Dar promises hard work to address grim economic situation
NEW YORK (April 15 2008): Finance Minister Ishaq Dar has said that after having released a balance sheet of the grim economic situation left behind by the previous government he will now get on with "fire fighting and damage control" to try and turn it around.
"It is an uphill task, and we have to take on the situation on an emergency basis," he told members of Pakistani community at a restaurant in Brooklyn, a borough of New York City, on Sunday night. "We have to recover what we have lost," he said while lambasting the previous government for mismanaging the economy, and expressing fears that the country may miss most of its economic targets for fiscal year, up to June 30.
After concluding his heavy engagements in Washington, where he led Pakistan's delegation to the World Bank-International Monetary Fund (IMF) spring meetings, the finance minister drove straight to Brooklyn where PML-N had arranged the meeting.
Besides PML-N US-based members, the meeting was attended by representatives of PPP and ANP. The minister spoke for more than 1-1/2 hours on the state of Pakistan's economy, laying all the facts on the table, and then answered questions, some of which were political in nature.
He told a questioner that the superior judiciary would be restored under the terms of the Murree Accord, signed by the leaders of PPP and PML-N. He said he did not have the slightest doubt that the time-bound pact would be honoured. "Restoration of pre-emergency judiciary and its independence is a priority of the coalition government." He declined to comment on MQM's move to part ways with PPP and sit in the opposition, but said that the alliance between PPP and PML-N was strong and in the best interests of the country.
Dealing with the economy, the finance minister said that the budget deficit had overshot the target of 4.5 percent of gross domestic product (GDP) for the financial year while inflation was running at 9.5 percent. The former government had also not raised oil prices in line with international trends in order to gain popularity in an election year.
"This is the legacy which the previous government has left us. There is evidence of understatement and fudging in economic projects by the previous government. We have to revise all our economic targets," the minister said.
Dar ruled out returning to another International Monetary Fund programme, to stabilise the economy. "Our experience in the 1990s [with the IMF] was not that encouraging, and we feel we can tackle this situation on our own."
He said that the previous government's claim that it had broadened the tax base proved of no consequence because it wasted huge amounts on luxury items. "Basically, the last government pursued a 'tax-and-spend' policy."
He said it was not his intention to play the blame game but the basic facts as he had found them had to be placed on record so as to enable the people to judge the performance of the present government in a year's time. He said the previous government had not been forthcoming on crucial economic information.
There just had not been enough transparency; something he promised the new government was committing itself to. He said there was need for Pakistan to go into more sustainable areas of growth, because the growth path chosen in the past was not sustainable.
"We have to go back to agriculture," he added. Dar said that strong safety nets for the poor would be built, in contrast with what the earlier government had done by providing such safety nets not for those most in need but for the rich. He promised progressive taxation with those with higher earnings paying more than those lower down the income scale. He said the country needs vigorous financial discipline.
Reform was needed and one reform was going to be the conversion of the Federal Bureau of Statistics into an autonomous agency so that its figures could be considered credible, he said. He said there were serious energy shortages today.
The Finance Minister said, "We are working to reduce fiscal deficit, reduce government borrowing from the central bank and correct other macro economic indicators. We have already started damage controlling the situation, including curbing the inflation and want to achieve maximum targets before the closing of this financial year. We are hopeful that we will reverse the negative trend and have a year of consolidation next year."
He said he was he was grateful to the coalition partners for having placed their confidence in him, and said: "All I promise is that I will put in hard effort to accomplish the task assigned to me."
Business Recorder [Pakistan's First Financial Daily]
........as if that policies are good then:
