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January 15, 2002
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Tuesday
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Shawwal 30, 1422
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Govt committed to structural reforms
By Our Staff Reporter
ISLAMABAD, Jan 14: The government has decided to assess all existing regulations and procedures with a view to eliminating red tape and corruption by pursuing further deregulation and removing irritants.
“The central challenge today is to address governance problems that remain a major obstacle to higher growth and better services,” said Minister for Finance Shaukat Aziz.
Speaking at the “17th Annual General Meeting of the Pakistan Society of Development Economists (PSDE),” here on Monday he said that assessing all existing regulations and procedures were the two additional dimensions of governance that will be receiving the government’s highest attention to eliminate red tape and corruption. The PSDE has been organized by Pakistan Institute of Development Economics (PIDE), Islamabad.
“Both these issues are affecting the interaction between the administration and the business community,” he said. The government, he pointed out, was also undertaking judicial reform programme in order to strengthen the rule of law and enhancing transparency and accessibility of the legal system by modernising the court system at all levels and strengthening capacity, effectiveness and accountability of law enforcement agents.
Aziz said that although a wide-ranging structural reform programme was put in place over the last two years, the government believed that much remained to be done to restore the momentum of growth, investor confidence and reducing poverty.
The government, he said, will implement the ambitious reform agenda of restructuring public expenditure towards growth enhancing and poverty reducing outlays, improving monitoring and transparency in public finances, tax policy and tax administration.
“We have enormous responsibilities on our shoulders,” the finance minister said adding the government was committed to the structural reform programme and that there was no looking back.
The finance minister also criticised the print media and said that role of the press was important so as to provide constructive feedback on policies pursued by the government. “The quality of analysis is mixed and should move towards more substantive critique and suggestions rather than mere criticism and no real implemental ideas,” he said. He said it was important that the work of PIDE actively shared its views with the public via press, which, he believed, would greatly raise the quality of economic analysis presently available to the Pakistani public via print media.
Aziz recalled that events of September 11 have had considerable effects on Pakistani economy due to which exports and revenues have declined. “The challenge before us is how to minimize the losses caused by the temporary difficulties and how to position ourselves to translate the openings of opportunities into real gains for the country.”
Pakistan, he said, has once again thrust into role of a front line state and that whatever happened to the global economy, was bound to create temporary difficulties for Pakistan.
“Our major weaknesses have so far been growth and investment,” he said adding that the crippling drought of dimensions never experienced in the country had damaged growth prospects last year despite impressive recovery in industrial growth.
The finance minister told the participants that the government has prepared a medium-term framework over period from 2001-02 to 2003-03 to achieve 5.2 to 5.5 per cent GDP growth rate and keep the inflation at about 5 per cent. Investment, the finance minister said, will rise gradually from last year’s level of about 16 per cent to 17 per cent of GDP by 2003-04, fiscal deficit to decline further to 3.2 per cent of GDP and current account deficit (including transfers) to 1.3 per cent and development spending reaching to close to 4 per cent of GDP.
The foreign exchange reserves, he pointed out, will be built to over 4 billion dollar (excluding commercial banks reserves with the state bank) by the end of 2003-04.
He said foreign investment, particularly in oil and gas sector, and information technology as well as privatization programme were likely to be affected due to the slowing down of the global economy.
The finance minister, nonetheless, was happy to mention that Pakistan has been offered substantial debt relief by bilateral and multilateral creditors to help get debt situation stabilised.
He said that the theme of the 17th PIDE meeting was debt, growth and poverty and as such was very relevant and focused on the priorities set forth by the government two years ago.
He said although the full impact of September 11 events was still to be realized and evaluated, it has nevertheless unleashed new and unpredictable forces that substantially raised the risk of global downturn.
“But due to our better policies, Pakistan stands economically stronger today to withstand the crisis emanating from the events of September 11,” he claimed.
Aziz conceded that despite reduction in fiscal and current account deficits along with an impressive recovery in industrial production, slower economic growth along with deterioration in governance have contributed to rise in poverty. “Almost one- third of the country’s population lives below the poverty line.” He said eversince the government took over in 1999, it had implemented various new measures aimed at improving the economy of the country.
In this regard, he recounted the achievements of the government and said while stabilization policy succeeded to a large extent in restoring macroeconomic stability and avoiding default, the structural reform measures have laid the foundation of sustained growth. Fiscal deficit, he said, has been reduced from average 7 per cent of GDP to 5.2 per cent in the second year of the government, and that the debt burden has reached to a sustainable level.
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