Finance Minister Ishaq Dar on Saturday hoped that the European Union will extend the GSP+ status for Pakistan, stressing that the commerce and foreign ministries were proactively working to counter any threats to it.
Addressing a post-budget press conference in Islamabad, he recalled that Pakistan was recognized as the world’s 24th largest economy prior to the ouster of Nawaz Sharif as prime minister in 2017, adding that the government was committed to boosting exports for economic prosperity. However, he admitted, industry had taken a major hit over the past year due to various challenges, leaving a meager growth rate of just 0.29%. He noted the federal deficit had been brought down to Rs. 7,573 billion, adding that after the provincial surplus was included, this was further reduced to Rs. 6,932 billion.
Noting that Pakistan had faced a “deep and steep” economic vulnerability, Dar claimed the government had successfully overcame it, and there would be no “further decline.” He stressed that the government’s aim over the past year had been to reverse economic losses so it could re-achieve the economic indicators of 2017. Referring to the budget’s targeted growth rate of 3.5%—described as overly ambitious by economists—he claimed proper and transparent implementation of the Public Sector Development Program would help achieve it.
Part of the government’s goal for economic prosperity, he said, was to bring about an agricultural revolution, as the country had significant untapped potential in this sector. In this regard, he said, Rs. 2,250 billion had been allocated for agricultural loans and duties on import of seeds abolished. There were also plans, he said, to convert 50,000 tube-wells to solar energy and increase the local production of urea.
Emphasizing that this budget was “different” from traditional budgets, he said its primary aim was economic growth. He stressed corrective measures must start somewhere, saying that economic growth would trigger further positive changes, including employment generation. This would, in turn, improve macroeconomic indicators and reduce inflation, he said, adding this would also enable a reduction to the policy interest rate. He noted that debt servicing was one of the largest portions of this budget and pledged efforts to reduce this burden and boost revenues for governance.
Dar said his core plan had always been to make Pakistan self-sufficient and self-reliant. Despite the current challenges, he reiterated, the country would not default and slammed people who kept predicting that eventuality, saying they were complicit in the country’s economic losses. He said “dignified” nations should work to prevent default proactively, stressing Pakistan had done the same. He said the government had prioritized the ninth and tenth reviews of the International Monetary Fund (IMF) and regretted that the lender had yet to revive a stalled bailout program. Regardless, he maintained, the country had alternative options if the deal were not materialized.
Q&A
During the question-and-answer portion of the press conference, Dar said the government had allocated funds for elections in the budget and said comments regarding any delay to the polls were individual opinions, which they had a right to express. Stressing that the government believed election should be conducted on time, he said discussions would be held with political parties that had suggested delaying polls and attempts would be made to evolve consensus on the issue.
To another question, he admitted that the government had allocated substantially for subsidies, noting especially the more than Rs. 1,900 billion earmarked for the power sector. He said this sector needed to be improved, noting it had proven a “stumbling block” in talks with the IMF. He further clarified that a previously announce fuel subsidy for vehicles below 800cc was currently shelved because it faced challenges of “current lending and borrowing process we are undergoing.”
To a question on his announcing rescheduling of debts, he said this did not include loans secured multilaterally or from the Paris Club. “We cannot go for the rescheduling of multilateral debt. We will make the payments on time when they become due. I don’t think it is a dignified way to go and tell them that we cannot pay,” he said. “As far as bilateral debt is concerned, the government can always negotiate for a longer term, which is nothing unusual,” he added.
On whether this would include domestic debt, the minister said this wasn’t needed. “It was a misfortune for us that we made such changes; we have completely paralyzed the government in terms of its maneuverability,” he regretted. “I personally don’t think at all that we reschedule the domestic debt, because being a sovereign country, if you cannot meet your own currency requirement for the debt repayment then it is a serious situation. I don’t think Pakistan has any issue vis-à-vis domestic debt,” he said.