KARACHI: Pakistan must revamp its fiscal and monetary policies to attract foreign investment from a variety of nations and spur economic growth, a former finance minister said on Saturday.
Speaking at the Habib Public School Alumni Association's economic discussion, ex-minister Miftah Ismail said that no foreign company would be prepared to invest in Pakistan unless the country's financial and monetary conditions improved.
"Over the past two decades, Pakistan has only received foreign investment in goods that are sold there," Ismail said. "No nation has made investments here to produce commodities and products for export to other nations."
He said the Special Investment Facilitation Council (SIFC) has been established to facilitate investment in various sectors of the economy.
"However, the SIFC's role does not include assisting multinational corporations in returning their dollar-denominated profits and dividends to their home countries. Foreign exchange for repatriation is arranged by the State Bank of Pakistan, not the SIFC."
There are reports that the United Arab Emirates has allocated $10 billion for investments in Pakistan's growing economy and that Pakistan may sell its share of Reko Dik to Saudi Arabia. In order to attract Saudi investment, Islamabad offered more appealing terms. These included quick profit repatriation and a smooth transaction process.
Ismail said no economic strategy is being developed at the moment that will enable Pakistan to make progress over the next 10 years unless it raises social indicators such as access to food, healthcare, and education.
He said that Pakistan's governments have always prioritised rapid economic growth over meeting the basic needs of the country's impoverished citizens.
The nation has the lowest regional healthcare spending.
The private sector is spending more on health due to the abundance of charities, despite the government's extremely low investment in this area.
Budgets for health and education can be increased by adopting a more positive mindset.
Pakistan has relatively little social spending because of its weak finances. In terms of funding for education, the country ranks lowest in the region; for the last fiscal year that ended on June 30, the estimated public expenditure on education as a percentage of GDP was 1.7 percent, according to the official data.
"An estimated 70 percent of households still consume water that has been tainted by germs, as reported by UNICEF," he said. "In Pakistan, there are 186 maternal deaths for every 100,000 live births. The infant mortality rate is 55.8 per 1,000 live births."
Higher inflation, according to Ismail, causes a bigger budget deficit. "If the government must borrow money to pay for loan interest, how can it reduce its debt?"
In order to reduce the budget deficit and poverty, he suggested that it is necessary to address the National Finance Commission (NFC) Award and reduce the provinces' share of the NFC. "Additionally, state-owned enterprises must be privatised because the government is not meant to run these companies."