April 03, 2008	Thursday	Rabi-ul-Awwal 25, 1429

LAHORE, April 2: Dr Salman Shah, former adviser on finance to prime minister Shaukat Aziz, says the new coalition government has inherited a sound economy from its predecessors to build on further and achieve a higher growth next fiscal year.

Talking to Dawn on Wednesday, Dr Shah, who was the finance minister in the outgoing caretaker government, rejected the suggestion that the State Bank of Pakistan’s second quarterly report accused the previous government of having lied by understating the growing fiscal deficit. “I find the report a very positive commentary on the economic performance during this year,” Dr Shah said.

“The central bank says the economy will grow at six to 6.5 per cent this year. The Asian Development Bank (ADB), too, has forecast 6.5 per cent growth. This is going to happen despite political uncertainty overshadowed the economy throughout these past years and we had to suffer worst kind of terrorism in which Benazir Bhutto was assassinated. So if the country attains that kind of growth despite all these negative factors, it means our economy is quite resilient and has sound foundations to build on further,” he argued.

He said 5 to 5.5 per cent fiscal deficit did not matter much in view of the record high global crude prices and the massive subsidy offered by the previous government on domestic oil prices and food. “In India, for example, they are experiencing as high a fiscal deficit as 8 per cent,” said Dr Shah.

He said, the expected tax revenue collection of Rs1,000 billion against the Rs1,025 billion target for the current financial year, strong foreign exchange reserves of $14 billion and other growth numbers signify that the economy was in good shape.

“If the new government managed to attract foreign investment by improving the current policies, it could achieve 7 to 7.5 per cent growth next year,” he said.