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Ishrat for increase in exports, FDI, remittances

LAHORE: State Bank Governor Dr. Ishrat Hussain on Monday said that the increase in exports, foreign direct investment (FDI) and remittances by the expatriats can help Pakistan make in-time debt-servicing.

"By adopting these measures, the country will not have to ask the donors for rescheduling of loans," he said while addressing the executive committee members of the Lahore Chamber of Commerce and Industry (LCCI) here.

He said that the annual shortfall ranging between $2 to 2.5 billion in the debt-servicing could be overcome by increasing exports by $1 billion, raising FDI to $1.1 billion from the present level of $600 million and boosting remittances from $1 billion to $1.8 billion.

"Private sector can help increase exports and remittances; you are the real movers and shakers," Ishrat Hussain told the businessmen.

He said that India had foreign exchange reserves of $35 billion against Pakistan's $1.5 billion.

Referring to recent report of the SBP on Pak economy, he said that there was need of 4-5 percent growth rate in agriculture, 7-8 percent in industry and 8-9 percent in exports to enable the country grow annually at the rate of 5 to 6 percent.

He said that government and private sector should work together to bring country's economy out of problems.

He said that continuity, predictibility and consistency of the fiscal and monetary policies was a must to create a congenial atmosphere for both local and foreign investors.

He said that the December 15 economic revival package was aimed at boosting all the segments of the economy with special emphasis on agriculture, small and medium industries and information technology.

He said that efforts were being made to decrease the number of taxes and their rates while broadening the tax base.

He said that the nation could not reduce its debt burden without making certain hard choices like lowering its consumption levels.

"Our consumption standards are not compatible with our resources," he regretted.

He said that the annual import bill for the food items like tea and edible oil was more than $1 billion.

He said that the establishment of raw material manufacturing facilities at domestic level like those of Engro-Asahi's PVC resin plant and ICI's PTA manufacturing unit could help country make cuts in its chemical raw material imports presently touching the mark of $1 billion annually.

He said that imposition of restrictions on imports could raise inflation rate in the country.

Referring to the post-World Trade Organisation scenario, he said that Pakistani textile sector should get itself prepared to face the challenges after the year 2005 when there would be no Multi-Fibre Arrangement (MFA) which presently provide for quotas.

"Our textiles products will have to be competitive in terms of value and quality while competing with those from the countries like India, China and Thailand," he added.

The SBP chief said that India was projecting software exports of $40 billion by the year 2005 while Pakistan's Information Technology exports presently stood at $20 to 30 million.

"The largest company listed on Bombay Stock Exchange is an information technology firm," he said.

Responding to a question regarding the Exit Control List (ECL), he said that the minority and nominee directors of the defaulting firms had been excluded from the ECL and added that the list was being revised and updated very frequently.

He said that the SBP was watching the spread of the banks. To another query, he said that the long term financing by the local banks could force the foreign banks to follow the suit. APP