January 22, 2025 (MLN): Chinese companies will be encouraged to transfer production units to Pakistan, making it their export hub under phase 2 of the China–Pakistan Economic Corridor (CPEC).
This was stated by Finance Minister Senator Muhammad Aurangzeb during a high-level discussion on the growing burden of global debts on developing economies at the World Economic Forum (WEF), where he served as a panelist.
He further mentioned that in CPEC phase 2, the focus would shift from government-to-government collaboration to business-to-business partnerships, according to the press release issued.
Finance Minister Aurangzeb also outlined Pakistan’s aim to access the world’s largest and most liquid capital market through Panda Bonds.
Learning from Egypt’s experiences, Pakistan seeks diversification in capital market access and aims to improve its credit ratings.
He also emphasized the need for the private sector to play a leading role in economic development, especially in Pakistan’s IT sector, which presents immense opportunities for the youth.
Pakistan will overcome challenges such as the increasing population, poverty, and environmental issues, moving toward sustainable economic development through the 10-year partnership program with the World Bank, he added.
“We are following a policy to stabilize the economy through exports by changing the economy’s DNA,” the finance minister stated.
The finance minister shared his views on establishing strong and resilient economies through changes in fiscal policies and debt sustainability.
He identified Pakistan’s biggest issues as the twin deficits of the current account and fiscal account.
He noted that the main cause of the fiscal deficit is the unsustainable 9-10% tax-to-GDP ratio, and efforts are underway to increase this ratio to 13% through structural reforms.
“Without increasing the tax-to-GDP ratio, it is impossible to gain an honorable position in the community of nations,” he added.
The government is also striving to reduce expenditures and the volume of debt repayments.
He further stated, “It is difficult to get rid of the burden of debt without fixing one’s own house.”
According to the Finance Minister, Pakistan’s debt-to-GDP ratio has decreased from 78% to 67%.
He emphasized that borrowing itself is not bad; rather, the key is the correct utilization of debt.
“Instead of using loans to manage expenses or provide subsidies, the focus should be on increasing productive capacity and promoting exports”, Muhammad Aurangzeb noted.
He acknowledged that Pakistan’s economic growth has been volatile.
“As soon as the GDP growth rate reaches 4%, the economy’s reliance on imports causes a balance of payments crisis,” said Finance Minister Aurangzeb.
He added that every time the balance of payments worsens, Pakistan has to turn to the International Monetary Fund (IMF).
Achieving sustainable development remains Pakistan’s top priority.
“It is a positive thing that Pakistani youth are securing good jobs worldwide,” said the finance minister.
Efforts are ongoing to create good job opportunities for youth in Pakistan.
“Through a sustainable policy framework and continuity, job opportunities will be created in the private sector,” he concluded.
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Posted on: 2025-01-22T11:30:12+05:00