-PM says economy cannot be streamlined without political stability
-Adds no matter what happens, whichever party comes into power, goals set in ‘Charter of Economy’ will remain unchanged
-Wants non-productive assets should be taxed, such as windfall profits in real estate
-Seeks a comprehensive plan for development
-Miftah says Pakistan needs $41b in next 12 months
By Anzal Amin
ISLAMABAD: Prime Minister Shehbaz Sharif Tuesday addressed a day-long pre-budget business conference in the federal capital and said that the country’s economy cannot be streamlined without political stability.
The conference was being held to explore avenues for consensus-based economic measures with all stakeholders on board. It brought together leaders from a wide range of industries on a single platform for a vibrant and interactive debate, in line with the prime minister’s vision of the Charter of Economy and an inclusive economic policy-making approach.
The prime minister said since Pakistan’s inception 75 years back, the economic development in the initial 25 years and the economic development after that have a “stark” difference.
PM Shehbaz said Pakistan’s five-year development programmes were made by top-tier professionals, which allowed the country to progress and Islamabad was way ahead of other nations in the region. “In the 1990s, the Pakistani rupee had better value than the Indian rupee. Pakistan also showed (India) how can we run the economy on modern lines; we liberalised Pakistan’s economy and India copied it,” he said.
PM Shehbaz added there were suggestions put forth by the conference’s participants, but “we should not limit ourselves to proposals and move ahead and implement them.”
“But it is important to note that without political stability, there can be no economic stability, and vice versa,” he said, stressing the need for a “Charter of Economy”, which would lead to long-term stability.
“No matter what happens, whichever party comes into power, the goals set in the ‘Charter of Economy’ will remain unchanged. It will become our sacred trust, which will not change,” the prime minister said, adding: “We need this.”
Moving on, the prime minister said there was a need to develop rural areas as when people travel from underdeveloped to developed cities, they become a burden on the resources of that place.
“The rural areas, which comprise 65% of Pakistan’s population, should be developed. This can only happen when our children get quality education there,” the prime minister noted.
He added that there was a need to increase the agricultural yield through modern technology as it could change the fate of Pakistan, which would later be exported and help the national exchequer.
PM Shehbaz said following the 18th amendment, the provinces were empowered and the federation’s powers were curbed. But he noted that the provinces and the Centre would have to work together to develop a comprehensive plan.
“For that, I will need your (businessmen’s) help. I am not saying this for a mere speech. No, we are forming a task force but I will not go into details of it now,” he said
Comparing the country’s IT industry with that of India’s, the prime minister said that the latter generates around $200 billion while Pakistan’s industry was hovering around $2.5 billion. “We must go for special export industrial zones,” he added.
The PM said that the government will make well-structured industrial zones. “To increase the export, the developed zone should be handed over to the investors to work on it. We need to fix ambitious targets.”
Talking about the tough decisions being taken by the government, PM Shehbaz said that the non-productive assets should be taxed. “The windfall profits in the real estate should be taxed,” he said.
Earlier, Finance Minister Miftah Ismail said on Tuesday that the country needed $41 billion dollars in the next 12 months, adding that he was “very confident” about it happening.
“We have to pay back $21bn in the next year. I am guessing that the outside limit of the current account deficit will be $12bn I think that we should have reserves of at least three months. So we need $41bn over the next 12 months and I think it will happen,” he said, adding that he was “very confident”, without elaborating further.
Addressing the Pre-Budget Business Conference organised by the government in Islamabad, the minister outlined the problems plaguing the country’s economy.
He said that the Shehbaz Sharif government had re-engaged with the International Monetary Fund (IMF). “We talked to them and we are very, very confident that we will soon have an agreement with the IMF. We are very, very confident of that.”
He went on to say that the current coalition government had taken tough decisions to stabilise the economy. “It is not easy for any prime minister to allow an increase in the price of fuel they way we have, twice of Rs30 each, but we were losing Rs84 per litre on diesel and Rs69 per litre on petrol.”
That loss would have been Rs120bn per month if we had continued to provide the fuel subsidy, the minister said. He went on to say that the cost of running the government of Pakistan was a little more than Rs40bn.
“We were spending thrice the amount of running the government on this subsidy,” he said, adding that it was also in contravention with the agreement the former government had signed with the IMF.
He claimed that the former government had promised the IMF to not give a fuel subsidy while also imposing a Rs30 levy and 17 per cent sales tax. “If I had followed the agreements [inked] by Shaukat Tarin and Imran Khan, I would either have been kicked out of the job or the price of petrol and diesel would be Rs300.”
He reiterated that the former government “laid a trap” for the current rulers by providing the fuel subsidy. However, he assured the businessmen that the government would stabilise the economy.
“We will take tough decisions because this is our country. It is our job to stabilise it and we will leave it in a better condition,” he vowed. He also highlighted that the government had recently engaged with Saudi Arabia, China, the United Arab Emirates and other countries for this purpose.
Ismail said that the government had prepared a “very progressive budget” but would also focus on fiscal control and consolidation, vowing to reduce the budget deficit.
He opined that Pakistan’s growth model was imperfect as the current account deficit always became an issue for economic growth. “Our imagination is limited and finance ministers meet with people like you and make tycoons richer,” he told the businessmen.
“When we do that, our imports increase because our consumption basket is very big,” he said.
The minister said average debt during the PTI government’s tenure was Rs5,177bn, while for the PML-N it was Rs2,132bn which was used for infrastructure development.
He said that over the span of 71 years, the country’s rulers — including military dictators — took out loans of Rs25,000bn while former premier Imran took out loans worth Rs20,000bn over a span of four years.
“This is 80 per cent of all loans taken by the entire government of Pakistan in the previous 71 years,” he said, adding that this had resulted in an increase in debt servicing. “The more you borrow, the more you have to pay.”
Talking about the problems being faced by businessmen in the country, he said that the government would ensure the supply of gas and power. “In the power sector, the government has given a subsidy of Rs1,072bn,” he said, adding that it could go up to Rs1,100bn.
“Unless we reform the power sector and bring good governance, it will be an albatross around our neck.”
