Economy needs to be protected from default: Miftah

KARACHI: Finance Minister Miftah Ismail has said the economy had to be kept solvent and protected from default for which prudent measures were being taken, such as slashing of imports that helped stabilise the rupee.

The minister was speaking at the Pakistan Stock Exchange on Friday, where he struck the gong to open the trading floor. Admitting that the strategy of curbing imports was not growth-friendly, the minister said it was far superior to the boom-and-bust cycles of the past. “I do not believe in the import substitution model and am in favour of export expansion. This is where we plan to focus our efforts and we will take this forward for sustained economic growth.”

Speaking about the macroeconomic situation, Miftah said, “Our tax to GDP percentage is very low at 9.2 percent. We have to do better in order to achieve economic stability but we will undertake reforms in a gradual and orderly fashion in this regard.”

The minister claimed that ending fuel subsidies and increasing direct taxes were bearing fruits and had saved Pakistan from default. Appreciating the importance of capital markets and their critical role in the development of a modern economy, he said, “We are committed to addressing all issues that have held back the capital markets in Pakistan and look forward to our discussion on the capital markets and the economy.”

Earlier, PSX MD Farrukh Khan said, “It is imperative for the growth of Pakistan’s economy to create a conducive environment which will help attract more companies and investors to the capital markets. A broad-based capital market helps to achieve important economic and social objectives, including improved savings and investment rates, documentation of the economy, increasing the number of taxpayers and reducing wealth inequality.”

He said that developing the capital markets was fully aligned with the government’s stated objectives. “Capital markets don’t ask for any concessions or subsidies; we only want a level playing field compared to other asset classes and the large informal sector,” Khan said, pleading for consistent tax and economic policies.

PSX Chairperson Dr Shamshad Akhtar thanked the minister for his visit and apprised him of the recent developments at the PSX. “PSX is a mature exchange and it has offered unbeatable returns. PSX is not only transforming but also has a good governance structure along with a robust regulatory framework. The most recent accomplishment is the Onsite Joint Inspection that has been put in place, which will ease the burden on the brokerage community.”

Securities and Exchange Commission of Pakistan Chairman Aamir Khan said that well-functioning capital markets could immensely contribute to the wellness of the overall economy, corporate sector and investors and for improving savings and investment rates.

The event concluded with a closed-door meeting, which included the federal minister along with the top management of PSX, SECP, and key stakeholders. In the meeting, matters impacting the capital markets, business, the current economic scenario and challenges were discussed.