Finance Minister Miftah Ismail while addressing a ceremony at the Pakistan Stock Exchange (PSX) said the government will control the imports for the next three months, even if it came at the cost of slower growth.
“I will not allow imports to increase for three months and, in the meantime, we will come up with a policy. I understand that growth will be reduced for a bit but I have no other choice.”
The finance minister noted that the government’s import restrictions would affect the automobile sector and electronic appliances industries. He said he did not want to create unemployment but his first priority was the reduction of imports. Keep in mind the import of CKD kits is being restricted due to which most assemblers have stopped taking new bookings and are observing non-production days due to shortage of kits in hand.
Commenting on the exchange rate, Miftah Ismail noted that dollar outflows had been surpassing inflows, which is why the rupee had fallen sharply against the greenback over the last month. The minister pointed out that the country’s import bill in June was $7.7bn and if the current account deficit widened to such an extent, it would create pressure on the rupee. He also highlighted that Pakistan’s import bill for the previous fiscal year stood at $80 billion while its exports amounted to just $31 billion. He said:
“No country can grow and be stable with this kind of current account deficit.”
The minister said that while he believed in the model of export expansion and not import substitution, the government needed to control the budget deficit for which immediate & harsh steps needed to be taken. He added that while the economic situation of Bangladesh, Vietnam and Pakistan was similar in the 90s, their exports were now around $100 billion and Pakistan had to “ask for money at every place”. He went on to add:
“It’s no fun. I think it’s time that we act like a mature, dignified nation. The new tax-to-GDP ratio is 9.2 per cent. You cannot run a country on this. You need more money.”
The government had prioritized two sectors — agriculture and export — and while incentives had already been offered for the former, a good incentive-based policy would be introduced for exporters soon, Ismail said.
“We do not want growth without exports. Growth is only favorable when it is export-oriented.”
Full Story: Dawn
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