Tackling debt and deficits key to Pakistan’s growth: Aurangzeb

DAVOS: Finance Minister Muhammad Aurangzeb said on Wednesday that sustainable development was a top priority for Pakistan. While speaking at a high-level forum on the impact of escalating global debt on developing nations during the World Economic Forum (WEF) in Davos, he said it was challenging to alleviate the debt burden without first addressing internal issues.

Aurangzeb pointed out that Pakistan’s primary challenge has been the twin deficits in its current and fiscal accounts, attributing the fiscal deficit mainly to an unsustainable tax-to-GDP ratio that currently hovers around 9 to 10 percent. He revealed that efforts are underway to increase this ratio to 13 percent.

The minister underscored the government’s commitment to reducing expenditures and minimising debt repayments. He also reported that Pakistan’s debt-to-GDP ratio has improved, decreasing from 78 percent to 67 percent.

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While acknowledging that borrowing is not inherently negative, the finance minister stressed that the key lies in effectively utilising loans. “Such funds should be directed towards enhancing productive capacity and boosting exports.”

Furthermore, he said the private sector must take a leading role in driving economic growth, and achieving sustainable development remains paramount for Pakistan. He highlighted the country’s objectives to combat rising population, poverty, and environmental challenges, facilitated by a 10-year partnership program with the World Bank.

He said the second phase of the China-Pakistan Economic Corridor (CPEC) will shift its focus towards fostering business-to-business collaboration, with an aim to encourage Chinese companies to relocate their production facilities to Pakistan, and expressed optimism that this could position Pakistan as a hub for Chinese exports.

“Employment opportunities in the private sector will arise through a sustainable policy framework and continuity in policies. It’s encouraging to see Pakistani youth securing good jobs globally,” he concluded, acknowledging the fluctuations in Pakistan’s economic growth over the years, which highlight the ongoing challenges faced in achieving stable economic development.