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| April 30, 2002 | Tuesday | Safar 16, 1423 |
‘Border tension hits fiscal recovery’
ISLAMABAD, April 29: The deployment of troops on the border have impacted the government’s efforts to achieve further fiscal consolidation, conceded the minister for finance.
“The events of Dec 13, precipitated by the terrorist attack on Indian parliament, created yet another crisis leading to the unprecedented massing of troops by India on Pakistan’s border. Pakistan had to deploy troops in self-defence resulting in an overrun in defence spending. This has impacted our efforts towards further fiscal consolidation,” said minister for finance Shaukat Aziz.
The 2-day meeting of Pakistan Development Forum (PDF) that began in Paris, was linked through video conferencing at the World Bank office in Islamabad.
Speaking at the inaugural session of the meeting from Islamabad the finance minister said on Monday that despite various challenges, including troops deployment on borders, Pakistan was making continued efforts to progress in many areas.
“However there were some disappointments,” he said adding that while key economic fundamentals have improved, some important areas did not show adequate progress and continue to be a source of concern.
The finance minister, who did not go to Paris due to referendum being held on Tuesday, said that due to Sept 11 events and severe effects of drought, the government’s efforts to consolidate gains and make further progress towards increasing economic growth and fiscal consolidation have been seriously interrupted.
One of the major disappointments, he pointed out, has been the prolongation of the catastrophic drought which has affected the growth of agriculture for over two years.
The second disappointment has been the deceleration of export growth. “We witnessed cancellation of exports orders, postponement of shipment, ‘halt’ order as well as delays in clearing Pakistani consignments at various ports.”
Like exports, imports, he continued, declined sharply due to which roughly 40 per cent of tax collection remained low. However, in the wake of regional development and in recognition of the difficulties it faced, Pakistan received grant assistance from its coalition partners which helped to offset budgetary looses as well as provide support to the balance of payments.
The minister told the meeting that Pakistan was negotiating with some donors the debt-for-social sector swaps, which will help in poverty reduction. Also, Pakistan was hoping to benefit from the reconstruction and rebuilding of Afghanistan, since this will facilitate the return of Afghan refugees and ease the pressure, particularly in the NWFP and Balochistan.
Aziz also assured the PDF meeting that the government remains firmly co