Finance Minister Ishaq Dar has said the government was determined to spend more money on infrastructure, small businesses and the poor, and the government has found an array of international partners to make it happen.
Ishaq Dar said this while giving an interview to The Nikkei about the development drive and the federal budget for the coming fiscal year in June 2018, which he said would focus on generating 6pc gross domestic product growth.
Dar is arguably the most influential member of Prime Minister Nawaz Sharif’s cabinet, the publication says adding that talking about the forthcoming federal budget, to be announced on May 26, Dar said, “After achieving macroeconomic stability, we have fully 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, “Our efforts will give growth another boost. Some fiscal measures and policies will be introduced.” He pointed to a recent agreement with the US-based International Finance Corporation to partner on creating a Pakistan Infrastructure Bank (PIB). The bank is expected to have paid-up capital of $1 billion.
The PIB will provide financing for infrastructure projects by the private sector, he explained, describing the new lender as an “equal partner with the Pakistan government and IFC for 20 per cent each.” Other stakeholders from around the world will account for the rest, 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,” Dar said. This entity’s three-year business plan calls for boosting the number of “beneficiaries of microfinance from the current 4 million to 10 million,” he added.
Meanwhile, the government, the DFID and KfW are teaming up on a Pakistan Poverty Alleviation Fund, with their respective shares to come to 49 per cent, 34 per cent and 17 per cent.
The minister said the government has also established a Pakistan Development Fund, which will invest in public-sector projects outside the budget. The government’s initial investment comes to $1.5 billion.
Power infrastructure is a top priority. Dar said 25,000 megawatts worth of thermal, hydro and renewable projects are in the pipeline, with 10,000MW to be added in main stream by March 2018. “We are already dealing with [liquefied natural gas] imports,” he said. “The energy shortage will be over.”
Dar chalked up the deficit to two major expenditure categories. One is infrastructure development. “We see a jump from Rs 600 billion ($5.72 billion) in fiscal 2012-13 to Rs 1,600 billion in fiscal 2016-17.” He also said social security — cash transfers for the poorest of the poor — has increased from Rs 40 billion to Rs 117 billion in the same period.
“The fiscal deficit is less than the development expenditure,” Dar said. “It means Pakistan is no longer borrowing for revenue expenditure but only for capital investment. It is a very healthy sign.”
As part of its efforts to build a more efficient economy, Pakistan has sought to privatize the banking and oil sectors through the stock exchange. But when it comes to Pakistan International Airlines and Pakistan Steel Mills, the process has stalled. “Unfortunately, it was politicized,” Dar said.
Dar acknowledged that some Chinese steel producers have shown interest in leasing PSM’s defunct facilities. “They are very keen, but it is too premature to make the details public,” the minister said. “I have to talk to my team and discuss the matter in the cabinet committee on privatization, chaired by myself.”
