ISLAMABAD - In a major development, World Bank on Wednesday decided to work out a $1.5 billion programme for ongoing fiscal year, 2013-2014, to supportPakistangovernment's economic policies.
"In view of the economic policies and stabilization measures taken by the present government, World Bank is now ready to work out a $1.5 billion programme for the present fiscal year to support government’s economic policies," said Philippe Le Houerou, vice-president for World Bank, while talking to Finance Minister Senator Ishaq Dar.
He said World Bank appreciated and shared the diagnosis ofPakistan's economy as well as the direction set by the incumbent government and would like to continue to be partners and take the relationship to the next level, after a successful conclusion of a programme with International Monetary Fund.
Philippe said he chose to visitPakistanon his first leg because he wanted to have a personal feel and discussion with the new government.
About Bhasha Dam, World Bank vice-president said Asian Development Bank was carrying out due diligence of the project and once it was completed “we will start working on it”.
World Bank official informed the finance minister that there was a great interest of foreign investors inPakistan, especially in the energy sector.
Ishaq Dar told Philippe the PML-N government had increased the Public Sector Development Programme, enhanced the social safety net budget and aimed to bring macro-economic stability. The government, he said, was committed to transparency, financial discipline and good governance. The minister, while terming the visit of World Bank delegation as timely, stated the country was going through a very delicate economic phase unprecedented in its history. “We are confronted with the twin menace of budget and current account deficit,” he added.
Giving an overview of economic situation inherited by the government, the minister said the public debt which was Rs3 trillion in 1999 had increased to over Rs14 trillion by June 2103.
The minister said, “We have prepared an economic roadmap, keeping in view the ground realities and set targets that were doable.”
Dar further said, “We had to clean up past acts which were long overdue.” In this connection, the circular debt was cleared and power tariffs were rationalized to check its reemergence. The government also announced along with the budget a three-year macro-economic stability framework which aimed at increasing the tax to GDP ratio to 13 per cent, bring down fiscal deficit to 4 per cent and public debt from 63.5 per cent to 57.5 per cent, and increase investment to GDP ratio from 14 to 20 per cent by the end of the third fiscal year.
The minister said the initial vibes of the measures taken by the government were positive, and foreign remittances from overseas Pakistanis had improved to a record amount of $1.4 billion in July 2013, and the stock exchange was booming. “There is a great potential of increase in our foreign remittances and we are presently working on how to enhance them.” The Overseas Investors' Chamber of Commerce which conducted a survey of business confidence has shown that the investors’ confidence has moved to plus two whereas it was -34 a few months back.
Referring to his recent visit to Karachi Stock Exchange, the minister told World Bank delegation that the approval had been given for trading of T-bills andPakistan's Investor Bonds in Stock Exchanges. Besides, the KSE had been asked to protect the interest of small investors whenever a major correction took place, he added.
Dar also said the Income Support Programme was important to provide social safety to the poorest segments of society and so did the schemes for the youth because of rising unemployment. The government, therefore, had allocated Rs75 billion for the current fiscal year as opposed Rs40 billion last year for Income Support Programme and had announced six new schemes for the youth.
The minister further said the PML-N government believed in encouraging regional trade and good relations with its neighbors and believed that regional cooperation had a great potential for accelerating growth in their economies for the betterment of people of this region. The meeting was attended by senior officials of Ministry of Finance, Ministry of Planning and Development, Ministry of Water and Power and Federal Board of Revenue.