Pakistan will see its annual economic growth rate surge to 7 percent in two years as it reaps the benefits from China and others investing more than $40 billion in infrastructure, according to the Finance Ministry's top bureaucrat. Prime Minister Nawaz Sharif's government is showing investors he's serious about implementing economic reforms by heading toward completion of an International Monetary Fund loan program, Finance Secretary Waqar Masood Khan said in an interview Thursday.
"We still face challenges in achieving a higher growth," Khan said. "Compared to our potential, our growth rate is significantly low." Sharif is targeting growth of 5 percent for the current fiscal year ending in June, an eight-year high, as he works with the IMF to turn around an economy hindered by energy shortages and terrorism. China's plans to invest $46 billion in an economic corridor are fueling optimism that growth is set to reach new heights.
Since Pakistan started taking IMF loans in the 1950s, it has struggled to see them through. It came close under former military president Pervez Musharraf, who didn't take the last installment of that loan.
Khan said completing an IMF loan program "is always very tough." He declined to say whether the government would seek to borrow more from the IMF in the future. "We will cross the bridge, when we come to it," he said. Khan doesn't see hurdles in selling a stake in national carrier Pakistan International Airlines Corp., a condition for the release of IMF loan installments. Protests by the national carrier's employees last month halted its flight operations.
"It is evident that there is more interaction required between the stakeholders," he said. "The government's commitment to bring strategic partner in PIA and other power companies is there and would be accomplished through a consultative process." The Sharif government has raised about $1.5 billion selling its remaining stakes in banks such as United Bank Ltd. and Habib Bank Ltd. That has helped increase the central bank's foreign reserves to about $16 billion, Khan said.