Having achieved macroeconomic stability despite some longstanding challenges, Pakistan is now endeavoring to consolidate economic gains in a wide array of sectors through far-reaching steps, Finance Minister Senator Ishaq Dar said Thursday.
Speaking at the Carnegie Endowment for International Peace, Dar also said Islamabad is striving for a 5 percent GDP growth this year on the back of a series of positive indicators that have seen the economy expand and foreign exchange reserves rise to the latest $ 17 billion mark.
“We still have a lot to achieve —but we are consistent in pursuing reforms –our government will go for consolidation, make them (gains) irreversible,” Dar, who is heading the Pakistani delegation to 2015 Spring IMF-World Bank meetings, said.
Dar pledged to to propose legislation that would help succeding government to carry forward economic momentum without having to pay accumulated dues like the circular power debt the current government had to retire right at the start of its tenure in 2013.
Pakistan’s ambassador to the United States Jalil Abbas Jilani and top economic managers accompanying the finance minister attended the event, moderated by Fredric Grare, Director South Asia Program.
The senator told the gathering of think tank, foreign policy, and economic experts that the government has a clear preference for long-term measures over the temporary arrangements, which in the previous eras harmed the national economy.
He also listed a number of power generation projects – hydro, solar, wind, civil nuclear -that would produce 7000 MW of power to plug the current shortfall and seek to further fuel economic growth by meeting the country’s exponential industrial and domestic requirements by 2017. The government is also planning to add 3600 MW of LNG-based power gas by the end of 2017. The decline in oil prices has also helped the Pakistani economy.
“I am confident that we would be able to succeed on the journey to joining the emerging economies league.”
The finance minister said, though faced with difficulties, Pakistan has implemented six levels of economic and fiscal reforms and is determined to complete all 12 levels vis-à-vis IMF program to make the current economic recovery durable.
Citing improvements in a range of macroeconomic figures including the GDP growth, tax collection, build up of forex reserves, check on inflation, double digit growth in foreign remittances, ease in balance of payment, and robust performance of the Karachi Stock Exchange, Dar said Prime Minister Nawaz Sharif’s democratic government has successfully enforced financial discipline and also stimulated the economy.
Going forward, he said, in the next few years Islamabad aims at chalking up 7 percent GDP growth, keeping the inflation under 8 percent, bringing fiscal deficit to 4 percent, bolstering foreign exchange reserves to $ 20 billion, boosting the industrial sector growth to 7 %, attracting foreign direct investment in the vicinity of $ 5.5 billion annually, achieving the exports target of $ 32 billion, and doubling the annual spending in education and health sectors to 4 % of DGP.
At the same time, Pakistan is meeting the high cost of its fight against violent extremists, he said.
“It is not a cost-free war— the Zarb e Azb (offensive) has been a huge success – it has destroyed sanctuaries (in the tribal areas along the Afghan border).”
Islamabad is working to meet the $ 1750 million cost of the fight that includes $ 450 million operational expenditure, $ 500 million on human resource and other areas, and $ 800 million on rehabilitation of the population and infrastructure.
Senator Dar said the world financial institutions and economists have acknowledged the country’s recent economic performance and its tremendous potential in wide-ranging areas of economic growth. In this respect, he referred to the IMF and World Bank appreciation for the economic recovery, Moody’s upgrading the country’s outlook from stable to positive and Japanese agency JETRO’s determination of Pakistan as a top investors’ choice.
Referring to British economist Jim O Neil’s forecast, he said, Pakistan will try its utmost to become the 18th largest economy of the world even before 2050, as predicted by Neil, who coined the term BRICs for the group of economies.
Pakistan is focused on four major areas including sustained improvement in economy, energy production, defeating extremism and enhancing education allocation.
He also reaffirmed Islamabad’s commitment to regional connectivity and improvement in trade with neighbors including Afghanistan. He underscored the importance of simultaneous progress in trade and other outstanding issues with India.
April 16, 2015