Government focusing on long term economic sustainability: Khurram Schehzad

KARACHI, Jan 24 (APP):The Advisor to Federal Finance Minister, Khurram Shehzad, on Friday, said that government is focusing on long term fiscal sustainability and key reforms were initiated to optimize the public finance.

He, while addressing a workshop titled “Economic and Debt Outlook 2025” organized here by Financial Market Association of Pakistan, said that key economic indicators have registered a positive growth due to comprehensive measures and we are expecting further improvement in international credit rating of Pakistan during the current fiscal year.

Khurram Schehzad said that key goals set by the ministry of finance to improve economic situation of the country included addressing the fiscal imbalance, promoting export led inclusive growth, focusing on long term fiscal sustainability and implementing structural reforms.

Government measures resulted in improved GDP, enhanced foreign exchange reserves, subsided inflation and lower policy rate along with significant improvement in other economic indicators, he noted adding that tax to GDP ratio has remained above the targets of IMF while Current Account balance is in pretty good shape.

We are focusing on long term stability and prioritizing it over the short term relief, he stated and added that it was a common opinion in the market that government and central bank should intervene to strengthen the value of local currency as it impacts the exports but State Bank of Pakistan had taken the appropriate decisions which not only helped stabilize the exchange rate but also has been recognized by international monetary and credit organizations.

He outlined that government wanted to subside the reliance on finance from banking sector by diversifying the debt sources so that debt profile of the country could be improved further. Referring to key reform initiated to optimize public finance, he informed that measures in the regard included right sizing of public sector entities and reforms in pension, state owned entities, energy sector and privatization.

Right sizing initiative, having a financial impact of Rs876 billion will be implemented in four phases while significant steps have already been taken in pension which will result into saving of Rs170 billion annually.

He also shared insights of SOE and energy sector reforms and informed that privatization of PIA, House Building Finance Corporation, Zarai Taraqiati Bank, State Life, First Women Bank and power distribution companies was under consideration.

A significant progress has been made in case of PIA, that has started its flights to Europe while resumption of PIA flights to UK was expected in end January or February, he said adding that privatization proceeds of the HBFC will soon enter into bidding phase while process to privatize ZTBL will start soon as well.

Reflecting on revenue enhancement measures he informed that steps underway for tax reforms, digitization, separation of tax policy and tax collection, and ensure transparency. “It was clear resolve of the government as well as finance ministry that every one has to pay taxes and must file tax returns,” he added.

We are also working on National Fiscal Pact with provinces for agriculture tax, he said and informed that three provinces has responded positively in the regard while interactions with Sindh government were continue and we are anticipating positive outcomes.

Director DMO Ministry of Finance Eraj Hashmi, at the occasion, spoke on reforms and key steps in debt management, capacity building of DMO, optimizing database, active treasury market engagements. He said that transition to sustainable finance was continue while Tax to GDP ratio has improved during the fiscal year.