- Former finance minister says lower and middle income groups suffer due to overheating of economy
Former finance minister Miftah Ismail said on Monday that Pakistan’s growth model only facilitates the top 1% elite of the country while making the lives of lower and middle income groups miserable.
“The government has given Rs570 billion worth of loans to them at 1% interest rate to import machinery, however, they also ordered consumables for themselves and their families from abroad, thus inflating the import bill,” he said while speaking at the 37th Corporate Excellence Awards organised by the Management Association of Pakistan (MAP) at a local hotel here on Monday.
“When the economy heats up, it is the lower and middle income groups that face the brunt as companies lay off employees.”
According to him, Pakistan’s growth model was “upside down as it gives protection to manufacturers at the cost of value addition”.
He added that Pakistan should not have a lofty import bill of $80 billion with just $30 billion revenue in exports and $30 billion remittances.
“Every government leaves depleted foreign exchange reserves at the end of its term,” he lamented.
Citing that the country failed to establish any significant brand in exports, he stressed the need for the country to turn export-oriented.
Besides, he emphasised that the country should focus on the development of its agriculture sector because “it is quite unfortunate that Pakistan is importing $2 billion worth of cotton, $1 billion worth of pulses and $4.5 billion worth of edible oil.”
“We are importing pulses from countries like Ethiopia, which reflects the dismal state of domestic agricultural sector,” the former finance minister said, adding that this whole situation was leading to back-to-back budget deficits.
When the current account posts a deficit, the government has to finance it through loans, Miftah pointed out.
“We should learn to live within our means. If we cannot export, then we should not import in huge amounts,” he opined. “Our private sector does not have the money required to finance the deficit and our provinces are not helping as well.”
He added that the provinces had increased their payrolls by 400% in the last few years and many officers were earning 50% higher salaries than federal government officials.
He also criticised Pakistan’s education system, citing that 10% of the world's illiterate children are from Pakistan.
“India has world-class universities which helped it grow by leaps and bounds in technology and IT,” the former finance minister said.