Federal Finance Minister Shaukat Tarin has said that the government is providing a subsidy of Rs 104 billion per month to keep petrol prices at Rs 150 per litre; “at the current international rate, its actual price is Rs 240 per litre”.
“We are expecting an economic growth rate over 5 percent this year and inflation will hover in the range of eight to 10 percent. The year 2022 will be the year of growth and we are on the path of sustainable growth,” he expressed these views while addressing a seminar ‘Revival of Pakistan Economy and Outlook in 2022’, which was organised by Nazaria Pakistan Trust on Friday.
He averred that inflation would decline in the coming few months; however, he found the super-cycle of inflation worrisome for the government, as international commodity prices had multiplied, which adversely affected the urban lower-middle, middle and salaried classes. “If this prolongs, it will further affect the public,” he added.
Talking about foreign exchange reserves, he said Pakistan had sufficient reserves to cover the import bills for four months whereas when they came into power it was only sufficient for one month.
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He talked at length about the economic history of Pakistan. He observed that the 70s nationalisation policy hindered the country’s economic growth; “after the joining someone else’s war in Afghanistan in 1979, our growth rate received another blow”.
He observed that “in the past Pakistan has witnessed sporadic growth while sustainable growth eluded us.” He pointed out that the previous governments managed to stabilise the economy, but never managed to sustain it.
“The Pakistan Tehreek-e-Insaf (PTI) government also had a similar situation when it came into power. We inherited a $20 billion current account deficit in 2018 plus $10 billion loans. Prime Minister Imran Khan turned to friendly countries to borrow the money to meet the deficit. The money we received was not enough to sustain the economy and subsequently, we had to approach the International Monetary Fund (IMF) for a bailout,” he said.
According to him, the IMF has only one method to put the economy on the right track, lower the demand. For this, the IMF asked us to increase the discount rate, devalue the currency to realistic levels, rationalise the energy rates and subsequently minimise the losses. Thus, after rebasing of the economy, the country’s economic growth decreased from 6 percent to 3 percent.
He further said the Covid-19 pandemic also impacted the economy that flattened the demand and subsequently we saw a negative growth, which decreased from 3 percent to minus 1 percent. He credited the Prime Minister for prudently handling the situation.
“Despite the challenges, the PM kept to its roadmap for the revival of the economy; he kept the focus on agriculture, housing and industries. To the surprise of everyone, the economy rebounded and the growth touched 5.6 percent, a rebound of 6.6 percent,” he added.
Train pointed out that the government adopted an inclusive and sustainable growth strategy focused on housing, agriculture, industry, youth, and underprivileged sectors. “The government has already achieved consolidation and is now focusing on improving the economy,” he added.
“To ensure sustainable growth, we have taken several measures, including increasing revenue, reducing the gap between exports and imports and increasing productivity,” he added.
According to him, only three million are registered taxpayers of which one million are those filers seeking withholding tax refunds. Ironically, out of 30,000 jewellers, only 70 jewellers are registered with the FBR. The size of retail is Rs 20 trillion of which only 3 to 4 trillion rupees are documented. These all issues were focused on, which raised revenue collection. Moreover, the customs department faces the challenge of under- and over-invoicing to the tune of billions of rupees; this needs to be corrected and the government focused on it.
“The government has asked China to shift the industry to Special Economic Zones in Pakistan. This will create employment as well as improve the trade balance between the two countries. Currently, the trade balance favour China. We have also sought Chinese support and investment in agriculture research and development, and the IT sector,” he added.
Similarly, he said, the government was focused on the IT sector and gave numerous incentives, including tax holidays, Special Technology Zones (STZs), funds for training and permissions for opening foreign currency accounts. This will increase the exports of IT products by $50 billion in the next five years.
“We are seeing a bumper crop of wheat and the harvesting has already started in Sindh while the services and production sectors are performing well. This will help to easily achieve the growth targets. All bumper crops witnessed this year, which will contribute 2.5 percent to the growth,” he added.
He observed that the housing mortgage was not available in Pakistan while only a 33 percent banking footprint existed in the country. “The banks lend 85 percent of total lending to only nine cities while getting deposits from across the country. The target is to increase the banking footprint to 80-90 percent,” he added.
The Minister believed that the roadmap given by the current government will not change by anyone in future. “We have changed the growth strategy from the past of trickledown effect to inclusive sustainable growth,” he added.
Meanwhile, while addressing the Prime Minister’s Kamyab Jawan Convention at the University of Lahore, he said that Prime Minister Imran Khan had set up National Youth Council, as he wanted to empower the country’s youth as per the ideology of Quaid-i-Azam Muhammad Ali Jinnah.
“Some journalists had asked Quaid-i-Azam Muhammad Ali Jinnah who would be your successor and Quaid replied youngsters of the country. The Prime Minister was the main driving force behind all the programmes started for the strengthening and welfare of youth. Country’s young population was the biggest advantage if used properly,” he added.