Default risk averted, but structural reforms essential for economy: Pasha

Minister of State for Finance and Revenue Aisha Ghaus Pasha on Monday reiterated that Pakistan is out of default risk, however, the country remains engulfed in challenges that demand structural reforms.

While talking about Pakistan's economic indicators at a ceremony held at the Institute of Strategic Studies Islamabad (ISSI), Pasha admitted that the country does not sit in a “very comfortable position” on the external front.

“However, we are not at any risk of default, as our external financing needs are ensured for the year 2023.”

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Some challenges remain and the government needs to keep a close watch, she said.

“Some of the measures initiated by the government have taken us in the right direction as indicated by recovery of Pakistani rupee and reduction in the import bill,” she said.

Pasha said that low exports, debt trap and repayment of loans are key risks for Pakistan in the short run.

However, a lot needs to be done to escape the boom and bust cycle in a sustainable manner, said Pasha, adding that since the 1990s, Pakistan has gone to the International Monetary Fund (IMF) after every two and a half years.

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“To get out of this boom and bust cycle, we need to introduce structural reforms not only on the external side but also on the internal side,” said Pasha.

The minister of state said that despite being endowed with resources, Pakistan had been unable to generate revenue to finance its expenditure needs.

The minister stressed the need to enhance tax compliance and stated that revenue collection should be done with due diligence and honesty. She held the view that policymakers needed to develop the right taxation policy.

“We need to think not about our share of the pie but about the size of the pie,” she said.

Pasha highlighted that meeting external financial needs is important for Pakistan's national security.

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She said that using 85 indicators, the government has devised an overall index of human security in Pakistan. “There is no sustainable improvement in the index, which is a worrying sign,” said Pasha.

Pasha said that national security, economic security and social security work in unison. “We have to maintain this as a virtuous cycle,” she said.