSO READ: Economy on the right path, Hafeez Shaikh tells US investors

Shaikh said that he was not trying to paint a rosy picture as there were still challenges to tackle particularly in terms of bringing down prices and coming up to people’s expectations for generating more jobs for them and achieving high growth rate.

“But the good news is that the growth rate agreed with the IMF is going to be surpassed by a vast margin and similarly, the IMF review of the first quarter concluded recently shows that that all the agreed targets have been surpassed with comfortable margins,” he said.

The adviser said that the government was committed to fiscal discipline, the role of private sector, transparency in governance, tracking down on corruption, reaching out to international community both the multilateral agencies as well as international and domestic private sector.

ALSO READ: Hafeez Shaikh, IMF director discuss program implementation

He agreed that bringing foreign investment to Pakistan and promotion of our exports were two key areas which had been neglected in the past but the current government was attaching priority to both these sectors. He said the government was also encouraging the private sector and a full-fledged privatisation programme.

He underscored the building and strengthening of institutions as a priority area for the government and the power and institutional autonomy granted to institutions such as the State Bank of Pakistan and FBR was evidence to let these institutions work with independence and through top professionals from the private sector.

He said the government needed more funds to invest in the infrastructure development as per the ADB estimates which recommended at least 8 per cent of GDP for the next 10 years on infrastructure development in Pakistan.

“We are blessed to have people in Pakistan and in the private sector who are resource-rich, determined, eager and curious to find solutions and together we can work to achieve the development goals as we moved ahead,” he added.