KARACHI: Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin has said that Pakistan has become a food-deficit country. Last year alone, it spent around $10 billion on imports of food and cotton.
However, despite a whopping import bill, Tarin seemed optimistic about economic growth of the country. He said: "We are running at little fast than 5 percent GDP growth as our agriculture is doing well now, exports are growing, crops, LSM, and revenues too growing well."
Addressing as chief guest at the CFA Society Pakistan's 18th Annual Excellence Awards ceremony at a local hotel, Friday night, Tarin said "unfortunately we have become a food-deficit country. We are importing wheat, sugar, palm oil, cotton, etc."
He said the International Monetary Fund (IMF) program will not impede our economy. The Fund wants Pakistan to ensure growth on a sustainable basis, and we also want the same. The GDP growth rate will stay in the range of 5 percent and 5.2 percent for 2021-22, he said, adding he does not like to see 6 percent GDP growth this year, arguing it is going to be damaging for the economy.
Tarin describes food inflation as 'major' challenge
Sharing government's vision, Tarin said it is pursuing a policy of bottom-up approach, and has come up with a complete economic package of Rs1.3 trillion for the 4 million poor households for the next three years.
We are giving them interest free agriculture loans, business loans housing loans, and giving them technical training and insurance.
We have launched the program, and the good news is that in less than a month we have launched it in KPK, Balochistan, Azad Kashmir, Gilgit-Baltistan, and five cities of Panjab and Sindh. 8,20,000 people have approached and of them some 2,20,000 people are now eligible.
Tarin said these 4 million households actually keep waiting for the trickle down effects for the last 70 years, but to no avail. Because trickle down reaches at the lowest level if the growth sustains at least for 15 to 20 years consecutively.
"Our slogan is inclusive and sustainable growth. For which, we need to achieve some fundamentals, firstly we have to grow our revenues, the 9 percent tax to GDP is not enough. We want to achieve 5 percent growth this year and 6 percent next year. Our revenues have gone up to 23 percent this year."
Sharing the economic vision of Pakistan, he took the audience back to 1968 when the country was the fourth-largest economy in Asia, bigger than South Korea, Saudi Arabia, and Thailand.
"Our growth rate was impressive, and we were amongst the tigers. Our planning commission was recognised for its excellence, and South Korea actually implemented our five year plan."
But after the fall of East Pakistan, we lost our weight. First the nationalisation of industry, banks, insurance companies, shipping companies, and then we eventually indulged into Afghan war 'needlessly'. To date, we have not come out of it. We have rendered 100,000 thousand human lives, and suffered Rs200 billion economic losses during the period.
By 2015, our per capita was around $1400, from $150 in 1968. With the same yardstick, South Korea had $200 per capita was $27,500 in year 2015. They took our five year plan. It was not that we just not had our plan, but we did not execute it.
When the incumbent government came in 2018, it inherited a current account deficit. It entered a 'tough' IMF program with front-loaded conditionalities, which resulted in slow down of our economy, and then came Covid-19 which had also hit our economy, and we went into a negative growth.
Tarin concerned over inflation risks amid PKR depreciation
He said however, PM Imran Khan visionary handling of Covid pandemic through smart lockdowns has been recognised world over. Concurrently, he invested in agriculture, housing, and industrial exports. All areas promoted employment, and resulted into a 3.94 percent growth last year. This was a welcome growth.
Tarin said when he assumed charge of minister he asked the government to change the gear of economy for sustainable growth. "We have 200 million people, we need two to three million jobs every year."
"We are now going to spend money on revamping our agriculture, it is entire value chain, we are also working to make our industry and exports competitive."
He said the exports are 9 percent to GDP, and imports are 25 percent of GDP. This is unsustainable. Our remittances have rescued us to date. Last year remittances grow by 26 percent to $29 billion but how long the country would continue to rely on this. We are going to give incentives to our industry, exports, especially IT.
He said the energy sector is bleeding. "This year alone, I will be giving around Rs770 billion subsidies to the power sector."
State-Owned Enterprises are losing around half a trillion rupees, and we have to fix them, as well. We are losing 1 percent of GDP. Successive governments have tried to fix the issue, but they lacked the political will.
He said Chinese are outsourcing 85 million jobs to other countries. We will be able to leverage CPEC for our own benefits.
We also have to make our financial sector responsive to the needs of our economy. Our financial sector is only 33 percent of GDP and lending is only 15 percent of GDP. 85 percent of credit is spent in 9 cities, 75 percent of that is being spent on corporate sector. It is dysfunctional. We have to fix it, he said.
He hoped to achieve the revenue collection of Rs6 trillion by the end of this year. He said Income tax has increased by 32 percent. Electricity usage has up by 13 percent year on year basis.
There is concern that Current Account Deficit has resurfaced which could damage the economy. But I can assure you that the numbers are balanced as of now. Net international reserves of SBP are growing.
In order to mitigate the challenges, we have to increase our savings, as 15 percent to GDP are not enough to support 5 to 6 percent gross domestic growth. Our banking footprint is only 33 percent, it must go up. Our exports must go up. In three to four years, our exports coverage to imports must go up to 80 percent, he said.
Hailing the CFA Society Pakistan, Tarin said that the country needs such prestigious awards to develop and adopt high standards of business practices and improve quality of life.
Abdur Rehman Warraich, President CFA Society Pakistan in his welcome address, said that this event has become an annual feature for many years. He thanked the board of CFA, volunteers and Judges for making the event successful.
Copyright Business Recorder, 2021