Adviser to Prime Minister on Finance & Revenue Dr. Abdul Hafeez Shaikh has said the government is striving for export-led growth as growth fuelled by consumption and not investing is not sustainable.
“We want quality growth which is led by growth in exports and investments and not driven by mere consumption which was a pattern in the previous government,” he said while talking to Dr. Christian Turner, British High Commissioner to Pakistan who called on the Adviser at the Finance Division today.
Dr. Christian Turner said his country supports the ongoing economic reforms in Pakistan and sees the economy as a key area for future collaborations. He said that he is interacting with the government’s economic team to find out avenues for improving bilateral trade and investment.
He said that British Airways had started its operations in Pakistan while the travel advisory for Pakistan was also being changed to encourage more British businessmen and tourists to visit Pakistan.
Dr. Abdul Hafeez Shaikh welcomed the gesture of the British government in changing its travel advisory and showing interest in further strengthening bilateral ties in trade and investment. He said the PTI government is also pursuing a broad-based economic reforms agenda by reducing interventions in the market and promoting the privatization process which had been neglected in the last 14 years.
He said the government had cut its civil budget by Rs. 40 billion while the defense budget has also been reduced in nominal terms. He said the government has not borrowed a single rupee in the last six months from the State Bank of Pakistan.
The adviser further told the British envoy that the government is also taking corrective measures to minimize the effects of inflation by doubling the budget for the social safety net, subsidizing gas and power utilities and further revamping and improving its multi-billion cash transfer program to protect the poor from price hikes.
He said the government had done a lot of work in bringing back macroeconomic stability to the economy and a platform has been built for further economic growth.
This was no easy work as tough decisions were taken to overcome the challenges on the external front, particularly in controlling the current account deficit, and the efforts had resulted in primary balance becoming surplus for the first time in many years.
Dr. Shaikh also spoke of Pakistan’s exports which had started showing an upward trend after remaining stagnant for almost five years. He said the revenue collection had jumped by nearly 16 percent while foreign direct investment and portfolio investment had also gone up manifold.
The government had reduced the circular debt in the power sector from nearly Rs. 30 billion a month to Rs 10-12 billion a month.
The prices of electricity are higher because of the failure of the previous government to not increase the electricity prices in its last 18 months which led to a higher circular debt. “However, the government is protecting nearly 72 percent electricity consumers and 92 percent agri tube-wells from any upward increase in power tariffs by providing them a subsidy,” he added.
Defence budget was increased in nominal terms although it may have gone down relative to GDP. It’s still way too high though.
Exports haven’t increased as much as they should have. They will have to let the rupee fall further.