Current account deficit within manageable limits: Ashfaque
ISLAMABAD (February 01 2008): Advisor and Special Secretary to the Ministry of Finance, Dr Ashfaque Hasan Khan, has said the current account deficit was well within manageable limits as despite unseen hits of billions of rupees to the economy inflows and outflows were not showing any huge difference.
Talking to Business Recorder, Dr Ashfaque Hasan Khan said the government's only worry was the rising oil prices in the world market and its impact on Pakistan's economy as it was adding to the budgetary pressure.
He said subsidy of billions of rupees every month on oil prices was forcing the government to review the budgetary projections for the current fiscal year. He said oil import bill was all time high of 6.5 billion dollars in the first half and at the current level it would cross 11 billion-dollar mark by June 30.
Dr Ashque Hasan Khan advocated immediate change in the policy of capping of the oil prices for minimising its pressure on the economy, and said the Ministry of Finance was strongly recommending at every forum to put an end to the exiting policy for passing on the actual prices to the consumers in different phases.
Dr Ashfaque Hasan Khan added that the government had different options to plug the current account deficit, including floating of a bond in the international market, but this option might be used at an appropriate time. However, he did not see the exiting conditions suitable for issuing any bond in global market.
He said Pakistan was issuing bonds in the international market every year since 2004, and it would like to use this option again once its economic team saw the global market ripe for such a move.
The advisor did not see any harm in borrowing from the State Bank of Pakistan for urgent government needs. He was of the view that the government was fully aware of the borrowing limit and its responsibilities under the Fiscal Responsibility Law.
Wheat import was another factor, which worried the advisor, who termed its import bill as another big blow to the economy that might cost the government 1.2 billion dollars.
The advisor was convinced that some elements created wheat crisis by hoarding stocks and the government measures were going to improve the situation drastically in next couple of weeks.
Business Recorder [Pakistan's First Financial Daily]