Finance Minister Aurangzeb outlines Pakistan’s 3% growth target for FY2025, backed by fiscal reforms, IMF support, and private sector investment.
Finance Minister Sets 3% Growth Target for FY2025
Finance Minister Senator Muhammad Aurangzeb has set the goal of Pakistani economic growth of over 3 percent in fiscal year 2025, even though the country is facing serious problems of climate change and population pressures. He said that the government is making extensive fiscal reforms to stabilize the economy and also to lure sustainable investment by the private sector.
Aurangzeb Highlights Fiscal Reforms and IMF Support
In a talk that was held at an event hosted by The Atlantic Council in Washington D.C., called Reform Efforts in Pakistan and the Challenges Ahead, Aurangzeb provided information about the current reform agenda of the government. It took place with Fred Kempe as the President and CEO of The Atlantic Council, and Dr. Aasim M. Husain as a former IMF official and author of Rescuing Pakistan Economy as moderators.
Dr. Husain praised the finance minister that she had successfully passed the first year of the IMF sponsored program and had agreed at staff level recently to a new disbursement to Pakistan clearing the way. Aurangzeb attributed the disciplined fiscal policy to the revival of investor confidence, reduction of sovereign bond spreads, and the first current account surplus in 14 years of the history of Pakistan. He emphasized that the role of recognition by international bodies and rating agencies was an indication of increased trust in the reform process in Pakistan.
Post-Flood Reconstruction and Fiscal Stability
The finance minister highlighted the fact that Pakistan opted to finance post-flood relief and reconstruction through the domestic resources and not through foreign aid- a move that showed that the government had enhanced financial abilities. He disclosed that a 300-day national plan was rolled out to restore destroyed infrastructure and make the country more resilient to future climate shocks.
Tax Reforms and National Fiscal Pact
Aurangzeb went into detail describing various fiscal reforms plans such as expansion of the tax base such as the agriculture sector, retail sector, and the real estate sector. He has pointed out that data analytics are being used to bolster compliance, and sales tax collecting leakages are kept at a minimum by AI. By the end of FY2025, the government expects to increase the ratio of taxes to GDP to 11 percent, and to 13 percent in the medium term.
Speaking of the federal-provincial fiscal coordination, the minister focused on the National Fiscal Pact which was signed with provincial governments as one of the key milestones. He confirmed that preparations to the new National Finance Commission (NFC) Award are underway with the first meeting being scheduled in early November after a delay by the floods last year.
Private Sector and Export-Led Growth Strategy
In the future, according to Aurangzeb, the growth approach of Pakistan is moving toward a privately-led, export oriented approach. He pointed to the new National Tariff Policy aimed at decreasing the reliance on imports by decreasing the duties of the raw material and intermediate goods. The finance minister cited information technology, mineral exports and the Reko Diq mining project as one of the major drivers of growth in the next few years.
When the government was reasserting its position in terms of having a market-based exchange rate and a sound monetary policy, which was overseen by the State Bank of Pakistan, it was done by Aurangzeb. He emphasized the importance of productivity improvement and structural adjustments in order to attain a long-term sustainable growth. The meeting ended with Dr. Husain applauding the reform agenda and showing hope in the path that Pakistan will take to recover its economy.
