Finance Minister Muhammad Aurangzeb on Monday said Pakistan’s economic direction had been set through a series of structural reforms, which were now being put in place to ensure sustainable and inclusive growth.
“I think there is a broad consensus that we have made significant progress and made considerable progress in terms of macroeconomic stability,” he said during a joint news conference on economic reforms.
He was accompanied by Energy Minister Awais Leghari, Information Technology Minister Shaza Fatima Khawaja, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial and Adviser to the Prime Minister on Privatization Muhammad Ali.
Aurangzeb said the government had achieved macroeconomic stability, as evidenced by external validation: three major international rating agencies upgraded Pakistan after a gap of three years. “These agencies are now aligned not only on our position but also on our positive outlook,” he added.
He said the successful completion of the second review of the International Monetary Fund (IMF) and subsequent staff-level agreement in Washington reaffirmed that the country’s economic trajectory was on the right track.
When the exchange rate stabilizes, foreign exchange reserves increase, inflation decreases and the official rate falls, the benefits are evident for industries, the minister commented, adding that investors had repatriated more than $4 million in profits and dividends.
Aurangzeb said investor confidence was crucial to attract new foreign direct investment (FDI). “Until our existing investors are satisfied, we cannot talk about more FDI,” he said, adding that the government had moved in the right direction towards stability.
Highlighting the next phase of economic management, the Finance Minister said Pakistan must now focus on avoiding historic boom-bust cycles and move towards sustained and inclusive growth.
Pakistan today stands at a unique confluence of economic stability and favorable geopolitical tailwinds, he said, pointing to increased trade and investment opportunities with China, the United States and the Gulf Cooperation Council countries.
He stressed that structural reforms were essential to achieve sustainable growth.
The minister said the government’s reform agenda covers key areas, including taxes, energy, restructuring of state-owned enterprises, privatizations, resizing of the federal government, digital transformation, debt management and pension reforms.
These are the areas that analysts, think tanks and our bilateral and multilateral partners constantly highlight, he added.
Increase in tax collection
Meanwhile, FBR Chairman Langrial said the tax-gross domestic product (GDP) ratio has increased over the past year by 1.49 per cent, attributing the government’s effective measures to collections.
“The rate of filing individual tax returns has increased,” he said. “The FBR is implementing the fiscal measures approved in the budget; it has the support of all institutions.”
Power Minister Leghari, giving an update on reforms in the power division, said electricity prices have been reduced by Rs 10.5 in the last 18 months. He said the reduction for industrial units has been to the tune of Rs 16 per unit.
“We are also set to operationalize the Competitive Trading Bilateral Contract Market (CTBCM) in January or February next year to facilitate the electricity trading market,” he said.
Describing the move as the biggest reform in the energy sector, he said “this will free the government from the purchasing power business and consumers will get better electricity prices in the future,” according to Radio Pakistan.
Leghari said the government has also reduced circular debt, with a plan to clear the Rs 1.2 trillion circular debt without imposing additional burden on consumers in the next six years.
More to follow.
