-Defends existing 3.94% growth rate
-Says economy to expand by 5% next year
-Central bank clarifies ambiguities over GDP growth rate numbers
By Ali Imran
ISLAMABAD: Finance Minister Shaukat Tarin said on Sunday there was a need to pursue sustainable and inclusive economic growth for everyone in Pakistan.
Addressing a news conference in Islamabad, the finance minister provided details on a number of initiatives and measures that were part of the government’s economic policy. “We have to pursue inclusive and sustainable [economic] growth. There should be similar [economic] growth for everyone including the rich, the poor and the middle class.”
That kind of economic growth could only be achieved when “fundamental fault lines” were corrected, Tarin said, adding that after a “long time”, the government was carrying out a big planning exercise, was focused on it and would act on it.
The finance minister said that economic growth had appeared along with stabilisation due to the government’s focus on certain targeted sectors such as housing, agriculture, industry and exports. He added the projection of 3.94 per cent GDP growth rate was a figure which provided “hope that if we move forward towards growth then maybe the next year we might have 5pc growth and more than 6pc the next year after that.”
Tarin proceeded to provide details of the strategy which had been formulated after his becoming the finance minister and said that short, medium and long-term planning had been carried out on some 12 sectors and would be presented before the prime minister by the end of the month. “What is in that whole strategy? The first thing is price stability.”
Tarin said inflation had increased all over the world and its impact was felt on Pakistan as well. He outlined a number of measures which would be taken to control price stability. Before elaborating on those measures, he explained that Pakistan’s position had changed from a country with a surplus of food to one with a deficit which had to import, blaming it on the lack of attention paid to the agricultural sector.
To address this and the problem of price stability, “we will have to take administrative measures at the start.”
As part of those measures, strict action would be required against people engaged in profiteering and hoarding practices and food supply would be increased. “We will tackle this through creation of strategic reserves and dump food wherever people try to profit.”
For medium and long-term measures, he said: “We will create structures such as commodity warehouses and cold storages and will want that farmers come and sell their produce themselves in the markets so price stability arrives.” He reiterated that more attention should be placed on agriculture so production output is increased.
“Our second focus is economic growth. We have to grow the economy,” he explained, adding that a number of economic indicators such as employment, revenues and people’s incomes were linked to economic growth.
He said that previously, Pakistan had been following the trickle-down approach to economic growth but now the bottom-up approach would be utilised as well.
“Our four to six million households at the bottom, what is their fault? Aren’t they Pakistan’s citizens?
“Don’t they have the right to have a roof, livelihood, education for their children and we take care of their health?” the finance minister questioned. He then elaborated that Prime Minister Imran Khan was going to take a “major initiative” which would not only focus on the usual areas in the trickle-down approach such as housing, agriculture, industry and exports but would also incorporate the bottom-up approach.
“We will bring schemes for the people where they will have livelihoods and will give interest-free loans to poor farmers if we have to do. It will be a major revolution which we will be bringing.”
He explained that focus would be paid on productive sectors so surplus could be achieved in agriculture and industry could be made competitive to increase exports and decrease imports. “This time we have to focus on exports,” Tarin stressed.
The finance minister also emphasised that increasing revenue was very important since until the Federal Board of Revenue’s and government’s revenues didn’t increase, the latter would always be in debt and “fiscal deficits will not reduce and the private sector won’t get credit so increasing revenues is a very critical thing we have to do.”
With regards to the financial sector, Tarin said that measures would be taken to encourage people to deposit their money in banks so it could be put to more productive use. The finance minister also called for the money collected from the across the country to be spent on the respective provinces instead of “nine cities”.
“This shouldn’t happen. If there are savings from KP (Khyber Pakhtunkhwa) and Balochistan then they should be spent there.”
The finance minister said if all these issues were corrected and worked upon then “it is our belief that there will be 6pc [economic] growth.”
The finance minister reiterated while responding to a question that power tariffs would not be increased to prevent further burden on the people and the same would follow for taxes. He said the International Monetary Fund (IMF) had been told that money would instead be collected through other “innovative ways” and he had “full hope” that the IMF would give space.
He also explained that Pakistan had fulfilled most of the Financial Action Task Force’s conditions with one or two “transactional items” left so he said the government was hopeful of a favourable response in the meeting in June.
Meanwhile, the State Bank of Pakistan (SBP) has released on Sunday a clarification on the media debate over GDP growth estimations being cited by the National Accounts Committee (NAC) noting underway strong economic recovery already highlighted in its quarterly reports. In a set of tweets published by the central bank via its official handle say that the provisional estimate for the financial year 2021 growth of 3.94 per cent that NAC released, reflects the strong economic recovery underway already anticipated and posted in its reports.
