ISLAMABAD, Jan 22 (Alliance News): Federal Finance Minister Muhammad Aurangzeb addressed the World Economic Forum on Tuesday, stating that it is impossible for developing economies like Pakistan to alleviate their debt burdens without addressing internal economic challenges first.
In a high-level discussion focused on the increasing global debt burden on developing economies, Aurangzeb highlighted Pakistan’s persistent twin deficits—current and fiscal accounts.
He pinpointed the unsustainable tax-to-GDP ratio of just 9-10 percent as a major factor driving the fiscal deficit, emphasizing efforts to increase it to 13 percent through structural reforms.
According to Aurangzeb, achieving a respectable standing in the international community is contingent upon improving the tax-to-GDP ratio.
He underscored the government’s efforts to cut expenditures and reduce debt repayments, emphasizing the need for reform.
“Fixing your own house is critical to relieving the debt burden,” he remarked, stressing the importance of promoting exports through enhanced productivity rather than financing expenses through loans or subsidies.
He outlined Pakistan’s volatile economic growth, noting that when GDP growth reaches 4 percent, the balance of payments tends to worsen due to high dependence on imports, which often results in resorting to the IMF.
Aurangzeb also pointed to the government’s focus on sustainable development, with efforts to stabilize the economy through exports and structural changes aimed at altering Pakistan’s economic “DNA.” He called on the private sector to play a leading role in this transformation.
Referring to the 10-year partnership program with the World Bank, he said it would be key to tackling population growth, poverty, and environmental issues while advancing towards long-term economic development.
Additionally, in the second phase of the China-Pakistan Economic Corridor (CPEC), the government aims to promote business-to-business relations rather than relying on government-to-government interactions.
He mentioned plans to encourage Chinese companies to relocate production units to Pakistan.
Furthermore, Aurangzeb outlined efforts to tap into the world’s largest Chinese capital market through Panda Bonds, aiming to diversify Pakistan’s access to global capital markets and improve its credit ratings.
He also mentioned opportunities within Pakistan’s growing IT sector, citing the positive trend of Pakistani youth securing global job placements.