PAKISTANS economic well-being is turning around from the decade of the 1990s, which its present administration refers to as a decade of lost opportunities.
Structural reforms have countered the weak macroeconomic management, lack of investor confidence, poor economic growth, stagnant exports, growing debt burden and poverty in the country.
The challenge is to restore macroeconomic stability, which would lay the foundation for achieving higher and sustainable growth.
The large fiscal and current account deficits and build-up of domestic and external debt were the major sources of macroeconomic imbalances in the country during the 1990s.
Pakistani High Commissioner to Malaysia Nasim Rana said the present administration had tackled the problem by undertaking a comprehensive set of economic stabilisation and structural reform measures to place the economy on a path of sustained growth, financial stability and improved external balances.
We are a nation of 145 million people and Pakistan has all the potential to grow into a dominant economy. The performance of key economic indicators is encouraging. Last year, we attracted US$2bil in foreign direct investments, and import and export figures are also up. This is a clear reflection of the growing economic activity in present-day Pakistan, Rana told Starbiz during an interview.
Rana said his government had pursued a two-pronged strategy to address the economic situation implement a stabilisation policy to cure the economic haemorrhage, and remove obstacles to private sector development, enhance economic incentives and improve resource allocation.
The confidence of the private sector has been restored, there has been a reverse flight of capital, real estate prices are picking up and the current account deficit has been reduced. Our foreign exchange reserves now stand at US$10.1bil, compared to US$1.2bil in 1999. Previously, 64% of our foreign exchange reserves were used for debt servicing. Over the past three years, we had brought this down to 42%. The inflation rate has been brought down to 5.6% from 11% to 12% during the 90s. Our target now is to reduce the rate to 4.4%, he said.
Rana said now that Pakistan had stabilised, the government had mapped a five-year plan to consolidate the countrys economic fundamentals.
These included raising per capita income by 42%, increasing real GDP growth to 6%, pegging the inflation rate at below 5%, raising the investment rate to 18% of the GDP, increasing the savings rate to 16.5% of GDP, reducing the fiscal deficit to below 3% of GDP, and maintaining the current account deficit in the range of 1% to 2.5% of the GDP.
Most importantly, we must continue to remain fiscally responsible. We also have a plan to reduce the number of people living below the poverty line by half over a 10-year period, he said.
Pakistans exports for the 2002-2003 fiscal term have been estimated at US$10.3bil,compared to US$7.8mil over 1998-1999. Imports are estimated at US$11.1bil now, against US$9.4bil during the earlier period.
Rana spoke of the importance his government placed on developing political and economic ties with Malaysia.
Malaysia is a model of economic development for Pakistan. Our people have a lot of goodwill for each other. We should continue to build on our strengths for mutual benefit, he stressed.
Rana said bilateral trade was picking up but Pakistan wanted to address Malaysias dominance of the trade balance.
The statistics showed that during the 2001-2002 period, Pakistan imported goods worth US$456mil from Malaysia, with its exports here valued at US$51mil.
There is a realisation on both sides that the imbalance needs to be addressed. The trade ratio need not be on a 50:50 basis, but it should not also be a situation of one-way traffic, he pointed out.
Rana said Pakistan could supply more leather goods, textiles, surgical products, fruits and vegetables to Malaysia.
Some of your packaging plants can also be relocated to Pakistan, which offers cheap labour. We are now an investment friendly country and almost 100% of your earnings can be brought back, he said.
He said Pakistans defence industry was gaining a fair share of the international market.
We are now able to compete internationally. We produce all kinds of weaponry, from bullets to tanks. Our defence products are sold to Europe, the Middle East and Germany, with certain components also exported to the US. We have also sold weapons systems to Malaysia. This defence industry is one area which could help address the trade imbalance problem. Our economy may not yet be very strong, but our defence industry certainly is, he quipped.
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