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FINANCE Minister Asad Umar says the government believes in the autonomy of the State Bank of Pakistan.
FINANCE Minister Asad Umar says the government believes in the autonomy of the State Bank of Pakistan.

ISLAMABAD: Minister for Finance Asad Umar on Tuesday said there was no financial crisis in the country as all economic indicators were improving and the financial gap for the current financial year (2018-19) had also been closed.

Speaking at the inaugural session of the 11th South Asia Economic Summit organised by the Sustainable Development Policy Institute (SDPI), he said that the current account deficit had decreased during the last three months from $2 billion per month to $1bn and the economic situation was far better now as compared to what it had been four to five months ago. Exports had started to increase and imports were decreasing, he explained.

“There is no need to create misconceptions about the economy, as this will hamper international investments and do no service to the country,” he added.

Finance minister says there is no need to create misconceptions about economy, as this will hamper international investments

Talking about the recent hike in the dollar rate and rupee devaluation, Mr Umar said that the neutrality of the State Bank of Pakistan (SBP) was intact: “We believe in the autonomy of the institution,” he emphasised, “and there is no change in government policy. The recent decision on the exchange rate was taken by the central bank. However, there is need to improve the communication mechanism, which is why the SBP governor has been taken on board. If needed, we will further institutionalise the structure and role of the SBP.”

The finance minister talked about the role of regional connectivity in poverty reduction, and said that intra-regional trade, especially trade between India and Pakistan, was one of the major growth drivers. Stressing the need to create political space for regional cooperation, he added that “it is our inability that we failed to pull the people of the region out of poverty.”

Dr Shamshad Akhtar, former caretaker finance minister, also spoke at the event and said that regional connectivity was gaining momentum today, where the One Belt, One Road (OBOR) initiative led by China could steer the effort for regional cooperation. She expressed the belief that OBOR had the potential to generate momentum to enhance regional partnership, which was currently in a state of deadlock between India and Pakistan in particular.

“The economy needs to progress on a set of new elements of requisite reforms, that include streamlining the tax system, improving the banking system, easing procedures to do business, improving competitiveness and promoting trade facilitation through trade regulation,” she noted.

Stressing that Pakistan and China could play an active role in regional cooperation and improved connectivity, she added that there exists the need to work on how development can contribute to peace efforts in the region. With reference to Pakistan-India relations, she asked India to follow the idea of ‘Naya Pakistan’ and go for ‘Naya Hindustan’.

Dr Ratnakar Adhikari, executive director of the Enhanced Integrated Framework secretariat of the World Trade Organisation, Switzerland, said that it is important for South Asian countries to invest in research and development to capitalise upon the potential of the fourth industrial revolution. According to him, one of the major challenges faced by the region is the lack of skilled labour that can adapt to technology. For this, he said, there is need to build an enabling environment and improve regulatory systems to build trust.

Dr Nagesh Kumar, head of the United Nations’ Economic and Social Commission for Asia and the Pacific’s south and south-west office, New Delhi, noted that today South Asia is the fastest growing region in the world. However, he explained, we need to focus on development gaps such as poverty, gender inequality, the poor state of health, and education etc.

In turn, Dr Abid Qaiyum Suleri, executive director of the SDPI, bolstered the gist of the discussion by saying that South Asian countries should set political differences aside for the sake of shared objectives. He expressed hope for improved regional cooperation, and referred to the opening of the Kartarpur corridor as a welcome step for peaceful co-existence. In this age of digitalisation and the internet, he added, despite their differences the people of both Pakistan and India are still connected.

Published in Dawn, December 5th, 2018

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