ISLAMABAD: Federal Minister for Finance, Senator Mohamamd Ishaq Dar Thursday termed the agriculture as backbone of country’s economy and said that government was giving special attention towards this sector to ensure sustainable economic growth.
The financial institutions must invest in this real state sector which gives quickest return and can give real boost to the economy, the minister said while launching `Financial Innovation Challenge Fund (FICF)-Challenge Round Second for Promoting Innovative Rural and Agriculture Finance in Pakistan” here.
The State Bank of Pakistan (SBP) is implementing this Financial Inclusion Programme (FIP), which is sponsored by UKAid, with an aim to improve access to financial services in Pakistan.
The federal minister said that FICF would go long way in promoting economy, particularly in enhancing rural employment and incomes of agri household, adding that agriculture sector has significance keeping in view the challenges of food security and growing population.
The federal minister said that the agriculture sector was contributing 21pc to GDP, absorbing 45pc of total labour force while 68% of rural population depends on this sector for their livelihood.
He said that agriculture financial inclusion would help economic growth, reduce poverty and inequality.
He was of the view that lower level of financial access was available to agriculture sector in Pakistan as compared to other countries, adding that the credit to agriculture sector was as low as 7% while the non-crop agriculture, which shares 53pc of agriculture GDP remains neglected in terms of financial credit.
He expressed satisfaction over the SBP’s agriculture credits which have increased from Rs. 360 billion last year to Rs. 380 billion, out of which 336 has already been disbursed so far.
Federal Minister for Finance, Ishaq Dar while talking about the overall economic said that GDP witnessed 5pc growth in first quarter of current financial year, however expressed concern over the low growth of agriculture sector.
He said that the government was determined to lift the GDP up to 6 to 7 percent in next three years.
He said that investment to GDP would also be raised upto 20pc percent in three years while the tax to GDP ratio would also be enhanced up to 13 percent.
The fiscal deficit would be reduced to 6pc this year, 5pc next year and would be further reduced to 4 percent in the third year.
The fiance minister said that the foreign exchange reserves would also be enhanced from $8 billion to $10 billion in the current month of March and by $16 billion in the current fiscal year.
He said that the government is determined to lift the exchange reserves up to $20 billion in next three years.
He said that the government was working on promoting regional integrity on trade and energy and informed about several energy projects, for which negotiations were going on with Tajikistan and Afghanistan.
He said that Pakistan was talking with Afghanistan to build joint power project at Kunar on the boarder of both the countries.
He said that the economy of Pakistan was moving on right direction as international agencies have termed Pakistan among the best investment friendly countries and forecast it to become 18th biggest economy by 2025.
He said that resolution of energy crisis, restoration of economy and elimination of terrorism were the top priorities of the government.
The minister said that after seven years, Pakistan would roadshow EU bond in the beginning of April while the actual bond would be issued in the middle of April 2014.
He said that $1.6 billion were outstanding in Coalition Support Fund (CSF) and government was following to get this amount as soon as possible.
The minister said that there has been 17pc increase in tax collection rate this year as compared to the last year.
Speaking on the occasion, Governor (Acting) SBP, Ashraf Mahmood Wathro said the bank has launched countrywide internship programme for 100 top agriculture graduates.
He said that there has been shift from microfiannce to inclusive finance and the bank has made number of action plans to promote agriculture.
He was of the view that 55% of agriculture GDP was coming from livestock for which share of credit was very small.
He said that promotion of inclusive growth was imperative to alleviate poverty as improving financial access to alleviate poverty was global challenge.
He said agriculture was playing an important role in economic growth, reducing poverty, particularly in areas.
He said that SBP has reactivated its Agriculture Advisor Committe (AAC) with an aim to promote agriculture sector through launching of FICA under UKAid, promote innovative technology and make recommendations to improve farmer’s access to finances.
Deputy Governor SBP, Saeed Ahmad, Head of the UK Department for International Development Pakistan, Richard Montgomery, Agriculturist and Member FICF Advisory Committee, Mahmood Nawaz Shah and President Habib Bank Limited, Nauman K. Dar also spoke on the occasion and highlighted importance of FICA for the promotion of agriculture sector.