Reforms must to get rid of IMF, says Aurangzeb

Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb has declared that structural reforms must by undertaken if Pakistan wanted to get rid of the International Monetary Fund (IMF), reported 24NewsHD TV channel.

Addressing the ground-breaking ceremony of the head office building of Securities and Exchange Commission of Pakistan (SECP) in Islamabad on Thursday, the federal minister reiterated the need for structural reforms to ensure the Extended Fund Facility (EFF) with International Monetary Fund (IMF) is the country’s last programme, highlighting the importance of privatization, export-led growth, and foreign direct investment to sustainable macroeconomic stability.

Aurangzeb said the Staff Level Agreement (SLA) has been signed with the IMF and it would go to Fund’s board for final approval.
“So under the fund umbrella, it is not only getting the fund but making sure that this time we do the structural reforms,” he remarked, adding “If we have to make it last programme of the fund then whether it is on taxation side, energy side, or SOE reforms and the privatization side, we have to move forward because we do not have the space and room any more to dither on this agenda.”

The minister said upgrade in Pakistan’s rating by Fitch, an international credit rating agency, and the policy rate reduction by State Bank of Pakistan (SBP) were direct manifestations of macroeconomic stability that the government has been following under the leadership of Shehbaz Sharif.

He said, the economic team would continue to move forward with this agenda. However, he added there was need to bring permanence into it. “Stabilization would lead to growth, so we have to bring permanence,” he added.

Talking about the role of private sector, the minister said, it has been decided in the cabinet committee on State-Owned Enterprises (SOEs) that all insurance companies under the public sector will be handed over the private sector. He said, there was no reason whatsoever the government holds on to those entities or their functions. Even the strategic functions would be done by private sector he said adding the government would be there to provide policy framework and policy continuity.

“The private sector has to lead this country,” he remarked, adding the entire insurance sector should be managed and held by the private sector.

He said, if the current IMF programme is to be made last one, then there is need to open road to market through export led growth and attract foreign direct investment (FDI).
He highlighted that FDI should come in for export-led industries, because we cannot create currency mismatches by borrowing from abroad.

“This time, the difficulty we are facing is due to currency mismatches. So if we have to borrow from abroad, it should be for projects which in turn produce foreign currency for the country,”

He said, access into international capital markets was another area that needed to be focused to bring capital into the country. He said, currently there was dependence on banks both by government and private sector so equity and debt markets have come to the forth so that funding base is diversified.

He said, modernity, efficiency, and transparency could be brought though capital markets, adding SECP should be guardian of public interest ensuring the markets remain fair, transparent and accountable.

The minister said the idea of SECP building was conceived around 24 years ago and was now being taken forward with the hope that it would be completed as soon as possible.