Friday July 12, 2024

No country can be run on foreign aid: Ahsan

By News Desk
January 20, 2023

LAHORE/ISLAMABAD: Federal Minister for Planning and Development Ahsan Iqbal on Thursday said that no country could be run on aid and loans of friendly countries. “However, Pakistan has to depend on the International Monetary Fund (IMF) and friendly countries to save the economy. We have to save the country from anarchy,” he said.

Iqbal talked about the latest IMF agreement. “It is dangling over our heads. The previous government made an irresponsible agreement with the IMF. Moreover, when the coalition government took over the government, they were informed that there are no funds for the budget.”

Ahsan Iqbal on addressing the environmental challenges faced by the agriculture sector of Pakistan said: “We are among the top 10 countries in every sector of agriculture. Now with environmental challenges that can also change.”

Earlier, Iqbal also said that the crisis the country was facing today was not created by the current government and claimed that the previous government went bankrupt internally. He said the success of the government was to save the country from bankruptcy in the external sector by taking tough decisions.

Ahsan Iqbal further said that the economy suffered a shock of $30 billion because of the last year monsoon floods. Pakistan has come out of the flood disaster and now the government was starting reconstruction in the affected areas.

Meanwhile, addressing an event here at the Pakistan Institute of Development Economics (PIDE), Ahsan Iqbal said the government would meet the conditions set by the International Monetary Fund (IMF) to complete the programme, but common man would not be affected by the decisions. He said the IMF agreement was hanging over the government which it had to negotiate with the Fund. The previous government, he said, had recklessly agreed upon the programme, therefore, the current government had no option but to continue the programme.

“We have to do a lot of adjustments, but we will take decisions in the larger interests of the state,” he said and hastened to add that “We will try to put minimum burden on the poor and common people”. The minister said Pakistan’s economy was in a shattered state when the current government took over and keeping in view the short available time, it decided to take short-term measures to turn around the economy in the right direction.

Ahsan Iqbal stressed the need for mobilising all available resources to increase productivity and exports of the country, so as to get rid of foreign loans on a permanent basis. “Pakistan’s productivity capacity is very low as compared to the standard average”, he said adding that in the agriculture sector alone, the country could earn billions of dollars by taking measures to increase the crops’ yield per acre.

For instance, he said the per acre wheat production in Pakistan can be increased by up to 80 percent by improving on-farm management. Similarly, he said, “Our industrial production possesses numerous inefficiencies due to which we are not competitive with the world.”

The biggest challenge in 75 years, he said, is that Pakistan’s productivity capacity could not be integrated with the global markets.

Ahsan Iqbal pointed out that export-led growth was important to resolve the balance of payment issues, therefore, he stressed the need to do all measures to earn the maximum foreign exchange reserves.

“We have to do resource mobilisation and also have to increase tax to GDP ratio up to the global average of over 18 percent, which is only at 09 percent in Pakistan”. He said in the previous four years, the debt servicing burden had increased to Rs4,500 billion, so if the resources are not mobilized, the country’s all collected tax would be spent on debt repayment.

Furthermore, he said increase in investment was another important factor to ensure sustainable economic development. “If the Pakistani investors only bring out their money and invest in the country, we will not need to go to the IMF or any other lender,” he said adding that foreign direct investment would also have to be increased up to $25-30 billion per year.

He also asked the Ministry of Commerce to take urgent measures to increase the country’s exports from the current $32 billion to over $100 billion in the shortest possible time. Earlier, Vice Chancellor PIDE Dr Nadeem Ul Haque emphasised that the regulatory system was the biggest problem in Pakistan, such as unnecessary documentation, taxation, and NOCs. Around 122 regulatory agencies collect taxes and do not contribute to productivity. Corporate governance is not very encouraging, and just 31 families in Pakistan are involved in import substitution and our industrial policies just protect them. The stock market in Pakistan is not financing exporting industries but import substitution.

Omer Siddique and other researchers from the PIDE focused on the historical trend of exports and economic growth in Pakistan.