ISLAMABAD: The economic managers, in a briefing to the caretaker prime minister, stated on Monday that the economy had come under pressure due to increase in expenditure and low revenue collection.

The Federal Finance Secretary, Nisar Khoso, informed the prime minister that the economy was in a bad shape due to government’s inability to increase tax-to-GDP ratio which at present was 9.5pc. The meeting was informed that GDP was estimated at Rs23tr. The Federal Board of Revenue (FBR) thrice revised its tax collection target for the current financial year.

This situation has worsened because of increase in the salary bill from Rs180bn to Rs340bn during the past five years when the outgoing government repeatedly raised salaries. Also, more than Rs2tr were provided in subsidies, including those given to the power sector.

The finance secretary, however, stated in his concluding remarks that the country was meeting its international obligations and foreign exchange reserves stood at $11.7 billion. The meeting was also informed that the Karachi Stock Exchange was performing well, and there was a flurry of fresh portfolio investment by foreigners.

The finance ministry recently released Rs3bn to boost transfer charges involved in the telegraphic transfer of money and would also release another Rs2bn on this account to provide comfort to the State Bank of Pakistan.

In his briefing, State Bank of Pakistan Governor Yaseen Anwer said that because of stringent management controls, the currency market had demonstrated stability.

In his presentation on streamlining and improving foreign remittances to facilitate Pakistanis working abroad to send money to their relatives, Mr Anwer said he was striving to encourage use of official channels by Pakistanis working abroad.

In response to a question by the prime minister regarding SBP efforts to eliminate hundi system, the governor stated that Pakistan Remittance Initiative (PRI) had been launched under which the remitter and the beneficiary would be exempt from transfer charges which in certain cases were prohibitive, especially for those workers who sent smaller amounts.

The SBP said that a pilot module using information technology for ensuring real-time transfer from anywhere to Pakistan was presently under trial.

In his opening remarks, the prime minister said that though primary objective of the government was to hold free, fair and transparent elections, the government was equally giving importance to economic stability. The prime minister said all steps would be taken for improving country’s economy. He directed the ministry of finance to focus on exploring ways and means to ensure that revenue targets set in the budget are achieved.

Senior officials of the Ministry of Finance, State Bank of Pakistan and officials of the Prime Minister’s Secretariat participated in the meeting. Although the prime minister selected a 14-member cabinet on April 1, his efforts to bring in a finance minister have so far failed.

Earlier, he picked Dr Mushtaq Khan to be his finance minister, but he could not take oath as he is serving as chief economist of the State Bank of Pakistan. According to knowledgeable sources, a number of technocrats were approached by the prime minister’s secretariat for the assignment, but they were reluctant to take charge because of depressing economic indicators.