The opinion is that the way the economy has operated is that people need to be given an opportunity to come into the tax net. On the messaging about the work that is being done on the economy; I want to tell you what the reality is and then you can decide as to how the communication is to be done. There are two things that are affecting the public right now; one is inflation, and the other is economic growth. These are definitely the biggest issues. But in the other side is a loud mafia who are seeing their money making mechanisms shut down. Pakistanis have two world records currently; one is social media trolling, the way social media trolled India is incomparable! And the second is the number of IMF loans we have taken; we have been in this situation repeatedly from 2008, 2013.
But the difference is, in the words of the IMF in this very room, when I was telling them that I don’t want to burden our own awaam... the imf reps themselves said to me that the burden of debt you have inherited is unprecedented. The long speeches that they do today, look at the situation they left Pakistan in. Our basic debts are so big that we are near bankruptcy. You are going go the IMF with these massive debts in toe for a bailout. We have had to fill big gaps; the last three months of PMLn we were bleeding 2 billion dollars a month. Immediate measures we had to take were to squeeze imports to in the long run increase our exports. Think of it as entering an operation theatre where a surgeon is standing to save a persons life post heart attack; will you say he’s cutting him open or he’s saving his life? You have to treat the condition to cure it. We have taken on a vested interest which no one thought we would ever take on. If you are not ready to take on these tough decisions then forget reforms.
Let’s talk about what we will do going ahead. I went in September to the PSE and this was the same question set to me; that when do u see growth. I told them that we will go through a 2 year stabilisation process. The first 6 months I said would be an extreme crunch and crisis. I met one of Pakistan’s top economists recently who I respect highly and he said to me that Asad you were right. We have now come forward from the survival stage and now we are loosing up our fists. You will see around June/July people noticing an upward trend. Job creation depends on what we prioritise. We are prioritising it and you will see the results from this summer onwards. The sectors we are focusing on are the ones with biggest job creation potential; tourism, SME, IT. Our focus is on sustainable growth. If after 5 years we are successful in raising the quality of life for the poor, and if we don’t have to go for another bailout in 5 years, it will be a massive success.
There should be a refinance market for mortgages also which we are working on, and foreclosure laws are also really important. These are technical things but we have to work on them. On the supply side, to incentivise banks to give money for low cost housing and for SME’s we are going towards lower interest rates on these loans. As far as petrol pricing is concerned, OGRA calculates pricing on imported fuel and implements the previous months pricing in the international market. OGRA wanted to raise the price by 11 rupees; we held it back at 6 rupees. The cost in rise of medicines is firstly because the cost of resources like gas etc and transport has gone up. Again in retrospect the pricing was kept so low that companies were going bankrupt and leaving Pakistan. But such a spike is also unacceptable and we will be discussing this on our next meeting agenda. Oil; when the drilling reaches at about 5000 metres we will know. What we do know is the potential find is big. It is a high risk project, but companies like Exxon only invest if the potential find is big. Pakistan has to compete for a global narrative; social media publications are warriors for the country. Till we do not fix the global narrative we will never achieve the goals we want. India lobbied everywhere to create trouble for Pakistan from FATF to the ICC and the reason for this is perception. This is a great opportunity for Pakistan to reset the narrative where Pakistan has been painted as a militant backward country. Today is the chance to reset the narrative as to where Pakistan stands and where India is today.
If you look at the numbers from PMLn time, there was double digit inflation during PMLn time which we have thankfully not hit as yet. If you look at the past, inflation affected all stratas of society equally. In fact the poor had higher levels of inflation affecting them. In our tenure this has seen a different trend with the poor feeling relatively less inflation as compared to higher income groups. Hafiz Pasha has written that unemployment grew in both PPP and PMLn tenures. But I will not paint a rosy picture because yes the economy has slowed down, so we are not seeing job creation at a high rate right now. But the textile sector for example has already seen growth and a lot of companies that were shutting are now operational again.
You need to go the IMF when there is a balance of payments crisis. Who To relieve the burden from is dependent on the government and our aim is to take it away from the most downtrodden in society and our plan is to object and focus in those areas which will create the post jobs. Our whole point is to increase revenues.
Hammad Azhar; You are absolutely right that there is a lack of marketing from FBR side. Last year we did actively market this and 34 percent was the increase that we saw in filing at the end of the year. Right now we are deep diving into the structural issues of the FBR. We are taking many steps to reform it. Today with the member audit I had a meeting; we do not want any tax collectors to have unfeted power; even the PM doesn’t have a right to question without any parameters. 40 percent of tax collection in Pakistan would happen from imports so obviously we have seen a slowdown since we have squeezed imports.
Yesterday I had a meeting with a successful VC, and we will be developing a framework for making it easier for them. The capital market is generally not looking as an interesting prospect for even local investors but we are working towards this to see that new technology sector companies are able to have access to finance through the open markets. The real test from an economy perspective is how much capital is being mobilised. Pakistan’s biggest IPO just happened recently; a 5 billion rupee IPO just happened. As for the tax developments for startups; what I am relying on right now is fintech to revolutionise. Once we go towards a cashless economy we will have complete transparency. We just launched the EMI rules because we know how important it is. This is the inflection point for e commerce, fintech, and technology. We all realise how important it is.
Our entire public sector enterprise, we gave a mandate for restricting of PIA and Steel mills. Tomorrow is the presentation to the PM on the PIA revamp. Steel mills meeting is coming up too. By the end of this month we will have a full plan for both. As far as agriculture development is concerned, nothing is a quick fix. There is no R&D happening, no water use efficiency and no connections to the markets. This can only change with focused implementation which will see results in 2-3 years. We can give immediate relief, but the real turnaround will take time.
Right now the economic team that we have, even if there is an amnesty there will be none for any public office holders. You’re saying all my policies are like Ishaq Dar, Ishaq dar says I’ve destroyed the economy! Imports kept growing, but my other perspective is one that needs focus. You need to organize a tv program; where you have two participants Ishaq Dar and Miftah Ismail who he can ask these same questions to. From 105 to 127 the dollar climbed to in 7 months. Dollar has climbed because of this economic policy that has led to such huge losses for us as a country. It’s a basic demand and supply situation.
If Pakistan is chasing India in a match and has a target to meet. And in the first 10 overs we had a slow start, it doesn’t mean that we won’t accelerate in the last 10. I have the opinion that PMLn knew that they had no chance in the next election so they destroyed things to the max. PIA saw the biggest losses in the time of Shahid Khaqan Abbasi. Nawaz sharif who claims to be a steel tycoon overseas leads our steel mills to near closure losses.
We will show you a comparison of what the previous governments done in their first year and then let’s see where we stand today. Regarding allowable losses by Nepra, since the past few months when we began a campaign we have seen a two percent decrease in the losses. But this will not just happen from administrative initiatives. Technological initiatives like smart metres are also being introduced to reduce electricity theft. But the third and most important is structural changes. The way renewable energy prices are dropping, this is also an opportunity for us to leapfrog. We need to bring this into our structural reform and on renewable energy we are working with the Korean develop a program on a whole extensive program on this.
When you take a responsibility; then you take positions and you take risks. You don’t worry about public opinion. I know what state our awaam is in and how we want to relieve the burden from them in the long run. We will go through a process; crisis, stabilisation and then growth. Exchange rate is an instrument; we need to look at a bigger picture with exports, employment and more. This was an economic variable that was kept overvalued. What has been the result of it? That our own farmers are being burdened, our local people are being burdened because we are making the price cheaper for the overseas competitors. National price monitoring committee will also be addressing the same issue.