LAHORE, April 30: Adviser to Prime Minister on Finance, Revenue, Economic Affairs and Statistics Dr Salman Shah has said that governance reforms were being introduced for strengthening the economy and removing social inequality.

Speaking at a pre-budget seminar on “Common Man and Economic Development”, here on Sunday, he said that a ‘debt limitation act’ would be promulgated under the governance reforms for preventing arbitrary borrowing by the government. Procurement of foreign loans would be possible only after the approval of the parliament after the promulgation of the act. The government also planned to reduce the tax rates and extend zero-duty regime to more sectors in the next budget.

He said that an independent statistical authority had been proposed to be established from the next financial year for ensuring availability of reliable statistics and restoring credibility of facts and figures given by the government under the reforms programme aimed at facilitating investment promotion. The proposal had been approved by the prime minister. It was being monitored by former State Bank governor Dr Ishrat Hussain.

He said that monopoly control authority was being replaced by another authority which would promote healthy competition and investment. Arbitration reforms would be made for commercial dispute resolution and civil service reforms for improving the quality of governance. As many as 500 civil servants would also be trained under a master’s programme at major universities.

He said that government claims in respect of a turnaround in economy were supported by the World Bank Survey on Doing Business 2006 which had placed Pakistan among the top 10 countries of the world. He said that 5.5 million new jobs had been created in the country during the past two years and poverty had reduced from 32 per cent to 25 pc.

He said that sustainability of government reforms had been proved by subscription of $2.5 billion for 30-year bonds worth $500 million floated by the government in international market in March by nearly 250 major investment houses of US, Europe, Middle East and Far East. Five-year Sakuk Bonds and Euro Bonds were floated earlier. No country was ready to extend even one-month credit to the government five years ago. Tax collection had also doubled.

He said that Pakistan and Vietnam had been placed in the list of emerging markets after India and China on account of their economic potential. He said that the government had reduced the fiscal deficit from over 7 per cent to between 3 and 3.5 per cent. Indian fiscal deficit was in double digits.

Public debt to GDP ratio which was over 100 per cent in 1990 had been reduced to 56 per cent now. It would continue to be reduced by 2.5 per cent every year in future as well.

He said that economy had been dominated by public sector during the past 30 years. The government was now handing over economic management to the private sector for better resource management. Over Rs 100 billion had been given as subsidy for running the KESC which were more than development budget of Sind. Its privatisation would save the government from paying subsidy and checking 40 per cent power theft.

He said that the credit of banking sector had increased from Rs 30 to 40 billion to Rs 450 billion during the past six years as a result of privatisation.

Federal Minister for Commerce Humayun Akhtar Khan said that he supported the promulgation of a law on Conflict of Interest to prevent the rulers from promoting their business interests. He said that all prominent politicians who criticised the government, (including Fakhar Imam and Shafqat Mahmud who also attended the seminar) had served under the military rulers in the past.

He said that safety nets were required for the vulnerable in view of increase in cost of living due to economic development. Skilled workers were not available for IT, construction and textile sectors due to rapid expansion.

He said that government would provide relief to the people in the next budget. Cement price had already reduced from Rs 400 per bag to Rs 320 per bag and would go down further. He said that 700 multinational companies were running business in the country and all were earning profits.

He said that prices of real estate and stocks had increased due to investment boom. Most of the investments were made by the Pakistanis themselves because of trust in economic reforms of the government. Oil prices could be reduced by finding other venues for surcharge on it.

He said that the civilian governments had continued to increase the defence budget but the present regime had frozen it. He said that cost of doing business required to be reduced to make the industry compatible. He said that the saving rate required to be raised.

Former Provincial Minister Shafqat Mahmood said that a rosy picture of the economy had been painted by government representatives through statistical jugglery. There was no reduction in absolute poverty despite government claims of economic turnaround.

He said that World Bank had placed Pakistan among five countries of the world with biggest gap between the rich and the poor. Every government allocated maximum budget for defence and welfare of aristocracy and neglected the poor completely. The problems of the people would not be solved as long as the army continued ruling the country.

Former Planning Commission Deputy Chairman Ahsan Iqbal said that political stability and national solidarity were the major problems being faced by the country. Economic conditions in the country improved whenever it started serving the world powers and deteriorated when the patronage was withdrawn. No country could make economic progress by increasing social inequality.

He said that there was an economic boom in the country because the government was being patronised after 9/11. Growth rate was, however, meaningless without political stability. He said that rich had become richer and poor poorer during the tenure of every military ruler. The price of essential commodities had increased two to three times and most of investment was made in speculative economy.

Lahore Chamber of Commerce and Industry President Mian Shafqat Ali said that common man was benefiting from economic development. Inflation and unemployment continued to create problems. He said that 18 per cent industry was paying 60 per cent taxes and agriculture sector was not paying taxes despite a much larger size. Fuel and energy prices required to be reduced to control the increasing cost of production.

Former agriculture advisor Sultan Ali Chaudhry said that 90 per cent farmers were poor. Crop yield was low because the government paid no attention to development of agriculture. Poverty reduction was not possible without improving the lot of farmers.