Pakistan is hoping to reach a staff-level agreement with the International Monetary Fund by June or early July, its finance minister said on Tuesday.
The country’s current $3 billion arrangement with the fund runs out in late-April, which it secured last summer to avert a sovereign default.
Islamabad is seeking a long-term bigger loan to help bring permanence to macroeconomic stability as well as an umbrella under which the country can execute structural reforms. “We are still hoping that we get a staff-level agreement by June or early July,” Finance Minister Muhammad Aurangzeb told a conference in Islamabad.
He returned from Washington last week after leading a team to attend the IMF and World Bank’s spring meetings. “We had very good discussions in Washington,” he said. He said he did not know at this stage the volume and tenure of the longer program.
Federal Minister for Finance and Revenue Muhammad Aurangzeb has said that the agriculture and information technology sectors have key potential to significantly contribute to the economic growth of the country. While responding to a motion titled “This House may discuss the economic situation in the country” here on Tuesday, he said that the agriculture and information technology sectors were poised to become the real levers of country’s economic growth.
Muhammad Aurangzeb reiterated the government’s commitment to facilitating the two sectors and expressed optimism that IT exports would surpass the $3.3 billion mark during the current financial year.
He emphasized the importance of promoting agricultural growth to achieve a rate of 5 to 6 percent annually, in addition to harnessing the potential of the local livestock sector. The minister highlighted the significant growth experienced in the agricultural sector due to successful bumper crop harvests, which promised a positive impact on the industrial sector.
The country’s economic situation had improved compared to the previous year, he asserted.
Muhammad Aurangzeb mentioned that the government assumed the office, the foreign exchange reserves were at $3.4 billion, covering only 15 days of imports. However, significant progress had been made, with reserves now exceeding $13.3 billion.
He anticipated further improvement following the disbursement of the tranche from the International Monetary Fund (IMF).
The minister noted the positive performance of the Pakistan Stock Exchange (PSX) in recent days, attributing it to the sentiments that were restoring market confidence.
Regarding economic indicators, he highlighted a 74 percent decrease in the current account deficit, which reached $1 billion as compared to $3.9 billion previously.
The minister also mentioned a 24.9 percent decrease in the trade deficit over the last nine months of the current financial year, which reduced from $22.7 billion to $17.0 billion. He outlined the government’s focus on three key areas for transformation: tax, energy sectors, and reforms in the State Owned Enterprises (SoEs).
Muhammad Aurangzeb expressed his intention to enhance the tax to GDP ratio, which currently stood at 9 percent, through tax enforcement measures and expanding the tax base. He affirmed the support of friendly countries both domestically and internationally for Pakistan’s economic growth. The finance minister said that the government was implementing the decisions of the Federal Shariat Court to promote an interest-free economy and establish Islamic banking branches across the country.
