Federal Minister for Finance and Revenue Miftah Ismail on Thursday urged industries to focus on exports while calling for the adoption of living within the means principle to achieve economic growth.
“What are the things we can do to bring economic improvement? I think there are four guiding principles which can help us achieve that,” said the federal minister in his address at the 'Leaders in Islamabad Business Summit' on Wednesday.
“The first principle is that we have to live within our means, as we all know that a budget deficit results in trade and current account deficits,” said the minister.
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Miftah said that the private sector in Pakistan does not offer enough savings, which can meet the government's needs.
“This year the budget deficit is targeted at Rs4,000 billion, which is very low in comparison to the Rs5,200 billion deficit last year,” he said.
Miftah was of the view that a current account deficit of 1-1.5% of GDP is normal for a developing country. “However, we have to see where the funds are being utilised,” he said.
The finance minister lamented that in Pakistan funds borrowed from different countries have not been put into productive use.
“The electricity generation in the country doubled from 13,500 MW in 2013 to 25,000 MW, however, this did not translate into a doubling of industrial production and exports,” said Miftah.
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Talking about the current rupee situation, Miftah said that the government decided to curb imports, which led to a decline in outgoing dollars. “This month there is a surplus of $700-800 million in the inter-bank market, as compared to the outflows. We have already made three-fourths of payments for August in the first week alone,” he said.
The minister admitted that some industries would bear some pain due to import curbs.
“The second principle is to focus on exports,” said Miftah.
The minister elaborated that rather than exporting to other countries, industries sell their products in Pakistan due to high-profit margin, as it is a protected market.
The minister was of the view that the import substitution model has been used by industries for rent-seeking only.
“I would urge all the big business houses in Pakistan to focus on exports,” said the minister. “We want all our industries to export."
Miftah said that the government should focus on enhancing the earnings of low-income groups. “The best way to achieve this is through export promotion and farm productivity.”
“Lastly, we need to educate our children. Half of our youth is out of school and uneducated,” said Miftah while admitting that the government both provincial and federal have failed in this regard.
“I would welcome all businesses to open schools and educate our children, especially focus on girls' education,” he said.
The 5th edition of the two-day event is currently under way in Islamabad with a large number of national along with 20 prominent international speakers attending the summit.
Miftah along with Federal Minister for Climate Change Senator Sherry Rehman attended the inaugural session. Senator Dr Musadik Malik, Minister of State on Petroleum, is scheduled to address the summit at the closing session on August 18.