Federal Minister for Planning, Development and Reforms Prof Ahsan Iqbal has said that all institutions of the country should work hard for making Pakistan one of the top 25 economies of the world by 2025.
He was presiding over a meeting, along with State Bank of Pakistan Governor Ashraf Mahmood Wathra, of the senior management of the Planning Commission and the SBP in Karachi.
Iqbal said during the meeting, “Making Pakistan one of top 25 economies of the world by 2025 requires very concerted and coordinated efforts by stakeholders who are involved in economic management of the country,” adding, “We have not been able to realise our true potential in many areas including industry, export, agriculture and human resources due to lack of shared vision.”
He said Pakistan is now well poised to grow and it is important that all relevant institutions work as a team in order to understand future challenges and opportunities.
Extolling the role played by the SBP, the minister said that the Bank is one of Pakistan’s success stories and one of the major institutions involved in the economic management of the country.
“SBP has a wealth of experience and knowledge and Planning Commission intends to collaborate with it in order to arrive at shared understanding and knowledge for future of the country’s economy.”
Welcoming the minister, SBP Governor Ashraf Mahmood Wathra said that the Bank is always forthcoming in addressing economic challenges of the country. The governor said that the initiative for engagement of SBP and Planning Commission on various economic issues to share expertise and knowledge on different subjects is a step in the right direction. He assured the minister that the SBP will work closely with the Planning Commission for evolving a roadmap for economic progress of the country.
Later, senior officials of the SBP gave a detailed presentation on adoption of flexible inflation targeting regime, challenges and potential strategies to boost the country’s exports and initiatives taken for strengthening of the agriculture sector.
The minister was apprised that with a view to enhancing the effectiveness of monetary policy, SBP plans to introduce a flexible inflation targeting framework as its monetary policy regime. By introducing an explicit range of inflation target, it would be easier for household and businesses to understand economic conditions and form future expectations accordingly. Moreover, the strategy would allow the SBP to balance the need for price stability with economic growth.
The presentation also discussed export sector of the country which has not been given enough importance yet. Most of the FDI that has come into the country was to cater to the domestic market (like power and automobile sectors) and not exports. Most companies did not invest in research & development and technology and also ignored the significance of branding. Also, manufacturers concentrated in a few traditional products and did not diversify and move-up the value chain. Underdeveloped human capital, lack of standardisation of products due to small scale companies and almost no investment in the past to establish domestic processing facilities (like tool and die manufacturing) are the key challenges for the export sector.
The meeting was informed that expansion of agricultural finance is a key pillar of the SBP’s strategic plan for financial inclusion. Agriculture lending has grown by more than 100% in the past 5 Years (from Rs 263 billion in 2010 to Rs 598 billion in 2015-16) whereas non performing loans in agri-lending are down from 17.8% in 2011-12 to 13.5% in 2015. At present, innovations like Warehouse Receipt (WHR) Financing, Value Chain Financing and Alternate Delivery Channels are being promoted in the agriculture sector. However, there is a need of moving from mandatory targets to market based mechanism, enabling regulatory framework, building capacity of farmers and introducing innovative financing models for optimum results in the agriculture sector.
The SBP envisions growth in agricultural credit by 10% each year over the next 5 years to reach Rs 1 trillion by 2020 and an expected 500,000 new farmers are expected to be added into the formal financial network by 2020 as per its Vision 2020.
‘SPECIAL ATTENTION BEING PAID TO STRENGTHENING NATIONAL ECONOMY’:
Ahsan Iqbal, while talking to media personnel after his address to traders and industrials at the Pakistan Stock Exchange in Karachi, said that completion of China Pakistan Economic Corridor will not only change fate of Pakistan but also benefit the entire region.
The minister said that due to measures taken by the government, the economy has been steered to the right path.
Ahsan Iqbal said positive indicators are coming from all the sectors because of vibrant and effective economic policies adopted by the government.
He said special attention is being paid on infrastructure development and strengthening the national economy.
The planning minister said for the improvement of Railways Rs 115 billion has been provided to the department.
He further said that bullish trend at the Pakistan Stock Exchange has continued and it has become symbol of Pakistan.
Ahsan Iqbal expressed the hope that the energy crisis faced by the nation will be overcome by 2018.