While speaking at the Washington’s Atlantic Council, Finance Minister Abdul Hafeez Shaikh called for a fair opportunity for Pakistan’s exports to international markets as he argued that a Pakistan-US relationship centering on economic interests would endure, in contrast with fickle nature of past transactional ties. “We feel if we are simply allowed to trade like other countries, if barriers are not imposed, we will do just fine”.
He said Islamabad has no desire to depend on aid forever. “We are not looking for a perpetual kind of government-to-government help. What we are looking for is a chance for our people to be allowed to compete with the rest.”
Preferential trade programme
Pakistan has been urging the US to reduce high tariff on its textile products in order to spur the country’s exports but, according to experts, Washington lobbies and opposition in Congress to preferential trade programs, have thwarted any headway on this development. A bill on allowing preferential access for Pakistani and Afghan products from specially designated reconstruction opportunity zones has been around for several years without any worthwhile progress. The United States in 2009 approved a five-year, $7.5 billion-dollar civilian assistance package for Pakistan, but some US lawmakers have sought to cut civilian aid due to concerns over extremism.
Developing regional ties
Pakistan’s finance minister said that trade including with rival India would be key to turning around his country’s economy, saying that aid handouts were not a long-term solution. Shaikh said that Commerce Minister Makhdoom Amin Fahim, who is on a visit to India, was given flexibility to negotiate on trade with Pakistan’s arch-rival whose economy has posted soaring growth since the 1990s. “I think that no country, no region of the world, has really shown true development if regional ties are not on a solid footing. That’s a lesson of experience that we want to learn and we want to adopt,” Shaikh said.
Pakistan paid the most for this war
The minister told the think tank gathering of South Asian experts that Pakistan has had episodes of external assistance during wars in the 1960s during the cold war, in the 1980s during the Soviet Union-Afghanistan war and now in the first decade of the 21st during the anti-terror war. “Twenty years back, we won a conflict together in Afghanistan but sadly we lost the peace. And the countries including US paid a price for it and Pakistan paid the highest price for this, apart from Afghanistan. We don’t want to lose the peace again. We want that this time we learn from the past and try to ensure that the relationship is based on a broader footing. That is why both governments are trying that the economy acquires centrality in the relationship. I am confident that if that be the case, the partnership will endure,” Shaikh said.
The International Monetary Fund has forecast growth of 3.8 per cent in the current year in Pakistan, which was devastated last year by floods and has been hit hard by radicalisation in the aftermath of 9/11 where certain elements blamed Pakistan for forwarding the interests of the US in the region. Pakistan is also negatively impacted by cross border insurgency from Afghanistan that has lead to a precarious law and order situation within the country. Floods that killed more than 230 people and damaged 70 per cent of the crops in Pakistan’s southern Sindh were a set-back to the country’s growth.
Pakistan, he said, is committed to repaying $1.2 billion due in the current financial year to the International Monetary Fund. “I think there is no danger or threat of Pakistan not having funds to pay back IMF,” he said, citing comfortable levels of foreign exchange reserves. Pakistan, he noted, has a history of always paying back their debts. So it is I think not even an issue that is of concern to us at this point,” said the minister. In answer to a question, Shaikh also pointed out that some developing countries have been subjected to much deeper and frequent scrutiny while developed economies grappling with very serious troubles have seen much softer examination.
Aid cuts by Washington?
He also met senior American officials at the State Department during his stay in Washington for IMF-World Bank annual meetings. He underscored that Pakistan-U.S. relationship is very important for the whole world and it should not be seen from a narrow angle but in a broader perspective. “In my conversations with my friends — there is no such talk,” he said, when participants wanted to know what would be the impact on Pakistan’s economy if Washington resorted to aid cut moves. The US spent half a billion dollars under the Kerry-Lugar bill in the last Pakistani financial year which ended in June, he said.
The IMF has helped prop up Pakistan’s economy with an $11 billion loan, of which the country has received $8 billion. Although the loan package ends Sept. 30, Pakistan does not plan on seeking the remaining funds because it has enough foreign exchange reserves. “Pakistan’s reserves are higher than they would have been,” Shaikh said. Its economy, forecast to grow about 3.8 per cent in the fiscal year ending in June, has also been hurt by high oil prices and security issues. Shaikh said he “felt” that his country would be able to weather the economic hits. “Where we want to go, is to get back to 5 to 6 per cent growth so we can accommodate our young people looking for jobs,” he said.
Facilitating foreign investment
Earlier, the minister and his team discussed ways to expand investment and business opportunities with members of US-Pakistan Business Council at the Chamber of Commerce. He said despite facing worst floods, the Pakistani economy has begun to show resilience, particularly in the external sectors. He reaffirmed Islamabad’s commitment to wide-ranging reforms and economic growth to reduce poverty. The minister held out commitment to facilitating foreign investment into various sectors of the economy and said a wide majority of the foreign companies has been reaping high dividends in Pakistan. Also, national institutions like State Bank and Federal Board of Revenue are working independently, free of any government interference. Accompanying the finance minister are top economic managers including Finance Secretary Dr Waqar Masood Khan, Acting Governor State Bank Anwar Yasin, Deputy Chairman Planning Commission Nadeem ul Haq, Chairman Federal Board of Revenue Salman Siddique, Secretary Economic Affairs Abdul Wajid Rana and Minister Economic at the embassy.
Aid for polio eradication
Japan will provide financial assistance of $65 million to Pakistan for the second round of polio eradication drive in the country under the globally known Bill and Melinda Gates Foundation. The new round of polio vaccination begins shortly. The Bill and Melinda Gates Foundation have purchased the $65 million soft loan from Japan. That loan will be converted into a grant for Pakistan, as it is the Foundation that will pay off the loan.