ISLAMABAD: Minister for Planning, Development and Special Initiatives Ahsan Iqbal Thursday said that the government would meet the conditions set by the International Monetary Fund (IMF) to complete the programme, but common man would not be affected by the decisions.
He said the IMF agreement was hanging over the government which it had to negotiate with the Fund. The previous government, he said had recklessly agreed upon the programme, therefore the current government has no option but to continue the programme.
“We have to do lot of adjustments, but we will take decisions in the larger interests of the state,” he said and hastened to add that “we will try to put minimum burden on the poor and common people”.
He was addressing at an event here at the Pakistan Institute of Development Economics (PIDE).
The minister said Pakistan’s economy was in shattered condition when the current government took over and keeping in view the short available time, it decided to take short term measures to turnaround the economy.
Ahsan Iqbal stressed the need for mobilizing all available resources to increase productivity and exports of the country so as to get rid of foreign loans on permanent basis.
“Pakistan’s productivity capacity is very low as compared to the standard average”, he said adding that in agriculture sector alone, the country could earn billions of dollars by taking measures to increase the crops’ yield per acre.
For instance, he said the per acre wheat production in Pakistan can be increased by up to 80 percent by improving on-farm management. Similarly, he said, “our industrial production possess numerous inefficiencies due to which we are not competitive with the world”.
The biggest challenge in 75 years, he said is that Pakistan’s productivity capacity could not be integrated with the global markets.
Ahsan Iqbal pointed out that export-led growth is important to resolve the balance of payment issues, therefore he stressed the need to do all measures to earn maximum foreign exchange reserves.
“We have to do resource mobilization and also have to increase tax to GDP ratio up to the global average of over 18 percent which is only at 09 percent in Pakistan”.
He said in previous four years, the debt servicing burden had increased to Rs 4500 billion, so if the resources are not mobilized, the country’s all collected tax would be spent on the debt repayment.
Furthermore, he said increasing investment was another important factor to ensure sustainable economic development.
“If the Pakistani investors only bring out their money and invest in the country, we will not need to go to the IMF or any other lender”, he said adding that foreign direct investment would also have to be increased up to $25-30 billion per year.
He also asked the Ministry of Commerce to take urgent measures to increase the country’s exports from current $32 billion to over $100 billion in shortest possible time.
Meanwhile, State Minister for Finance and Revenue, Ayesha Ghaus Pasha highlighted that the government wants to continue programme with the International Monetary Fund (IMF) in such a way that the common man should not bear the burden of tough decisions to be made as per the Fund’s condition.
Speaking to the media here after attending the Senate Standing Committee on Finance, Mrs. Pasha said that the government’s economic team is having meetings with the Prime Minister to focus on its program with the IMF.
She said the Prime Minister was not in favor of taking tax measures across the board that could put an extra burden on the poor and common people.
To a question, she did not give any date when to start talks with the IMF team but she said that the government was firm to go with the program after having a detailed workout.
She said the government would try to convince the IMF about the worst situation in Pakistan after the disastrous floods last year. “The people are already suffering due to the disastrous flooding and they are not in a position to afford any further measures”.
Earlier, briefing the Senate Committee on Finance she informed that Pakistan is going through an extraordinary situation.
A representative of the Pharmaceutical Manufacturing Association briefed the committee that the pharmaceutical industry has a potential of $6 billion.
He said that this industry imports 93% of raw materials and the remaining 7 percent is also ordered from India, however, the LCs are 100% closed.
He said that we have made advance payments but still the LCs are not open adding that all the banks are saying that they don’t have dollars.
Replying to a pharma representative, the State Minister said that you should not say such things on such a platform, adding that Pakistan is going through an extraordinary situation.
Senate Standing Committee on Finance and Revenue met under the chairmanship of Senator Saleem Mandviwala.
Mrs. Pasha requested to understand that normal economic conditions cannot be provided yet and that we have inherited the current account deficit.
She said that we have given instructions to the banks to open necessary Letters of Credit (LC’s).
If LCs are not open, it does not mean that the country is going bankrupt, she added.
LCs related to essential food items, energy, pharmaceuticals exports, and agricultural products will be opened, she added.
The State Minister said that we are trying our best to increase foreign exchange reserves but it takes time.
The Committee directed the State Bank to immediately open LCs in the pharmaceutical industry.
The committee also consider the matter of Exemption of FED/Sales Tax to Industrial Traders of Ex-FATA and instructed the special secretary of finance to arrange a meeting with the state minister of the chamber of representatives.
