Economic reforms to be backed by political will, assures Tarin

Pakistan is set to undertake a comprehensive economic reforms program that would be backed by political will this time, assured Finance Minister Shaukat Tarin during a webinar organised by the Islamabad-based Institute for Policy Reforms (IPR) on Sunday.

Tarin’s remarks came during a question-and-answer session as he looked to pacify concerns around Pakistan’s economic recovery and its sustainability.

“There is a political will to make changes this time,” said Tarin. “Prime Minister Imran Khan has assured me of this. The political apparatus will be involved, and reforms would be inclusive.”

Pakistan announced that its economy grew by 3.94% in the outgoing fiscal year, beating many earlier estimates that projected the Covid-hit economy to register GDP growth of around 1.5%-2.5%.

The recovery comes a year after Pakistan registered its first economic contraction in decades, with many estimating that the recovery was unlikely to be V-shaped.

However, as the growth phase gets underway in the last leg of the Pakistan Tehreek-e-Insaf (PTI) government’s tenure, questions remain over whether the upward trajectory would sustain.

“You can make all the (economic) plans, but they can get disrupted by political forces. But we have involved all the experts, politicians, and policymakers this time.

“We will do everything necessary to ensure the betterment of Pakistan. PM Imran has assured me of this as well.

“I had no reason to join this government, but I have a passion, and want to see this society transform into an economic welfare state. We will take it to fruition. But if there is disruption, then, frankly, that would be the end.”

Talking about economic numbers at the start of the webinar, Tarin said the government will aim to add Rs1 trillion to its tax revenue next year. "This year we will have the highest revenue collection of about Rs 4.8 trillion rupees, which is for the first time in history but then next year we will go to around Rs Rs5.8 trillion, so that will be our number one focus," he said.

On Saturday, the Federal Board of Revenue (FBR) reported to have crossed Rs4.1 trillion in tax revenue during the first 11 months of the outgoing fiscal year, a feat lauded by PM Imran. It also indicated a revival of economic activity, led largely by the industrial and large-scale manufacturing sectors.

Tarin said the aim now is to make the sector more productive. “We have to make our industries more efficient, which will translate into our exports getting more efficient.

"Because our exports are not keeping pace with our overall growth, we fall short of dollars. Never have we gone for a tailspin for any other reason than the balance of payments," said Tarin, referring to the constant balance of payments crisis that pushes Pakistan to knock at the doors of the International Monetary Fund (IMF).

IT sector benefits

Tarin, who has spent a majority part of his career in the private sector working at Citibank and HBL, said the government will give incentives to the e-commerce sector. “We want to incentivise the IT sector.

“I have a meeting, and we will look to put an end to the FBR’s harassment of the IT sector.”

Meanwhile, amid calls to reduce the burden on consumers, Tarin said the prime minister has given his commitment that the government is not going to increase the electricity tariff in the near future. “People are already burdened with very costly electricity,” he said.

Talking about rising food inflation, the finance minister was of the view that unless we do not increase the output of our agriculture sector, food inflation is not going to be controlled in a long term.

Exploring new avenues for exports

During the question-and-answer session, Tarin addressed the challenge of increasing Pakistan’s exports that have not increased as much even as the rupee declined more than 50% between 2017 and 2021.

“We will incentivise value-addition, and explore new areas of exports including motor parts, three-wheelers, motorcycles. This has to be done to ensure exports grow.”

Post-Covid recovery

Tarin said that the pandemic had badly affected the country's economy, but a fiscal stimulus helped revive activity.

"PM Imran did a great job by introducing the construction package," Tarin remarked. "He [PM] realized that the construction sector doesn’t just include labor, but also supports around 40 to 42 industries on its own," he stated.

The finance minister, who also served as chairman of the then Karachi Stock Exchange, also stressed the need to increase research in the country’s agricultural sector.