LAHORE: Federal Finance Minister Muhammad Aurangzeb has said Pakistan will not be allowed to return to its cycle of economic boom and bust, arguing that mobilising private capital is essential to growth.
Addressing an event, Aurangzeb said promoting investment through public-private partnerships and privatisation is achievable, and that the government is pursuing a structural reform agenda for durable economic stability.
He said transparency, performance and investor confidence would be prioritised in the privatisation process, and that private investment in infrastructure and public service projects must be increased through PPPs. Privatisation and public-private partnership, he said, are important vehicles for advancing the private sector.
The partnership between government and the private sector must be strengthened further for economic growth, he said, adding that stability had been achieved as a result of difficult decisions and now has to be made permanent.
Aurangzeb said the overall deficit has fallen from 12.5 per cent to 2.6 per cent.
He said the Federal Board of Revenue’s tax collection has risen significantly, with FBR income up 40 per cent over the past few years, and the tax-to-GDP ratio improving from 8.8 per cent to 10.3 per cent.
On exports, he said IT services exports stood at $4.6 billion in the last fiscal year, with freelancers contributing $1.6 billion of that. Goods exports remain at approximately $30 billion, a figure he said requires further work.
Reforms are continuing in energy, state-owned enterprises, taxation and privatisation, he said.
The figures are the minister’s own and warrant context rather than acceptance at face value.
The move from 12.5 per cent to 2.6 per cent is a striking one, and the comparison depends heavily on which measure and which period is being used — a primary balance and an overall fiscal deficit are different things, and the starting point selected shapes the size of the improvement. The finance ministry’s published fiscal operations statements are the reference against which the claim can be checked.
The tax-to-GDP improvement from 8.8 to 10.3 per cent is real but leaves Pakistan well below regional comparators, most of which sit in the mid-teens or higher. A ratio in the low tens constrains what any government can spend on health, education and infrastructure without borrowing.
The 40 per cent rise in FBR income is nominal. In a period when inflation ran at multiples of that rate for part of the span, nominal revenue growth overstates the real expansion of the tax base — a distinction that matters when the figure is offered as evidence of reform.
The $4.6 billion IT services export figure, with $1.6 billion from freelancers, describes a sector with a structure unlike the rest of Pakistan’s export economy.
More than a third of it comes from individuals working independently, invoicing overseas clients without a firm, a factory or an export licence between them. That is a low-capital, high-margin export stream that requires little from the state beyond payment infrastructure and reliable connectivity.
Set against roughly $30 billion in goods exports — a figure the minister acknowledged needs work — the contrast frames Pakistan’s export problem. Goods exports have been broadly flat for years while the import bill has grown, which is the mechanism that produces the external crises the minister says he wants to end.
The commitment not to return to boom-bust cycles is the political core of the statement. Pakistan’s pattern has been consistent: growth driven by consumption and imports, followed by a current account crisis, followed by stabilisation under an IMF programme, followed by a resumption of the same growth model.
Breaking it requires export-led rather than consumption-led growth. On the minister’s own figures, the export side of that transition has not yet happened.
All figures in this report are as stated by the finance minister and have not been independently verified. Where they differ from published data, The Lahore Times will note the discrepancy.
Leave a Reply