ISLAMABAD - Finance Minister Muhammad Aurangzeb on Tuesday said that no plan-B could be imagined without the International Monetary Fund (IMF), which is often the “last option” for a country.
Pakistan has recently requested the IMF for a fresh loan programme. Finance minister stressed that apart from the IMF, no plan B could be imagined, with the new staff-level agreement expected in June or July. He informed that discussions will commence upon the arrival of the IMF mission to Pakistan, expected by mid-May. “We hope that if everything goes well and the privatization is agreed upon, the staff-level agreement will be signed at the end of June or the beginning of July,” he added.
He explained that the economic situation of the country has improved due to the government’s efforts as the tax collection is increasing and the current account is in surplus, which are signs of progress. He emphasized that despite challenges, the economy are on an upward trajectory, with measures such as the IMF’s nine-month program providing crucial support to the economy.
He further said that Pakistan’s foreign exchange reserves are stable. “The country’s foreign exchange reserves have increased and will reach $10 billion by June [this year],” the Finance Minister said while addressing the 7th Leaders in Islamic Business Summit in Islamabad. He further said that foreign exchange reserves held by the central bank are currently around $8 billion, which would enhance to over $9 billion after getting the last tranche from the International Monetary Fund (IMF) under stand-by arrangement by the end of this month. He said reserves are in a much better position in comparison to the previous year when the foreign exchange reserves had dropped to $3.4 billion.
He said that there is nothing to worry about regarding the registration scheme for traders. Talking about tax cases worth billions pending in tribunals, Finance Minister said the law minister has been asked to look into these matters. “There is Rs1.73 trillion worth of cases awaiting resolution. These tribunals are under the jurisdiction of the administration. We have to solve this matter, not the courts,” he stressed.
Regarding structural reforms, Minister Aurangzeb stressed the importance of reforms in sectors like energy to attract investment. He reassured that the government is actively working to create an enabling environment for investment. He also made it clear that no one was forcing Pakistan to do anything, “we are going to the 24th IMF program for the sake of national interest at our own will”. Minister Aurangzeb reiterated that participation in the IMF program is a strategic decision made in the national interest, emphasizing the government’s commitment to economic stability and growth.
As Pakistan navigates economic challenges and works towards sustainable growth, Minister Aurangzeb’s remarks underscore the government’s determination to implement reforms and pursue policies that benefit the nation’s economy and its citizens.
Talking about the economic situation of the country, he said that the gross domestic product (GDP) growth is expected to be at 2.6% in FY2024. The government is taking steps to attract foreign investment and has set targets to keep the current account and fiscal deficits within reasonable limits. “The CAD has been reduced to $1 billion after a 74% reduction in the FY24,” the minister said, adding that the inflation is expected to remain at 24% during the ongoing fiscal year.
Whereas the trade deficit has also been slashed to $17 billion after a 24.9% reduction, he remarked.”Steps have been taken to improve the performance of the agriculture sector [which has] a growth rate of 5%,” he added. Commenting on the improved revenue generation, Aurangzeb said that the Federal Bureau of Revenue (FBR) has witnessed a significant 30.2% increase in its tax collection to surpass its Rs6.707 trillion target during the current fiscal year.
Meanwhile, Minister for Finance Muhammad Aurangzeb, in a first private member day of the National Assembly, expressed the hope that the country’s economic situation is getting better and the next IMF tranche of 1.1 billion dollars would be received soon.
The Minister, responding to the concerns raised by the parliamentarians on Tuesday, claimed that foreign exchange reserves were 3.4 billion dollars and after making payment of Euro bond with interest, foreign exchange reserves touching 8 billion dollars.
He said there was 74 percent decrease in the current account deficit as it reached $1 billion as compared to $3.9 billion previously.
“There are many surpluses as far our fiscal situation is concerned and current account deficit has been converted into surplus,” he said, comparing it with the previous economic situation in the country. Aurengzeb that the ongoing fiscal year would wrap up with foreign exchange reserves between 9 to 10 billion dollars. He hinted at structural reforms saying that Pakistan could not go ahead with 9 percent tax to GDP ratio. “I will request the Parliament to extend its support to the government to increase in tax revenue and improve energy equation,” he said. The Minister said that the friendly countries and international financial institutions were seeing better economic situation of the country.”