ISLAMABAD: Federal Minister for Finance Muhammad Aurangzeb on Tuesday maintained there is a dire need for improving energy equation to run the industry besides paying attention to 70-80 loss-making State-Owned Enterprises (SOEs), which contribute roughly 90 percent to the total losses.
Speaking in the National Assembly, Aurangzeb said the country could no longer bear the burden of the loss-making entities as it results in massive annual losses to the national kitty.
With the current account deficit miraculously transformed into a surplus and foreign exchange reserves soaring to $8 billion, he stressed the need to impose more taxes and energy sector reforms to facilitate export growth and mitigate institutional losses.
Aurangzeb briefs global FIs on reform initiatives
Amid talks with international financial institutions including the International Monetary Fund (IMF) and the World Bank, he said the global community is taking keen interest in Pakistan’s economic success, citing talks with his co0unterparts of Saudi Arabia, the UAE and China during his recent visit the US.
“The road back to the market, for which we need to increase our export and take forward the external borrowing. I spoke to rating agencies like Moody’s, Fitch and S&P and this time, we are deep junk as we are at triple-C and […] at some point of time, we have to go into investment grade to access the international capital market as dealing the external front has always been our issue,” he added.
He said “this year, from where we’d started, we are in a much better position than last year,” adding “as in fiscal position, we have surpluses and the current account deficit has been converted into surplus as the State Bank of Pakistan (SBP) issued the numbers of March yesterday.”
About the foreign exchange reserves, he said that it had gone to $3.4 billion which is equivalent to 15-day import cover, which is now at $8 billion. He said the next tranche of $1.1 billion will be received this week and by June this fiscal year will wrap up between $9-10 billion which is equivalent to two months’ import cover.
He said the stock market, which is a data point, is at an all-time high. It reflects the sentiments of the friendly countries given his talks with the IMF, the World Bank, the ADB, the AIB and the AIFC representatives, adding that all his counterparts from Saudi Arabia and UAE, Turkey and China wanted the economic success of Pakistan.
“This is what I am trying to tell you that there is huge support for us from abroad, and the people who are here also want us to come out of this crisis,” he added.
He said the agriculture economy is growing at 5 percent as “we have a bumper crop, while dairy and livestock business has also increased remarkably.”
The minister said the IMF and external borrowing would have no impact on agriculture and IT as “it all depends on us how we facilitate these two sectors”.
He claimed that the IT sector of the country will export $3.2 to $3.3 billion software this year, which is a big achievement.
He said that the country will have to come out of IMF borrowing at all costs but it would not be possible without structural reforms, adding that “with nine percent tax-to-GDP growth, as majority of the countries are at 13, 14 and 15percent while the neighbouring India is at 18 percent.” “We cannot impose the same old sectors with super taxes windfall taxes as this has now become outdated, as our friend countries want equity investment and that is the reason, we have no option but to take difficult decisions,” he added.
About ending the Riba system in the country, he said the government is already implementing the Federal Shariat Court (FSC)’s decision gradually, and that is the reason a large number of banks are switching to Islamic banking from the conventional system.
Responding to the finance minister’s speech, the opposition leader in the National Assembly Omar Ayub said that both direct and local investment would not be possible unless the rule of law is ensured in the country.
He said that there exists no constitution and rule of law as scores of political workers are languishing in jails for the last many months, which would dent the confidence of the investor.
He said that the private sector has gone down the drain due to political instability in the country, adding Pakistan’s private sector borrowing has plunged by 86.3 per cent to Rs57.4 billion in the first half of the current FY23, compared to Rs419 billion during the same period last year.
Copyright Business Recorder, 2024
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