Minister for Finance, Economic Affairs and Privatisation, Ishaq Dar. – File Photo
ISLAMABAD: Minister for Finance, Economic Affairs and Privatisation, Ishaq Dar has said that country's leadership was fully committed to deal with all three Es (Energy, Economy and Extremism) inherited to the present government.
“We inherited an economy that was in a serious state of imbalance,” the Wall Street Journal, one of the leading US newspapers, quoted Ishaq Dar as saying in an interview.
Pakistan's new finance minister, who has already moved to pull the economy from the brink and garnered vital support from the International Monetary Fund (IMF), said that the country now would launch a wide-scale privatisation programme as it seeks to meet ambitious growth targets.
Dar said that as a result of the planned overhauls, he sought to double the economy's growth rate, currently barely keeping up with the population increase, to 6 per cent in three years.
Under the previous administration of Pakistan People’s Party (PPP), investment had collapsed, the budget deficit had jumped to well over 8 per cent, public debt had ballooned, and depleted foreign-exchange reserves meant Pakistan was in danger of defaulting on $3 billion of international loan repayments due this financial year, he said.
The minister said that since then, the government quickly managed to remove the $5 billion chain of “circular” debt that was choking the crucial electricity sector, by paying off and restructuring the liabilities.
Ishaq Dar said that to protect its foreign reserves, the government also secured this month a $6.6 billion loan from the IMF, winning guarded praise from the fund for its agenda. For the past three years, he said multilateral lenders had shunned Pakistan. Publicly owned enterprises have become a major burden on the economy, losing between $4 billion and $5 billion a year, he said. “Surely we can't keep bleeding like that.”
The government's plan is to privatise around 35 public corporations in the next three years, he said. This month, the government announced the first on offer: a minority stake in Pakistan International Airlines, the troubled national carrier.
He added that increasing the tax revenue is another priority.
Dar said that only about one million people pay income tax in Pakistan, a country of 180 million.
He aimed to add 500,000 taxpayers over the government's five- year term, raising tax revenue as a proportion of gross domestic product to 15 per cent from the current 8.5pc.
“Stabilisation measures and structural reforms are always painful,” he said and added: “We have taken some very difficult decisions.”