Hafeez calls for fiscally responsible attitude
ISLAMABAD: Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh called for demonstration of fiscally responsible attitude as corona led impacts were expected to deeply distort economic fabric of Pakistan.
He also called on all the federal ministries and divisions to have innovative and out of box brainstorming to achieve further cost cutting, along with efficient utilization of meagre budgetary resources.
The adviser was addressing a meeting held at the Finance Division to discuss budgetary outlook for the next financial year. Minister for Industries and Production Hammad Azhar and Advisor to the Prime Minister on Commerce Razak Dawood also participated in the meeting apart from core team of Finance Division, according to a press statement issued by the ministry.
The focus of the meeting was on spending priorities of the federal government amid corona led economic downturn and in the wake of International Monetary Fund (IMF) review.
During the meeting, the Debt Wing of the Ministry of Finance shared the perspective on budget deficit projections and borrowing plans for foreign and domestic components of debt.
The T-bills and bonds dominated domestic debt borrowing had witnessed decline in cost of debt financing due to robust debt management strategy.
It was apprised that choice of timing of tapping the money markets and quantum of debt raising had helped in reshaping the maturity structure of debt portfolio.
Growing market confidence had led to saving in borrowings costs for the government of Pakistan as banks were now dominant participants in auctions.
It was highlighted that debt to gross domestic product (GDP) ratio had been distorted due to economic compression.
The adviser instructed that option of tapping sharia compliant bonds may also be exercised to diversify the portfolio.
The finance secretary shared that with every one percent decrease in policy rate, saving of Rs50 billion in debt servicing was expected.
The debt director general shared the details about repricing options for existing domestic debt portfolio, in case of interest rate cuts.
The strategy of raising major chunk of financing needs through floating rate bonds, during high interest rate environment was appreciated.
Adviser commerce advised that debt managers must keep eye on the yield curve inversion and its implications on borrowing choices in a macroeconomic climate dominated by recessionary headwinds.
Dr Ishrat Husain highlighted the significance of broadening the investors’ base in the pursuit of better price discovery.
The finance secretary shared plans on further expenditure squeeze, rationalizing all domains of current expenditure including running of civil government, interest payments, subsidies and other related expenditures.
Plan was shared to divert current expenditure savings to corona stimulus financing, under the vision of prime minister.
The finance secretary apprised that core areas of reform pertained to general austerity and discouraging supplementary grants as principle.
He also shared the proposal of disbursement of electricity subsidy to subsistence consumers through Ehsaas, damage control in PSEs including their selective turnaround and scope of their management outsourcing through PPP modalities.
The team deliberated on the transfer of four tertiary care hospitals from provinces to federation in the backdrop of new National Finance Commission (NFC) talks, as the act would place additional recurring liabilities worth Rs 27 billion per year on the platter of federal government.
The ongoing work on right sizing of federal government by Prime Minister’s Task Force under Dr Ishrat Husain was appreciated as it was expected to bring long awaited fresh breeze in the corridors of status quo driven bureaucracy. – APP