Key Takeaways
- Pakistan must prioritize exports, productivity, and private-sector investment for sustainable growth.
- The Finance Minister highlighted that stability alone is not enough to ensure long-term economic success.
- Reforms in taxation, privatisation, and tariffs are aimed at making businesses more competitive.
Finance Minister Senator Muhammad Aurangzeb has called for a shift in Pakistan’s economic strategy, urging the country to focus on exports, productivity, and private-sector investment to avoid another cycle of crises.
Speaking at a policy dialogue titled ‘From Stabilisation to Growth: Pakistan’s Long-Term Reform Agenda,’ hosted by the Lahore University of Management Sciences (LUMS) and the American Business Forum (ABF), Aurangzeb emphasized that stability alone is insufficient for sustainable growth.
He warned that a return to consumption-led growth could set the recovery back by four to five years, stressing the need for a more robust and sustainable approach.
The minister highlighted significant progress on macroeconomic stability, noting that the twin deficits had fallen from 12.5 per cent of GDP at the start of the reform process to 2.6 per cent by the end of the last fiscal year.
Other achievements include a 22-year low in the fiscal deficit, a current account deficit of about 0.1 per cent of GDP, and foreign exchange reserves that have climbed to more than three months of import cover.
Aurangzeb also mentioned that Pakistan has received three credit-rating upgrades since April last year, indicating improved economic performance.
However, he stressed that these achievements alone are not enough, and reforms in taxation, privatisation, debt management, and tariffs are essential to make businesses more competitive and encourage investment.
As part of this, control of the Export Development Fund has been moved from bureaucrats to the private sector, allowing exporters to set their own priorities.
Reforms in livestock, dairy, and energy are also underway, with livestock and dairy making up about 63 per cent of agricultural GDP.
The government is pursuing the privatisation of state-owned enterprises and has received bids for three power distribution companies.
Tariff cuts are designed to lower the cost of imported raw materials and intermediate goods, helping businesses compete internationally.
IT services exports have grown from under USD1 billion to USD4.6 billion and are expected to reach USD5.5 billion this fiscal year.
Exporters are being supported with financing at 4.5 per cent and surplus electricity at Rs23 per unit.
Pakistan must move beyond economic stabilisation and build growth on exports, productivity and private-sector investment if it is to avoid another cycle of crises.
Senator Muhammad Aurangzeb, Finance Minister
