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Monday April 15, 2024

Finance Minister Aurangzeb aims for long-term macroeconomic stability

“First quarter of 2024 is better than first quarter of 2023. GDP is better, there is macroeconomic stability," he says

By Business Desk
March 13, 2024
Newly appointed Finance Minister Muhammad Aurangzaib, poses after taking oath in Islamabad, on March 11, 2024. — Ministry of Finance
Newly appointed Finance Minister Muhammad Aurangzaib, poses after taking oath in Islamabad, on March 11, 2024. — Ministry of Finance

Finance Minister Muhammad Aurangzeb said Wednesday he aims to establish enduring macroeconomic stability in Pakistan, which is poised to transition into sustainable growth amid the country's fiscal challenges.

“The first quarter of 2024 is better than the first quarter of 2023. GDP is better, there is macroeconomic stability, the exchange rate is also stable. We will now have to make this macro stability permanent,” Aurangzeb told Geo News’ Shahzeb Khanzada.

The debt-ridden economy, which shrank 0.2% last year and is expected to grow around 2% this year, has been under extreme stress with low reserves, a balance of payment crisis, inflation at 23%, policy interest rates at 22% and record local currency depreciation.

Aurangzeb, a veteran banker who has served at Pakistan’s largest commercial banks, took oath as the finance minister on March 11, and faces an uphill task to stabilise the economy.

In the interview, the newly-appointed finance minister said he would reduce the leakages in revenue and cut expenditure in the PSDP through public-private partnership.

For expanding revenue, he said successive governments so far haven’t tapped China’s bond market, hoping that Pakistan would enter it in the ongoing year.

Ahead of the second and final review of the International Monetary Fund’s (IMF) $3 billion Standby Agreement (SBA), he said that Pakistan is in a good position in terms of fulfilling prerequisites.

The Fund will hold the second review of the SBA this week, the finance ministry and the IMF said earlier in the day, during which the government will also ask for a new longer-term bailout.

The four-day review begins on Thursday and if successful, the IMF will release a final tranche of around $1.1 billion secured by Islamabad under a last-gasp rescue package last summer, averting a sovereign debt default.

"Pakistan has met all structural benchmarks, qualitative performance criteria and indicative targets for successful completion of the IMF review," the ministry added, hoping for a successful IMF staff level agreement after the appraisal.

In conversation with reporters a day earlier, the finance minister said Tuesday that Pakistan would seek a “large and long programme” from the IMF under the Extended Fund Facility (EFF).