ISLAMABAD: The development drive and the federal budget for the upcoming fiscal year will focus on generating 6pc growth in gross domestic product (GDP), said Finance Minister Ishaq Dar.
In an interview with Japanese Nikkei Asian Review, he said that Pakistan was determined to funnel more money towards infrastructure, small business and the poor people, adding that the government has found an array of international partners to make it happen.
“After (achieving) macroeconomic stability, we are focused on higher GDP growth that brings a better life to people, better per capita income, job opportunities and fills the gap in infrastructure demand,” he said while talking about the forthcoming federal budget to be announced on May 26.
During the next fiscal year, the government efforts would give growth another boost as it intends to introduce some fiscal measures and policies, the minister added. Dar pointed to a recent agreement with the US-based International Finance Corporation (IFC) to partner on creating a Pakistan Infrastructure Bank (PIB).
The PIB will provide financing for infrastructure projects by the private sector, he explained, describing the new lender as an “equal partnership by the Pakistan government and IFC for 20pc each”. Other stakeholders from around the world will account for the rest, while the bank is expected to have paid-up capital of $1b, said Dar.
Talking about the other initiatives, he said, “With partnerships with the UK’s Department for International Development and the German government-owned development bank KfW, we have created the Pakistan Microfinance Investment Company.”
This entity’s three-year business plan calls for boosting the number of “beneficiaries of microfinance from the current 4m to 10m,” he added. Meanwhile, the government, the DFID and KfW were teaming up on a Pakistan Poverty Alleviation Fund, with their respective shares to come to 49pc, 34pc and 17pc.
Islamabad has also established a Pakistan Development Fund, which will invest in public-sector projects outside the budget. The government’s initial investment comes to $1.5b.
Power infrastructure is a top priority, said the finance minister, adding that 25,000 megawatts worth of thermal, hydro and renewable projects are in the pipeline, with 10,000MW to come on stream by March 2018.
“We are already dealing with (liquefied natural gas) imports. The energy shortage will be over.”
Talking about economic expansion, Dar said the government was hoping for over 5pc growth for the current fiscal year, noting that the “World Bank is projecting 5.2pc in 2017 and 5.5pc in 2018.”
He suggested 6pc was doable by next fiscal year, and that 7pc was possible for the following year. An additional wrinkle to consider, he stressed, is that “our GDP is reportedly underestimated by 22-25pc. If (the growth rate for) fiscal 2017-18 is 6pc, it would be actually 7pc or more.” Dar said that the fiscal deficit was cut from 8.8pc to 4.6pc of GDP, adding, “This fiscal year, we expect it will be close to 4.1pc.”
