KARACHI: Pakistani Finance Minister Asad Umar said on Saturday that the government will introduce a “debt instrument” for Pakistanis living overseas in order to secure financing for the construction of a number of dams.
“We are planning to issue a debt instrument for overseas Pakistanis, on which we will offer them good returns,” he said during a speech to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). He did not elaborate.
Facing a water and power shortage, Pakistan is currently seeking donations to build dams in Diamer-Basha and Mohmand and has set up a fund for that purpose. Prime Minister Imran Khan has already asked expat Pakistanis to donate $1000 each to the Dam Fund established by the chief justice of Pakistan.
Umar also explained that the government was taking steps to increase the investment opportunities for small and medium enterprises (SMEs), which currently contribute 30 percent of the country’s GDP.
“We are asking banks to increase SME financing by reducing their cash-to-deposit ratio from the existing 37 percent to 25 percent,” he said. “By doing this, two trillion rupees of credit will be available for financing purposes. People keep asking how we will finance our housing project. This is how.”
Pakistan is currently facing serious economic challenges. According to the central bank, Pakistan’s foreign exchange reserves stand at $8.08 billion and its current-account deficit for July-August was $2.7 billion.
However, the minister told the business community that the government was reshaping the country’s foreign policy by focusing more on its economy. “The ministries of finance, commerce and foreign affairs are working closely to make Pakistan self-reliant and economically secure,” Umar said.
He noted that oil products make up around 30 percent of the country’s $60 billion imports, so the government is currently encouraging domestic oil exploration.
Earlier, speaking about the International Monetary Fund bailout program at an event organized by the Pakistan Stock Exchange, the finance minister said that the government had approached the IMF for the last time.
“This will be the last IMF program Pakistan is seeking,” he claimed.
Pakistan approached the IMF last week for a bailout program to stabilize the country’s external balance-of-payments crisis. Last year, the country faced a current-account deficit of $18 billion and is currently struggling with depleted foreign-exchange reserves.
Pakistan needs $12 billion to plug the financing gap for the current year and, Umar said that gap would be reduced by “adding one time.”
He stressed that Pakistan’s current-account deficit was easing, saying it had “almost halved” in the August-September period to around $1 billion, as imports had gone down and exports had surged.
The finance minister assured his audience that the country’s “painful economic days” would end “in three years,” claiming that “the third year will be the break-even time since all the indicators are moving in the right direction.”
Umar reiterated that the country was not in emergency mode, contrary to what was being said in the media.
He assured his audience that the government would find solutions for the real price valuation of properties in the country for greater transparency and stressed that the government was working to make it easier to do business in Pakistan.
“The council of business leaders is tasked to come up with suggestions to improve the country’s ranking from 147 to under 100 (in the World Bank’s ‘Doing Business’ report),” he added.