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Monday May 27, 2024

No Plan B to IMF bailout: Aurangzeb

Aurangzeb ruled out possibility of any “Plan B” and made it clear Pakistan would go for longer and larger size of IMF programme to implement the long-awaited structural reforms

By Mehtab Haider
April 24, 2024
Minister for Finance and Revenue Muhammad Aurangzeb delivered a keynote address at Leaders in Business Summit Islamabad on April 23, 2024. — PID
Minister for Finance and Revenue Muhammad Aurangzeb delivered a keynote address at Leaders in Business Summit Islamabad on April 23, 2024. — PID 

ISLAMABAD: Minister for Finance and Revenue Muhammad Aurangzeb has ruled out the possibility of any “Plan B” and made it clear Pakistan would go for longer and larger size of IMF programme to implement the long-awaited structural reforms.

“There is no Plan B. Government will go for longer and larger size of IMF programme, and then will turn into execution mode to jack up tax-to-GDP ratio, fixing cash bleeding of energy sector, bringing reforms into SOEs and privatising PIA and other loss-making entities,” the minister for finance said.

He was addressing the inaugural session of Leaders in Islamabad Business Summit 2024. The session was organised by the Nutshell Group in collaboration with OICCI and others here Tuesday.

In his speech, the minister said commercial financing nosedived in the wake of deterioration in the ratings of international creditors. Now after striking a fresh bailout package from the IMF, commercial financing would be resumed after improvements by the rating agencies.

He said there would be a roadmap that the next 24th IMF programme should be the last. The country then would have to move into the execution mode instead of waiting for prescriptions. “We are going for IMF programme which is owned by us and funded by IMF,” he said. He said foreign exchange reserves were expected to go up close to $10 billion till the end of June 2024.

The minister said he held a meeting with the World Bank high-ups during his stay in Washington. He attended annual spring meetings of Breton Wood Institutions (BWIs) and WB highlighted to set few priority areas for long-term basis, including climate change, digitisation in FBR and stunting of children in Pakistan for the next 5 to 15 years period for which the Bank would also extend its financial support.

He hoped the GDP growth would be returned into positive trajectory, as the agriculture growth would be hovering around in the range of 5pc, while inflation would be receding due to improved agriculture productivity and base effects. He said it was the jurisdiction of SBP to talk about the monetary policy, but there was possibility of reducing inflation with the hope to decline in the range of 5 to 7pc by September 2024. There are hopes the monetary policy will also show declining trends.

He said there were no bindings of the IMF for improving agriculture and IT sector, as incentives could be given to achieve its maximum dividends. He said IT exports could be jacked up from $3 billion to $25 billion, but in the short to medium term it could be increased up to $8 to $10 billion.

The textile sector was bound range, and there is a huge potential in metal and mining and other sectors. He said rice exports helped the country. The current account deficit remained surplus for March 2024, he said.