WASHINGTON, Oct 23: Economic advisers to the country’s two main political parties – the PPP and the PML (N) – have told an international financial organisation that if elected, they will continue the economic reforms introduced by the current government, says a senior economic adviser from Islamabad.
Dr Ashfaq Hasan Khan, special secretary to the Ministry of Finance, told a gathering of American financial experts at the Johns Hopkins University that PPP’s Naved Qamar and PML (N)’s Ahsan Iqbal were not the first Pakistani politicians to do so.
“Despite political differences,” he said, “there’s an agreement in Pakistan on the general direction of the economy.”
Merril-Lynch, an international financial firm which provides advisory, banking, investment and wealth management services on a global basis, recently interviewed the two politicians to see how their policies would differ from those of the current government if they were elected to power.
In a separate presentation, Dr Salman Shah, economic adviser to the prime minister, also hoped that whoever is elected in the general elections later this year, “will continue to build on the solid base provided by this government.”
He said that “second-generation reforms” in Pakistan will focus on a bank privatization programme that helped power five years of seven per cent growth and doubled Pakistan’s GDP during the last seven years.
Pakistan, he said, is the sixth largest country with a population of 160 million of which, 100 million is less than 25 years old and the country is determined to convert its “demographic transition into demographic dividend.”
Dr Khan, however, said that to use this young work force for reaping economic dividends, Pakistan will have to provide jobs to them.
“There will be many ‘madressah Hafsas’ in Pakistan if we fail to provide jobs to this young population of more than a hundred million,” he warned.
Dr Shah said that the second reforms would lead to “leaner government and a much more active and aggressive private sector” in the country.
He said his government intended to move forward with privatization of the power and energy sectors as well as railways and airlines. Islamabad also planned tax reforms to broaden the tax base and steps to enlist the private sector in infrastructure development.
Both Dr Shah and Dr Khan pointed out that political change and the violence affecting certain parts of the country have had no negative impact on the economy.
“In spite of all the politics, the economy keeps doing well because the reforms have made sure that the economy is now more driven by the private sector than by the politicians,” Dr Shah said.
In his speech to the governors of the World Bank and the IMG, Dr Shah urged international financial organisations to undertake internal reforms to help growing economies.
“To meet the major challenges of our times, our international institutions have also to reform, improve their internal governance, adjust their business model and strategies to remain relevant and deliver effective results,” he said.
The World Bank Group, he said, must retain flexibility, promote use of country ownership and country system, scale up access to banks and financial and knowledge resources and reduce non-financial costs of doing business with the bank.
Dr Shah appealed to foreign investors and governments to maintain interest in Pakistan as it fights domestic insurgents and the Afghan Taliban and Al Qaeda operatives.
“In the war on extremism, it’s very important that we succeed in Pakistan and that’s for the entire world,” he said. “On our own, we are not going to be able to sustain it.”
The government’s top economic manager also listed challenges confronting Pakistan, which include managing domestic demand and expansion of domestic markets; improving competitiveness for exports growth; increasing savings and investment to support growth momentum, and creating job opportunities for the young generation.
“The challenges are enormous but we have a clear road map to meet these,” he said while speaking on “Pakistan’s Economic Outlook and Investment Opportunities.”
Dr Shah said Pakistan had doubled the size of its economy to $160 billion, maintained a consistent growth and attracted record inflows of foreign investment, more than $8 billion last year. The country has seen a rapid rise in overseas remittances, building up foreign reserve to $16.5 level.
