No switch to put country on high-growth path from low growth: minister

ISLAMABAD: Federal Minister for Finance and Revenues Muhammad Aurangzeb has said there is no automatic switch to take the country from the path of low to high growth as it requires changing the growth model from import dependence to export-led growth.

“As long as our growth remains dependent on import-led growth and until and unless we change this growth model towards export- led growth, there will be no sustainable growth. It happened when we moved from the growth rate of 2.5 to 6-7 percent range, then we had shortfall of dollars and were left with no option but to negotiate a tough programme with the IMF. Now from the next fiscal year, we will start making this transition from import dependence to export-led growth,” the finance minister said in his exclusive interview on Geo News programme ‘Aaj Shahzeb Khanzada Kay Saath’ on Wednesday.

He said Pakistan would launch the Panda bond in the next fiscal year in order to tap liquidity from the Chinese market. In the post-EFF scenario from the IMF, he said, the government would approach Middle Eastern banks and secure commercial financing and support from them to primarily help the country with the trade business, etc.

“The first quarter of 2024 is much 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,” he said.

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 haven’t yet tapped China’s bond market, hoping that Pakistan would enter it in the ongoing year.

Ahead of the second and final review of the IMF’s $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).