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'Hope is very much in the air': Asad Umar on Pakistan's economy

Updated December 13, 2018

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Finance Minister Asad Umar said both the monetary and fiscal policies were moving in the direction of reforms that are required by the IMF. —BBC News screengrab
Finance Minister Asad Umar said both the monetary and fiscal policies were moving in the direction of reforms that are required by the IMF. —BBC News screengrab

Finance Minister Asad Umar on Wednesday asserted that surveys held following the completion of PTI government's first 100 days in power showed that "a very clear majority of Pakistanis think the country is moving in the right direction and heading towards a better place than where it was before".

"Hope is very much in the air," the finance minister mentioned while being interviewed by Stephen Sackur on BBC News programme Hard Talk.

When asked how well the government was doing to keep up with the promises made by Imran Khan before coming into power, especially given the fact that the prime minister had previously remarked that he would be "ashamed to go abroad and ask for money", Umar responded by saying:

"When the government came into power, it was a well-known fact that Pakistan needed some kind of a bailout...the real challenge, the real decision is — and that's how we will be judged in the future — did we take the decisions of setting the country's economy on a path where this is going to be what I have repeatedly said, the last IMF programme if we get into one right now."

Umar said after he took charge as the finance minister, the government reached out to friendly countries for bilateral financial assistance as well as started a dialogue with the IMF simultaneously because it had no time to first work out a strategy and then start negotiations.

The finance minister said, the government did not wait for the IMF to impose any conditions on Pakistan to do what it was required to do.

"In the very first 100 days we increased electricity prices, gas prices, we put in place a supplementary finance budget, we increased taxes, the policy rate has been increased by the central bank, the currency rate has been adjusted by the central bank," he explained.

He said both the monetary and fiscal policies were moving in the direction of reforms that are required by the IMF.

"We don't need IMF's dictation for us to do that because we believe this is what's necessary. However, the path for reforms is different in the eyes of IMF, as we stand today, versus what we think is right."

The finance minister said that this was what the ongoing dialogue with IMF was debating over. "There is no difference of opinion with the IMF in terms of what needs to be done. It is the pace, the sequence, and the extent which is being discussed," he added.

To a question regarding Pakistan standing with Saudi Arabia and in return acquiring monetary assistance, while the world was shocked and disgusted over the news of journalist Jamal Khashoggi's murder, the finance minister said:

"I would be happy to be ashamed of standing up with a country with whom we have had close bilateral ties...maybe the western leaders should be ashamed of themselves talking about democracy, talking about freedoms, and still reaching out in the same Saudi pockets to take billions of dollars of business deals. The leader of the Western world Donald Trump stands up and openly says 'I am getting too much business from Saudi Arabia for me to worry about what happened to Khashoggi.'"

He clarified Pakistan was just being consistent in the bilateral relationship with Saudi Arabia which has remained the same regardless of who remains in power. Pakistan's relationship with Saudi Arabia goes back half-a-century and it had got nothing to do with Yemen or Khashoggi, he added.

With respect to the investment in Balochistan under China Pakistan Economic Corridor (CPEC), the minister said the Balochistan government was eager to enhance investment in the province under the CPEC project.

He said Pakistan's debts payable to China were less than 10 per cent of its total debts while the US was the largest debtor of China with over $1.3 trillion debt owed to it.

To another question, Umar said people of Balochistan were patriotic Pakistanis but there were some sponsored activities by terrorists who were trained and funded from outside Pakistan.

"There are concerted efforts led by India to damage the CPEC. People of Balochistan have elected a government that fully stands by CPEC and have also shown loyalty with Pakistan," the finance minister said.

To a question regarding tax reforms, he said the government has taken several new initiatives aimed at enhancing the tax base and revenue to facilitate the socio-economic development of the country.

The revenue generation aspect is absolutely central to be able to deal with the horrendous challenges that we have, the finance minister said.

"The health and education situation needs drastic reforms and for that you need revenue, and for that, you need an efficient revenue authority," Umar said, adding: "We have separated tax policy from tax administration."

The finance minister said that almost the entire top leadership of the revenue authority has been changed.

He also said that modern technology is being utilised to chase those who were evading taxes and 3,100 of them have already been served notices, whereas a list of over 700,000 top tax evaders has been prepared.