'No one wants to roll over the debt'

FinMin says private sector should lead economic growth

ISLAMABAD:

Finance Minister Muhammad Aurangzeb warned on Friday that no one was ready to deposit amount in the country and roll over the debt, as he urged the private sector to come forward and lead the country's economic growth by avoiding "speed money".

Addressing the literature festival in Islamabad, Aurangzeb highlighted the government achievements of bringing economic stability to the country and listed several measures for sustaining the growth, including tax and structural reforms and moving forward in digitisation.

"A lot has improved in the last 12-14 months. Macroeconomic stability has been achieved, the currency is stable, foreign exchange reserves have stabilised, inflation has come down and the government has paid back $1 billion loan," the minister said.

"By March-June [quarter], foreign exchange reserves will be enough for three-month imports. Energy costs are coming down to affordable levels, but more structural reforms are necessary," he said, adding that state-owned enterprises (SOEs) should be reformed and privatised.

However, he warned that the current tax-to-GDP ratio of 10% was not sustainable. Therefore, he stressed the need for tax and structural reforms. He also called for focussing on technology for end-to-end digitisation. "Moving forward in digitisation, will stop leakage," he emphasised.

Aurangzeb said that Inflation has come down in the country, so its benefit should reach the common man. He pointed out that the price of chicken had decreased 14% in the world market but it increased in Pakistan by 15%.

For future, he said that no one was now ready to make deposits and roll over the debt any more. Instead, he added, the government looked for investment from friendly countries, including China, Saudi Arabia and the United Arab Emirates (UAE).

Speaking about the loan agreement with the International Monetary Fund (IMF), he said that there was nothing secret in the deal. "Country cannot run on donations. The private sector should take the lead so that dependence on the government is reduced and the system runs efficiently," he said.

"The private sector should come forward to run this country [but] businesses should avoid speed money," he said, adding that welfare work had its place, but taxes were needed for the long-term development of the country.

He explained that the first phase of the China-Pakistan Economic Corridor (CPEC) envisaged construction of infrastructure, while the phase II was business-to-business (B2B). "Now everything will be done at B2B level," the minister added.

About the privatisation of the Pakistan International Airlines (PIA), Aurangzeb said that the issue was not "so simple", otherwise, it would have been done 10 years ago. He said that there were many ways to privatise a government institution. "Outsourcing and public-private partnerships are also the ways."

The minister revealed that the plans were in hand to issue Eurobond next year, while talks were under way for issuing the Panda bond. He said that Pakistan's "population bomb' has exploded and warned: "What will happen when the population reaches 400 to 450 million."