Published Date: Dec 5, 2018
Financing gap largely plugged: minister
Finance Minister Asad Umar Tuesday dismissed the notion that there is any immediate economic crisis in the country, saying financing gap for the current fiscal year 2018-19 has been plugged. Addressing the inauguration ceremony of the 11th South Asia Economic Summit organised under the auspices of Sustainable Development Policy Institute (SDPI), the finance minister said that there will be no compromise on the independence of State Bank of Pakistan (SBP); rather, it will further be institutionalised, if deem necessary.
The country is not facing any immediate economic crisis and all fundamental economic indicators are improving, said Umar adding that the financing gap for the current fiscal year has been plugged due to vibrant economic policies of the government, which will soon be visible.
The finance minister said that the incumbent government took over in difficult economic situation as exports were on downward trend, imports were increasing and the current account deficit had reached $ 2 billion per month.
The rupee has been witnessing depreciation since last year, he said. Last year rupee depreciated by Rs 23 during the last seven months, while further depreciated by Rs 10 in the last four months of the current fiscal year. So the rupee was already depreciating and came under pressure due to increasing imports and decreasing exports, he added.
Umar, however, said that all fundamental economic indicators are now improving with exports witnessing an upward trend while the imports are decreasing. Current account deficit is also being overcome gradually, but still Pakistan could not afford one billion dollar current account deficit and needs to overcome it, said the minister, adding that several measures have been taken while more would be taken to address this issue as well.
The finance minister while speaking about the current depreciation of the rupee said, "The State Bank of Pakistan (SBP) had taken the decision and will continue to decide itself. Such decisions are taken by the central bank and if needed, its working will be strengthened."
He said before the fresh wave of volatility in exchange rate, the SBP governor had informed him that inter-bank rate of dollar against rupee was increasing; therefore the central bank would have to take decision of depreciating the currency.
"Though I knew that it will happen, I did not know when it will happen and how much the value of rupee will be depreciated," he added.
Upholding that there has been no change in the Pakistan Tehreek-e-Insaf (PTI) policy, the finance minister said, "There will be no compromise on the independence of SBP rather it will further be institutionalised." The State Bank”s neutrality is intact and the government believes in this and there is no change in the policy of PTI, he further said.
The SBP would remain autonomous, said the minister, adding that there is need to improve communication mechanism. "I ask the governor SBP for developing a mechanism. Central bank and I keep in touch," said the minister.
He further said a mechanism regarding communication between the SBP and Ministry of Finance is being worked out. The governor SBP should come up with a mechanism for the Finance Ministry, Umar added.
He said that spreading rumours about the national economy would not do any service to the country. "Let exporters increase their exports and investors do investment. There is no need to create chaos in the country," he added.
Umar further said that there is need to enhance efforts for peace and development between India and Pakistan as intra-regional trade is need of the hour to bring the people out of poverty.
The finance minister further said that Imran Khan loves to take risks and bold actions as he did in case of Kartarpur. He will continue to take such actions to enhance cooperation between the two countries.
"The response from the Indian side is unfortunate. We hope that this SAARC cooperation will strengthen in future," said the minister adding that there is a need to think out of the box solutions amid tensions and political confrontations between the two states.
He further said that growth driver of Pakistan is intra-regional trade between India and Pakistan, especially its ability to meet the needs of the people and getting people out of poverty. "If we promote the intra-regional trade and take steps in the right directions, we can create political space for this to happen. Solution will come from policy experts and conferences like this," he added. "Leaders take bold decisions and real opportunity is for those who trust in peaceful South Asia," he further said.
"Indian response to Kartarpur initiatives was dismal which we were not hoping; however, Pakistan is hopeful for positive response from India. Productive solutions will translate hope into reality," the minister added.
Former caretaker Finance Minister Dr Shamshad Akhtar said that this new age of globalisation and digitisation amid nationalism calls for enhanced regional cooperation and connectivity.
She said connectivity should not be constrained to road development but to have ICT, digitisation, energy cooperation and construction of ports, etc. She said, "Sustainable Developments Goals (SDGs) can guide us to improve trans-boundary corridor where institutions like SDPI has distinct role to play. Regional connectivity is of course gaining momentum today, where Belt and Road Initiative (BRI) led by China can steer the efforts for regional cooperation."
Dr Akhtar said that BRI has the potential to generate momentum to enhance regional partnership, which is currently in the state of deadlock, especially between India and Pakistan. "Economy needs to progress on a set of new elements of requisite reforms, which include streamlining tax system, improvement in banking system, easing the procedures to do business, improving competitiveness and promoting trade facilitation through trade regulation," she said. Pakistan and China can play active role in regional cooperation and improve connectivity, she further said, adding that there is a need to think and work on how development can be part of peace and contribute to peace efforts in the region.
Dr Abid Qaiyum Suleri, SDPI Executive Director, said when SAARC was unable to move forward, the SAES platform kept the discussion on economy and trade cooperation alive. He said that South Asian countries should keep their political differences aside for the sake of shared objectives; otherwise the region would remain least connected.
Dr Nagesh Kumar, Head of UNESCAP South and South-West Asia Office, New Delhi, India, said, "South Asia is today the fastest growing region in the world, however, we need to capture on the development gaps, such as poverty, gender inequality, poor state of health and education, etc." He said, "We are not able to use the talent and potential of fast economic growth and development." He said that fresh approach to development is needed where SDGs have the potential to consolidate the unfinished business of MDGs and provide sustainable future to the people of South Asia.
He said that the South Asian governments need to focus on job creation through sustainable industrialisation, provision of essential basic services and universal access to health and education as well as universal social protection, ensuring food security, promoting gender equality through women entrepreneurship, and enhancing cooperation on environmental issues.
Dr Ratnakar Adhikari, Executive Director of Enhanced Integrated Framework Secretariat, World Trade Organisation (WTO), Switzerland, said that it is important for South Asian countries to invest in research and development to capitalise the potential of 4th Industrial Revolution. There is a need to enable the students and young generation to use the new digital technology to keep their pace with global development. He said that one of the major challenges of the region is lack of skilled labour to adapt to the technology, which requires capacity building. Also, there is a need to build an enabling environment and improve regulatory system to build trust among stakeholders, he added.