Federal Finance Minister Senator Ishaq Dar has said the development drive and the federal budget for the coming fiscal year would focus on generating six percent gross domestic product growth (GDP). In an interview with Japanese the Nikkei Asian Review, the minister said, "Pakistan was determined to funnel more money toward infrastructure, small businesses and the poor, and the government has found an array of international partners to make it happen."
"After (achieving) macroeconomic stability, we have fully focused on higher GDP growth that brings a better life to people, better per capita income, job opportunities and fills the gap in infrastructure demand," he said while talking about the forthcoming federal budget, to be announced on May 26.
He said, "During the next fiscal year, the government efforts would give growth another boost as it intends to introduce some fiscal measures and policies." Dar pointed to a recent agreement with the US-based International Finance Corporation (IFC) to partner on creating a Pakistan Infrastructure Bank (PIB). "The PIB will provide financing for infrastructure projects by the private sector," he explained, describing the new lender as an "equal partnership by the Pakistan government and IFC for 20 percent each."
"Other stakeholders from around the world will account for the rest," he said, adding the bank was expected to have paid-up capital of $1 billion. He said, "The PIB was just one piece of the puzzle. With partnerships with the UK's Department for International Development and the German government-owned development bank KfW, we have created the Pakistan Microfinance Investment Company." "This entity's three-year business plan calls for boosting the number of "beneficiaries of microfinance from the current 4 million to 10 million," he added.
"Meanwhile, the government, the DFID and KfW were teaming up on a Pakistan Poverty Alleviation Fund, with their respective shares to come to 49 percent, 34 percent and 17 percent," he said. "Islamabad has also established a Pakistan Development Fund, which will invest in public-sector projects outside the budget. The government's initial investment comes to $1.5 billion," he said.
He informed that, "Power infrastructure is a top priority. 25,000 megawatts worth of thermal, hydro and renewable projects are in the pipeline, with 10,000MW to come onstream by March 2018." "We are already dealing with [liquefied natural gas] imports," he said. "The energy shortage will be over," he said. Talking about economic expansion, Dar said, "The government was hoping for over 5 percent growth for the current fiscal year. The World Bank is projecting 5.2 percent in 2017 and 5.5 percent in 2018."
He suggested, "six percent was doable next fiscal year, and that 7 percent was possible for the following year. An additional wrinkle to consider, he stressed, is that our GDP is reportedly underestimated by 22-25 percent. If [the growth rate for] fiscal 2017-18 is 6 percent, it would be actually 7 percent or more." He said, "The fiscal deficit was cut from 8.8 percent to 4.6 percent of GDP, adding this fiscal year, we expect it will be close to 4.1 percent."
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