PSDP volume to be raised to Rs200bn in next budget
LAHORE, April 17: State Bank of Pakistan (SBP) Governor Dr Ishrat Husain said on Saturday that the volume of Public Sector Development Programme (PSDP) would be increased to Rs200 billion in the budget for 2004-05 from present Rs160 billion.
"The increase in the PSDP volume has been possible only due to decrease in the fiscal deficit and bringing in discipline in the government spendings," he said while addressing the executive committee members of the Lahore Chamber of Commerce and Industry (LCCI) here.
He said the country was eyeing on a growth rate of 6 per cent during the next fiscal year from 5.8 per cent during the current year.
He lauded the private sector in making these achievements possible by increasing the production and value addition in different economic sectors.
Dr Husain said the government was patronizing the private sector so that more jobs could be created.
He said the government alone could not overcome the problem of unemployment as the over-employment in the state enterprises like PIA and Railways resulted in financial haemorrhaging of Rs100 billion per annum.
He said the downward revision of export refinance markup rate to 3 per cent had helped bring down the cost of financing.
He said private sector got Rs235 billion credit during the first nine months of the current fiscal year against Rs85 billion in the corresponding period of last year.
"Banks are now looking for more customers," he said.
The SBP governor said the government had facilitated the launch of consumer financing by the banks to cater to the needs of middle- and low-income groups of society.
"No country can make progress in the absence of banking credit for the middle class," he added.
He said the consumer financing had mainly benefited the auto industry as the production of automobiles had now shot up to 100,000 units from the previous level of 30,000.
Similarly, the production of airconditioners had risen to 800,000 units per annum from 300,000.
He said more focus on the housing sector could accelerate activity in at least 37 downstream industries.
He said increased construction activity had jacked the cement production capacity to 100 per cent from 50 per cent.
Similar trends have been witnessed in the steel sector, he added.
On availability of credit for the agriculture sector, Dr Husain said the credit extended by the commercial banks to the agriculture sector exceeded the volume of that provided by the Zarai Taraqiati Bank Limited (ZTBL) this year, first time in the history of the country.
Dr Hussain said the Institute of Bankers Pakistan (IBP) had started the training of bankers in the field of SME loaning.
He hoped that the development of SME sector would generate a big number of jobs.
He said the production capacity of Pakistan Steel Mills was being raised to 3 million tonnes from the present 1.1 million tonnes.
Earlier, LCCI president Mian Anjum Nisar said SMEs were subjected to high markup rates and added that the core of the problem remained the inherent insecurities of the commercial banks.
He said the money policy instruments put into action since 2001, had resulted in the slashing down of the markup rates for working finance and for the deposits.
The policy makers' perception about easing out the private sector in the context of working capital had paid off, he said.-APP
