Economic Survey FY24: Pakistan sees economic progress with reduced deficit, stable rupee

Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, announced significant strides in Pakistan’s economic landscape despite numerous challenges.

Addressing a press conference at the launch of the Economic Survey of Pakistan 2023-24, the minister highlighted a 30 per cent increase in revenue collection, a reduced current account deficit, lower inflation rates, and a stabilised currency.

Senator Aurangzeb emphasised the remarkable economic turnaround from a previously precarious situation marked by a 0.2 per cent GDP contraction, a 29 per cent rupee depreciation, and dwindling foreign exchange reserves that had dropped to merely two weeks’ worth of import cover.

He acknowledged the difficulties faced by the large-scale manufacturing sector, primarily due to high-interest rates and energy issues, but noted that the agriculture sector had provided a much-needed boost with bumper crops.

“The agriculture, dairy, and livestock sectors are poised to remain key drivers of growth in the coming years,” Aurangzeb stated.

Reflecting on the economic journey of the current fiscal year, Aurangzeb credited Prime Minister Shehbaz Sharif’s leadership and the pivotal decision to engage with the International Monetary Fund (IMF). The signing of a nine-month Standby Agreement with the IMF, he said, was crucial for the country’s progress and economic stability.

“The decision to approach the IMF has been fruitful, restoring confidence in Pakistan’s economy,” Aurangzeb noted. He underscored the successful conclusion of the IMF’s Stand-By Arrangement (SBA) as evidence of Pakistan’s commitment to economic discipline, which had been acknowledged by the IMF.

Looking ahead, Aurangzeb mentioned ongoing productive and constructive dialogues with the IMF, focusing on Pakistan’s reform agenda. “This is Pakistan’s program, supported and funded by the IMF,” he said, detailing areas such as tax revenue enhancement, energy sector improvements, power sector reforms, and the privatisation of state-owned enterprises.

The minister highlighted the dramatic reduction in the Current Account Deficit (CAD) from an estimated $6 billion to just $200 million. He also noted that Pakistan had experienced a current account surplus for three consecutive months, with remittances reaching $3.2 billion in May.

He attributed the currency’s stabilisation and the decrease in inflation to a series of administrative measures by the caretaker government, including crackdowns on illegal financial activities like Hundi-Hawala, smuggling, and regulating transit trade to Afghanistan.

Additionally, interventions by the State Bank of Pakistan had curbed market speculation, further contributing to the currency’s stability.

Senator Aurangzeb concluded on an optimistic note, expressing confidence in the ongoing positive dialogue with the IMF and reaffirming the government’s commitment to achieving Pakistan’s economic goals.