Prime Minister Imran Khan took a neutral opinion on the state of economic affairs to verify official indicators and situation on the ground shown by his economic team.
Former special assistant on revenue Haroon Akhtar Khan gave a presentation to the prime minister and his team on the current state of affairs, sources said.
The meeting was attended by the ruling Pakistan Tehreek-e-Insaf (PTI)’s former secretary-general Jahangir Khan Tareen, along with the government’s core economic team.
Among the attendees were State Bank of Pakistan (SBP) Governor Dr Reza Baqir, Planning Minister Asad Umar, Adviser on Finance Dr Hafeez Shaikh, Food Minister Makhdom Khusro Bakhtyar, Commerce Adviser Razak Dawood, Adviser on Institutional Reforms Dr Ishrat Husain, and Economic Affairs Minister Hammad Azhar.
Akhtar Khan’s presentation was part of recent interactions by the prime minister with independent voices, including former member of his Economic Advisory Council Atif Mian, a former governor of the central bank and former finance minister.
A few days ago, Mian had given a briefing through a video link.
The briefing was held against the backdrop of growing public resentment, a rosy picture painted by the ministry of finance and the SBP, and intelligence reports suggesting that the economic conditions were not as good as described in official briefings, the sources said.
The briefing focused on the Federal Board of Revenue (FBR)’s performance, the country’s overall economic situation, business revival, struggling exports and troubles brewing in the banking sector, the sources said.
Akhtar Khan had been asked to give the briefing in his capacity as a businessman and public policy expert due to his stint in the last Pakistan Muslim League – Nawaz (PML-N) government as special assistant to the prime minister on revenue.
The contours of the briefing were not in line with what the finance ministry and the SBP were telling to the prime minister about the status of the exports, tax collection, inflationary trends and business revival, another meeting participant said.
The meeting took place the day Pakistan stock market faced another round of battering and the benchmark KSE-100 index dived over 841 points to finish trading deep in the red.
Reeling from the turmoil in global markets in addition to a soaring inflation in the country, the Pakistan Stock Exchange fell below the 39,300-point mark as investors opted to offload stocks.
The prime minister was told that contrary to the perception that the economy was recovering from the stabilisation phase, there were as yet no signs of an economic revival, the sources said.
Large-scale industries have been contracting for the last over 15 months and the exports nose-diving for the last three months.
Similarly, banks’ non-performing loans were on the rise, the sources said.
The sources said that the SBP governor defended the decision to keep interest rates high and stated that in the last monetary policy meeting, there was some discussion on increasing the interest rates to contain high inflation.
In January 2020, the headline inflation shot up to 14.6% – double the pace of 5.6% in January 2019 – the highest in past over nine years, according to the Pakistan Bureau of Statistics.
The cost of living has significantly increased in the past one-and-half-year due to increase in utility prices, 33% currency devaluation and high interest rates, and squeeze on both formal and informal economy.
The prime minister is also set to announce a Rs16bn package to provide subsidised food items at the Utility Stores Corporation and by setting up new outlets.
The Rs16bn cost is inclusive of the Rs6bn cost of setting up the outlets.
Such measures have not paid any dividend in the past.
The Rs16bn will be diverted from Benazir Income Support Programme (BISP) funds and the finance ministry will not give any subsidy, the sources said.
It was also discussed in the meeting that high interest rates cannot control food inflation.
The SBP governor is said to have told the meeting that the central bank increased the subsidised long-term financing for the export-oriented sectors and also took other measures to boost credit for the private sector.
However, according to some participants, the measures were not enough to give confidence to the private sector, the sources said.
A realistic assessment about the FBR’s ability to collect taxes in the current fiscal year was also given to the prime minister.
In seven months (July-January) of 2019-20, the FBR reported tax collection of Rs2.407tn, falling short of the target by Rs385bn.
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