Govt to meet IMF conditions without overburdening common man: Ahsan Iqbal

ISLAMABAD, Jan 19 (APP): Minister for Planning, Development and Special Initiatives Ahsan Iqbal Thursday said that the government would meet the conditions set by the International Monetary Fund (IMF) to complete the programme, but common man would not be affected by the decisions.

He said the IMF agreement was hanging over the government which it had to negotiate with the Fund. The previous government, he said had recklessly agreed upon the programme, therefore the current government has no option but to continue the programme.

“We have to do a lot of adjustments, but we will take decisions in the larger interests of the state,” he said and hastened to add that “we will try to put minimum burden on the poor and common people”.

He was addressing an event here at the Pakistan Institute of Development Economics (PIDE).

The minister said Pakistan’s economy was in shattered condition when the current government took over and keeping in view the short available time, it decided to take short-term measures to turn around the economy in the right direction.

Ahsan Iqbal stressed the need for mobilizing all available resources to increase productivity and exports of the country so as to get rid of foreign loans on a permanent basis.

“Pakistan’s productivity capacity is very low as compared to the standard average”, he said adding that in the agriculture sector alone, the country could earn billions of dollars by taking measures to increase the crops’ yield per acre.

For instance, he said the per acre wheat production in Pakistan can be increased by up to 80 percent by improving on-farm management. Similarly, he said, “our industrial production possesses numerous inefficiencies due to which we are not competitive with the world”.

The biggest challenge in 75 years, he said is that Pakistan’s productivity capacity could not be integrated with the global markets.

Ahsan Iqbal pointed out that export-led growth is important to resolve the balance of payment issues, therefore he stressed the need to do all measures to earn maximum foreign exchange reserves.

“We have to do resource mobilization and also have to increase tax to GDP ratio up to the global average of over 18 percent which is only at 09 percent in Pakistan”.

He said in the previous four years, the debt servicing burden had increased to Rs 4500 billion, so if the resources are not mobilized, the country’s all collected tax would be spent on the debt repayment.

Furthermore, he said increase in investment was another important factor to ensure sustainable economic development.

“If the Pakistani investors only bring out their money and invest in the country, we will not need to go to the IMF or any other lender”, he said adding that foreign direct investment would also have to be increased up to $25-30 billion per year.

He also asked the Ministry of Commerce to take urgent measures to increase the country’s exports from the current $32 billion to over $100 billion in the shortest possible time.

Earlier Vice Chancellor PIDE Dr. Nadeem ul Haque emphasized that the regulatory system is the biggest problem in Pakistan, such as unnecessary documentation, taxation, and NOCs. Around 122 regulatory agencies collect taxes and do not contribute to productivity. Corporate governance is not very encouraging, and just 31 families in Pakistan are involved in import substitution, and our industrial policies just protect them. The stock market in Pakistan is not financing exporting industries but import substitution.

Omer Siddique and other researchers from PIDE focused on the historical trend of exports and economic growth in Pakistan. The reasons for the trade deficit are low export competitiveness and a few product lines. Both productivity and investment are declining over time. We previously used development money for consumption, resulting in the lowest productivity in the region compared to Bangladesh, China, India, and Sir Lanka. Although we have volatile productivity in Pakistan, recently, data shows that Pakistan’s performance is not very impressive. Data on exports show that we export mainly primary goods, which disconnects us from the global supply chain. Overall, Pakistan exports textile-related products, and we just target a few product lines exports.

“We have a low score on the economic complexity index. Knives are considered complex products showing poor technological structure, whereas chemicals and machinery are considered complex products in China. Low geographical coverage does not allow us to expand our exports; around 65% of our total exports are directed to 10 countries. However, stagnant exports and a few product lines do now allow us to increase our export base.”

The PIDE’s Pro Vice-Chancellor, Dr. Durre Nayab, RASTA Director, Dr. Faheem Jehangir, Dr. Muhammad Zeeshan, Mr. Muhammad Armghan, and many other economists and researchers were also present at the meeting.