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Govt focusing on long term economic sustainability: Khurram Schehzad

Govt focusing on long term economic sustainability: Khurram Schehzad
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January 25, 2025 (MLN): The government is focusing on long-term fiscal sustainability, and key reforms have been initiated to optimize public finance.

This was said by the advisor to the Federal Finance Minister, Khurram Schehzad while addressing a workshop titled "Economic and Debt Outlook 2025," organized by the Financial Market Association of Pakistan.

He mentioned that key economic indicators have shown positive growth due to comprehensive measures, according to the press release issued.

He also stated that further improvement in Pakistan's international credit rating is expected during the current fiscal year.

Khurram Schehzad added that the key goals set by the Ministry of Finance to improve the country's economic situation included addressing fiscal imbalances and promoting export-led inclusive growth.

He further emphasized the importance of focusing on long-term fiscal sustainability and implementing structural reforms.

Government measures have resulted in improved GDP, enhanced foreign exchange reserves, reduced inflation, and a lower policy rate, along with significant improvements in other economic indicators.

He noted that the tax-to-GDP ratio has remained above IMF targets, while the Current Account balance is in good shape.

“We are focusing on long-term stability and prioritizing it over short-term relief,” he stated.

“It was a common opinion in the market that the government and central bank should intervene to strengthen the value of the local currency as it impacts exports.

However, the State Bank of Pakistan has made appropriate decisions that not only helped stabilize the exchange rate but have also been recognized by international monetary and credit organizations,” Khurram Schehzad added.

He outlined that the government wanted to reduce reliance on financing from the banking sector by diversifying debt sources so that the country's debt profile could be improved further.

Referring to key reforms initiated to optimize public finance, he informed that the measures included the right-sizing of public sector entities and reforms in the pension system, state-owned entities, the energy sector, and privatization.

He also shared insights into SOE and energy sector reforms, informing that the privatization of Pakistan International Airlines (PIA), House Building Finance Corporation, Zarai Taraqiati Bank, State Life, First Women Bank, and power distribution companies was under consideration.

Significant progress has been made with PIA, which has started flights to Europe. The resumption of PIA flights to the UK is expected by the end of January or February.

He also mentioned that the privatization proceeds of HBFC will soon enter the bidding phase, and the process to privatize ZTBL will start soon as well.

Reflecting on revenue-enhancement measures, he informed that steps are underway for tax reforms, digitization, the separation of tax policy and tax collection, and ensuring transparency.

“It is the clear resolve of the government and the finance ministry that everyone must pay taxes and file tax returns,” he added.

“We are also working on a National Fiscal Pact with provinces for agriculture tax,” he said.

He informed that three provinces have responded positively in this regard, while interactions with the sindh government are ongoing, and positive outcomes are anticipated.

Director DMO Ministry of Finance Eraj Hashmi emphasized the importance of reforms and key steps in debt management, capacity building of the DMO, optimizing the database, and active treasury market engagements.

He said that the transition to sustainable finance is ongoing, while the tax-to-GDP ratio has improved during the fiscal year.

Copyright Mettis Link News

Posted on: 2025-01-25T17:15:02+05:00