Finance Minister Shaukat Tarin will chair a meeting of the Monetary and Fiscal Policy Coordinating Committee on Wednesday. – Courtesy photo: PID
ISLAMABAD: Pakistan’s economic executives on Wednesday identified rising international commodity prices, higher import bills and current account deficits (CAD) as major risks to the macroeconomic outlook and decided to have closer coordination and vigilance for policy adjustments in support of higher growth.
At a meeting of the Monetary and Fiscal Policies Coordination Board (MFPCB) chaired by Treasury Secretary Shaukat Tarin, the Governor of the State Bank of Pakistan, Dr Inflation, dismissed.
The Finance Minister called for “the design and implementation of policies to achieve economic objectives and to overcome the possible risks” and recommended that the MFPCB be more effective in maintaining better policy coordination to achieve the envisaged macroeconomic objective.
Other board members present were the Prime Minister’s Advisor for Trade and Investment Abdul Razak Dawood, the Deputy Chairman of the Planning Commission (PC) Dr. Jehanzaib Khan and private member Dr. Asad Zaman.
The SBP governor stresses that the rise in commodity prices will have an impact on higher import bills
The finance minister briefed the board on the current economic situation in the country and highlighted the main incentives in the budget that are improving business confidence and moving the economy on a strong economic recovery path. He said that all major economic indicators related to the real sector of the economy, financial, monetary and external sectors are doing well and the government is proactively implementing all policies to meet the main socio-economic objectives of the current fiscal year.
The minister “also drew attention to the possible risks to economic activities and the strategy for combating these risks, which were estimated by the members of the Board of Directors,” it said in an official statement.
An official said the CAD is expected to rise as imports rise with higher international commodity prices.
Treasury Secretary explained budget allocations for various activities and the ways and means to maintain budget discipline and how steps were taken to contain non-development spending, with an emphasis on making the most of resources to improve overall service delivery for the common man.
Governor SBP explained the monetary policy course announced a few weeks ago. While sharing the SBP’s analysis of policy rates, credit availability, exchange rate movements and inflation, he explained that the policy mix supports the growth momentum. However, he highlighted “the rise in commodity prices on the world market, which has an impact on higher import bills and inflation”.
At the same time, he said it is encouraging that exports are picking up along with the surge in imports of machinery, which will increase the production capacity of the economy and create exportable surpluses. He told the forum that SBP was implementing policies to promote business activities in various economic sectors. He said there are numerous opportunities for investors and exporters and youth in the country to benefit from SBP’s programs to expand or start their business.
The vice-chairman of the PC briefed the session on the implementation of development activities and the possible options for mobilizing resources and using them effectively for the development of potential economic sectors.
Mr. Dawood provided information on the country’s trade structure along with the key objectives and process steps to increase exports to potential areas. He also pointed out different categories of imports that could be rationalized by focusing on their substitutes.
According to the official statement, Dr. Zaman explained the government’s important fiscal and monetary measures in support of business activities, highlighting potential areas where Pakistan has comparative advantages in the export market and should be treated as low hanging fruits for import substitution. He recommended that the goal of well-coordinated monetary and fiscal policies should be to achieve full employment.
Posted in Dawn, August 26, 2021