Economy to post 4 percent growth: Hafeez

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Pakistan's economy is expected to post a healthy growth of four percent during the current year after the democratic government in Islamabad took a series of steps to put the economic house in order, despite high oil prices and uncertain global economic outlook, Finance Minister Dr Abdul Hafeez Shaikh said Wednesday.

Dr Shaikh, who is heading a team of top Pakistani economic managers to the annual spring IMF-World Bank meetings, said "although the 4 percent growth rate is below Pakistan's potential, it is the best" in recent years.

The minister was speaking at Washington's Brookings Institution. Pakistan's ambassador to the United States Sherry Rehman also attended the event, conducted by American expert on South Asian Teresita Schaffer and senior security analyst Bruce Riedel.

Shaikh listed a host of positive indicators Islamabad has been able to achieve despite inheriting a bleak economic situation and in the face of 2010 epic floods, law and order and security challenges in the region, global economic contraction and rocketing oil prices.

These include a check on inflation, unprecedented revenue generation, historically highest level of $18 billion foreign exchange reserves, a 29 percent increase in exports last year, continued upward trend in exports this year, a cap on government borrowing and success of the austerity drive.

A consistent expansion in the volume of remittances sent by overseas Pakistanis (more than one billion every month) has also eased the economic situation.

Dr Shaikh said payment of foreign loans including those of the international financial institutions, which have accumulated over the years, is a pressuring factor.

Yet, the country has been paying off the debt it owes and this year it is paying $1.4 billion to the International Monetary Fund, a big part of which has already been paid.

The finance minister also apprised the think tank gathering that Pakistani government, which is following inclusive politics in a coalition arrangement, has devolved financial powers to provinces and expanded the share of provinces under the finance commission award from 47 percent to 70 percent so they can pay due attention to progress in long-neglected socio-economic sectors.

The Benazir Income Support Program has also been successful in giving small loans to the poor and is benefiting millions of families.

On the economic dimension of the US-Pakistan relations, Dr Shaikh referred to the importance of greater trade access for Pakistani products and inflow of American investment into his South Asian country and efforts towards conclusion of a bilateral investment treaty.

"What we are looking from the United States is exactly the same what we are looking from other economic partners - that we have as few barriers to trade as possible, flow of capital involving investments and joint ventures, that businesses from here come and benefit from opportunities in Pakistan," he said.

He also noted that the US has been providing assistance to Pakistan in various development areas. "I want to ensure that those monies are well-spent (so that) they have an impact on lives of people."

Courtesy: Business Recorder

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