Reforms averted default: Ahsan

ISLAMABAD: Federal Minister for Planning Ahsan Iqbal on Thursday said that Pakistan has transitioned from near economic collapse in 2022 to a phase of macroeconomic stability, crediting tough but necessary reforms for this turnaround.

Speaking at a press conference at the P Block Auditorium, he said, “When we assumed office, Pakistan was on the brink of internal default, the rupee was crashing, reserves were depleted, and we faced a collapsed economy. What critics called austerity was, in reality, a rescue operation.”

He noted that the GDP has rebounded to 2.7pc in the current fiscal year, with a growth target of 4.2pc set for 2025–26. “We’re now financing debt and defence from our own resources. Soon, we’ll be self-sufficient in development spending,” he added.

The minister said the Planning Commission would propose removing population as a primary criterion in the National Finance Commission (NFC) Award formula.

He described the current approach, where population plays a dominant role in determining the distribution of financial resources among provinces, as regressive, arguing that it incentivises provinces to inflate population figures for greater fiscal allocations.

Ahsan Iqbal said the process of devolution under the 18th Amendment remains incomplete. While powers were shifted from the Centre to the provinces, the provinces, he noted, have largely retained authority without devolving it further to the district level. “This should now be part of our national agenda—ensuring that governance reaches the grassroots level to improve service delivery,” he stressed.

The minister stated that the government is committed to a gradual and stable economic recovery, avoiding past patterns that led to twin deficits. “This time, the Urran will not be allowed to crash,” he asserted.

Ahsan Iqbal pointed out that development spending through the Public Sector Development Programme (PSDP) has declined from 2.6pc of GDP in 2017–18 to just 0.8pc, which he called a serious concern. However, he added that provinces’ share in development has increased, bringing the total national development outlay to Rs4.2 trillion.

Addressing a question about salary hikes for the Senate chairman, National Assembly speaker, and parliamentarians, Ahsan remarked that provincial ministers now earn more than federal ministers and MNAs. “Even my subordinates are drawing higher salaries. I receive Rs200,000 a month, while the Planning secretary gets Rs500,000,” he said.

Outlining key targets, Ahsan Iqbal said the government is pursuing 4.5pc growth in agriculture, supported by Rs4.2 billion in investment in crop productivity, livestock, modernisation, and mechanisation — augmented by initiatives like the Punjab Kissan Card. Industry is projected to grow at 4.3pc, aided by lower tariffs and improved energy supply, while the services sector is expected to grow at 4pc, driven by IT exports, digital retail, and fintech. He projected that inflation will remain within 7pc to 7.5pc, thanks to easing global oil prices and a stable exchange rate. Remittances, growing exports, and foreign inflows are also contributing to macroeconomic stability. “The world is acknowledging Pakistan’s turnaround,” he said.

Ahsan Iqbal noted a marked improvement in investor confidence, citing the IMF’s approval of $1.4 billion under the RSF, a first for Pakistan. He also highlighted the successful completion of the SBA programme, the second tranche under the EFF, and credit rating upgrades by Fitch and Moody’s. The World Bank’s ten-year $20 billion Country Partnership Framework, he said, reflects strong international trust in Pakistan’s reform trajectory.

He emphasised that the fiscal deficit has declined from 5.9pc to 3.9pc, and remittances are expected to reach $38 billion this year. Additionally, Rs140 billion in losses from power sector companies have been curtailed, and $5 billion in new energy exploration and production investments have been secured.

The minister said the FY2025-26 budget aligns with the ‘Urran Pakistan’ five-sector growth strategy, offering relief to the salaried class and pensioners, simplifying taxes for small businesses, and boosting social protection. The BISP budget has been increased to Rs716 billion, he said, reaffirming the government’s commitment to inclusive development.

He also shared that under the 13th Five-Year Plan, total development spending of Rs17 trillion is envisaged — Rs7 trillion from the federal government and Rs10 trillion from provinces. This year’s Rs4.2 trillion outlay, he said, reflects ambition despite constraints. “We requested Rs1.6 trillion for the federal PSDP, but only Rs1 trillion was approved, leading us to drop 367 low-impact projects, saving Rs2.73 trillion.” Ahsan Iqbal said the federal government is currently managing Rs12.8 trillion worth of projects, with Rs8.5 trillion in throw-forward liabilities, adding that delays and underfunding inflate project costs annually. “Our new focus is on high-impact initiatives that generate employment, boost exports, build climate resilience, and enhance human capital.”

He emphasised reform through data-driven governance, streamlined processes, citizen-focused delivery, and robust monitoring to eliminate inefficiencies and leakages.

The minister said 280 projects were completed in 2024-25, including seven major health initiatives such as the expansion of PIMS with 6,600 beds and digital health infrastructure. He cited the success of olive production as an example of effective PSDP investments.

Ahsan reiterated that current priorities include completing ongoing projects and targeting development in underserved areas — Balochistan, Gilgit-Baltistan, and KP’s merged districts. A total of Rs42 billion has been earmarked under the Accelerated Implementation Programme (AIP) for solar energy, FATA University, and policing infrastructure.

Major infrastructure projects underway include: Diamer Bhasha Dam (Rs33 billion); Mohmand Dam (Rs35 billion); Quetta-Karachi Highway (Rs100 billion); M-6 Motorway and N-55 Indus Highway; Eastbay Expressway Phase II.

Over Rs223 billion has been allocated to water and energy, including 12 hydropower projects and the 1,200-MW Sindh Solar Project, as part of a shift toward a clean, self-reliant energy future.

In the education and tech sectors, Ahsan announced the launch of Daanish Schools and new university campuses in Muzaffargarh and Rajanpur. The government is also rolling out over 23,000 IT training slots, 18,000 internships, and 100,000 laptops to equip youth for the digital economy. He said that initiatives like National Centres and Quantum Valley aim to place Pakistan on the global tech map.