Salman defends economic strategy of past govt



Tuesday, April 15, 2008
By our correspondent

LAHORE: Former federal finance minister Dr Salman Shah has defended the overall economic strategy of the past government, stating that undue pressure created by high oil and commodity rates did put temporary pressures.

He was speaking at a discussion arranged by SAFMA on the State of Pakistan’s economy.Defending the increase in petroleum rates by the interim government, he said that budget deficit would have gone out of hand had these raises not been made. He said the new government in fact should announce similar increases in petroleum rates before the end of the current fiscal.

He said even then the government would be burdened with subsidies on petroleum products. He advised the government to eliminate all subsidies on petrol by the end of next year.He said the government promoted use of locally produced natural gas that has kept the petroleum demand to almost the same level as in 1999. He said now that entire available gas production is being utilized the import of petroleum products is on rise. He said Pakistan would pay $11.5 billion for the same amount of oil it imported in 1999-2000 for $3.1 billion.

He said global wheat rates were at almost the same level as in Pakistan only 16 months back. Today he added even after increasing the wheat support price to Rs625 per maund the international wheat rates are double the local rates.

He said that there is no overshooting of expenses. He said Rs400 billion budget deficit amounts to four per cent of GDP. It would be higher this year due to high oil and commodity rates that burdened the national exchequer.

He claimed that the growth, inflation and debit indicators have improved vastly during past eight years. The GDP he added has shot up from $65 billion to $160 billion. Tax revenues he continued have shot-up from Rs300 billion in 1999 to around one trillion rupees now. He said these increased revenues in fact facilitated the government in accelerating growth and development work.

He said it was wrong to assume that 9/11 facilitated the transformation in economy. He claimed that Ghazi-Brotha hydropower project completed in 2004 added over 1400 MW power in the system. He said the electricity consumption however increased by higher percentage than envisaged by the planners. He added that there was a lapse on the part of the government to neglect further addition in electricity production. However he clarified that 3000MW power projects were initiated by the previous regime that would be operational in 16 months.

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