Pakistan's economy moving in right direction following structural reforms: Finance Minister

Islamabad: Pakistan's Finance Minister Muhammad Aurangzeb on Monday said that the country's economy was moving in the right direction following a series of structural reforms.

Aurangzeb made the comments while addressing a joint press conference along with Power Minister Awais Leghari, Information Technology Minister Shaza Fatima Khawaja, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial and Adviser to the PM on Privatisation Muhammad Ali.

The government has made “significant progress” toward achieving macroeconomic stability, he said, adding that the staff-level agreement recently reached with the International Monetary Fund (IMF) validates Pakistan's economic recovery efforts.

“I believe there is a broad consensus that we have made significant inroads and achieved considerable progress in terms of macroeconomic stability,” he said.

He said three leading international rating agencies upgraded Pakistan's status after a gap of three years. “These agencies are now aligned not only on where we stand but also on our positive outlook,” he added.

He said that the government's primary objective is to ensure sustainable economic stability through structural reforms. “Fundamental reforms in the tax system, energy sector, and other key areas are essential for long-term growth,” the minister said.

Aurangzeb said that the structural reforms like in right-sizing and new pension laws were now being operationalised to ensure sustainable and inclusive growth.

“When the exchange rate stabilises, foreign exchange reserves rise, inflation declines, and the policy rate comes down, the benefits are evident for industries,” he said, adding that investors had repatriated more than USD 4 million in profits and dividends.

The minister said the government’s reform agenda covered key areas, including taxation, energy, restructuring of state-owned enterprises, privatisation, rightsizing of the federal government, digital transformation, debt management and pension reforms.

He said investor confidence was crucial for attracting new foreign direct investment (FDI) and stressed that the government had moved in the right direction toward stability.

The finance minister said Pakistan must now focus on avoiding historical boom-and-bust cycles and move toward sustained and inclusive growth.

Power Minister Leghari said that electricity prices have been reduced by PKRs 10.50 over the last 18 months. He said the reduction for the industrial units has been to the tune of PKRs16 per unit.

“We are also set to operationalise the Competitive Trading Bilateral Contract Market (CTBCM) in January or February next year to facilitate the electricity trading market,” he said. “This will free the government from the business of purchasing power, and the consumers will get better prices for electricity in future.“ Minister for Information Technology and Telecommunication Shaza Fatima said the PM had formed three committees on the cashless economy and we are moving towards a cashless economy.

FBR Chairman Langrial said that Pakistan's tax-to-GDP ratio has increased by 1.5% for the first time. He said that the rate of filing individual income tax returns has also increased this year, with the number of taxpayers rising to 5.9 million. He added that income tax filings saw an 18% jump compared to the previous year.

He also said that the government aims to raise its tax-to-GDP ratio to 18% in the coming years, adding that comprehensive tax reforms cannot be achieved within a single year.

Adviser to the PM on Privatisation Muhammad Ali said the government is ensuring transparency in the privatisation process, which will be accelerated, noting that First Women Bank was sold for PKRs 5 billion and added that the UAE company that bought the bank has now entered Pakistan.

He said progress has been made on the privatisation of the Pakistan International Airlines.