close
Friday May 24, 2024

Pakistan needs at least 3 years to implement IMF's structural reforms: FinMin

Finance minister says Pakistan doesn't need more policy prescriptions as it knows what it needs to keep economy steady

By Web Desk
April 16, 2024
Finance Minister Muhammad Aurangzeb speaking during an interview with US think tank Atlantic Council. — X/@Financegovpk
Finance Minister Muhammad Aurangzeb speaking during an interview with US think tank Atlantic Council. — X/@Financegovpk

WASHINGTON: As Pakistan eyes another International Monetary Fund (IMF) bailout package, Finance Minister Muhammad Aurangzeb said that the South Asian nation needs two to three years to implement structural reforms prescribed by the global lender. 

Aurangzeb is currently in the United States on his maiden visit to hold talks with the IMF for a fresh bailout package and attend the spring meetings of the World Bank. 

Pakistan doesn't need more policy prescriptions as it knows what it needs to keep the economy steady which is implementation of reforms, said the finance minister while speaking at the Atlantic Council think tank in Washington.

"We have known the what and why not for years but for decades. [...] It's time for us to actually start moving the execution of these aspects and why we're looking for a larger and extended program, so once we get into the execution we will need a two to three-year time period to go through the structural reforms," said Aurangzeb.

Aurangzeb said that if Pakistan — which has entered 24 programs with the IMF — doesn't go through the structural reforms, unfortunately, the country would still be looking for another program.

"The purpose is to agree on the priorities with the Fund and try to get the EFF in place as quickly as we can but these are just preliminary discussions," said the finance minister.

Pakistan entered in 'much better' shape in 2024 economically

Speaking about the country's economic outlook, Aurangzeb said that Pakistan entered this year in much better shape and a lot of it has to do with the nine-month Stand-By Arrangement (SBA) programme.

He said that the overall GDP was moving in the right direction, agriculture GDP and services sector are doing well inflation has come down from the peak of 37-38% and the exchange rate is stable, adding that all of this has moved the country in the right direction.

"Now we need permanence in the macroeconomic stability hence the discussion with IMF on a larger and extended program. We are also going to be focused on the growth aspects of it because when you are talking to Fund or you are in a Fund program, it's only about stabilisation."

Aurangzeb said that the ownership and the sponsorship of the next program comes from Prime Minister Shehbaz Sharif as he has been "quiet keen and vocal" that Pakistan is going to go in another program to run with the structural reforms agenda.

Ministry to bring under-taxed, untaxed sectors into net

When asked how is the Finance Ministry going to achieve close to balance budget, FinMin Aurangzeb said that they need to bring the under-taxed and untaxed sectors into the net.

When it comes to revenue and tax authority, Pakistan needs to go end-to-end digitalisation of the tax authority to minimise human intervention, he added.

"Its not just about revenue, its about transparency and client experience which is going to bring trust and confidence back into the tax authority."

He added that Pakistan needs to move towards public-private partnerships at federal and provincial levels.

When asked about Pakistan's priorities with reforms at the IMF and World Bank, Aurangzeb Pakistan deals with the effects of climate change and financial inclusivity.

"We are dealing with adaptation and financing and to the extent that these institutions come in to help countries like Pakistan from inclusive growth perspective and climate change perspective. Our interests are going to be very well aligned."