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'Ishrat asks private sector to help boost exports

overseas Pakistan from present $1 billion to $1.8 billion.

These steps will though not help to increase our foreign exchange reserves, but can make us current with payment of debt servicing, he added.

Dr. Ishrat Hussain said that continuity, consistency and predictability should be the main features of any economic policy and claimed that the SBP was working in collaboration with the Finance Ministry to achieve it.

He stressed upon the need for public and private sector co-operation to work together to bring country out of economic mess. He said that the past practices of alleging each other should be done away.

Referring to the current economic situation of Pakistan, the SBP governor said, We need to ensure four percent to five percent growth in the agricultural sector, seven percent to eight percent in Industrial and eight percent to nine percent in exports so as to enable the country to achieve annual growth rate from five percent to six percent.

Ishrat stated that the December 15 package given by the government for economic revival was aimed at boosting all sections of the economy with especial emphasis on agriculture as well as encouraging the small and medium size industry and information technology in the country.

He said the government intended to reform taxes and its policy was that there should be fewer taxes, lower tax rates and broader tax base. He said in future there would be only taxes such as Income Tax and General Sales Tax (GST) and many other small taxes would be abolished.

The SBP governor said that the government was giving special emphasis on Information Technology sector as it was the fastest growing industry world over. He told the business community in Lahore that India was projecting its software export in year 2005 at $ 40 billion, while at present, Pakistan was earning from this sectorÕs export only $20 to $30 million.

Ishrat stated that the largest companies enlisted on the Bombay Stock Exchange were dealing in the Information Technology-related activities, while there was not a single company registered with the Karachi Stock Exchange in this regard.

Talking about the point raised by LCCI President Ilyas M. Chaudhry, in his address of welcome regarding recovery through the National Accountability Bureau, the SBP Governor said that the recovery was being done from defaulters of DFIs and the nationalized banks owned by the state, in this way the state was protecting its own assets, he added.

He said recovery, bankruptcy and fore-closure laws were being redefined to introduce a perpetual mechanism to ensure recovery of the stuck-up loans. He said these laws would also be helpful in differentiating between the wilful and circumstantial defaulters.

About Credit Investigation Bureau (CIB) clearance on fresh credit to a sick unit, the SBP Governor averred that the SBP did not give a clearance certificate and said that it had a data base and they only inform the bank that A, B or C had taken loan and it was long overdue and that the bank should keep in mind the risk factor while extending loan.

Commenting on lowering of interest rates by some nationalized banks and ignoring the directives of the SBP by some foreign banks, Ishrat said that the government had lowered the interest rate and linked it with the treasury bills and rapport rates. He asked the businessmen to approach banks which have lower interest rates, in this it would set an example for foreign banks to follow.

About the Restructuring and Turnaround Corporation (RTC), he said that the RTC was going to use all the available options for the revival of the sick units and quoted example of Malaysia where an institution like RTC had successfully handled this issue.

To a question about the Exit Control List (ECL), he said that it was being revised and updated after brief intervals.

Ishrat said that the country while making some hard choices must lower its consumption level both in the public and private sectors as our consumption standards were not compatible with our resources. The annual import bill for the food items such as tea and edible oil was more than $1 billion, he added.

Referring to the exhaustion of World Trade Organisation (WTO) in 2005, the SBP governor said that after this the country should be ready to accept challenges from countries, India, China and Thailand.

To a suggestion raised by one of the LCCI members, Sheikh Salim Ali, he said that restrictions on import would result in high inflation and prices and said that it was not an easy choice.

Iftikhar Ali Malik a former LCCI president suggested that the foreign banks should be asked to finance local industry and corporate sector as they were doing in India.