LAHORE
\nFinance Minister Muhammad Aurangzeb has ruled out pursuing liquidity-fuelled, consumption-led economic growth, saying Pakistan must prioritise sustainable, export-led expansion and continue with tariff reforms to improve the competitiveness of its industries.
\nThe finance minister was speaking at the Lahore University of Management Sciences (Lums) on Saturday at an event organised by the American Business Forum (ABF). ABF President Osman Khalid Waheed, former State Bank governor Raza Baqir and Habib Group Vice Chairman Salman Burni also spoke.
\nAurangzeb said Pakistan could not afford to repeat the cycle of import-dependent growth that had previously led to balance-of-payments problems and forced the country to seek support from lenders of last resort.
\nHe said the government was committed to continuing tariff reforms, primarily to reduce the cost of raw materials and intermediate goods for exporters, despite concerns over the timing of the measures.
\n\u201cWe are very clear: no matter how much pressure there is, we are not going to go for liquidity-fuelled, consumption-led growth,\u201d he said, adding that Pakistan needed to avoid another cycle in which a temporary acceleration in economic activity was followed by a balance-of-payments crisis.
\nAurangzeb said the government had attempted to provide a direction towards export-led growth in the latest budget through measures including the elimination of super taxes, reductions in tax slabs and financing for exporters at 4.5 per cent.
\nOn tariff reforms, he said the government had protected domestic industries for too long without sunset clauses and that the existing approach could not continue indefinitely.
\n\u201cWe are in year two of the tariff reform, and we are going to continue with that; there is no turning back,\u201d he said.
\nThe finance minister also stressed that economic growth needed to generate employment, pointing to the contrast between Pakistan\u2019s growth trajectory and that of its neighbour, where growth of 7 to 8pc, he argued, had not translated into sufficient job creation.
\n\u201cThat\u2019s why you see people there where they are,\u201d he said, emphasising that the sectors driving growth must also address unemployment.<\/p>\n
Global outlook remains uncertain
\nReflecting on discussions at international forums in New York, London and the annual meetings of the World Bank and the International Monetary Fund (IMF) in Bangkok, Aurangzeb said the global economy had remained resilient but faced an uncertain and worrying outlook.
\nHe identified growing differences in economic fortunes between oil-exporting and oil-importing countries, as well as economies benefiting from artificial intelligence, as key themes in discussions on global growth.
\nEnergy shocks and the El Nino weather phenomenon had featured prominently in discussions, he said, warning that their effects were intensifying and contributing to food-security concerns in some parts of the world.
\nHe also highlighted high debt levels, limited fiscal space in some economies and the growing importance of digital infrastructure and labour-market preparedness for artificial intelligence.
\nAs trade fragmentation and geopolitical polarisation intensified, regional corridors and regional blocs were emerging as significant opportunities, he said, adding that these developments could be particularly important for Pakistan.<\/p>\n
Twin deficits narrow
\nThe finance czar said Pakistan had made significant progress in reducing its fiscal and external imbalances, with the combined twin deficits falling from 12.5pc of gross domestic product (GDP) to 2.6pc by the end of the last fiscal year.
\nHe said the fiscal deficit had dropped to a 22-year low, while the country had recorded primary surpluses for three consecutive years. The current account deficit narrowed to around 0.1pc of GDP, supported by remittances and IT exports.
\nAurangzeb said IT export services had risen from less than $1 billion to $4.6bn and were projected to reach $5.5bn in the current fiscal year. Foreign exchange reserves had improved to over three months of import cover, compared with two weeks during the crisis.
\nCiting three credit-rating upgrades since April last year, he said a recent Panda bond had attracted an order book twice its size, reflecting investor confidence beyond Pakistan\u2019s current IMF programme, due to end in October next year.<\/p>\n","protected":false},"excerpt":{"rendered":"
LAHORE Finance Minister Muhammad Aurangzeb has ruled out pursuing liquidity-fuelled, consumption-led economic growth, saying Pakistan must prioritise sustainable, export-led expansion and continue with tariff reforms to improve the competitiveness of its industries. The finance minister was speaking at the Lahore University of Management Sciences (Lums) on Saturday at an event organised by the American Business […]<\/p>\n","protected":false},"author":2,"featured_media":537700,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-574033","post","type-post","status-publish","format-standard","has-post-thumbnail","category-top-news"],"yoast_head":"\n