Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb on Wednesday admitted that the country’s debts had increased by 41 percent, hinting at further cut in policy rate and electricity prices, reported 24NewsHD TV channel.
Addressing the 78th Independence Day and Maarka-e-Haq celebrations at the Rawalpindi Chamber of Commerce and Industry (RCCI), Aurangzeb, however, the situation would improve with the repayment of the debts.
The minister claimed that the country’s economy had improved during the last one and a half year. “The government has significantly brought down the rate of inflation and the policy rate,” he added.
Aurangzeb said the government would speed up the privatization of loss-making state-owned entities. He said it was for the first time in the country’s history that the agricultural income had also been taxed. “We had no other option, but to broaden the tax base,” he said.
The minister said that a task force was working on a further reduction in electricity prices, hinting at potential easing of country’s policy rate later this year, noting slowing inflation and stable economic indicators.
Aurangzeb said “I am always careful that the policy rate and the market-based exchange rate are very much under the purview of the State Bank of Pakistan (SBP) and the Monetary Policy Committee (MPC). Having said that, citing core and average inflation, my personal view is that I do think there is room to do more in terms of the policy rate. I am very hopeful that during this calendar year, we will see movement on the policy rate going south,” he said.
During his address, the minister said that the international financial organisations have lauded the government’s economic reform agenda. “S&P and Fitch have already upgraded us, and I am very hopeful that soon the third agency [Moody’s] will also upgrade us,” he said.
Shifting to trade development, Aurangzeb said the recently announced trade deal with the United States “provides a fantastic opportunity to capitalise on”.
The government believes that Pakistan’s exporters are poised to gain a significant competitive edge in the US market after the government successfully negotiated a reduction in reciprocal tariffs from 29% to 19%. This marks the lowest tariff rate in the region and presents a major opportunity to boost Pakistan’s exports to the US.
Meanwhile, the finance minister elaborated on his government’s economic performance, saying that in recent years the size of the economy and overall income have increased, there is stability in the financial sector, a record reduction in fiscal deficit and inflation, the current account is in surplus, and a record rise in remittances is registered.
“National security and economic stability are essential for each other, and it is encouraging that over the past one and a half year, we have made strong progress on the economic front,” said Aurangzeb.
He said that last year the government reduced its debt servicing cost by Rs1 trillion. It intends to repeat this feat in the current fiscal year as well, he said, saying the transformation in the Federal Board of Revenue (FBR) is underway. “I am very clear that taxation needs to be brought to a regionally competitive level. We cannot further burden the salaried class and the manufacturing sector,” he added.