Finance Minister Muhammad Ishaq Dar has told the Standard and Poors, the credit rating agency, that Pakistan is making all efforrts to streamline the economy David T. Beers of Standard and Poors called on Ishaq Dar in Madrid on Monday, and discussed the macro-economic situation in the country, especially imbalances caused by food and oil prices, according to a message received here.
The Finance Minister apprised the credit rating agency of the government''s efforts to streamline the economy. He said the next finance bill would definitely focus more on revenue generation, targeting subsidies for the poor and bringing the central bank borrowing in its place.
Ishaq Dar said: "We are focusing on credible database. Our special stress will be on agriculture and manufacturing sectors". He added that credit would be made available to these sectors with a view not to subsidising but for efficient management of these sectors.
For agency: "We are preparing an energy plan, but we need infrastructure support", he added. Dar stated that "our budget was doubly hit; one by increase in prices and the other by price adjustments." The subsidies were not budgeted properly in the past, he observed.
On the bond issue, the Finance Minister stated that "we still have appetite for the sovereign bond but the question is of the pricing. "Price has improved and we are considering the issue. We are not interested in exchangeable bonds", he remarked.
The Finance Minister also spoke about the current prices shocks being faced by the developing countries in general and the South Asian countries in particular. He stated that the achievements made so far by developing countries for MDGs might be eroded due to price increase in food and oil, and proposed the Saarc should discuss the issue in the forum to find out solutions.
On Pakistan''s intervention, the Saarc forum was moved to consider the proposal, which was approved to become part of agenda of the next Saarc Finance Minister''s meeting. Heads of the Nordic Investment Bank (NIB) and European Investment Bank (EIB) also held separate meetings with Ishaq Dar separately. Both the leading banks showed their keen interest in extending financial assistance to Pakistan.
The NIB showed its interest in providing financial support in power sector. Ishaq Dar welcomed the NIB''s offer and invited them to finance hydel projects. To facilitate their investment, a financing framework agreement will be concluded between the NIB and Pakistan.
The EIB, which is a European Union investment institution, also expressed their desire to the possibilities of financing projects in Pakistan in viable public and private sector projects in infrastructure, industry, agro-industry, mining and services.
They expressed their keenness for partnership with other multilateral development banks, especially ADB with focus on electricity generation projects as co-financier in joint venture projects. Dar asked the EIB to finance hydel projects, especially Basha Dam, in a consortium with other banks and financial institutions.
He also asked the bank to help Pakistan in energy management, ie energy conservation and efficiency. A team, of HSBC also met the Finance Minister and discussed the possibility of HSBC''s participation in the government bond issue and operations of HSBC in Pakistan.
State Bank of Pakistan Governor Dr Shamshad Akhtar also joined the meeting. The Finance Minister also appreciated the keenness of HSBC for the future government issues and their operation in the banking sector in Pakistan. He stated that the new government was making a policy review to avoid pressure on foreign exchange reserves in future.
"We are keen in medium to long term gains instead of short term benefits", he remarked. The HSBC team showed keenness in expansion of their operations in Pakistan. The SBP Governor stated that HSBC should also come into the small and medium enterprises (SME) sector.
She said that Pakistan was the most liberal regime in banking sector policy and regulations in the whole of Asia. The HSBC acknowledged that Pakistan was a great potential market for investment. Director General of Asian Development Bank Juan Miranda and his team also met the Finance Minister.
Miranda confirmed that ADB had already disbursed 300 million dollars and by June 2008, another up to 650 million dollars would be disbursed. The SBP Governor, who also attended the meeting, asked the ADB to provide 500 million dollars on Fast Track Basis for strengthening of the State Bank of Pakistan The Finance Minister ensured the ADB team that the reforms in the financial sector would be implemented as agreed with a the ADB.
Dr Shamshad Akhtar, Executive Director Sibtain Fazle Haleem, Ambassador Pakistan in Spain Humour Hasan, Joint Secretary of EAD Zafar Hasan Reza and Commercial Councillor in Pakistan Embassy in Madrid Basat Hayat Tarar also accompanied Ishaq Dar. The Finance Minister also attended a meeting of the Finance Ministers of the member countries of the South Asian Association for Regional Cooperation (Saarc) in Madrid on April 4.
He is currently in Madrid to attend the 41st annual meeting of the Asian Development Bank (ADB), which started on May 3. The meeting, to be concluded on Tuesday (May 6) was held on the sideline of the ADB annual meeting. Earlier two meetings were held in India in 2006 and Japan in 2007.
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