Islamabad: As Pakistan continues to grapple with economic challenges, Finance Minister Muhammad Aurangzeb has emphasized the crucial role of reforms in liberating the country from its reliance on the International Monetary Fund (IMF). Speaking at the groundbreaking ceremony of the new head office of the Securities and Exchange Commission of Pakistan (SECP) in Islamabad, Aurangzeb outlined the necessity of economic reforms for sustainable development and highlighted the private sector’s vital role in the country’s economic future.
The Path to Economic Independence: Aurangzeb stressed that the country’s development hinges on comprehensive economic reforms. “Reforms are essential to get rid of the IMF,” he stated, underscoring that the government’s strategy includes empowering the private sector to drive economic growth. This approach comes at a time when Pakistan has secured a 37-month, $7 billion bailout program from the IMF, pending approval from the lender’s executive board.
International Support and Debt Restructuring: The approval of the IMF package is contingent upon Pakistan securing $12 billion in debt profiling from friendly nations, including $5 billion from Saudi Arabia, $4 billion from China, and $3 billion from the United Arab Emirates (UAE). These funds are crucial for easing the country’s debt burden over a three to five-year period.
Pakistan faces significant economic woes, exacerbated by a weakening local currency and dwindling foreign exchange reserves. The country needs to repay $24.8 billion in external debt during the current fiscal year, with $21.2 billion earmarked for principal repayment and $3.6 billion for interest payments.
Positive Economic Indicators: Despite these challenges, Aurangzeb pointed to several positive developments. He noted that Fitch Ratings has upgraded Pakistan’s rating, reflecting improved global confidence in the country’s economic outlook. Additionally, the State Bank of Pakistan has reduced the policy rate from 20.5% to 19.5%, marking the second rate cut in a row, driven by a slight cooling in inflation.
The finance minister highlighted the importance of the private sector, stating that it is being encouraged to take a leading role in the economy. The government, he assured, will refrain from engaging in businesses that should be managed by the private sector. Aurangzeb also emphasized the need for reforms in the power sector to attract foreign direct investment, asserting that the government’s role is to provide a conducive policy framework.
Deputy PM Dar’s Optimism: Deputy Prime Minister Ishaq Dar echoed Aurangzeb’s sentiments, reassuring that despite Pakistan’s $130 billion foreign debt, the country has significant economic potential. Dar emphasized the government’s focus on increasing exports and continuing development projects, even with limited resources. He described the ongoing reforms as the “need of the hour” to unlock economic opportunities and overcome challenges.