IMF programme comes under fire in first EAC meeting: Agriculture

Govt claims EAC members endorsed policies

Khalid Mustafa
Sunday, January 12, 2014

imf-programmeISLAMABAD: The government needs to seek $2 billion upfront from IMF to stabilise its foreign reserves as the existing design of the IMF programme is not a recipe for the economic problems of the country.

The existing programme is faulty as the Fund gives $500 million but takes $1 billion owing to which the reserves position is not improving. The design of the IMF programme is thus faulty which needs to be rectified.

These were the remarks of eminent economist Dr Ashfaque H Khan, Dean and Professor of NUST Business School in the first meeting of the Economic Advisory Council (EAC) that lasted here on Saturday for four hours with Finance Minister Ishaq Dar in the chair, a senior official who was part of the meeting told The News.

According to him, Dr Khan asked the government to publish the tax directory of parliamentarians so that the masses could know how much their representatives pay in taxes. “Dr Khan also stressed to look into the methodology of measuring the numbers of growth, inflation and unemployment and asked for increasing the capacity of Pakistan’s Bureau of Statistics.”

Dr Khan said Pakistan can have the technical expertise either from UN or from IMF’s statistical department. He highlighted the fault in measuring the said crucial numbers and said it is high time to review the methodology of measuring these basic economic indicators.

He suggested constitution of a high powered committee which may include some foreign experts to resolve the faulty method once for all. “If it happens, then every one would believe in the numbers of basic economic indicators of Pakistan’s Bureau of Statistics,” the official said while quoting Dr Khan in the meeting.

However, According to a press release, the finance minister welcomed members of the Economic Advisory Council and expressed the hope that the re-activation of EAC will prove to be useful as this forum would provide an opportunity to interact and exchange ideas with prominent persons associated with the economy of Pakistan.

The ministry of finance, he added wanted to benefit from their wisdom and was open to any suggestions which could add value. If we all put our head together we can tern around Pakistan’s economy, he added. The ministry of finance, he offered was ready to provide them access and arrange meetings so that they can play a productive role.

The council after thorough deliberations decided that it shall identify certain critical sectors and areas where its input could help the government in formulating policies. In this connection the EAC identified power sector, exploration of natural resources, agriculture, social sector, resource mobilisation, public sector disinvestment and foreign remittances as areas where its expertise could be utilised. The finance minister said that tapping of natural resources and mobilisation of resources and of the natural resources is the way forward and that government is pro-actively working on both these counts.

The finance minister referring to a briefing made by him earlier to the cabinet and media on January 1, 2014 said that the PML-N government is committed to transparency and has therefore constituted an autonomous body called the Pakistan Bureau of Statistics (PBS) so that authenticity of economic figures can be ensured. The government he said will do all that is possible to further strengthen PBS and would welcome suggestions to achieve robust economic data. Similarly, the decision to release quarterly accounts as well as rebasing of accounts every ten years has been taken with the purpose to bring transparency in the monetary and fiscal side

Dilating on the legacy inherited by present government he said that the projected deficit last fiscal year was reduced from 8.8% to 8.2% with prudent fiscal management by the PML-N government which was further brought down to 8% by provincial surpluses. Another challenge for the new government was the clearance of circular debt which was cleared as it was legally, commercially and ethically binding on the government since it was a contractual obligation. That it added 1700MW in the national grid and helped increase generation up to 14500MW reduced loadshedding considerably as well as increased industrial production which in turn helped achieve 5% growth in the first quarter.

The finance minister said that the economic situation inherited by the PML-N government left little option but to approach the IMF as external inflows had dried down due to failure on the part of the previous government to abide by Stand-By Arrangement (SBA) agreed with the IMF.

The IMF diligence helped the present government in re-engaging with international institutions. There is no harm to borrow and create assets but certainly bad if it is used for current expenditures, he added

Disclosing that the IMF team is expected in the end of this month he informed the council that IFC and other international commercial banks and organisations are approaching the government and he is confident that Pakistan’s foreign exchange reserves would reach $16 billion by December 31, 2014. He also disclosed that the remittances have shown an increase of 9% which reached $7.78 billion while exports have increased to $12.64 billion showing an increase of 5% this year.

The commercial banks had increased credit to the private sector to Rs250 billion against Rs73 billion which reflected increase in economic activity, similarly the revenue collection has also shown a growth of 17% in the last 5 months as compared same period last year.

Turning to the exchange rate situation the minister said speculators were responsible for depreciation of Rupee against dollar and said that comments on exchange rate issue should be made in responsible manner.

All members of EAC endorsed the view point of finance minister on the issue and assured him of their full support as it was a sensitive issue.

The finance minister said that the government is undertaking reforms which are sometimes painful. It is also working on a policy to tap hydro carbon resources as there are reports of proven reserves. Dr Ashfaq H Khan appreciated the government decision for publishing a tax directory. He further suggested strengthening of PBS through its capacity building.

Dr Farrukh Saleem appreciated the endeavors of the government to manage budget deficit which he termed as the root cause of our economic malaise. Supporting the government’s policy of disinvestment of Public Sector Entities (PSE) he suggested a communication strategy for public awareness in order to dispel any misperception. Farrukh Qayyum said that the way the auction of spectrum license is carried out would set the pace for planned disinvestment by the government.

Dr Abid Qayyum Suleryi appreciated the decision of the finance minister to allot NTN numbers to parliamentarians and offered to make a presentation on shale gas deposits in the country. Arshad Zubari suggested that the government should appoint a professional to manage debt and encourage construction industry to create new job opportunities.

Razzaq Dawood emphsised on the need to work out a comprehensive policy to boost exports which according to him was the solution to our economic problems.

Farooq Rehmatullah offered to make a presentation on Pakistan’s Hydro Carbon potential in the next meeting of EAC.

It was decided that the next meeting of the EAC would be held in the 2nd week of February.

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