Pakistan Charts Course for Economic Stability with IMF-Backed Reforms, Finance Minister Says
Islamabad - November 3, 2023 – Pakistan is on a path to sustained economic recovery driven by structural reforms, according to Finance Minister Shamshad Akhtar, who highlighted key improvements across multiple sectors today.The minister stated these areas are consistently recognized by analysts, think tanks, and international partners.
The updates came as various ministers detailed progress on critical economic fronts. Federal Board of Revenue (FBR) Chairman Langrial announced a 1.49 percent increase in the tax-to-GDP ratio over the past year, attributing the gains to effective government measures. He noted an increase in individual tax return submissions and affirmed the FBR’s full implementation of approved budget measures with support from all institutions.
Significant strides have also been made in the power sector. Power Minister Leghari reported a reduction in electricity prices of Rs10.50 over the last 18 months, with industrial units seeing a larger reduction of Rs16 per unit. He announced the planned operationalization of the Competitive Trading Bilateral Contract Market (CTBCM) in january or February of next year, calling it the “biggest reform in the power sector.” Leghari stated the CTBCM will remove the government from direct power purchasing, leading to better prices for consumers. Moreover,the government is aiming to clear Rs1.2 trillion in circular debt over the next six years without increasing the burden on consumers.
digitization is also a key component of the economic strategy. IT minister Shaza Fatima emphasized that digitization will enhance convenience, transparency, and efficiency, eliminating queues for payments and making it harder to conceal transactions. She highlighted the link between digitization, expanding the tax net, and increasing revenues.
Privatization efforts are also underway, with Privatisation adviser Muhammad Ali pointing to the successful privatization of First Women Bank and a target to privatize Pakistan International Airlines by the end of the year. He indicated strong interest from several leading Pakistani groups in acquiring the national flag carrier.
These reforms come after Pakistan navigated a severe economic crisis characterized by critically low foreign exchange reserves, a balance-of-payments crisis, and the threat of default in 2023. the crisis was averted following a crucial loan tranche release from the International Monetary Fund (IMF), alongside financial support from countries including China, the United Arab Emirates, and Saudi Arabia.
Since averting default, Pakistan has implemented tough IMF-prescribed reforms to stabilize the economy and improve macroeconomic indicators. This has led to upgrades in Pakistan’s sovereign credit rating from global agencies including Fitch, Moody’s, and S&P Global this year.
