Finance Minister Muhammad Aurangzeb has ruled out a return to liquidity-fuelled, consumption-led growth, saying Pakistan must prioritise sustainable, export-led expansion. "We are very clear: no matter how much pressure there is, we are not going to go for liquidity-fuelled, consumption-led growth," he told an American Business Forum event at the Lahore University of Management Sciences on Saturday.
Aurangzeb said import-dependent growth had repeatedly ended in balance-of-payments crises that forced Pakistan to turn to lenders of last resort. Tariff reforms, he said, were aimed mainly at cutting the cost of raw materials and intermediate goods for exporters, after domestic industries had been protected for too long without sunset clauses. "We are in year two of the tariff reform, and we are going to continue with that; there is no turning back."
The numbers behind the message
According to the minister, Pakistan's combined twin deficits fell from 12.5 per cent of GDP to 2.6pc by the end of the last fiscal year, the fiscal deficit hit a 22-year low and the country posted primary surpluses for three straight years. IT services exports have grown from under $1 billion to $4.6bn and are projected to reach $5.5bn this fiscal year, while reserves now cover more than three months of imports.
He said external debt payments had fallen from $26.5bn last year to $21.5bn in the current fiscal year, and that energy supplies had been secured through November despite the Middle East conflict. Aurangzeb also named the 2.55pc population growth rate as a major challenge, and said restoring investor confidence required clearing about $4bn in pending dividend and profit repatriations.