June 8, 2022
ISLAMABAD – Prime Minister Shehbaz Sharif on Tuesday stressed the need for creating a charter of economy, saying that all stakeholders should collaborate on formulating a framework for achieving economic growth.
He made the remarks while addressing the day-long Pre-Budget Business Conference organised by the government to explore avenues of consensus-based economic measures, which was attended by top economists, industrialists and businessmen.
During his speech, the premier said that in order to enhance exports and agricultural yield, financial management was imperative.
“All of us will have to move collectively. The government will need guidance from stakeholders and experts. The government will form a taskforce on agriculture and exports for formulating comprehensive plans,” he said.
PM Shehbaz said his government had around 15 months to undertake short and medium-term measures for the economy.
He regretted that Pakistan lagged behind other nations, while the rest had excelled by following their development plans.
He said Pakistan was blessed with talented people who were capable of replicating India’s success in the IT industry. PM Shehbaz said he had tasked Minister for Information Technology Aminul Haque with taking IT exports to $15bn over the next two years.
“We cannot progress until we set ambitious targets,” he stressed.
He went on to say that development plans could not be realised until there was political stability. The premier also highlighted the need for focusing on exports and improving the agriculture sector.
He went on to say that he was trying to “repair” ties with friendly countries, which had soured during the previous government’s tenure. “I have spoken to China, Japan, Turkey and other countries and invited them to invest in Pakistan.”
He urged the business community to extend their support to him in this endeavour.
Pakistan needs $41bn in next 12 months, confident it ‘will happen’: Miftah
Meanwhile, Finance Minister Miftah Ismail said that the country needed $41 billion dollars in the next 12 months, adding that he was “very confident” about it happening.
“We have to pay back $21bn in the next year. I am guessing that the outside limit of the current account deficit will be $12bn […] I think that we should have reserves of at least three months […] So we need $41bn over the next 12 months and I think it will happen,” he said, adding that he was “very confident”, without elaborating further.
He said that the Shehbaz Sharif government had re-engaged with the International Monetary Fund (IMF). “We talked to them and we are very, very confident that we will soon have an agreement with the IMF. We are very, very confident of that.”
He went on to say that the current coalition government had taken tough decisions to stabilise the economy. “It is not easy for any prime minister to allow an increase in the price of fuel they way we have, twice of Rs30 each, but we were losing Rs84 per litre on diesel and Rs69 per litre on petrol.”
That loss would have been Rs120bn per month if we had continued to provide the fuel subsidy, the minister said. He went on to say that the cost of running the government of Pakistan was a little more than Rs40bn.
“We were spending thrice the amount of running the government on this subsidy,” he said, adding that it was also in contravention with the agreement the former government had signed with the IMF.
He claimed that the former government had promised the IMF to not give a fuel subsidy while also imposing a Rs30 levy and 17 per cent sales tax. “If I had followed the agreements [inked] by Shaukat Tarin and Imran Khan, I would either have been kicked out of the job or the price of petrol and diesel would be Rs300.”
He reiterated that the former government “laid a trap” for the current rulers by providing the fuel subsidy. However, he assured the businessmen that the government would stabilise the economy.
“We will take tough decisions because this is our country. It is our job to stabilise it and we will leave it in a better condition,” he vowed. He also highlighted that the government had recently engaged with Saudi Arabia, China, the United Arab Emirates and other countries for this purpose.
Ismail said that the government had prepared a “very progressive budget” but would also focus on fiscal control and consolidation, vowing to reduce the budget deficit.
He opined that Pakistan’s growth model was imperfect as the current account deficit always became an issue for economic growth. “Our imagination is limited and finance ministers meet with people like you and make tycoons richer,” he told the businessmen.
“When we do that, our imports increase because our consumption basket is very big,” he said.
The minister said average debt during the PTI government’s tenure was Rs5,177bn, while for the PML-N it was Rs2,132bn which was used for infrastructure development.
He said that over the span of 71 years, the country’s rulers — including military dictators — took out loans of Rs25,000bn while former premier Imran took out loans worth Rs20,000bn over a span of four years.
“This is 80 per cent of all loans taken by the entire government of Pakistan in the previous 71 years,” he said, adding that this had resulted in an increase in debt servicing. “The more you borrow, the more you have to pay.”
Talking about the problems being faced by businessmen in the country, he said that the government would ensure the supply of gas and power. “In the power sector, the government has given a subsidy of Rs1,072bn,” he said, adding that it could go up to Rs1,100bn.
“Unless we reform the power sector and bring good governance, it will be an albatross around our neck.”