ISLAMABAD: Finance Minister Muhammad Aurangzeb Tuesday forewarned that there are no sacred cows and everyone has to contribute to the economy and stated that dialogue with the International Monetary Fund (IMF) for the new programme is moving ahead positively.
While addressing a press conference after launching Economic Survey 2023-24 on Tuesday, the minister said that the EFF would be Pakistan’s programme which would be aided supported, helped, and funded by the IMF.
The minister said that there is no such thing as strategic SOEs, however, there can be strategic activity but this activity does not need to be kept in the public sector and has to be managed under the public-private partnership.
Aurangzeb highlights country’s progress towards economic stability
Aurangzeb said that Pakistan had a very constructive and productive discussion with the IMF because of the successful conclusion of the 9-month Stand-By-Arrangement (SBA). Going forward Pakistan is committed to the IMF reforms agenda as we have to increase the tax-to-GDP ratio, and fix the energy sector and SOEs. He said that the discussion with the IMF is progressing very positively and the government has to increase the tax-to-GDP ratio and reform the energy sector and SOEs.
About external financing under the fund programme, he said that the way the government managed the fiscal year 2023-24, and a similar pattern will follow in the next fiscal year (2024-25),- rollovers as well as expected commercial bank borrowings.
The minister said that the IMF is the lender of last resort and Pakistan had no Plan Band had to take the nine-month SBA. He said that Pakistan would have been in an entirely different situation if he had not gone to the IMF at that point in time.
The minister said although he has been in office only for three and a half months but even when he was in the private sector he was very loud and clear that Pakistan should take the IMF programme.
About the performance of the economy, he said that the LSM side was encouraging primarily because of interest rates and energy prices but termed agriculture as a saviour and stated that agriculture is going to remain a huge leverage of growth as the country goes forward.
On the fiscal side, he said that there was a 30 percent growth in revenue which was unprecedented and the federal government was able to relieve on primary balance to the IMF due to surpluses generated by the provinces.
He said that the current account deficit projection was $6 billion and now the latest forecast is it would be around $200 million this fiscal year because $3.2 billion in remittances in May would result in another month of surplus.
He said the currency stability was due to three of four reasons including prevention of Hundi/Hawala, smuggling and Afghan trade transit was checked and the SBP moved on structural side through which exchange company’s capital requirement was increased, exchange companies involved in speculation were phased out, etc.
Going forward the government will ensure that speculation does not resurrect.
He said that the foreign exchange reserves of the country are a little over $9 billion and these have not been funded by debt stock. As a result, this would help the country to start the next fiscal year on a very good and strong note.
The minister said that the inflation rate has also come down to 11.8 percent in May from 48 per cent which led to a reduction in the policy rate by 150 basis points and monetary easing has started and every central bank in the world does not want to reverse its decision in terms of easing.
He said the market has responded positively and foreign buying has come back into the market.
He said that track and trace was a “spectacular failure”.
He said that the DISCOs have to be run by the private sector and one thing is very clear these would not remain in the public sector.
In response to a question regarding capacity payment, the Minister of State for Energy Ali Pervez Malik said he felt that capacity payment was a huge burden due to which they could not give relief in the electricity price, adding that sovereign commitments have to be respected and dialogue and talks could be the only solution.
Asked about the problems and potential crisis facing the agriculture sector, the finance minister said that agriculture and information technology are two sectors that have nothing to do with the IMF and the government can make an intervention in terms of finance, seeds etc.
He said that the agriculture sector is a very critical pillar of growth.
He said PASSCO would be restructured and efforts would be made to get the government out of business sector.
The minister said that the sole purpose of the China visit was to rejuvenate the second phase of the China-Pakistan Economic Corridor (CPEC) and there were business-to-business meetings and debt rollover is an ongoing discussion which would be carried forward.
Copyright Business Recorder, 2024
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