Corruption, whether real or perceived, Panama or Bahamas, harms the economy and foreign direct investment while honesty, transparency and accountability is the best way to address the issue, stated Christine Lagarde Managing Director of the International Monetary Fund (IMF) on Tuesday.
Addressing a joint press conference with Finance Minister Ishaq Dar on the last day of her two-day visit to Pakistan, the MD IMF said real or perceived corruption has a cost on business. It hampers the economy and foreign direct investment (FDI) and is a burden on the ambition of youth.
Lagarde further stated that progress of technology and the spread of information, its collection and dissemination, would make it impossible to deal with it and not run and hide.
Any combination of reforms envisioned by the authorities has to be on two legs – fiscal consolidation and social safety net, Lagarde added.
Removal of subsidies on energy is an efficient reform as these subsidies were benefiting the affluent class. To questions on whether Pakistan has requested another IMF programme or would such a need arise in future, she responded: “no and no”.
She advised Pakistan to reduce expenditure and increase revenue collection to bring down its overall debt and debt servicing and added that there are not many options when the country wants to address the issue of debt.
At the outset of the briefing, she condoled with Prime Minister Nawaz Sharif and the nation on the loss of precious lives in the terrorist attack in Quetta Police Training College.
She said that exports are key drivers of growth and there is space Pakistan can exploit it as low oil prices were supportive of balance of payment position.
She said to increase exports there are million of measures and this also includes smooth customs mechanism in order to facilitate business in neighbouring countries. She said that she is not supportive of providing subsidies to increase the exports.
Lagarde also felicitated Pakistan for successful completion of IMF-supported economic reforms package and stated that program has been very helpful for the country in terms of macroeconomic stability and provided a platform to move ahead of further reforms in key areas of the economy.
The MD IMF said that the country has significantly improved social protection spending and power sector subsidies have been reduced gradually and after making a significant stride and achieving a lot the authorities need to do much more to address the remaining challenges.
Finance Minister Ishaq Dar said after achieving consolidation, now the focus would be on the growth, job creation and poverty reduction.
The Minister said that the federal government development spending has been increased from Rs 300 billion to Rs 800 billion and allocation of social safety net, Benazir Income Support Programme, to Rs 117 billion from Rs 40 billion, three years ago. Dar said the country has first time completed the IMF programme.
Dar, visibly annoyed over the question on the Panama Leaks and corruption, stated there was no justification of protest sit-ins after the process has been triggered in this regard.
The minister said that battle against terrorism is now in the final stage and incidents like Quetta are blowbacks. The Finance Minister said government has already tabled a law in the National Assembly to give tooth to the 1956 Inquiry Commission Act and has taken various measures to counter the bribery and “we are optimistic about the possibility of effective cooperation among the member counties of OECD.”
Finance Minister said that soon after the “Panama Leaks”, prime minister offered the constitution of a commission. Dar said that Pakistan Bureau of Statistics is an autonomous body on data and those who challenge the statistics are grossly biased.
In a press release, Christine Lagarde stated, “I would like to start by offering my condolences to the Pakistani people for the tragic loss of lives at the Quetta attack overnight. We are deeply sorry for the families of those who lost their lives in this horrific attack.
“I wish to thank Prime Minister Nawaz Sharif, Finance Minister Ishaq Dar, Central Bank Governor Ashraf Wathra, and other senior government officials for their productive exchange of views and their warm hospitality during my visit to Islamabad.
“I congratulate Pakistan on having successfully completed its IMF-supported economic reform program. Improved macroeconomic stability as well as strengthened external buffers and public finances will provide a solid foundation for the economy.
Many tax exemptions and concessions have been removed, and higher tax revenue has allowed for greater public investment and social spending. About 1.5 million more poor households are benefiting from targeted social assistance than three years ago.
Power outages have gradually decreased and the financial performance of the power sector is strengthening. A country-wide strategy to improve the business climate is being implemented”.
“Much has been achieved and much more remains to be done, so this is Pakistan’s moment of opportunity to forcefully address remaining economic challenges and lay the foundation for more private sector job creation and higher living standards for all segments of society.
“In my discussions, I emphasised the need to continue strengthening resilience by building fiscal and external cushions to be adequately prepared for future economic shocks.
Achieving higher and more sustainable growth will also require completing important structural reforms in the energy sector, and tax policy and administration; ending losses in public enterprises; and making a sustained effort to improve governance and foster a dynamic and export-oriented private sector.
In parallel, added focus on strengthening health, education, closing the gender gap and providing social protection can ensure that gains in living standards are widely shared,” it added.
“My visit also gave me an opportunity to meet with students, women leaders, and representatives of the business community and civil society.
I am grateful for the perspectives they shared with me about Pakistan’s opportunities and challenges. Pakistan’s economic transformation cannot happen without the country’s youth-who comprise about 60 percent of the population-and women, of whom only one in four participate in the labor force”.
“While the IMF-supported program has been completed, Pakistan’s partnership with the IMF continues through our ongoing close policy dialogue and capacity building engagement.
I would like to reiterate the IMF’s strong support for Pakistan as the country moves forward to address its economic challenges and realise its vast economic potential,” the statement concluded. -Business Recorder