LAHORE, May 26: Pakistan will talk with Saudi Arabia on oil imports and has also authorized imports of wheat to try to dampen inflationary pressures from high commodity prices , Finance Minister Shaukat Aziz said here on Wednesday.
Mr Aziz singled out inflation as one of the main challenges to an economy he sees growing 6.6 per cent next year, after six per cent growth in 2003-04. "There are certain challenges like inflation control and fluctuating oil and wheat prices which are disturbing factors," Mr Aziz told a business forum.
The finance minister said Pakistan was trying to come to some agreement with Saudi Arabia to soften the impact of high global oil prices. "Saudi Arabia is increasing its oil production which will affect oil prices at international level and after that we will also negotiate with them in this regard," he said.
Pakistan announced in March that a deferred payment arrangement with Saudi Arabia, which allowed Pakistan to pay 75 per cent upfront and the rest later for oil imports of between 80,000 to 100,000 barrels per day, had ended last January. -Reuters
Our Staff Reporter adds: Finance Minister Shaukat Aziz has indicated that the government will set GDP growth rate target of 6.6 per cent or more for next financial year.
Speaking to businessmen at the Lahore Chamber of Commerce and Industry on Wednesday, he said the GDP was expected to grow at 6-6.5 per cent during the current year after several years.
"The higher than targeted GDP growth will allow us to present an aggressive budget for 2004-05, because now we have room for taking some bold decisions," the minister said.
"It will also provide us sufficient fiscal space to accelerate spending on the development of infrastructure - railway, roads, irrigation, etc., - and health and education and development of human capital," he said.
He said the higher than targeted GDP growth had been achieved as a result of macroeconomic stability. He said the large-scale manufacturing had registered a 15 per cent growth and agriculture three per cent.
Mr Aziz said non-oil, non-food imports of machinery and raw materials had also increased which was going to leave a positive impact on the economy and push up growth further. He said revenue collection had also increased and per capita income had gone up to $600.
He said construction activity had picked up, adding the government would take certain decisions in the next budget to further escalate it as it was a major driver of growth. He claimed that both domestic and foreign investment had also increased. "FDI is expected to cross $1 billion by the end of the current fiscal year."
The minister said sudden flare in the international oil rates and wheat prices had caused inflation to go up but the government was trying to keep it under control.
He said the government had decided to maintain a buffer stock of wheat in the country in order to hold down its rates. He said the government was importing one million tons wheat and would resort to further import if required.
The minister said the tariff regime would be restructured in order to ensure cheaper import of raw materials for the industry and sales tax system would be improved to stop leakages.
Mr Aziz said the consistent and pro-business economic policies had created a very conducive environment in the country. "If your business is not growing at 15-20 per cent today, then you are in serious trouble.
It means that either you are in a wrong business or mismanaging it. You must sell it and sit home," he told the businessmen. He said the businessmen could not hope for a better, conducive environment and added that they should make efforts to reduce their costs and become competitive.
The minister complimented the textile industry for acquiring the competitiveness that is needed in the quota-free world. In response to a plea made by former Pakistan Hosiery Manufacturers Association (PHMA) chairman Shahzad Azam Khan, he said he was aware of the problems faced by the knitwear industry and would take appropriate measures in the next budget. The PHMA chief pointed out that 33 hosiery/ knitwear units had already been closed down due to the problems faced by this sector.
Though he did not say in so many words, but indicated that the government may cut tax rates in the next budget. "I urge you to make profits and pay the government what you owe it. If tax collection does not increase, we'll have to think of reverting back to old system," he said.
Defending the launch of Eurobonds comparatively at a higher interest rate, Mr Aziz said the bonds had been launched in order to let the international lending agencies that Pakistan could raise funds for its needs from the open market as well. He said this step would help the government obtain international credit at softer terms.
Dear visitor, the comments section is undergoing an overhaul and will return soon.