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PM vows historic action against money laundering
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ISLAMABAD, DEC 29 - The largest ever clampdown against money laundering would begin soon to stop a $10 billion annual loss caused by the illegal practice, said Prime Minister Imran Khan on Friday.
while reassuring the nation that the crisis of confidence was over.
The prime minister also saw a ‘softening’ International Monetary Fund (IMF) stance after improvement in Pakistan’s relations with all global powers that matter.
He was speaking to a group of economic journalists at PM’s Office. Minister for Information Fawad Chaudhry and Finance Minister Asad Umar were also present.
The phase of “economic uncertainty” is over after the United Arab Emirates, China and Saudi Arabia announced assistance packages, said PM Khan.
He gave the statement an hour after the Pakistan Stock Exchange dropped over 900 points in intra-day trading. The PSX has dropped 3%, or 1,142.51 points, since Wednesday.
The government would soon launch the biggest ever crackdown against money laundering in the history of Pakistan, said the premier while outlining his priorities to put the economy back on track.
He said that clampdown against money laundering was the reason behind hue and cry being raised in Sindh.
A Joint Investigation Team (JIT) has implicated former president Asif Ali Zardari and his close business friends in Rs42 billion money laundering through fictitious bank accounts.
The prime minister said that according to a US State Department report, $10 billion annual money laundering was going on that had to be stopped.
He added that the demand for dollar had decreased during the elections period when Pakistan had sealed its international border, which suggested that the currency was being smuggled out.
To a question, the PM said that the implementation on Financial Action Task Force (FATF) Action Plan was in favour of Pakistan.
The FATF wanted an end to money laundering and action against armed groups, said the PM.
Both of these steps are in the benefit of the country, said the prime minister. He said that action against the armed groups is also part of the National Action Plan.
While commenting on the current economic situation, the PM said that Pakistan has got the breathing space that it needed and soon an economic turnaround will begin.
There is no economic crisis in Pakistan, although there are challenges, which stemmed from past years’ mismanagement, he added.
The uncertainty on the economic front has ended due to assistance packages given by the UAE, Saudi Arabia and China, said the premier.
The only remaining issue is on what conditions Pakistan would get a loan from the IMF, said PM Khan.
The PM hoped that the IMF would give loan to Pakistan but said that the country was not in a hurry as it was now in a comfort zone.
he IMF’s attitude towards the PTI government was different than the one it had with the last government,” said the PM. He said that there was a political reason behind IMF’s attitude but now it understood the view of the government.
“The way our relations are improving with the world powers, Pakistan would not face further problems with the IMF,” said the PM.
His comments give credence to the perception that the United States uses the IMF as a tool to achieve its objectives, although the PM did not take the name of the US.
The PM said that the government was trying to protect the poorest segments from the adverse impacts of measures being taken to revive the economy.
He also said that the PTI government would introduce the best ever poverty alleviation programme.
“Pakistan’s economic problems can only be solved through wealth creation and we have to come out of the mindset that the investors are bad people,” said PM Khan. The PM said that efforts were under way to enhance remittances to $30 billion annually.
The finance minister also appeared suggesting that Pakistan no more needs the IMF to meet the financing gap on the external front.
“I do not need to get an IMF programme for meeting the financing needs but I would still need to get an IMF package to give a signal to the markets,” said Umar.
To a question on adverse implications of IMF conditions, the finance minister said that when there is an issue of survival, “economic growth becomes a secondary issue”.
The minister said that Pakistan has not taken even a single action on the desire of the IMF.
“In mid-January, I will present a money bill in parliament that will be aimed at boosting economic growth and it will include the macroeconomic projections for next three years,” said Asad Umar.
The finance minister said that the IMF was asking for primary budget balance. It’s a measure that suggests that the revenues should be sufficient to meet the current expenditures.
“Directionally, Pakistan and the IMF are on the same page but the problem is the pace and sequencing of reforms,” said the minister.
The source of economic growth will determine whether it is sustainable or not, he said, adding that in past the growth was financed through imported capital. Umar said that the government would implement an export-oriented and productivity-led economic growth model.
The international investors were keen to invest in Pakistan due to its geographical location, young population and cheap labour, said the premier.
The deals being finalised with China under the CPEC are different from past as this time the focus is on technology transfer, relocation of industries from China and agriculture development, he added.
The addiction to taking loans was the reason behind the current economic mess, said the PM. He said that in the past, the country’s foreign policy was aimed at fetching aid and borrowing money.
This flawed policy cost the country dearly as it lost its sovereignty and self-esteem, he added.
“We now must think beyond the shortcuts and bring changes in the financial structure to enable long-term planning for growth and prosperity, said PM Khan.
The PM said that due to the 18th amendment, the fiscal burden of the federal government had increased but it had lowered the responsibilities of the provinces.
The finance minister said that the 18th amendment was a step in the right direction but the fiscal relationship between the federal and provincial governments has broken down.
Umar said that Sindh has finally nominated its technical member for the National Finance Commission, allowing the federal government to start the process to notify the new commission for finalisation of next award.
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