KARACHI, Feb 18: Federal Finance Minister Shaukat Aziz said on Monday that President General Pervez Musharraf is forming a cabinet committee, which would suggest modalities for eliminating irritants and red tape and with it, corruption opportunities in existing procedures and regulations, that govern interaction between the administration and the business community.

Simultaneously, the government is taking up a judicial reform programme to strengthen the rule of law, enhance transparency and accessibility of the legal system by modernizing the court system at all levels and strengthening capacity, effectiveness and accountability of law enforcement agents.

In his key note address in the concluding session of the two days international conference on direct foreign investment organized by the International Chamber of Commerce (ICC), the finance minister claimed of having restored the macro-economic stability in last more than two years.

Shaukat Aziz said that there are many countries negotiating with Pakistan for debt for education swap as well as for debt for social sector swap. “This will provide us enough resources to improve our education, health and social sector in a relatively shorter period of time,” he expressed the hope.

A bulging foreign exchange reserve of 5 billion dollars was the other achievement claimed by the finance minister who anticipates foreign exchange reserves to go up further to 6 billion dollars in the short to medium term leading to improvement in Pakistan’s credit rating.

Most importantly, he was confident of Pakistan benefiting from the reconstruction and rebuilding of Afghanistan.

But even then he frankly said: “We believe that much remains to be done to restore the momentum of growth, investor confidence, and reducing poverty.”

He then went on to identify the key areas being targeted for reforms which are restructuring public expenditure towards growth enhancing and poverty reducing outlay, improving monitoring and transparency in public finances: tax policy and tax administration, public enterprise restructuring and privatization and financial sector and foreign exchange market. “In all areas, the central challenge is to address governance problems that remains a major obstacle to higher growth and better social services,” the minister said.

He spelt out the future strategy to consolidate the macroeconomic stabilization, revive economic activity, reduce the public debt burden, while directing the expenditure efforts at poverty reduction and social development. “We are aware that the need to reduce the debt overhang must be sustained by substantial fiscal consolidation and a continuous reduction in the fiscal deficit over the medium terms,” he informed the gathering.

Shaukat Aziz said that the government prepared a medium term framework covering period 2001-2002 to 2003-2004, which has, however, received a severe setback by the September 11 events in the United States. He said tax revenues, exports, imports, industrial production, foreign investment and privatization programme have been affected by the “new and unpredictable forces” unleashed by the September 11 event.

However, in face of all these odds the Finance Minister claimed that Pakistan, as compared to many countries in the region, has done reasonably well. Foreign exchange reserves have swelled to five billion dollars and are expected to go up to 6 billion dollars by June next, exchange rate has not only remained stable but has strengthened rupee, and government’s intervention is keeping dollar value up to safeguard exporters, inflation is lowest at 2.6 per cent, flow of workers’ remittances have accelerated, stock market remained bullish reflecting improvement in economic fundamentals.

The crisis, he pointed out ,has opened up new opportunities for Pakistan as well. He referred to the grant assistance given to Pakistan by the international coalition partners to offset budgetary loss as well as support for balance of payment. He recalled 2.7 billion dollars saving spread over three years given by the Paris Club.

“Pakistan has witnessed a long and harsh winter, particularly in the 1990s,” he told the participants of the ICC conference who included many foreigners from the US, Canada and other countries. “But then through two and half years of our concerted efforts, spring is beginning to now descend on Pakistan’s economic scene,” Shaukat Aziz offered a message of hope.