Aurangzeb updates Fitch team on economic ‘achievements’
ISLAMABAD: Finance Minister Muhammad Aurangzeb briefed officials of a global rating agency on Monday about Pakistan’s economy and the successful agreement with the International Monetary Fund (IMF) to stabilise macroeconomic indicators.
A virtual meeting via Zoom was held five days after the Business Monitor International (BMI), a subsidiary of Fitch credit ratings firm, released its detailed analysis of macroeconomic and political variables to provide insight into emerging trends in Pakistan.
Fitch forecast that the PMLN-led coalition government would remain in office for 18 months while implementing all IMF-mandated reforms. However, the rating agency cautioned that political turbulence could impact the country’s economy.
An official announcement said that Mr Aurangzeb informed the rating agency about multilateral institutions’ confidence in financing Pakistan’s projects and briefed them about Pakistan’s
Staff-Level Agreement (SLA) finalised this month with the IMF for a new medium-term programme aimed at bolstering Pakistan’s homegrown economic reforms agenda.
The minister apprised the Fitch representatives of salient features of the new programme, including setting a target of increasing tax revenues by 1.5pc of GDP in FY25 and by 3pc over the next three years. A primary surplus of 1pc of GDP will also be achieved in FY25.
During the meeting, Fitch Ratings was led by Senior Director Thomas Rookmaker and directors Asia Pacific Sovereign Krisjanis Krustins and Jeremy Zook. Senior officials of the finance ministry also attended.
The representatives from Fitch Ratings appreciated the ambitious targets and fiscal measures adopted by the government of Pakistan and acknowledged the improvement in economic indicators.
Mr Aurangzeb provided an extensive update on Pakistan’s current economic landscape starting with the successful completion of Pakistan’s nine-month Stand-By Arrangement with the IMF, emphasising its positive impact on the country’s macroeconomic indicators.
He highlighted Pakistan’s foreign exchange reserves reaching $9.4 billion, robust stock exchange performance, and CPI inflation at 12.6pc in June. He noted a 7.7pc increase in remittances.
Addressing fiscal reforms, Mr Aurangzeb emphasised the government’s efforts to broaden the tax base, citing a substantial 30pc increase in tax collection during FY24 compared to FY23. Furthermore, over 150,000 retailers have registered as first-time taxpayers.
IT exports crossed the $3bn mark for the first time in FY24. He reiterated the government’s commitment to further improving the tax-to-GDP ratio as part of ongoing fiscal consolidation measures.
The discussions encompassed the ongoing reforms in the energy sector and state-owned enterprises, including privatisation and rightsizing of federal government entities to streamline operations and improve governance, the announcement added.
Strategic SOEs
APP adds: The Cabinet Committee on State-Owned Enterprises (CCoSOEs) on Monday decided that National Insurance Company Ltd (NICL), State Life Insurance Company Ltd (SLICL) and Pakistan Re-Insurance Company Ltd (PRCL) did not meet the criteria of strategic or essential state-owned enterprises and would not be categorised as essential for the public sector.
A press release said the committee meeting, chaired by the finance minister, also considered the summaries presented by different ministries and divisions to categorise their relevant SOEs as strategic, essential, or otherwise.
The commerce ministry was directed to explore public-private partnership model for Pak Expo Company, whereas the committee also considered the summary presented by the Ministry of Science and Technology and approved to rename and restructure STEDEC into Indigenous Research and Development Agency (Pvt) Ltd.
It was further directed to constitute its board and operationalise the entity by December 2024. The CCoSOEs also approved the proposals of Aviation Division and Ministry of Communications for the appointment of candidates as independent directors on the boards of PIA Holding Company, Pakistan Postal Services Management and Postal Life Insurance Company Ltd.
The committee directed the Ministry of Communications to present proposals for categorisation of these entities at the earliest.
Published in Dawn, July 23rd, 2024