ISLAMABAD: Federal Finance Minister Muhammad Aurangzeb has stressed the need to stabilise economy to get rid of the burden of debt.
Minister Aurangzeb was addressing a discussion on the “increasing global debt burden on developing economies” during the World Economic Forum in Davos, Switzerland, the other day.
He mentioned Pakistan government’s efforts to stabilise economy by “reducing expenditures and debt servicing.”
He said that Pakistan’s debt-to-GDP ratio has decreased from 78 percent to 67 percent.
The finance minister also highlighted rising population, poverty and environmental issues as main hurdles to economic stability. He mentioned 10-year partnership programme with the World Bank for country’s sustainable economic development.
He emphasized that in the second phase of CPEC (China-Pakistan Economic Corridor), the focus will shift to promoting business-to-business engagement. He said Chinese companies will be encouraged to relocate their production units to Pakistan under CPEC Phase II.
He hoped that Chinese companies could potentially make Pakistan the hub for their exports.
Minister Aurangzeb said that Pakistan’s biggest problem has been the twin deficits of the current account and fiscal account. The main reason for the fiscal deficit has been the unsustainable tax-to-GDP ratio of 9 to 10 percent.
He said the government was trying to increase the tax-to-GDP ratio to 13 percent by introducing structural reforms.
Moreover, the minister said, the government has been planning cut in its expenses and reduce the volume of debt payments.
The finance minister said it was impossible to get rid of the burden of debt without setting one’s house in order.
Aurangzeb opposed taking loans to run government’s expenses or give subsidies. He favoured promoting exports by increasing productivity,
Pakistan’s economic growth has been volatile, he said and added that as soon as the GDP growth rate reaches 4 percent, the balance of payments disturbed due to increase in imports of raw material.
When the balance of payments disturbed, we have to go to the IMF, he continued.
He said that achieving sustainable development is Pakistan’s top priority. “We are pursuing a policy of stabilizing the economy through [increasing] exports.”
He stressed on the role of private sector in economic development.
Minister Aurangzeb highlighted “immense opportunities” for the youth in Pakistan’s IT sector and added that efforts were being made to create good job opportunities in the country.
“Job opportunities will be created in the private sector through a sustainable policy framework and policy continuity. It is a heartening to note that Pakistani youth are getting good jobs around the world,” he concluded.
