Minister of State for Finance Bilal Azhar Kayani on Monday said export-led growth was essential to stabilize the economy, while presenting a screenshot of the improvement in the country’s financial situation achieved through the government’s efforts.
Addressing the media in Islamabad, Kayani spoke about the improvement of Pakistan’s economy over the last one and a half years and highlighted that the objective of primary balance had been achieved.
He said the country saw a 26 percent increase in tax collections during the last fiscal year despite modest gross domestic product (GDP) growth and a low inflation rate.
“We also increased the tax-to-GDP ratio of the Federal Bureau of Revenue (FBR) and reduced inflation from 33 percent to 4.5 percent,” Kayani mentioned. The proportion, he specified, experienced an increase of 1.4 percent, going from 8.8 percent to around 10.2 to 10.3 percent.
“We have recorded the first current account surplus in 14 years, which is also the largest current account surplus in 22 years,” he said, adding that foreign exchange reserves were one of the most important parts of the economy.
“When the current account is in surplus, our foreign exchange reserves stabilize,” Kayani explained, noting that the policy rate had been halved from 22 percent to 11 percent as a result of controlling inflation.
The minister said the primary balance target had been achieved despite there being no mini-budget last year.
Acknowledging the privatization of First Women Bank Ltd (FWBL) earlier this month, Kayani said progress on the privatization of Pakistan International Airlines (PIA) was expected soon.
On October 18, FWBL was acquired by Abu Dhabi-based International Holding Company, which Prime Minister Shehbaz Sharif hailed as a milestone in economic ties between Pakistan and the UAE, saying the deal would pave the way for more joint ventures and partnerships in various sectors.
In addition, the government has also been making efforts to sell the troubled national flag carrier PIA, which has racked up more than $2.5 billion in losses in about a decade. In June, it received expressions of interest from five parties, including business groups and a military-owned company.
State Minister Kayani said Prime Minister Shehbaz also believed that the country needed private sector-led growth, adding that the government had to play its role with respect to policy formulation and facilitation.
Pakistan faced a protracted economic crisis in recent years, marked by critically low foreign exchange reserves, an acute balance of payments crisis and the imminent risk of default in 2023. The crisis was averted after the International Monetary Fund (IMF) released a crucial loan tranche, while support from friendly countries, including China, the United Arab Emirates and Saudi Arabia, also played a key role.
After avoiding default, Pakistan undertook tough reforms prescribed by the IMF to stabilize its economy and strengthen macroeconomic indicators. This year, global credit rating agencies such as Fitch, Moody’s and S&P Global upgraded Pakistan’s sovereign credit rating.
Last week, Finance Minister Muhammad Aurangzeb said he was hopeful that Pakistan could achieve GDP growth close to 3.5 percent during the current fiscal year, despite the impact of recent floods.
Aurangzeb also stated that the country’s foreign exchange reserves were currently sufficient to cover approximately two and a half months of imports, and projections indicate that this could increase to three months by the end of the current fiscal year.
Earlier this month, Pakistan repaid its $500 million Eurobond on time, and the government said the timely repayment reflects fiscal discipline, stronger reserves, improved ratings and a more sustainable debt profile.
