Aurangzeb for urgent economic reforms to restore credibility

ISLAMABAD: Federal Minister for Finance Muhammad Aurangzeb said on Thursday that the “country has lost its credibility,” emphasising that urgent economic reforms are necessary to restore trust.

During a meeting of the Senate Standing Committee on Climate Change, headed by Senator Sherry Rehman, the top financial czar briefed lawmakers on the country’s climate financing challenges and its negotiations with international lenders.

Aurangzeb also said that a team of the International Monetary Fund (IMF) would be in Pakistan for a four-day visit next week to take forward the discussion on a $1 billion fund for climate resilience.

Pakistan seeks sustainable growth as Aurangzeb highlights structural reforms: report

“The next IMF mission is scheduled for February 24 to 28, which will be here to take the climate resiliency fund discussion forward,” he told reporters during an informal talk with reporters after the meeting.

He said the Asian Development Bank (ADB) had committed $500 million, while Pakistan expects to secure $1 billion from the IMF next week.

“For now, talks will be held on the structure for the amount with an agreement as a goal. In my opinion, the amount should be at least $1 billion,” he added.

Amid the government’s ongoing strenuous efforts to stabilise the economy after a rather tumultuous period, the minister said the government was also working on issuing Green Panda Bonds to attract further investment.

He also announced a major shift in tax policy, stating that the Finance Ministry will now oversee tax policy, while the Federal Board of Revenue (FBR) will focus solely on tax collection.

He also stressed the need for structural reforms to achieve sustainable and inclusive economic growth.

During a briefing, conducted in collaboration with the Ministry of Finance, Senator Rehman underscored the pressing need for structured financial solutions to bridge the estimated $340 billion funding gap necessary for sustainability.

She emphasised that Pakistan’s financial capacity remains significantly lower than that of Bangladesh, a critical disparity that requires immediate intervention.

“Climate finance is not just about pledges; it’s about ensuring timely access to funds and building institutional capacity for climate resilience,” she added.

“Our existing financing structures are inadequate, and without robust financial solutions, Pakistan will continue to lag behind in climate adaptation and mitigation.”

Aurangzeb also acknowledged the significant challenges in climate adaptation and financing, emphasising the need for a structured approach that incorporates key enablers such as the National Adaptation Plan and National Climate Finance strategy.

“Green technology is pivotal for sustainability, but clear definitions and parameters are essential for effective monitoring and reporting. The World Bank’s Country Partnership Framework prioritizes climate financing, while discussions with the IMF under the Extended Fund Facility are ongoing, with around $1 billion expected,” he added.

However, he said that bureaucratic hurdles continue to obstruct access to climate funds, highlighting the need for streamlined processes, adding to advance climate resilience, we must optimise existing resources and collaborate closely with partners like the United Nations Development Programme (UNDP).

It was mutually agreed by Senator Sherry Rehman and Aurangzeb that climate financing must be creatively programmed to ensure effective resource mobilization and project execution.

Addressing the Electric Vehicle (EV) Policy, Rehman emphasised the importance of launching and incentivising EV adoption to reduce carbon emissions and combat urban pollution.

“We must ensure that the EV Policy is not just on paper but actively implemented with proper incentives. This will not only reduce Punjab’s smog but also set the stage for a green energy transition across the country,” she added.

Aurangzeb supported this stance, reiterating that policy mapping in the budgeting process is essential to align EV initiatives with broader economic objectives.

He announced the establishment of an advisory board to oversee various policy matters. The stakeholders, including the finance minister agreed with Senator Rehman that addressing taxation anomalies is crucial for the successful implementation of the new EV policy.

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Senator Rehman emphasised “removing these barriers would incentivize both importers and manufacturers,” adding as seen globally, such measures are essential to reduce pollution and facilitate the transition to an electric vehicle ecosystem.

“Given its environmental challenges, Pakistan stands to benefit from this shift more than any other country.”

She further emphasised the need for urgent policy reforms to address limitations in carbon sinks and forestry projects, which have reached their maximum capacity.

She stressed that mangrove restoration efforts, currently managed through private-sector partnerships and federal government-issued no-objection certificates (NOCs), require a policy shift to allow Sindh to utilise the entire delta without bureaucratic restrictions.

“Reliance on private funding alone is unsustainable. Innovative financing solutions, including targeting foreign markets for waste management, must be explored,” she added.

“Biogas and other waste management models offer potential, yet bureaucratic inefficiencies continue to hinder progress. Institutional capacity gaps prevent the effective utilisation of vertical funds, and securing $50 billion annually remains unrealistic without proper financial management.”

She called for a structured approach, including measurable project metrics and debt swaps, to significantly improve financial viability.

“Engaging experts and enhancing institutional agility, including within UN agencies, is critical. Above all, climate action cannot succeed without the direct involvement of both the Finance and Planning Ministries, underscoring the urgent need for a dedicated financial cell within the Ministry of Finance.”

She concluded the session by highlighting the committee’s outreach to provincial governments, adding there is a need to actively engage with all provinces to ensure cohesive climate action across the country.

Copyright Business Recorder, 2025