ISLAMABAD: Finance Minister Muhammad Aurangzeb on Wednesday said that debt servicing remained the single largest expenditure for the government, while inefficiencies in state-owned enterprises in the past had resulted in annual losses of nearly Rs1 trillion.
Speaking at the Pakistan Policy Dialogue, the finance minister said the incumbent government had taken difficult decisions to curb wasteful spending and initiate long-delayed structural reforms aimed at putting the economy on a sustainable path.
He noted that workers’ remittances stood at $38 billion in the previous fiscal year and were expected to exceed $41bn during the current year, terming the rise a positive signal for macroeconomic stability.
Mr Aurangzeb said the transformation of the Federal Board of Revenue (FBR) was underway, with greater emphasis on compliance and enforcement to ensure effective implementation of tax laws. He added that reforms were also being introduced in the energy sector to reduce its burden on the national exchequer.
On privatisation, the finance minister said domestic investors had participated in the Pakistan International Airlines (PIA) privatisation process, while 24 state-owned enterprises had already been handed over to the Privatisation Commission. He explained that the decision to shut down entities such as Utility Stores Corporation, PWD and Pasco was taken due to widespread corruption in subsidy distribution, which had caused heavy losses to the treasury.
The minister cautioned against unnecessary increases in duties, stating that high tariffs raised business costs and hampered economic activity. He revealed that the government had saved Rs850bn in interest payments during the previous year and expected further savings in the current fiscal year.
Mr Aurangzeb also announced that Pakistan would launch Panda bonds within the next two weeks. Citing a recent survey, he said 73 per cent of investors had expressed confidence in investing in Pakistan. While acknowledging an increase in the trade deficit, he maintained that the current account remained within targeted limits.
He said large-scale manufacturing showed positive performance in the first quarter of the current fiscal year, private-sector credit had risen to Rs1.1 trillion, and 135,000 new investors had entered the Pakistan Stock Exchange. Over the past 18 months, stock market investment had increased by 41pc, he added.
Highlighting the country’s human capital, the finance minister said Pakistan had the world’s third-largest freelancer workforce and stressed the need to provide youth with modern digital platforms and systems. However, he warned that achieving a $3 trillion economy by 2047 would require effective population control, noting that sustained growth was not possible with an annual population increase of 2.55pc.
He said reductions in debt servicing costs had been achieved through careful planning and practical measures, with the savings being redirected towards development projects. He added that Pakistan was also investing in the Chinese market, expecting a 2.5pc gain from currency conversion. International rating agencies had shown confidence in the reform agenda, while the International Finance Corporation (IFC) had completed $3.5bn worth of investment in Pakistan.
Discussing the Reko Diq project, Mr Aurangzeb said exports would begin in 2028, with expected earnings of $2.8bn in the first year. He also pointed to the IFC’s $400m investment in the Telenor transaction as evidence of growing global investor confidence.
Earlier, Adviser on Privatization Muhammad Ali said flawed economic policies in the past had discouraged private investment and increased reliance on borrowing. He stressed that privatisation was not an ideological choice but a practical tool to correct market failures. Federal Minister Musadik Malik said sustainable prosperity depended on enhancing productivity and ensuring equal opportunities for all citizens. He criticized policies that provided subsidized electricity, gas and tax concessions to select groups, weakening the broader economy.
Planning Minister Ahsan Iqbal said Pakistan, despite being a nuclear power and an exporter of JF-17 aircraft, needed to take further steps to enhance global competitiveness. While acknowledging progress in tractor manufacturing, automobiles and engineering sectors, he said serious reforms were required to boost exports, citing China and Vietnam as examples to follow.