Comprehensive strategy devised to move towards sustainable growth: Tarin

ISLAMABAD: Terming revenue generation, power reforms, price stability and overall economic growth as four big challenges, Federal Minister for Finance and Revenue, Shaukat Tarin Wednesday said that the government had devised a comprehensive strategy to come out from stability phase to sustainable growth path.

Addressing a press conference here, the minister said that the government had formulated around twelve sub-groups in designated areas to firm-up proposals and present short, medium and long-term plans with respective timelines for an effective way forward to lead the country towards sustainable growth.

He said that inflation had been a serious concern for the government, saying that there was a huge gap between the price the farmers are selling the products and in the retail market, which needed to be bridged. He said that the key focus is to bring price stability in the country.

Likewise, the government wanted to expand the social protection network by including other sectors like health, employment and skill development in it.

He said that fiscal stability was another area where the government was focusing on, adding that despite devolution of various ministries and departments, the expenditures could not be curtailed. Hence focus would be on it to cut the expenditures and bring about fiscal stability.

He said that the Federal Board of Revenue (FBR) had done pretty good job, but admitted that there was element of harassment, which he said would be eliminated.

The reforms in power and energy sector were another areas where the government would be focusing while saying that there was huge under-spending in agriculture sector, the minister said that the government would treat agriculture as major industry and focus on agri inputs to boost yield.

He said that the manufacturing industry of the country was not competitive and so was the case with export-oriented industry, hence it needed consolidation for which a sub-group has been formulated. He said that unlike other countries, there was no Foreign Direct Investment involved in export industry, which needed to be considered.

He also underlined the importance to utilize China Pakistan Economic Corridor (CPEC) for promoting exports from the country. He said that China had made huge investment now it was time that Special Economic Zones are established here so that industries manufacture products for the export purpose.

He said that IT was also a promising and game-changing sector, exports of which could be mounted from current $2billion to $8 billion in next 8 years.

He said that the government was also focused on bringing about reforms in State Owned Entities (SOEs), which he said would be supervised by private sector to enhance their efficiency.

The minister also highlighted importance of financial sector, saying that this also needed to be improved, citing an example that the banking footprint was just 33% of GDP in Pakistan, which he said was much lower while in China it was around 225 percent of GDP

He said that loans through Kamyab Jawan would be scaled up and government would also launch Kamyab Kissan programme. He said that these programmes would help bring prosperity at gross roots level.

The minister said that the government had to face challenges when it assumed power back in 2018 and had to tackle around $20 billion current account deficit in addition to debt payments. He said that weak financial position forced government to go to IMF and accept much difficult condition than in 2008.

He said that the economy was going well on growth path when the Covid-19 hit the country in 2019 and affected economy. However, the government managed it well and even gave relief package of Rs1.2 trillion.

Consequently, the economic indicators were showing positive results as remittances, industry, revenues were growing, however the third wave of Covid-19 came with another threat which had affected this growth

Citing example, he said that the growth of revenues in April was 92 percent compared to same month of last year, however during the last ten days, due to lockdown, it slid down to 57 percent.

With respect to Pakistan’s programme with the International Monetary Fund (IMF), Minister for Finance Shaukat Tarin pointed out that the government was trying to convince the International Monetary Fund (IMF) that Pakistan had not enough space to raise power tariffs and taxes.

He said the current programme with the IMF was different with the earlier programmes due to unfriendly environment on international front.

Some of hostile countries also made the programme more difficult for Pakistan and such conditions were placed that had a political cost.

But despite that, the government followed and managed to bring economic stability.

The minister made it clear that Pakistan was not quitting the IMF programme, however the country's interests will be given due consideration.

Our common man has been tired of the inflation and if fuel charges and tariffs are increased, this will further instigate the inflation, adding prime minister will not accept this.

He said “we have talked to the IMF and the World Bank and they have responded sympathetically”.

He said the government was trying to convince IMF that tariff increase was not the only way to raise money.

The second thing is about taxes, this is not necessary to withdraw exemption, he said adding that “we will increase taxes through innovative ways”.

Tax to GDP ratio, he said would reach 10.25 percent and every year this would have to slowly and gradually increase by 1 to 1.25 percent.

The IMF had asked Pakistan to increase Rs 3800 billion to Rs 5500 billion which is not feasible to implement.

If we start raising the tax to GDP ratio by 1 to 1.25 percent then in 7-8 years we will reach 20 percent, he added.