Shaukat Tarin says country's financial sector needs restructuring
Pakistan Finance Minister Shaukat Tarin says that the GDP grew by 3.94% during the fiscal year 2020-21, much above their expectations, but sustained 6% or 7% GDP growth is needed to generate required employment.
“With increasing youth in the country, we need 2 million jobs every year,” Tarin said while unveiling Economic Survey 2020-21. “For that, we need GDP growth of 6% or 7%.”
The unemployment rate is estimated at 8.83% during the ongoing fiscal year.
The gross domestic product or GDP is the total monetary value of the final goods and services of a country in one year.
He said that there should be sustained growth for 20 to 30 years so that the benefits trickle down to the bottom – the underprivileged segment of society. “We just give them (poor segment) dreams and nothing else,” he said.
Tarin said that China was looking to outsource 85 million jobs and Pakistan should be one of the countries that should benefit from it.
He said that Special Economic Zones should be enabled and made attractive for companies to come and invest and create employment.
Tarin said that the financial sector needs restructuring as banks were not doing their job properly. He said that the privileged segment easily receives credit from banks.
“Commercial banks don’t give credit to the poor,” said Tarin, who is a former banker. “Corporation takes 75% of the bank credit. SMEs (Small and Medium Size Enterprises) get only 6% bank credit.”
He added that banks have low penetration – 33% of the GDP. Whereas Bangladesh has 50% and China 225%. He said that nine cities were getting 85% of the total credit in Pakistan.
Tarin stressed focusing on the Information Technology sector. He said that India’s IT exports stood at $1 billion in 2000 but then the country put special focus on the industry and its exports increased 10 times to $100 billion by the year 2010.
He further said that the government will try to jack up exports such as auto parts and motorcycles and attract foreign direct investment.
Tarin claimed that the Financial Action Task Force (FATF) committee members were satisfied with Pakistan’s performance.
However, he said that he cannot comment on whether Pakistan will be taken out of the FATF grey list.
Tarin said that a committee of professional persons will be made under the Privatization Commission that would try to resolve Pakistan’s perennial problem of loss-making SOEs.
He said that political influence was the reason that the issue of the loss-making SOEs was not resolved.
“But this needs to change and therefore a committee of professional people will be formed under Privatization Commission, which will try to resolve the issue of loss-making SOEs.”
The SOEs such as PIA, Railways, and Steel Mills perennially report losses.