‘Pakistan shifting to bottom-up policy for growth’

ISLAMABAD: Shaukat Tarin, Federal Minister for Finance and Revenue, on Saturday said Pakistan was now adopting a bottom-up approach to ensure growth as the trickle-down (top-down) policy never yielded results in the last 72 years.

“The government will use commercial banks to retail credit to microfinance institutions like Akhuwat and microfinance institutions to provide low rate loans to 5 to 6 million households to start their own business and these small businesses will lead the growth engine,” said Tarin virtually addressing the launch of InfraZamin Pakistan Limited.

InfraZamin is a first-of-its-kind facility providing local currency guarantee solutions for infrastructure finance.

Tarin said Pakistan’s debt market was improving in terms of depth, breadth, and liquidity. “Pakistan’s GDP growth rate for current financial year, closing on June 30, will

be 4 percent. The growth is coming from real estate, agriculture exports and the housing sector, which were the focus areas of Prime Minister Imran Khan.” The finance minister said Pakistan needed to grow its economy further, because it had a huge youth bench to give at least 1.5 to 2 million jobs every year.

“So, Pakistan will target growth that will be inclusive and sustainable and in which microfinance lending will be our main tool.” Every household in urban area would be given a loan of Rs.0.5 million for 3 years on subsidised rate to start their own small business, and in rural area, every grower family would be extended Rs150,000 per crop, the finance minister said.

Aamir Khan, Chairman Securities and Exchange Commission of Pakistan (SECP), said the regulator expected to address three specific objectives i.e., increasing the contribution of local players towards funding infrastructure projects and deepening of institutional investor base, developing local debt capital market, and supporting infrastructure developments through PPP structures.

Khan hoped InfraZamin Pakistan would play a pivotal role in ushering greater private sector participation in sectors such as affordable housing, renewable energy, education, and healthcare.

Dr Shamshad Akhtar, Chairperson Karandaaz Pakistan said, "As lead sponsors, we are delighted to partner with InfraCo Asia and GuarantCo in setting up this, first of its kind, innovative structure and look forward to InfraZamin leveraging its capital and competence for the development of sustainable infrastructure to enhance country’s competitiveness and national connectivity”.

“We are confident that InfraZamin will help the private sector play its due role in this regard and add to the sophistication of Pakistan’s financial architecture; all leading towards economic growth, jobs creation, and poverty reduction. We count on fostering public-private partnership in infrastructure development,” Akhtar added. InfraZamin officials including Dr Akhtar were very appreciative of the Finance Minister’s comments of support for InfraZamin and for him taking the time out from his busy schedule to address the audience live virtually from Islamabad. InfraZamin also expressed its gratitude for the support received from the regulatory authorities especially the SECP for the establishment of a framework for an infrastructure guarantee company in a short span of time.