Prime Minister Shaukat Aziz has said that his government is opting for accelerated economic growth after having achieved macro-economic stability based on sound fundamentals. In this connection, the Prime Minister disclosed that some new initiatives would be announced in different areas after Eid, so that with private sector's partnership the country achieves a growth rate of seven to eight percent in the coming years.
He was addressing a select gathering of leading businessmen and office bearers of the chambers of commerce and industry at an Iftar dinner he hosted at the Prime Minister's Secretariat on Wednesday.
Shaukat said that after Eid he would address the nation on various domestic and international issues, as he believes the government and the private sector in the globalise environment have to take quick decisions. And it is the private sector that has to play the key role, the government being only a facilitator and regulator, he added.
The Prime Minister said that the private sector has a unique opportunity to expand its role in the economy. "The environment you have is unique, which never came before."
He told the business community to take advantage of the environment, of the rising consumer demand and invest more, which will create jobs and contribute to growth.
The Prime Minister in his speech referred to the announcement of privatisation of the PTCL; building of Sunder industrial estate in Punjab; the boost in textile industry and proposals of number of garment cities; focus on IT and telecommunication as the new initiatives coming in the way of the private sector.
He said that the government is working hard for market access to our textiles in the US and Japan and spoke briefly of the discussion he had with the visiting Richard Armitage in Islamabad on Tuesday, who wanted closer economic ties with Pakistan. Commerce ministry, he added, would take some new steps shortly.
Shaukat gave a detailed resume of the many-sided achievements in the economy which, he said, after a broad-based recovery is poised to achieve seven to eight percent growth in the next two to three years with the leading role to be played by the private sector.
He remarked Pakistan is experiencing " extraordinary buoyancy in its economy."
The current fiscal, Shaukat added, has started on a strong note with large-scale manufacturing, tax revenues and exports and imports exceeding by two-digit growth.
Inflation, he admitted, at 9.2 percent is high owing to demand side pressure and supply side shocks of food and fuel price increases.
The Prime Minister also spoke at length of the first quarter achievements. On the agriculture side, he said, we are expecting a bumper cotton crop, around 12.1 million bales, adding that based on the performance of major crops we could safely say that the target of 4 percent agriculture growth would be achieved this year.
Shaukat said that our fiscal policy stance has remained decidedly growth-oriented. We have made significant progress on fiscal front in recent years. The overall budget deficit that averaged nearly 7 percent of the GDP in the 1990's has been reduced to 2.4 percent in 2003-04. This year, he added, our performance on fiscal front has been extra-ordinary. "During the first quarter, the budget deficit has amounted to Rs 22 billion or 0.36 percent of the full year GDP against the target of Rs 89.4 billion or 1.45 percent of GDP. Viewed against last year's performance, the budget deficit number looks even more impressive, as then the deficit was Rs 40.9 billion or 0.7 percent of GDP and during the first quarter, the deficit is as low as Rs 22 billion -- almost one-half of last year."
Continuing, the Prime Minister said that last year, the private sector borrowed Rs 325 billion from the banking system. In three-and a half months of the current fiscal year private sector borrowed Rs 83 billion against Rs 54 billion for the same period last year.
Despite recent 'measured' tightening of the monetary policy to counter inflationary expectations, the weighted average lending rate is still at 5.8 percent, Shaukat said and added that the growing confidence of the private sector is also reflected on the rising imports of machinery and equipment which showed 39 percent increase this quarter.
"Both export and imports have grown by high double digit. Worker's remittances in the first quarter amounted to $983 million -- 8.5 percent more than last year."
He said that foreign direct investment too showed a rising trend, as it amounted to $181 million as against $117 million of last year. On the whole, the Prime Minister said, we have been doing just fine so far and there are indications that like last year, we will over perform in many areas this year as well.
However, Shaukat added that it is not uncommon to find some pressure points building when economic activity accelerates. He elaborated that we are witnessing two pressure points -- inflation and exchange rate. Inflation, he said, is relatively high owing to demand and supply side pressure, adding, "we have taken several measures to contain inflation. We have been successful so far and I am confident that as we move forward we will witness a declaration in inflation in coming months."
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