'No magic wand' to fix economy at once: Aurangzeb

Fin Min identifies agriculture, IT as twin engines of progress

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ISLAMABAD:

Finance Minister Muhammad Aurangzeb on Sunday identified agriculture and Information Technology (IT) as the twin engines to drive Pakistan towards a sustainable economic growth, stressing that the government did not have any magic wand to fix the country's plethora of problems at once.

Talking to the media following a meeting with farmers and stakeholders in Kamalia in Toba Tek Singh district, the minister emphasised that the country did not run on charities but on taxes. In this regard, he added, efforts were afoot to eliminate corruption and plug the leakages.

The minister reaffirmed the government's commitment to promoting an export-led economic growth and hoped the country would be put on the path to a "sustainable" Gross Domestic Product (GDP) growth rate in the next year.

"We are an import-based economy. Whenever imports increase, there comes a shortage of dollars, and then we have a balance of payments problem, then we run towards the IMF [International Monetary Fund]," the minister said.

"We do not have a magic wand that this [problem] will go away at once. Therefore, we have to tackle it in such a way that there is growth, and the growth is on the basis of exports," he said. "We are very clear agriculture and IT have to lead this country as we move forward," he added.

"We should find solution and promote these [IT and agriculture] sectors for sustainable economic development," the minister stressed. He expressed concern that despite numerous research institutions in the agriculture sector, the desired results of higher crop yields could not be achieved.

In the last six months, the minister said, the government achieved macroeconomic stability – a crucial foundation for GDP growth. He highlighted the improvement in vital economic indicators, saying that inflation had fallen to a single digit while the interest rate had also come down and was heading towards a single digit.

"As the interest rate comes down, it will come down further and go towards a single digit, because doing business at 23, 24% borrowing is one thing, and doing business at 10, 11% or 8, 9% borrowing is another thing," he told the media persons.

Tax collection

"I will be the last person to say that we have achieved what we had said but building on these achievements, Pakistan's economy is poised to transition towards sustainable growth from 2025 onwards," he added.

Aurangzeb reiterated the government's commitment to bringing reforms in taxation, energy, and State-Owned Enterprises (SOEs) sectors. He also said that the government planned to simplify taxation process, ensure digitisation, and reduce human intervention.

He stressed the need for improving the tax-to-GDP ratio, which currently stood at 9-10%, and aimed to increase it to 13.5%. "The country does not run on charity, the country runs on taxes. We will increase it [tax-to-GDP ratio]. Reforms are under way in this regard," he added.

"We are bringing reforms in the institutions. Because of leakages in the tax system, the salaried class is burdened, now the salaried class has reached a point where we cannot go further. Therefore, other sectors will have to be brought into the tax net, everyone will have to pay taxes," he said.

However, he warned that there were problems. "We are trying to control them. We are eliminating corruption and leakages," he added. He appealed for national unity for the sake of the country and for the sake of a charter of economy, saying that "we are because of Pakistan."

As part of the reforms, the minister continued, the government should have a minimum role in running businesses. Instead, the minister stressed a more robust role of the private sector. He added that the government's role should be reduced to regulating them to prevent monopolies.

"The more the government gets out of businesses, the better. The private sector should take the lead and we have to take care of regulation, so that it does not become a monopoly. He warned that government intervention was tantamount to a form of corruption because of licencing.

Wherever we intervene, we commit corruption. It means licencing; it means that we do such things for you when you provide us with such things. "It will be better that the government gets out of everything [running businesses]," the minister stated.

Aurangzeb expressed the hope that energy tariffs would come down, as efforts were afoot to plug leakages in the distribution companies (DISCOS). He said that the government was determined to go to the doorsteps of stakeholders instead of merely sitting in Islamabad.

(WITH INPUT FROM APP)