PAKISTAN has asked the developed economies to adopt accommodative monetary policies to revive global economic growth.
Representing the country at the 48th annual meeting of the Asian Development Bank’s board of directors, Finance Minister Ishaq Dar pledged on Monday that Pakistan would continue fighting terrorism without any discrimination.
He said the global economic outlook appeared positive with a decline in oil prices and market growth, but accommodative monetary policies were required from the developed economies to support this upturn.
“Accommodative monetary policy (in advanced economies) remains essential to support economic activity and lift inflation expectations. There is also a strong case for increasing infrastructure investment in some economies and for implementing structural reforms to boost potential output,” he said.
Also, he added, structural reforms were needed at the international level to put the global economy on a sound footing while the oil prices were low. He said the ADB’s forecast for growth in developing Asia at 6.3 per cent in 2015 and 2016 was encouraging, which must augment soft recovery at the global level.
Developed countries asked to revive global economic growth
Mr Dar welcomed merger of ADB’s Asian Development Fund and Ordinary Capital Resources and termed it an innovative initiative, but warned that it should not compromise the ADB’s principal policy objective of promoting sustained development and economic growth to support social sectors like health and education and reduce poverty.
He said the Pakistan government had taken painful but necessary reforms to restore economic stability that was very fragile when it took over after May 2013 elections. The policy focus on four Es – education, energy, combating extremism and enhancing health and education indicators – was now completely aligned with the country assistance strategy of the ADB.
He said Pakistan always supported regional cooperation and mentioned progress on CASA-1000 (Central Asia South Asia electricity trade) and the China-Pakistan Economic Corridor as a manifestation of this objective.
The finance minister said it was the resolve of the government in Pakistan to continue fight against terrorism with all resources and adopt economic policies for inclusive growth. “The government has an inflexible resolve towards elimination of terrorism…action is being taken against terrorists without any distinction or discrimination”
He said when the present government took over the economic growth rate was less than 3.8pc, inflation averaged 12pc and reserves were below $8 billion, including the State Bank’s stock at $3bn, in February 2014 and circular debt stood at Rs580bn and debt-to-GDP ratio was above 63pc.
Mr Dar reported successful completion of six quarterly reviews by the International Monetary Fund of an economic reform agenda finalised in consultations with different multilateral partners.
As a result, he said, the fiscal deficit had come down from 8.8pc of GDP to around 6pc last year and targeted to be kept below 5pc during the current financial year. An economic growth rate of 4.14pc had been achieved at the end of the last financial year, highest in six years, while revenue collection went up by 16.7pc last year and 13pc in the first nine months of the current year.
The minister said inflation had also come down to less than 6.5pc and further to below 5pc in the first 10 months of the current financial year. Remittances grew by 15pc and foreign exchange reserves had now gone beyond $17.67bn.
He said the country’s stock exchange had grown by 69pc as the economy turned stable and taken a direction as immediate risks to economy had evaporated. He said the operation against extremism was progressing successfully.
“With sincere efforts, structural reforms, stabilisation measures and various policy initiatives, the economy has been put on the right track.”
He said these efforts and improvements had received recognition from the international agencies. Moody’s improved Pakistan’s rating outlook last year from negative to stable and, more recently, from stable to positive.
Moreover Japan’s trade organisation, Jetro, the British economist Peter O’Neil and Morgan Stanley have all predicted that Pakistan will soon be one of the most significant economies of global emerging markets.
Published in Dawn, May 5th, 2015