Said Finance Minister Muhammad Aurangzeb
Federal Minister for Finance Muhammad Aurangzeb announced that Pakistan has finalized its program with the International Monetary Fund (IMF) and emphasized that this would be the last time the country seeks assistance from the IMF. Speaking at a press conference in Islamabad, Aurangzeb highlighted that to become part of the G20, Pakistan must focus on formalizing its economy and implementing structural reforms.
The $7 billion bailout package, approved recently by the IMF, comes with a series of reforms that the government has committed to. These include a restructured agriculture income tax, redistribution of fiscal responsibilities to provincial governments, and curbing subsidies to improve economic efficiency. Pakistan has been one of the IMF’s most frequent borrowers, with over 20 loans since 1958, making it the fifth-largest debtor of the institution. However, the Finance Minister expressed optimism that the measures undertaken would ensure this is the last IMF deal for the country.
Prioritizing Economic Stability Over Popularity
The Finance Minister stated that increasing tax revenues and expanding the tax base are crucial for long-term economic stability. He acknowledged that microeconomic stability is not an end in itself but a means to achieving broader economic goals. With around 732,000 new taxpayers registered this year, the total number of taxpayers has risen from 1.6 million to 3.2 million. He reiterated that non-filers will be barred from purchasing properties or vehicles to ensure compliance.
Enhancing Investor Confidence
Aurangzeb mentioned that Pakistan’s foreign exchange reserves are at their highest levels, and there has been notable growth in national and IT exports. This economic progress has boosted investor confidence, which is seen as a significant achievement.
The Finance Minister also highlighted a reduction in the policy rate by 4.5%, expressing confidence that both the exchange rate and policy rate will stabilize, providing a conducive environment for business growth.
Right-sizing the Government
In an effort to optimize the government’s structure, six ministries will be closed, while two others will be merged. Additionally, 150,000 posts across various ministries will be eliminated as part of a cost-cutting measure. This right-sizing initiative is aimed at improving governmental efficiency and reducing unnecessary expenses.
Declining Inflation Rates
Aurangzeb noted that inflation has dropped to single digits due to effective government policies. He pointed out that this decline is tangible and not just a hollow claim. He urged provincial governments to take further steps to reduce inflation and transportation costs in line with the reduced petroleum prices.
The Finance Minister concluded by asserting that the country is moving in the right direction. With structural reforms in place and a commitment to long-term stability, he believes Pakistan is on the path to economic improvement.