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Oct 24, 2013| Courtesy by : pn.com.pk
Prime Minister’s Remarks at the US-Pakistan Business Council (USPBC) Luncheon. Washington DC
Let me begin by sharing with you that we inherited a broken economy with average GDP growth of 3% in last five years, lowest investment to GDP at 14%, unbearable federal fiscal deficit of 8.2 %, mounting 63.5% public debt to GDP and all-time low of 8.5% tax-GDP. Our government has taken immediate stability measures and structural reforms and has embarked upon a clear roadmap of bringing macro-economic stability in Pakistan in next three years. By fiscal year 2016 our targets include GDP growth at over 6%, investment to GDP at 20%, fiscal deficit to cut to half at 4%, public debt to be brought within statutory limit of under 60% and through enhancing tax net and improving fiscal governance to increase tax GDP to 13%. We also have a target to double our national forex reserves to $20 billion by fiscal year 2016.
There are few places in the world today that so uniquely offer the promise of land, geography and people, as does Pakistan. Perhaps it is because of this potential that US-Pakistan Business Council, in one of its recent reports, described “Pakistan as a giant you haven’t considered” for investment.
Increased urbanization, favourable demographics and growing middle class, are usually recognized as the parameters of growth. Fortunately, Pakistan has it all.
We are the most urbanized country in the South Asia and with over 180 million people, we are the sixth largest country in the world.
At a time when most countries confront the worrisome prospect of greying populations and the burden of demographics fatigue, Pakistan faces no such challenge. Nearly sixty percent of our population is under the age of thirty, thus offering huge demographic dividends.
By 2025, Pakistan will be one of the six countries in the world with a 100 million strong middle class, ready to seek and afford better lifestyles and living standards.
Already, even during these more difficult times, Pakistan witnessed growth, both in the financial sector and consumer spending. The explosive growth of our IT sector further illustrates this point.
The entrepreneurial ability of our middle class gives us another reason for hope and optimism. They have been our economy’s backbone. Whether it be the fashion industry, or franchises of foreign food chains, most of the new businesses are spearheaded by aspiring young entrepreneurs, seeking a chance to make a difference.
Clearly, Pakistan is an upcoming emerging market. In fact, such multi-nationals as Uni-Lever, Colgate-Palmolive and Nestle Pakistan, have all made record profits in recent years. Their experience, as most of them will tell you, has been exceptionally rewarding. This has encouraged other enterprises to expand their investments in Pakistan.
Ladies and Gentlemen,
Apart from demographics, Pakistan’s proximity to two of the world’s largest markets – China and India – places us right in the middle of where all the action is going to be in the years to come.
The energy that will fuel growth in the region and beyond, is also in abundance not just up north of Pakistan in the largely untapped and locked Central Asia, but also down South in Iran, the Gulf and the Middle East.
At our end, to harness the potential that this geographical advantage offers, we are making the required national investments and attracting more from overseas to develop trade and energy corridors, linking the ports in the South to Northern Pakistan and onwards to China, Afghanistan and Central Asia.
In particular, firm decisions have already been taken on a number of major power projects totaling around 10,000 MW that would be able to meet the supply demand gap in power sector. Other ambitious projects such as the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, the Iran-Pakistan Gas Pipeline, the Central Asia South Asia (CASA)-1000 electricity project, Pakistan China Economic Corridor, the Torkham-Jalalabad Road and the Kunar Power Project, should give you a good idea of what is possible and what is being done already.
Ladies and Gentlemen,
This was all about our geography, demography and economy – the real and the potential. Let me now talk about the broader political environment, within which these growth factors play.
I have come here shortly after assuming the Office of the Prime Minister for the third time. I have the advantage of having seen and known our challenges, as they have evolved over the last three decades. I also know of the opportunities that were missed, and a sense of why they were missed, and what lies ahead.
Ladies and Gentlemen,
While our challenges may be more formidable today than before, we are certainly a better and more confident country.
We just completed the first democratic transition in Pakistan, where one elected government passed the baton to another elected government peacefully. For those of you who are familiar with Pakistan, the historic significance of this must be evident.
However, what is even more significant is that this transition is not taking place in vacuum. In fact, it is a reflection of growing institutional strength and consolidation in Pakistan, which is so critical for sustaining any democratic, pluralistic and peace-loving polity.
Our media enjoys complete freedom; our judiciary is independent, and our civil society proactive and well-informed. Collectively, they empower the democratically elected leadership and hold it to vigorous accountability and scrutiny. With all the institutions of State committed to upholding the Constitution, observing the law and abiding by due process, we see the dawn of a new era in Pakistan.
Some of you may view this as much too optimistic a scenario, but we are aware of the daunting challenges. Acute energy shortages, a week economy and militancy, do post huge problems for Pakistan, but we are engaged in well thought out policy programmes and plans of action, to resolve them and in fact implementation in this regard has already begun. Moreover, we will soon be coming up with fiscal incentives driven policy for oil and gas exploration in Pakistan. Ladies and Gentlemen,
We also know that there is no way we can turnaround the economy, without first dealing with the serious energy shortfalls that we have inherited. Nor can we attract investments, without improving the internal security environment. Moreover, sustainable internal security would remain elusive, without a peaceful and stable region, ready to invest in development, prosperity and wellbeing of our peoples.
Clearly, all these challenges are interconnected. My government is determined to address them seriously and with resolve.
I have made it my top priority to do whatever is required to improve the security environment in Pakistan. It is now my personal mission to push and prod all those who can and must contribute in building peace and enforcing the writ of the State, be it in Karachi, Quetta or FATA, or any other part of Pakistan.
The initial contours of our national security and counterterrorism strategy have already been given shape. We are closely consulting with the political parties and other stakeholders, to secure their support for full and effective implementation of the strategy.
While dealing firmly with the challenges of terrorism and extremism across the country, we are also keeping the doors open for those who are willing to be reconciled with. The All Parties Conference (APC) has fully endorsed this approach and promised complete support.
I am also happy to share that in a short span of just over four months we have been in the government, we have taken a number of significant steps. My government has settled inherited energy circular debt, amounting to 5 billion dollars. Consequently, we have succeeded in adding 1700 MW of electricity to the national grid. Moreover, financial plans are being finalized to begin work on Diamer Bhasha and Dasu hydel power projects, as well as few wind and solar projects.
We have also devised, with consensus, a new National Power Policy, geared to mitigate power shortfalls and eventually eliminate load shedding; given a budget together with 3 years macro-economic stability program, launched a fiscal austerity drive to curb non-developmental expenditure; negotiated a program with IMF support package with the IMF amounting to $ 6.6 billion, consistent with our national priorities and concluded a number of major agreements, designed to promote regional connectivity. Consequently, FDI has started to inflow again. This is best reflected in the latest survey conducted by Overseas Investors Chamber, according to which business confidence has improved 36 points – from 34% negative in August 2012 to 2% positive in August 2013. The recent favourable comments by Moody’s and S&P would surely have been noticed to you.
Ladies and Gentlemen,
On the external front, my Government is determined to pursue regional peace and security, as its top most priority. We seek good neighborly relations with India, Afghanistan and the rest of the countries in the region.
As you would be aware, no region has lagged as far behind in the world as South Asia. To lift our people out of poverty, we must first of all establish peace in the region. This is why I have reached out to the Indian Prime Minister and sought to pursue peace and full normalization of relations with our eastern neighbor.
With Afghanistan, I have assured President Karzai who visited Islamabad last month, that Pakistan supports an Afghan led and Afghan owned reconciliation process. Pakistan will do all it can, to support the realization of peace and stability in Afghanistan, as we believe that a peaceful, stable and united Afghanistan is a pre-requisite, for a peaceful and stable Pakistan.
With the United States, Pakistan wants good relations that can benefit the peoples of both countries. It is true that there have been difficulties in recent past. However, the important thing is that both sides have remained fully engaged, even in that difficult phase. Happily, we have been able to put the relationship back on a stable and upward trajectory.
Ladies and Gentlemen,
I hope that I have been able to give you a run-down of where we are in Pakistan; where we are heading and how my government proposes to get there. I am aware of the fact that when people came out to vote in record numbers on May 11, 2013, despite the threats and challenges, they voted for peace, development, transparency and good governance in Pakistan, which are hallmarks of my government.
I am determined to respond effectively to their hopes and aspirations. Your help and support in projecting our real potential in attracting private investments will remain critical to the success of our endavours, as we strive to build a strong, stable, peaceful and commercially vibrant Pakistan.
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