No sacred cows, no strategic SOEs, says Aurangzeb as he unveils Pakistan Economic Survey 2023-24

Federal Minister for Finance and Revenue Muhammad Aurangzeb categorically stated that there are “no sacred cows” when it came to contributing to Pakistan’s economy, remarks that were made as he unveiled the Economic Survey 2023-24 on Tuesday evening.

Pakistan missed its growth target of 3.5% in the outgoing fiscal year, posting a figure of 2.4%, revealed provisional figures of the survey, but Aurangzeb maintained that the road to stability is ongoing.

Agriculture sector has recorded highest growth in the last 19 years which is a significant achievement towards ensuring food security and price stability. - Economic Survey 2023-24

The country also missed most of its economic targets despite an improved performance by the agriculture sector with industries and services sector registering subdued growth of 1.2%.

“In FY22-23, our GDP contracted by 0.2%, while PKR depreciated by 29%, and our foreign exchange reserve went down to two weeks of import cover,” he said, recalling that the economy was in much worse shape earlier.

The former banker also reiterated his stance on “no such thing as Pakistan having a strategic state-owned enterprise”.

“I would like to repeat that there is no such thing as a strategic SOE,” he said, sitting alongside Minister for State Ali Pervaiz and secretaries of finance and planning.

His stance on strategic SOEs has seemingly clashed with reports that suggest the government is looking to privatise all entities of the government, barring those where there is ‘strategic need’ to retain.

Aurangzeb, however, said that the SOE might still have strategic needs, but cannot be a strategic entity.

The reference came as Pakistan pursues an aggressive privatisation programme, also being advocated by the International Monetary Fund (IMF).

On the IMF, Aurangzeb said Pakistan’s Stand-By Arrangement (SBA), which concluded in April, helped the economy.

“Even when I was there in the private sector, I was loud and clear that we should enter a programme with the IMF. There was no ‘Plan B’.

“If the nine-month SBA had not been achieved, we would have been in a very different situation.

“On the new programme, I can say that we have made considerable progress.”

Pakistan is currently engaged in talks for a longer, larger programme with the IMF, and talks are reportedly set to continue virtually.

Meanwhile, the finance minister said Pakistan’s Large Scale Manufacturing (LSM) was affected due to high interest rates and energy prices.

“However, our saviour was the agriculture sector, and it will continue to remain a huge lever of growth as we go forward.”

He said that during the fiscal year 2023-24, Federal Board of Revenue’s (FBR) tax collection grew by nearly 30%, “which is almost unprecedented”.

The finance minister projected Pakistan’s current account balance to be in surplus in May, reiterating that administrative measures taken by the government also stabilised the currency.

“Foreign exchange reserves improved to over $9 billion. Full credit to the central bank. Our reserves are not funded by the debt stock.

“Inflation has lowered from 38% (in May,2023) to 11% (in May 2024) on the basis of which the central bank has cut the policy rate.”

Aurangzeb said foreign buying in Pakistan’s stock market is also a sign of confidence.

“The SBP reducing the key policy rate is an independent market of confidence. (But) we need to increase our tax to GDP ratio.

“There are no sacred cows when it comes to taxation. Everyone has to contribute to the economy,” he said, a day before he presents the government’s budget proposals in the National Assembly.