KARACHI - Advisor to Prime Minister on Finance Shaukat Tarin has said that Karachi Stock Exchange (KSE) liquidity crunch will end in November and added that proposed Rs20 billion fund will be injected into KSE to bail it out before the removal of the floor. He assured the entire amount would be invested in a day or two before the final decision was taken to remove the floor mechanism. He said this while addressing a press conference at the KSE on Friday. The advisor however, neither gave the date on which the expected injection of fund would be given or when the floor will be removed. Tarin said the government would not interfere in the process of floor removal and it would be up to the discretion of KSE board when they wanted to remove it. Mr Tarin who met with the KSE board of directors before talking to media, said that the KSE board had given a coherent plan to him in the backdrop of current crisis in the stock market and added that the plan would be reviewed to tackle the crisis in the market. He said that the government would do whatever it could to enhance the performance of stock markets to attract foreign investors. "When the overall economy of the country goes up and down, the stock markets also follow the same patterns," Tarin said. Tarin said that four state-owned companies, Employees Old Age Benefits Institution (EOBI), National Investment Trust (NIT), National Bank(NBP) and State Life Insurance Company would equally contribute Rs5 billion each into the newly proposed market stabilisation fund of Rs20 billion. He said that better economic conditions lead to minimising terrorist activities and better law and order situation lead to improved economy. Both he said were interlinked. Speaking at length on inflationary trend in the country, he said that "we have our own economic growth plan to bring down inflation." The plan includes lowering the interest rates, curtailing fiscal deficit and increase revenue and emphatically added that any deal with the IMF would be done on our own terms. Tarin told stock market members that his ultimate aim was to get inflation down to less than 5 percent. He declined to provide details about the IMF talks but said inflation had to come down so lending rates could be cut to between 7 and 9 percent. Tarin said the government is working on a plan to increase tax to GDP ratio up to 15 per cent. He said that the plan would be chalked out for a five-year span. "I have been the former chairman of KSE and I am well aware about its matters and their complications," he said. "We would never renege on our obligations," he said, adding: "I assure you that we are not going to default but we would have to take the harsh decisions to deal with the current situation." "The harsh decisions would be taken after having a consensus of all the stakeholders," he said and added that the harsh decisions would be taken only when they deemed necessary. "We are not taking any dictation from IMF and we are taking IMF package on our own conditions." He said we have told IMF that how the inflation has gone higher in the country. Shaukat Tarin said that he wanted to reduce the interest rate to single digit and inflation rate to 5 per cent in coming years. The advisor said Pakistan would raise interest rates if it believes that is a necessity to cut inflation. Shaukat Tarin told members of the KSE that interest rates were under discussion with the IMF. "If we believe ourselves that there is a necessity in doing whatever is required to bring down inflation, we will, obviously, have to take those harsh decisions," he said. The advisor on finance said that the government wanted to make every manufacturing industry highly competitive than making them only export oriented one. "If we have competitive industry, we could easily defend against the high imports and push it down," he argued. He said that since 2000, a huge foreign investment was seen in the manufacturing sector but during the last year the sector growth turned negative and stood at 3.5 per cent owing to the high cost of doing business. He said that unprecedented 25 per cent inflation and record oil prices had badly hit the economy of the country and added that the previous government should have passed on the rising cost of food and oil to the end consumer. But as it was not done the present government was facing the mistakes of previous government. "I can assure you that the macroeconomic fundamentals will start improving in coming month. The present government is doing its level best to ease prevalent troubling economic data," he said. Tarin indicated that the government was working out to fill the widening fiscal deficit to 4.3 per cent during the next 3-4 years. Such types of revised measures and adjustment in fiscal management would take the economy towards better from the worse. "In order to attract foreign investment in the power and gas sectors, we are trying to standardize the gas and electricity charges by introducing same tariffs among the existing gas and power brands. He said the banking sector had enjoyed robust growth during last five years on the back of privatisation, so he asked the commercial banks to support the stock markets and facilitate to stabilise the exchange rate as the banks have been provided additional liquidity from the State Bank therefore; there will be no room for depreciation of Pak rupee against the US dollar and other major currencies in the local money market. He rejected the impression that the domestic economy appears to be in default. But he admitted that it was heading for slowdown on account of macroeconomic imbalances, triggered by downward trend in the GDP growth, hyper inflation and weak balance of payments scenario. To a question, he said the proposed market stabilisation fund of Rs20 billion would soon be injected in the identified government owned companies.