LAHORE, Jan 19: Pakistan is heading for higher growth rate because of the macro-economic stability brought about by the wide range of economic and structural reforms introduced over the past few years.

"Pakistan may manage to attain six per cent growth rate at the end of the year (on June 30) against the target of 5.3 per cent," IMF official Dr Henri Ghesquiere said on Monday. He was speaking at a seminar on Growth Performance and Prospects: Pakistan and the Region, organized by LUMS.

Dr Ghesquiere was confident that Pakistan's economy is showing improvements in various economic areas as a result of the reforms that have been performing quite well.

He said the performance of the country over the years had considerably revived confidence of investors. The stability of the local currency and improvement in the foreign exchange reserves had played an important role in it.

Dr Ghesquiere said that continuity of reforms and policies augured well for the economic future of the country. He claimed that Pakistan's growth rate belied the criticism that macro-economic stability had been achieved at the expense of economic growth.

He was confident that the country would successfully manage to alleviate poverty and generate jobs if it continue on the path of reforms to attain higher growth.

Besides, public debt ratio to Gross Domestic Product (GDP) has significantly improved and the country is well on its way to have this ratio cut down to 85 per cent by the end of this fiscal year from 110 per cent three years or so ago.

The government has set a target of slashing this ratio further to 60 per cent under Fiscal Responsibility Law. The IMF official was satisfied to note that "legislation by the government had helped to improve the performance of public sector enterprizes.

"The banking and financial institutions were showing signs of improvement." He also spoke on the tax reforms. Dr Ghesquiere said the success of the government's investments in the social sector, including education and health, depended on proper execution of policies by the state institutions.

He said the fund respected the government's decision of "ending the three-year IMF programmes after it expires in November. "The Fund would however extend technical assistance to Pakistan," he said.

World Bank's vice-president Jemaluddin Kassum spoke on China's phenomenal economic success. He was of the view that the "nations which have integrated themselves with regional and global economy through trade and investment have traditionally grown faster over a period and managed to control poverty reduction better than the other.

"Regional integration and cooperation was gaining full momentum throughout Asia with China as a major driver. The broader this agreement gets in terms of countries as well as sectors in the removal of intraregional barriers, the greater the gains."

Mr Kassum maintained Pakistan had benefited from the expanding Chinese market as its exports to mainland China had grown several times. "Implementation of the Preferential Tariff Agreement (PTA) will help improve Pakistan's balance of payment (BoP) position as it currently favours China. The agreement offers opportunities to Pakistan to gain access to the Chinese market through the reduced tariffs on garments, agricultural produce and other goods.

"The trade between China and India had increased seven times since the signing of a similar pact between them five years ago." The World Bank vice-president was encouraged by the establishment of free trade area in South Asia, saying Pakistan must "continue its trade liberalization policies and take advantage of the increased opportunities this agreement will bring".

Former finance minister Sartaj Aziz maintained that the rate of investment in Pakistan was very low, only 14 per cent of GDP. He said it needed to be raised to around 17 per cent in order to sustain six to seven per cent GDP growth required for poverty reduction and job generation.

"Until this happens, higher GDP growth would remain an elusive goal." He said investors were being discouraged by non-economic snags - like terrorism and a volatile Afghanistan. He also called upon the government for improving investment climate in the country to prepare the economy for competition in a highly globalized world economy.

Mr Aziz said the businessmen would also have to 'change' their existing mindset and their approach of doing business. He said it would not be difficult for the Pakistani industry to compete with India if it could live with competition from China.

Others who spoke on the occasion included former ambassador Jamshaid Marker, economist Dr Akmal Hussain, former secretary-general of finance Moeen Afzal and World Bank official Dr Ijaz Nabi.