Pakistan's external debt and liabilities, which were over 52 percent of the gross domestic product (GDP) five years back, have come down to 37 percent last year and are expected to decline further by the end of current financial year. "External debt and liabilities, which were 22 times of foreign exchanges reserves in 1998-99, have come down to 2.6 times last year," Advisor to Finance Ministry Dr Ashfaque Hasan Khan told APP in an exclusive interview. Dr Ashfaque expressed the hope that debt would further come down by the end of this year. He said the external debt and liabilities as percentage of foreign exchange earnings were 335 percent of the GDP in 1998-99, which had come down to 164.5 percent in 2003-04 and were expected to decline further by the end of current financial year.
As a result of the pursuance of the debt reduction strategy, Pakistan's debt situation was now on the solid downward footing and fast approaching at a sustainable level, he remarked.
Dr Ashfaque said that the public debt, which was over 100 percent of the GDP in 1998-99, came down to 68.8 percent last year (2003-2004) and was expected to come down further by 64 percent by the end of current financial year.
Dr Ashfaque said: "We are now witnessing acceleration in the GDP growth consistently in the last three years."
Notwithstanding major progress "we have made over the last five years, including Pakistan emerging as one of the fastest growing economies of Asia, there are many challenges still lying ahead."
The most important challenge included sustaining the current growth momentum translating the economic gains to the common people at a much faster pace, he added.
In the 2002-03 financial year, the growth rate achieved was 5.1 percent, while in 2003-04, it grew by 6.4 percent and this year its was expected to grow at the rate of over seven percent, he added.
About expected growth rate for the current financial year, he said: "All available information suggests we will exceed the seven percent growth this year.
"How to sustain this growth will be a challenge for us," he remarked.
Dr Ashfaque said in the forthcoming budget outlay would be over one trillion rupees and efforts would be made to address the challenge.
"We will try to create even more conducive environment for the private sector development and, therefore, the focus of the forthcoming budget would be pro-investment and pro-growth," he remarked.
In the budget, he said, the government would be focusing more on the economic growth to create more jobs and employment opportunities in the country, adding the growth would also increase the income of the people and help improve their living standards.
The enhanced economic growth was likely to increase the per-capita income of the people, he said, adding the growth in the economy would give the government more public resources and tax collections, helping it to spend more on education, health and other social welfare sectors.
The Advisor on Finance said that East Asian countries grew their GDP by seven to eight percent on sustained basis for more than two decades, which helped them to resolve their problems, including poverty. "We are also targeting seven to eight percent growth in the next five years," he remarked.
Dr Ashfaque said: "If we succeed in attaining this growth, Pakistan will be much different from it is today," adding the government wanted to translate the gains of growth at much faster pace to the people in the country. "We need to quicken the process," he remarked.
The Advisor to the Prime Minister on Finance said the government was focusing on the provision of five basic amenities, including education, health, clean drinking water, Sui gas and electricity so that people in the country could find some relief to overcome their problems.
Highlighting three major factors of inflation, Dr Ashfaque said the demand pressures supply shocks and oil prices were the main factors of the inflation.
He said about 2.38 billion dollars were spent on oil import during the period from July to February of the current financial year while 1.85 billion dollars were utilised in the same period of the last fiscal, showing an increase of 28 percent. He said that this year the oil import bill was likely to be one billion dollars.
The Advisor on Finance said that due to higher production in the wheat, the prices of the wheat and floor were showing downward trend.
To maintain prices of the commodities and ensure its supply according to the demand, he said, and added the government had adopted short-term, medium-term and long-term strategy for the benefit of the common man.
He said under the short-term strategy, the government had allowed free import of five essential items immediately to maintain their prices. Under the long-term strategy, the government would try to enhance the local production of those items, he added.
Dr Ashfaque said the exports increased by 14.6 percent during July-March 2004-05, with worth 10.2 billion dollars exports realised during this period as against 8.9 billion dollars of the same period of last fiscal. He expressed the hope that the exports of the country would be around 14 billion dollars by the end of current financial year.
About imports, he said that those grew by 37.8 percent in July-March of the current fiscal, adding that out of the total imports of 12.3 billion dollars during July-February period, 45 percent imports worth 5.6 billion dollars accounted for machinery and chemical goods.
Those imports, which related to industrial equipment and capital goods, would help in creating base for the growth of national economy, he added.
About trade deficit, Dr Ashfaque said, those were the benchmarks for the production of national economy and "we should not worry about the trade deficit."
He said: "We should not worry about it, rather it would expand productive base and enhance the production."
He said that if the investment grew by 1.3 to 1.5 percent of the GDP, then our current account deficit was expected to be in the range of 1.3 to 1.5 percent of the GDP. That level of deficit for a developing country like Pakistan, which was trying to grow at much faster pace, was quite reasonable, he remarked.
"If we can attract foreign direct investment (FDI) in the range of 1.3 percent to 1.5 percent of the GDP, we can finance this deficit without adding to the country's debt burden because the FDI is a non-debt creating inflow," he remarked.
About the remittances' situation, Dr Ashfaque said Pakistan received remittances of 3.5 billion dollars in July-March this year as against 2.87 billion dollars in the same period of last year, showing 6.1 percent growth.
He hoped that by the end of the current financial year, total remittances would touch four billion dollar-mark.
He added that the country realised a private investment of 900.7 million dollars during the first seven months of the current financial year as against 587 million dollars in the same period of last year, showing a growth of 53.5 percent.
He said that in the first nine months of the current financial year, the FDI was 793 million dollars as against 632 million dollars in the same period of last year.
Dr Ashfaque said by raising the income of our people and strengthening the country's physical and human infrastructure, maintaining financial discipline and pursuing the continuity and consistency in the policies would be the key factors to address the above-listed challenges.
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