KARACHI, Dec 8: Hopes of striking a deal on Bilateral Investment Treaty (BIT) between Pakistan and the US will get a boost when officials of two nations hold an interactive session next week through a video link, to energise a process that was dormant for the last four years.US Ambassador Cameron Munter shared his vision of Pakistan's economy focussing both on challenges and opportunities in a meeting here with a group of journalists.
He expressed cautious optimism about Pakistan that enjoys long-term commitment from friendly nations in its efforts to put the economy back on growth trajectory and achieve security targets.
The US official defended foreign pressure on Pakistan to enforce tax reforms but clarified that passage of RGST bill in parliament was not a pre-condition for warm bilateral relationship between the two nations.
Munter was not hopeful for a greater access in the US market for Pakistani products in the near future, but expected progress on the BIT and Reconstruction Opportunity Zones (ROZs) soon.
“Yes, we expect the government to go ahead with the tax reforms that we consider crucial for bolstering Pakistan's economy. Besides, it would strengthen the position of Pakistan's supporters in US Congress that has the authority to pass or block more active economic support, such as greater market access, to Pakistan,” Mr Munter said the other day.
He hinted at trust deficit in the Western capitals regarding the willingness of the government to carry out reforms to become lean and clean.
Mr Munter admitted that stoking tax reforms and tight monetary policy compromise growth prospects. He, however, said that public spending beyond means was also not sustainable as deficit financing was a key reason of ballooning inflation.
“If you don't improve revenue generation, the government will be forced to turn to the State Bank for financing, which will further distort the base indicators and shroud the growth prospects. It is a difficult decision, but a choice has to be made.”
“When Pakistanis pay their taxes judiciously, it would help the US authorities to fight Pakistan's case in Congress for committing US taxpayers' money for its key ally in the war against terrorism,” he insisted. “If RGST bill is shot down by parliament, it will be a blow to confidence of lenders as the system of assistance is coupled with reforms.”
He considered corruption, fiscal indiscipline, narrow tax base and deficiencies in key sectors such as energy to be his main concerns when he assesses Pakistan's future prospects economically.
“The United States is engaged with the government on all levels to improve the business climate in Pakistan by reducing corruption and improving transparency,” he added.
He said security, terrorism and crimes also remained big worries for foreign investors. “Pakistan put in a great effort to fight terrorism,” he said, mentioning the successes in Swat and South Waziristan.
He said the United States remained committed to building a long-term partnership with Pakistan. “We are not going to repeat the 1989 mistake of walking away from the region after the withdrawal of Soviet troops. We paid for that mistake along with others,” he said. “Our approach is not based on helping Pakistan militarily but to support its efforts to grow economically. We are committed to democracy and stability in Pakistan.”