February 27, 2003	Thursday	Zul Hijjah 25, 1423

ISLAMABAD, Feb 26: The increased flow of foreign investment, including remittances by the overseas Pakistanis, are ‘not’ helping in creating job opportunities in the country, says Governor, State Bank of Pakistan, Dr Ishrat Hussain.

“My main concern is that despite having a lot of foreign capital, Foreign Direct Investment (FDI) and remittances sent by the overseas Pakistanis, adequate employments are not being created,” he further stated.

Talking to Dawn after inaugurating the “Financial Sector Strengthening Programme” of the Swiss Agency for Development and Cooperation (SDC) here on Wednesday, the central bank chief called for creating sufficient jobs, specially for the educated youth.

“In fact the major investment is coming in the oil and gas and the IT sectors, but there are no many new jobs available,” he said, adding that there was a need for an effective public and private sector partnership to address the issue of employment.

He was of the view that there was an urgent need to invest more in agriculture, irrigation water resources and the public sector development programme for creating new jobs. “And there is also a need for investment by the private sector in small and medium enterprises (SMEs) and agriculture finance for creating new job opportunities,” the SBP governor said.

Dr Ishrat said that it was becoming difficult for the government to absorb educated youths everywhere and that this job should be taken up by the private sector.

Responding to a question, he dispelled the impression that an increased amount of dollars was coming from Dubai to show enhanced level of foreign exchange reserves.

“We have considerable export earnings, FDI and remittances and they all are coming in the inter-bank, and this is how we are getting increased amount of reserves that now reached to over $9.6 billion,” Dr Ishrat said.

And the central bank, he said, was keeping with it the surplus dollars and as such it was wrong to say that the greenback was first sent to Dubai by money changers and then brought back into the country.

Nevertheless, he defended the purchase of dollar from the open market, and in this behalf he referred to India which purchased $7.5 billion in March last year from the open market. “This is obsoletely a prudent practice to buy dollar from the market and this is practised everywhere in the world,” he asserted.

He also pointed out that the increased amount of foreign exchange was also coming because of exporting manpower services by Pakistan. “India is getting this dollar because of exporting IT services and we are having this dollar through exporting manpower services.”

Answering another question, he said the government had successfully completed the restructuring of most of the commercial banks and development financial institutions (DFIs). Currently, he said, the restructuring of Zari Tarqqiati Bank (former Agricultural Development

Bank of Pakistan) was being finalized.

Dr Ishrat said the restructuring of Habib Bank had been completed, while the United Bank was finally privatized last year. “And the National Bank’s 20 per cent shares had been offered to the public through stock market,” he said, adding the National Bank has given for the first time 12.5 per cent dividend to its shareholders.

The central bank governor expressed the hope that 4.5 per cent GDP growth fixed for 2002-03 will be achieved.