Fiscal, monetary policies in line with required economic reforms: Asad Umar
Need to become a domestic-resourced mobilised, productivity-led and export-oriented economy, says finance minister
Finance Minister Asad Umar addresses the Karachi Stock Exchange Oct 20 2018. Photo:AFP
Finance Minister Asad Umar said that Pakistan's fiscal and monetary policies are in line with the economic reforms that are required to take the country out of its current economic predicament and are not related to the International Monetary Fund's (IMF) "dictation".
"We don't need the International Monetary Fund's dictation, because these reforms are necessary," the finance minister stated.
Speaking on BBC's current affairs TV show Hard talk – to be aired early Thursday morning – Umar said that, "the government has not waited for IMF sanctions and conditions to do what we think is required for the economy".
Negotiations with IMF
"The PTI government has increased gas prices within its first 100 days, increased electricity prices, increased taxes in the supplementary budget, policy rate was increased by the State Bank of Pakistan (SBP) and the rupee has been devalued and the currency has been adjusted as well."
Elaborating on the government's ongoing negotiation with the IMF, Umar reiterated that there is no difference between the IMF and the government on "what needs to be done, however the difference lies in the path of reform".
He further said that the pace and sequence of reforms are currently under discussion with the international monetary body.
Responding to questions on Prime Minister Imran Khan's U-Turn regarding acquiring financial assistance and bailout from friendly countries and possibly the IMF, Umar said that he had stated earlier that Pakistan needed financial assistance to overcome the current economic crisis.
We are not proud of the fact that we had to go and ask for assistance, the finance minister stated, adding that the "real challenge on which we will be judged is that whether we took decisions of setting the country's economy on a path where this is going to be Pakistan's last IMF bailout".
Umar added that clear directions have been set in this regard during the first 100 days of PTI's government.
"Pakistan has been using a growth strategy which is imported capital finance consumption-led that has led to these current account deficits," said the finance minister while explaining Pakistan's current economic situation.
"Until we become a domestic resourced mobilised productivity-led and export-oriented economy, we are not getting out of this begging bowl syndrome."
Highlighting the reasoning behind the strategy, Umar said it was part of "our strategy to reach out to friendly countries and negotiate a bailout with the IMF simultaneously", adding that "we had no time to work out a strategy which is a preferred option".
Saudi Arabia and Pakistan's bilateral relationship
The corporate bigwig also shed light on Pakistan's bilateral relationship with Saudi Arabia in the backdrop of the Khashoggi crisis and western criticism of the kingdom. "Pakistan and Saudi Arabia enjoy a consistent bilateral relationship, irrespective of who is in power."
"Western countries should be ashamed for talking about democracy and freedom, and reaching into Saudi pockets for business deals worth billions of dollars."
He added that the two countries also enjoy a close military relationship, which is not influenced by events in Yemen and neither by the alleged murder of the dissident journalist.
CPEC is 'a good deal'
Terming the China-Pakistan Economic Corridor a "good deal in which interests of both the investors and the country are being served", the finance minister said, "We'll worry about our China debt problem, the US should worry about its problem". He added that the US had the largest debt in the world to China amounting to $1.3 trillion.
Worst is over for Pakistan’s beleaguered economy: Umar
"Pakistan owes 10 per cent of its foreign debt is Chinese, 90 per cent is non-Chinese."
"We have had 12 different IMF programmes in 30 years, why such an interest suddenly now to which source or country owes Pakistan? Why were the same questions not asked when Pakistan owed western banks," questioned the minister.
Balochistan and CPEC
Umar maintained that efforts by foreign-sponsored actors to destabilise CPEC and Balochistan are ongoing, and such elements are being trained abroad to subvert the initiative.
When asked of the 'foreign hand' behind such activities, the finance minister pointed towards Pakistan's eastern neighbour, India. Referring to the convicted spy Kulbhushan Yadav, Umar said details of India's intervention in Balochistan, and the country at large are available and have been shared with the international community.
Pakistan to share CPEC debt details with IMF: Asad Umar
Rule of law, accountability and revenue generation
Highlighting the government's strategy to overcome issues in the education and health sectors, Umar said revenue generation and taxes are central to the challenges faced by the country as "we need revenue".
"We have separated tax policy from tax administration, absolutely central to the reform effort," adding that the leadership of that revenue authority has also been changed.
The finance minister further added that changes in laws are being made to deploy the use of technology, data analytics and algorithms to trace where taxes are being evaded in order to recover them.
"We have a list of high net worth people who evade taxes and served notices to them," the minister went on to add.
"We believe in rule of law, court decided the decision and the government stands by it," said Umar referring to the acquittal of Aasia Bibi.
"After the decision, those who caused instability and violated law and order are facing accountability."
He also talked of media freedom in Pakistan and said, "the need for free media is paramount and PTI stands by that responsibility," adding that there needs to be accountability for media and social media, to control the spread of fake news.
"We don't need the International Monetary Fund's dictation, because these reforms are necessary," the finance minister stated.
Speaking on BBC's current affairs TV show Hard talk – to be aired early Thursday morning – Umar said that, "the government has not waited for IMF sanctions and conditions to do what we think is required for the economy".
Negotiations with IMF
"The PTI government has increased gas prices within its first 100 days, increased electricity prices, increased taxes in the supplementary budget, policy rate was increased by the State Bank of Pakistan (SBP) and the rupee has been devalued and the currency has been adjusted as well."
Elaborating on the government's ongoing negotiation with the IMF, Umar reiterated that there is no difference between the IMF and the government on "what needs to be done, however the difference lies in the path of reform".
He further said that the pace and sequence of reforms are currently under discussion with the international monetary body.
Responding to questions on Prime Minister Imran Khan's U-Turn regarding acquiring financial assistance and bailout from friendly countries and possibly the IMF, Umar said that he had stated earlier that Pakistan needed financial assistance to overcome the current economic crisis.
We are not proud of the fact that we had to go and ask for assistance, the finance minister stated, adding that the "real challenge on which we will be judged is that whether we took decisions of setting the country's economy on a path where this is going to be Pakistan's last IMF bailout".
Umar added that clear directions have been set in this regard during the first 100 days of PTI's government.
"Pakistan has been using a growth strategy which is imported capital finance consumption-led that has led to these current account deficits," said the finance minister while explaining Pakistan's current economic situation.
"Until we become a domestic resourced mobilised productivity-led and export-oriented economy, we are not getting out of this begging bowl syndrome."
Highlighting the reasoning behind the strategy, Umar said it was part of "our strategy to reach out to friendly countries and negotiate a bailout with the IMF simultaneously", adding that "we had no time to work out a strategy which is a preferred option".
Saudi Arabia and Pakistan's bilateral relationship
The corporate bigwig also shed light on Pakistan's bilateral relationship with Saudi Arabia in the backdrop of the Khashoggi crisis and western criticism of the kingdom. "Pakistan and Saudi Arabia enjoy a consistent bilateral relationship, irrespective of who is in power."
"Western countries should be ashamed for talking about democracy and freedom, and reaching into Saudi pockets for business deals worth billions of dollars."
He added that the two countries also enjoy a close military relationship, which is not influenced by events in Yemen and neither by the alleged murder of the dissident journalist.
CPEC is 'a good deal'
Terming the China-Pakistan Economic Corridor a "good deal in which interests of both the investors and the country are being served", the finance minister said, "We'll worry about our China debt problem, the US should worry about its problem". He added that the US had the largest debt in the world to China amounting to $1.3 trillion.
Worst is over for Pakistan’s beleaguered economy: Umar
"Pakistan owes 10 per cent of its foreign debt is Chinese, 90 per cent is non-Chinese."
"We have had 12 different IMF programmes in 30 years, why such an interest suddenly now to which source or country owes Pakistan? Why were the same questions not asked when Pakistan owed western banks," questioned the minister.
Balochistan and CPEC
Umar maintained that efforts by foreign-sponsored actors to destabilise CPEC and Balochistan are ongoing, and such elements are being trained abroad to subvert the initiative.
When asked of the 'foreign hand' behind such activities, the finance minister pointed towards Pakistan's eastern neighbour, India. Referring to the convicted spy Kulbhushan Yadav, Umar said details of India's intervention in Balochistan, and the country at large are available and have been shared with the international community.
Pakistan to share CPEC debt details with IMF: Asad Umar
Rule of law, accountability and revenue generation
Highlighting the government's strategy to overcome issues in the education and health sectors, Umar said revenue generation and taxes are central to the challenges faced by the country as "we need revenue".
"We have separated tax policy from tax administration, absolutely central to the reform effort," adding that the leadership of that revenue authority has also been changed.
The finance minister further added that changes in laws are being made to deploy the use of technology, data analytics and algorithms to trace where taxes are being evaded in order to recover them.
"We have a list of high net worth people who evade taxes and served notices to them," the minister went on to add.
"We believe in rule of law, court decided the decision and the government stands by it," said Umar referring to the acquittal of Aasia Bibi.
"After the decision, those who caused instability and violated law and order are facing accountability."
He also talked of media freedom in Pakistan and said, "the need for free media is paramount and PTI stands by that responsibility," adding that there needs to be accountability for media and social media, to control the spread of fake news.