Pakistan aims to boost economic growth to 6%

Pakistan’s economy is on track to post “inclusive and sustainable growth” of up to 5% this year, which will help the country graduate from the International Monetary Fund (IMF) in September, its top official said.

Finance Minister Shaukat Tarin, who is leading tough economic reforms, is confident of accelerating the country’s gross domestic product (GDP) growth to 6% in the next fiscal year from July.

“We don’t need the IMF if we achieve sustainable growth of 6%. I don’t think we need another IMF program once we complete the ongoing Extended Financing Facility (EFF) in September,” Tarin told the Khaleej Times in an exclusive interview in Dubai.

Pakistan, which has secured more than 20 IMF bailouts over the past five decades, signed a $6 billion loan program in July 2019. It has completed all six fund reviews and has attracted $3 billion so far. now to support the country’s foreign exchange reserves, which currently stood firm at $23 billion.

“We will today start a two-week process for the seventh IMF review of Pakistan’s economy. said Tarin, adding that the eighth and ninth reviews will bring the remaining $2 billion to the national prize pool by September.

The IMF, which projects 4% GDP growth for Pakistan, said the EFF program had boosted Pakistan’s fiscal buffers before the onset of the Covid-19 pandemic, and a strong economic recovery has taken hold. installed since the summer of 2020. He also warned that Pakistan’s economy remains vulnerable to Covid-19 outbreaks, tightening international financial conditions, rising geopolitical tensions and delayed implementation of structural reforms.

“Sustainable growth of 5-6% is the only way to reduce dependence on the IMF and other multinational lenders, and we are confident of achieving this goal under the leadership of Prime Minister Imran Khan” , said the Minister of Finance.

Elaborating, he said the government’s economic reforms had revived ailing industries, improved the agricultural sector and boosted exports despite the commodity price shock in international markets. However, the country still needs to increase savings rates and revenue collection to maintain the growth momentum in the coming years.

“We are working very hard to increase savings rates and tax revenues as well as to close the gap between exports and imports. Tax revenue has already reached 6 trillion rupees and next year we will reach 8 trillion rupees in taxes,” Tarin said.

Economic experts have said that the savings rate, which is currently around 15%, should be increased to 25% in Pakistan. They also said that the tax-to-GDP ratio should also be increased by 10% to 20% to maintain higher growth momentum.

“Pakistan’s information technology has immense potential for growth, and the government is keen to revolutionize this sector to boost exports in the years to come. We can double our traditional exports in the next four to five years and increase IT exports by providing incentives to the sector and creating a strong ecosystem for startups in the country,” the finance minister said.

“Over the next five years, our traditional exports will reach over $60 billion, while IT exports could reach $50 billion, bringing the total to over $100 billion per year. In addition, remittances of $30 billion a year will help ensure a sustainable current account surplus,” he added.

Tarin, an industry veteran, said the government is also focusing on improving productivity by reviving industries and improving the agricultural sector with the help of China.

“We want to consolidate our industrial sector and attract foreign investment in key sectors. China will move its share of industrial units to special economic zones in Pakistan, which will generate more job opportunities in the country,” the finance minister said.

“China has planned to move up to 85 million jobs to foreign countries over the next 10 years. We have asked the Chinese leadership to transfer at least 10 million jobs to Pakistan by relocating its major industrial units to special economic zones in the country,” he said.

In response to a question, the finance minister said China would increase imports from Pakistan, which would also improve productivity and generate more job opportunities in the country.

“The Chinese decision will help us create 1.5 to 2 million jobs per year over the next five years. This will be a game-changer for Pakistan, where 60% of the population is under 30,” Tarin said.

“Prime Minister Imran Khan had fruitful meetings with Chinese President Xi Jinping and Premier Li Keqiang, and they promised to solve Pakistan’s economic problems,” he said.

In response to a question about the challenges ahead, the finance minister said the “super cycle” posed a serious threat to global economic recovery, and Pakistan was no exception.

“No one should doubt that the Pakistani economy is on the path to growth as agriculture, industries and service sectors are performing well, but this super cycle is putting pressure on prices and causing unrest and disruption. frustration among the masses. Our challenge is to make sure that this frustration doesn’t spill out onto the streets, and if we keep up that pressure in the next six to nine months, then all will be well for the next general election in 2023,” said the Minister of Finance.

On inflation, he said that commodity prices in international markets were on the rise and the government was doing all it could to minimize its impact on the common man.

“Crude prices rose above $100 a barrel while edible oil also traded in the high territory. super cycle,” Tarin said, adding that prices will drop significantly in the coming months after gasoline and electricity prices are frozen at current levels until June.

“We are an oil importing nation and supply gasoline in the country at oil producer prices without any subsidy,” the minister said.

Asked about the outlook for the Pakistani rupee, the minister said it is stable at current levels and no further devaluation is in sight.

“The rupee-dollar parity reflects market trends and is not expected to face high volatility. It should trade within the current range with some normal fluctuations against the US dollar and other major currencies,” he said. he declares.

Tarin, 68, further said the government would continue to test bonds and the sukuk market to raise funds to support foreign exchange reserves.

“We planned to raise $1 billion via an ESG-compliant Eurobond in March,” he said.

The Finance Minister expressed confidence in Roshan digital accounts and its future ability to attract more than nine million overseas Pakistanis globally and said banks should step up to realize the true potential of this game-changing program .

“Banks should adopt a ‘push strategy’ to exploit more Pakistanis abroad by publicizing RDA and its products. UAE banks are doing a great job with an aggressive approach, and other lenders should adopt a similar strategy in Saudi Arabia, Europe and the United States,” Tarin said.

“We need to strengthen the sales team in the Gulf and other developed markets to realize the true potential of RDA,” he said.

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Muzaffar Rizvi

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