Political instability holds back economic growth, not corruption: Iqbal

Federal minister says many countries progressed despite having similar levels of corruption as Pakistan

Insisting that corruption is not the major hindrance to Pakistan's economic progress, Federal Minister for Planning, Development, Reforms and Special Initiatives Ahsan Iqbal on Monday said that some countries even managed to develop with similar levels of corruption.

"I can count many countries in the world that have developed despite having similar corruption as ours but you can't point out a single country that has progressed despite political instability and discontinuity of policy," Iqbal said while addressing a seminar "Unblock Pakistan’s Economic Potential" organised by Islamabad Policy Research Institute (IPRI).

Giving examples of Bangladesh and India, the federal minister said that both countries managed to progress despite having similar corruption as Pakistan.

Read more: The politics of corruption

The federal minister further said that economic growth in Pakistan requires strong fiscal discipline and economic management. “We have to move towards export-led growth and bring the tax to Gross Domestic Product (GDP) ratio closer to the countries of the region.”

He said that Pakistan is lagging behind the other countries in the region as the tax to GDP ratio of the country has never been above 12 per cent.

He lamented that Pakistan is also lagging behind in exports compared to other regional countries including India and Bangladesh. "At present Foreign Direct investment in Pakistan is only $1.5 billion while in Vietnam it is $30 billion."

He pointed out that Pakistan’s savings and investment ratio is very low which needs improvement. "We have not paid attention to human resource development, the dream of economic development cannot be fulfilled on 50 per cent education."

He added: “We have to make our youth skilled and educated. Because of the CPEC project, we got the attention of the world. The world wants to invest here.”

Also read: Incompetence versus corruption

The minister said that we took $29 billion from China and we spent Rs2,300 billion on CPEC projects from our development programme, adding that we have given a lasting infrastructure to Pakistan.

The government, he said, is budgeting the deficit at the moment and the current deficit is forcing the government to take new loans. "We have set a revenue target of Rs7,000 billion and in addition, there will be Rs2,000 billion non-tax revenue."

He said that Pakistan has to repay Rs4,000 billion loans, in addition, Rs1,500 billion is the country's defence expenditure and Rs500 billion is the government expenditure.

"Our annual pension expenditure is Rs530 billion of which our defence pension defence annual expenditure is Rs400 billion and civilian Rs130 billion."

In addition, he said, there is an annual development programme of Rs700 billion while Rs1,200 billion goes to the provinces, adding that the government is giving subsidies of Rs700 billion this year.

"In order to balance our annual budget, we have to move towards export-led growth so that the country’s economy is sustainable and inclusive," he added.

(With additional input from APP)