Islamabad, November 16, 2024 – Federal Finance Minister Muhammad Aurangzeb has dismissed the possibility of introducing a mini-budget after the conclusion of successful discussions with the International Monetary Fund (IMF). The talks, which included an in-person visit by the IMF mission led by Nathan Porter, were described as productive and aimed at fostering confidence rather than reviewing Pakistan’s economy.
The IMF delegation’s visit, from November 12 to 15, facilitated open and fact-based dialogue on Pakistan’s economic position and ongoing reform efforts. The global lender emphasized the need to expand Pakistan’s tax base by targeting untapped revenue sources, a critical step in addressing the country’s fiscal challenges.
Focus on Economic Reforms
The IMF mission reaffirmed its support for the 2024 Extended Fund Facility (EFF), urging Pakistan to maintain prudent fiscal and monetary policies. The discussions also highlighted the importance of mobilizing revenue, delegating more social and developmental responsibilities to provinces, and addressing structural energy sector issues to ensure sustainability.
The delegation acknowledged Pakistan’s commitment to economic reforms, particularly in broadening the tax base and addressing inefficiencies in key sectors. Efforts to reduce vulnerabilities and lay the groundwork for sustainable growth were central to the discussions, with the IMF encouraging the continuation of fiscal discipline and targeted reforms.
Privatization and Fiscal Management
Finance Minister Aurangzeb acknowledged setbacks in privatizing Pakistan International Airlines (PIA) but reiterated the government’s determination to proceed with privatizing state-owned enterprises (SOEs). Entities such as Gencos, DISCOs, and airports are also slated for gradual privatization, as part of the government’s broader reform agenda.
Efforts in the power sector are progressing, with a focus on improving transmission and distribution systems. Federal Minister Awais Leghari has been commended for his role in advancing these initiatives. Additionally, the approval of the National Fiscal Pact has faced minor delays, but provincial governments have shown strong support, underscoring a unified approach to fiscal reforms.
Rightsizing and Pension Reforms
The government’s rightsizing initiative has made significant progress, with restructuring completed in 11 ministries and ongoing in five more. This effort aims to streamline governance and reduce expenditures, aligning with broader fiscal consolidation goals.
Reforms in the pension scheme have also been initiated, including contributions from civil bureaucracy. These measures are designed to address long-standing inefficiencies and ensure the scheme’s sustainability, contrary to perceptions that no action has been taken in this area.
National Consensus and Forward Path
Aurangzeb praised provincial leaders, including Sindh Chief Minister Murad Ali Shah and representatives from Khyber Pakhtunkhwa, for their cooperative stance on national interests. This collaboration reflects a broader consensus on tackling fiscal and economic challenges through coordinated efforts.
With virtual negotiations with the IMF ongoing, the government remains focused on implementing structural reforms, reducing vulnerabilities, and fostering sustainable growth. The minister’s assurance of no mini-budget underscores the administration’s commitment to stability and confidence-building amidst ongoing economic challenges.
