Pakistan’s Finance Minister Hafeez Shaikh says Pakistan is expected to cap this year with nearly 4% in growth, while the country has to pay $1.4 billion in loan repayments.
His speech at the Brookings Institution, however, was mostly about the current administration’s shortcomings when it came to sound economic policies.
The finance minister talked about the government’s failure to implement Value Added Tax, energy sector problems and the challenges faced following the floods of 2010.
Shaikh said that Pakistan budgeted for the loan repayments, most of which have been disbursed. He said that Pakistan was expected to grow by 4% this year. However, when asked about the IMF projection of 3.4% growth, Shaikh said the country has revised those figures since an increase in growth was registered in the agriculture and manufacturing sector. Shaikh said the economic managers believe growth would be above 3.8%.
He said that while he would not want to comment on the figures of the Coalition Support Funds, the administration is talking to the US on the issue and believes it would be resolved soon. The US halted disbursement of Coalition Support Funds last year as bilateral relations went into freefall after the Raymond Davis incident and the Abbottabad raid. Shaikh, who is in town leading a four-member team to attend the IMF/World Bank Spring Meetings 2012, said that the government was trying to improve the energy sector. It is a historical failure of Pakistan that the country has a small tax base, he added. Shaikh said that the United States had been providing assistance – the country helped them gain market access to the EU and played a role in the transit trade agreement with Afghanistan.
Published in The Express Tribune, April 19th, 2012.
COMMENTS (10)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ
1714024018-0/ModiLara-(1)1714024018-0-270x192.webp)
@j. von hettlingen: Value Added Tax is the surest way of collecting tax at the source and increase tax-gdp ratio. To make fair, essential items like food & medicine can be exempted from VAT.
http://www.riazhaq.com/2011/05/pakistans-tax-evasion-fosters-foreign.html
Value Added Tax is not wise, as the poor and those with low income with have to bear the brunt. Tax the rich instead. Tax collection is abysmal and Pakistan's elite – landlords and industrialists, some of whom are part of the current government – adamantly evades taxation by using political influence.
Given the huge size of the underground economy in Pakistan, I think the 4% figure is understated. Going by robust consumption of everything from cars to cement to fmcg, the actual growth rate is not reflected in official figures.
http://www.riazhaq.com/2012/04/pak-consumer-boom-fuels-underground.html
Now take that growth rate and adjust it for the M2 (money supply growth), and walla! Pakistan's economy contracted. And I dont even have a PhD.
A statement by a Foreign Finance Minister. Come to Pakistan and touch the ground realities. respect your Ph.D. and say the truth.
To show 4% growth rate they'll silently fudge and lower the previous year's growth figure. This has happened before.
Day dreaming by Hafeez Sheikh
These statistics are misleading and farce. Overall growth may be 4% if divided amongst 100% people, however the second fact which should have been given alongside would be the distribution of this 4% . In our case the beneficiaries are about 100 to 150 families amongst the population of 180 million, mostly dwelling in Islamabad, Lahore and Karachi
Another report in ET says we need to repay 3.7 trillion next year? From Where will growth come Sir???? These beg and borrow policies have ruined the country. Achieve half of that projection and we will be happy after paying foreign debts and 20% hike in defense budget.
He can give any figures he likes: the fact is economy is in ruins and FM needs to stand up and take responsibility for the mess.Looking at various facts the GDP growth would not exceed 3.4%(and this is being optimistic)
I hope someone does detail analysis of past projections given by FM and the actuals?