Won’t lose focus on ensuring structural reforms, FinMin tells foreign investors

Islamabad (APP): Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb said Tuesday that the government was focused on ensuring that Pakistan stays on the course of structural reforms in core sectors of the economy, including energy, SOEs, privatisation, taxation and rightsizing of government.

He said that in the past Pakistan has been seen as a single-tranche country but time has come to remove this perception and implement the structural benchmarks agreed under the programme with the foreign investors to ensure permanence to the macroeconomic stability.

He made this observation while talking to a group of investors led by Barclays, who called on the Minister at Finance Division.

The Minister briefed the delegation on various policy interventions and initiatives implemented during the last 12 months to reform the economy and also gave them an overview of the growth and macroeconomic stability in key economic indicators, including twin deficits, stable currency, foreign exchange reserves, and inflation that remained “a big story throughout the year”.

The Minister said the current macroeconomic stability was an outcome of a successful conclusion of the nine-month IMF Stand-by Agreement, initiated by Prime Minister Shehbaz Sharif and implemented with discipline, rigour and vigour by the caretaker administration, paving the way for a larger and longer EFF to bring permanence to the macroeconomic stability and implement structural reforms.

He highlighted a positive outcome of the macroeconomic stability for Pakistan was its ability to not only clear the Letters of Credit and Import backlogs by May and June last year, but also clear the payments of profits and dividends close to $ 2 billion to foreign investors.

He said the new fiscal year had started on a clean slate and noted the continuation of macroeconomic stability in the first quarter with the current account deficit remaining under control due to strong remittances, healthy RDA flows and exports showing positive trends in terms of diversification and a higher delta in IT exports and services as per August figures.

The Minister also referred to credit upgrades by the international credit rating agencies and shared plans to access the international capital markets.

He said the government had sent some powerful signals to the local market by scrapping some bank auctions to convey the message that it was under no desperation to borrow and it would only borrow at more palatable rates.

He said the government wanted the banks to start lending to the private sector on impersonal terms and also mentioned the incentives offered to banks in the budget this year for increasing their micro-lending to the private sector, particularly agriculture, IT ecosystem and the SME sector.

He also briefed the delegation about various steps and measures taken by the government to demonstrate its seriousness in implementing the reforms agenda, including the signing of a National Fiscal Pact between the federation and its four units to implement reforms in various sectors.

The minister said the government’s vision was simple and it was to let the private sector lead the growth with policy framework and continuity provided by the government.

To a question, the Minister noted a big drop in the inflation figures from a 38-pc high last year to a 44-month low of 6.9 per cent in September this year, which was a strong marker of economic recovery.

The members of the Barclays Investors delegation lauded the Minister for his thorough roundup of the Pakistan economy, and expressed their appreciation for the way “things have started looking up in Pakistan”.

They also appreciated the structural reforms and stability visible in different sectors of the economy and evinced keen interest in exploring opportunities for participating in the growth of Pakistan's economy though investment and business collaborations.