ISLAMABAD: Federal Minister for Finance and Revenue Shaukat Tarin on Thursday expressed hope for successful outcome of top level negotiations with International Monetary Fund (IMF), for putting the $6 billion Extended Fund Facility (EFF) back on track.
“I believe that the progress we have made to date is really encouraging and as we say, Inshallah I see this happening now in this visit,” the federal minister said in an interview at United States Institute of Peace on ‘Pakistan’s economic future.
The minister said the concluding 6th round of talks with IMF was the most important part of his visit to US, adding that many virtual meetings already took place while the technical level discussions had also been concluded.
He said, at the end, meetings would be held with seniors at the IMF, including managing director of the Fund.
The minister said his government thought that IMF’s demand to increase power tariffs would trigger inflation, adding that this point was made in technical discussion with the fund, which was also informed that the increase in tariff would be made gradually to avert any abrupt impact on inflation.
He said there were some problems on power side, including excessive capacity, for which the government had to pay, adding, performance of distribution and generation companies was also being improved. He said all this was being successfully negotiated with the IMF.
Economy and Growth Rate
The minister said there was no stagnation in growth, the Pakistan economy would grow by over five percent during the fiscal year 2021-22.
He said back in 1960s Pakistan’s economy was forth largest in Asia, however, the nationalization policy of Zulfiqar Ali Bhutto and Afghan War in 1979 disrupted the economic growth.
He said Prime Minister Imran Khan took over an economy which was struggling in 2018 with $20 billion current account deficit, unsustainable fiscal deficit, adding that he had to go for tough IMF programme besides taking some politically unpopular decisions including currency devaluation, increasing discount rate and increasing utility prices.
The minister said as the country’s economy had started consolidating and growing, the Covid-19 pandemic hit the world.
However, it was nicely dealt by the government as was indicated by far lesser human and property losses caused by the pandemic in Pakistan compared to rest of the world.
The minister said the government during Covid-19 kept investing in two productive sectors, agriculture and industry as well as housing.
He said during Fiscal Year 2021, the growth was recorded at over four percent as compared to negative half percent growth the previous year, showing V-shaped recovery.
He said, the country had around 60 percent population below the age of 30 years who needed jobs, so the government revitalized agriculture, industry, exports, housing and believe that economy would grow by over five percent. However, he said at the same time there was need to make sure it is not overheated.
He said, the government was also ensuring that underprivileged were not ignored and made to wait for trickle down effect of positive economic growth, which had never reached to them for many decades. So, he said, the government utilized bottom-up approaches to ensure sustainable and inclusive growth.
For the purpose, the government was providing interest free loans to farmers and low income families besides issuing health cards and giving technical trainings to help around four million households.
Change in Focus from Geo-Security to Geo-Economics
The minister said the PM had changed the focus of the country from geo-security to geo-politics to ensure economic welfare of people. This kind of change in focus meant everything changes in terms of foreign policy, economic policy, internal security, and whatever else and relationship with neighbours.
He said Pakistan was having good relations with all neighbouring countries, but there were issues with India, which needed to be resolved.
Pak-India Trade and Kashmir Dispute
The minister said there was a fundamental issue between Pakistan and India and that was Kashmir, which he said, was a disputed territory as per the United Nations Security Council resolutions.
However, he said the current Indian government was not accepting its disputed nature and had taken few unilateral decisions, depriving Kashmiris of various privileges given to them.
Tarin said trade and economic operations between India and Pakistan were suffering, adding that Imran Khan had offered so many times to India that if they took one step Pakistan would take two steps, urging Indian government to respond positively.
He said at political level, there was a need to provide some space for economics and welfare of people of both the countries.
The minister said like other counties of the globe, Pakistan also wanted inclusive government in Afghanistan and was also striving for that.
However, he cautioned that Taliban government was running out of cash and if the world did not come to support them on humanitarian grounds, there would be complete chaos, which would spill over to Pakistan and other countries.
He said since Taliban were saying that they would cooperate with world, became responsible country, took care of human rights, protected women rights and pledged not to promote terrorism, they should help them step by step and encouraged them to demonstrate improvements in there behaviour.
He said if situation in Afghanistan deteriorated it would affect Pakistan the most.
Talking about the security situation in Pakistan, the minister said Pakistan had fenced border with Afghanistan, except a small strip near Chaman while traffic flow to and from Afghanistan had been controlled and security forces were also taking necessary action to maintain security.
Reforms in Human Resource
The minister said the government was working to reform the entire human resource; brought in private sector in key position in ministries and had combination of bureaucrats who understood both government and private sector.
He said Federal Board of Revenue (FBR) had constituted a committee on these lines having half-half representation from public and private sectors to move forward efficiently.
Ease of Doing Business
The minister said that owing to the comprehensive policy decisions, Pakistan jumped 28 places in ease of doing business. He said the Prime Minister was taking charge himself and Board of Investment was reporting directly to him while the PM was holding two meetings every month.
He said Special Economic Zones (SEZs) would be made autonomous to provide a conducive environment to the foreign investors, adding that autonomous status would initially be introduced in around six zones within next 12 months and would be replicated in other zones later.
The minister said there were around 85 companies run by the government out of which 15 were making loses of around one percent of Gross Domestic Product. These included airline, railways, steel mill and power distribution companies.
He said these companies would be disassociated from ministries and their control would be handed over to professional people to overhaul them and within five years, these would be privatized. He maintained that in developing countries like Pakistan, government had no job to run the businesses.
He said people were being probed for flight of capital, adding that nobody would be spared and whoever had done anything wrong would have to face the consequences.
The minister said Pakistan wanted to be friend with everybody including United States and China.
He said Pakistan had major strategic partnership with US and its friendship with China would not affect its relations with US. “We believe we can work with both powers equally.”
He said, China had helped us to build infrastructure and that did not mean Pakistan had become China-Centric. “We are open and want to do business with china, US, Europe, Japan, Korea. We are open country. There should be no misconception,” he cleared.
On China Pakistan Economic Corridor (CPEC), the minister said Pakistan needed to build infrastructure to attract foreign investments. Since Pakistan was not in position to build such huge infrastructure, so China provided funds and helped us in building roads, railways, power generation and other infrastructure which generated economic activity.
To a question, the minister said there were few projects where companies from China, United States and Pakistan were engaged in joint ventures and collaborating with each other. This cooperation could be enhanced he added.
The minister again made it clear that Gwadar port was not China-Centric, saying that it was open to everybody including Japanese, South Koreans, and Europeans. He said if anybody wanted to have business with African countries and Central Asia States, Gwadar was the right place.
The minister said the government wanted to attract investment form different counties and that was why it had developed infrastructure. He said, Gwadar was a big opportunity as it was a unique territory covering Gulf, Central Asian republics and even distance to China was also short from this port.
Any country could come and invest and Pakistan had been making efforts to attract people from different countries to invest in economic zones and was also approaching overseas Pakistanis for the purpose.
However, he said, peace and stability in Afghanistan was needed, adding that stable Afghanistan was good for all, urging world community to help make Afghanistan manageable for benefit of all.
FATF Grey List
The minister said Pakistan had met 26 out of 27 Financial Action Task Force (FATF) conditions and the 27th one was also half met.
He said, any other country meeting such conditions would have been removed from the grey list, however, “Pakistan was being punished by some countries for different reason, not the economic.”
“Frankly it is same mantra that Pakistan is a terrorist state. Pakistan encourages terrorism,” he said adding that the country which lost 80,000 people and suffered $150 billion loses and had been suffering for 40 years was being blamed continuously.
Future of Pakistan
The minister said, no amount of hurdle would stop us to making Pakistan economically great again and one of the top countries in Asia first and then world. “In our lifetime if we make Pakistan one of the top countries economically in Asia that will be an achievement that is my motivation,” he said.