ISLAMABAD: Finance Minister Asad Umar on Monday said that the economic turmoil will soon be over, asserting that the talks with the International Monetary Fund (IMF) for the country’s “last bailout package” are in final stages.
While addressing the ‘Medium Term Economic Framework’ here, Asad Umar indicated that the government was all set to complete the agreement with IMF as the talks have reached its final stages. The minister said he was going to attend the IMF Spring meeting to be held in Washington next week.
The finance minister said that instead of taking easy decisions influenced by “the news cycle or elections”, the Pakistan Tehreek-e-Insaf (PTI) government wanted to strengthen the economy by devising policies that will strengthen the economy in the long term.
He said his government will increase the exports to $40 billion by the end to its five-year term. “I will assure you that next finance minister will not crying over the balance of payment issue when he will resume office in 2023,” the minister claimed.
Talking about the current state of economy, the minister said, “The crisis is over. Now we are in the stabilisation process. Once the economy is stable, the country can move towards growth.”
According to him, Pakistan’s economy is still hostage to a huge spending gap and fiscal and current account deficits. “At this stage, the government is borrowing loans in order to pay the interest of old loans. The country’s primary deficit is negative,” he said. The minister also identified low revenue generation by the FBR as a key reason behind the economic difficulties being faced by the country. Drop in exports and low savings also hinder the country’s economic growth, he said.
“Revenue will only increase when the economy develops,” he said and announced that the government had decided to form a separate tax policy unit with experts on board. He also stressed on the importance of using technology to reform the tax collection system. For that purpose, FBR has secured the services of Pakistan Revenue Automation (PRAL) and a board with people with relevant expertise has been formed.
While avoiding to share economic numbers of the medium-term economic framework till finalisation of the agreement with IMF, Finance Minister Umar claimed that the framework was prepared by Economic Advisory Council (EAC) and with consultation with other renowned economists like Hafeez Pasha.
The minister admitted that during the past 15 years, the public finance management/discipline has literally been broken down.
“This government is going to introduce the new public finance management system as required legislation and process has been completed. The supplementary bills are also breaking fiscal discipline. The government is going to stop the supplementary budgets by next financial year,” he said.
Talking about the devaluation of rupee, the finance minister said, “Exchange rate is not [the best] measure of strong economy.”
“At one point, the Pakistani rupee was stronger than the Japanese yen, even though the latter’s per capita income was much higher than ours,” he explained, while adding that the past governments had “ruined” the economy by artificially maintaining the exchange rate, and insisted that the practice had to be ended.
“In order to end the practice [of artificially maintaining the exchange rate], economic fundamentals need to be strengthened,” he explained. “By artificially maintaining the exchange rate, we harm our farmers and exporters and give a free subsidy to foreign traders.”
He took a hit at critics who accused the government of having destabilised the economy with the weakening in the rupee-dollar exchange rate, saying the criticism was unfounded.
He also expressed his frustration with TV anchors who have been critical of his policies, suggesting business reporters, “who have a much better understanding of the technicalities of the economy,” to sit with anchors and share their knowledge on how to report on economic matters.