.Islamabad: The Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla, convened today to receive a comprehensive briefing on the current economic situation of the country.
Governor SBP, Jameel Ahmad, apprised that things are moving in the right direction, with indicators of inflation and the policy rate showing a downward trend. He stated that the inflation rate has come down to 4.10% compared to 38% in May 2023. Additionally, the policy rate has come down to 13%, which was previously 22%, and it is expected that the policy rate will be in single digits in the coming months.
Importantly, the current account deficit has reduced to 1.7% compared to 17.5% in the Financial Year 2022, and it is expected that it will come around 0.1% by the end of this Financial Year. In the country’s import bill of 4.2 billion dollars in November 2024, the share of petroleum products is only 0.9 billion dollars. Senator Shibli Faraz, Leader of the Opposition, inquired about the decline in the imports of petroleum products. Governor SBP replied that the volume of petroleum products has decreased; however, the import bill mainly decreased due to low international prices.
Mr. Jameel Ahmad remarked that the State Bank of Pakistan reserves currently stand at around 11.7 billion dollars. It is important to note that the SBP reserves have increased without an increase in debt. In 2018, the country’s debt was around 100 billion dollars against the SBP reserves of 3 billion dollars, but as of today, it has risen to 11.7 billion against the country’s debt of 100 billion dollars.
While giving the future prospects of the country’s economy, the Governor SBP predicted that the annual growth of the country will be 2.5% to 3.5% by the end of this Financial Year.
Mr. Jameel Ahmad also highlighted areas of improvement in the country’s economy. He stated that Pakistan is a country that spends only 1.9% and 0.8% of its GDP on education and health, and these numbers are really low compared to Turkey, India, Brazil, the Philippines, and Sri Lanka. He opined that the country needs to spend more on these sectors, as it may constrain long-term sustainable growth.
Furthermore, Chairman Committee highlighted the issue of fees being charged by VISA and MasterCard on domestic withdrawals. He revealed that around 2.5 million USD is being paid every week by almost every bank in the country, and surprisingly, consumers have been charged in dollars on every domestic withdrawal and transaction. Governor SBP informed that, to tackle the issue, the SBP introduced PayPak in 2016, and as of now, PayPak has acquired 23% market share. Chairman Committee stated that the charges should not be applied to domestic transactions, and most importantly, they should not be charged in dollars. The Committee recommended that the SBP find a long-term solution for the issue and also directed the SBP to provide the details of the amounts paid by the banks in lieu of fees.
Additionally, the Committee highlighted the issue of the delay in the appointment of the new CEO of EXIM Bank. Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, stated that EXIM Bank is a key enabler in the country’s economy and the government is working on its transition. He informed that the members of EXIM have been appointed, and the process for the appointment of the new CEO will be completed soon. The Committee decided to quarterly review the progress of EXIM Bank.
While discussing the matter of imposing FED on EVs, FBR officials informed that the matter has been resolved and Federal Excise Duty will not be charged on EVs, as per the opinion of the Ministry of Law and Justice.
Moreover, the Committee was briefed by the AGPR on the reasons for non-compliance with the orders of the Chairman of the Senate of Pakistan regarding the pay fixation of the newly promoted Private Secretaries and Director Staff of the Senate Secretariat. AGPR officials informed that the referred policy mentioned by the Senate Secretariat no longer exists, and therefore the matter will be decided by the Court.
The Committee was briefed on the Pakistan Remittances Initiative (PRI). Senator Saleem Mandviwalla highlighted that it was introduced to enhance national remittances, and under this initiative, the SBP bears the fee on behalf of the remitter. SBP officials informed that remittances have increased from 7 to 8 billion USD in 2009 to 30 to 35 billion USD now. Moreover, the SBP has paid around 86 billion rupees to the banks in lieu of charges last year. The Committee recommended that the SBP provide details of the amount paid so far in lieu of charges, along with the year-wise details of remittances.
In attendance were Senators Shahzaib Durrani,Mohsin Aziz,Manzoor Ahmad,Leader of Opposition Syed Shibli Faraz,Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb,Governor SBP Jameel Ahmad,Additional Secretary for Finance and Revenue Amjad Mahmood and other senior officials from relevant Departments.