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Monday, 30 September, 2024 I | 25 Rabi ul Awwal, 1446
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DNA OVERHAUL MUST TO FOSTER SUSTAINABLE ECONOMIC GROWTH, SAYS FINMIN
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g Says EFF help to bring g Stresses sustainable Saying this is going to be last permanence to macroeconomic growth needs IMF programme stability and execut critical reforms macroeconomic stability
Govt plans major cuts: 150,000 vacant posts to be eliminated PROFIT
NEWS DESK
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PROFIT APP
EAFFIRMING the government’s resolve to implementing homegrown structural reforms, Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb here on Sunday emphasized the crucial need to bring fundamental changes in the DNA of country’s economy, leading to an export-driven model, thereby fostering sustainable growth. “We need to adopt new approach. If we are saying that this is going to be the last programme of IMF, we have just embarked on, we have to change the DNA of economy fundamentally,” the minister said while addressing a press conference here. He was accompanied by Chairman Federal Board of Revenue, Rashid Mahmood Langrial. He said, there were two main reasons for going to International Monetary Fund (IMF) for Extended Fund
Facility (EFF) which include bringing permanence to macroeconomic stability and executing critical reforms under homegrown economic agenda. He said, macroeconomic stability, creates a foundation and “if foundation is not strong, we cannot construct a house. “If we have to go for inclusive and sustainable growth, it has to be on the background of the macroeconomic stability,” he remarked. The minister said the macroeconomic stability has continued during the first quarter of the current fiscal year, however it needed permanence to lead to sustainable growth. “Macroeconomic stability is not an end in itself, it is a means to an end,” he remarked. Hence, bringing structural reforms was not only a requirement by the International Monetary Fund (IMF), but Pakistan needed it. He said, Pakistan was in defining moment, because it is going to determine the direction of the travel, and “we are very clear, about the direction of travel.”
In a significant move to cut administrative costs, the government has announced plans to eliminate 150,000 vacant positions, dissolve one ministry, and merge two others. Finance Minister Muhammad Aurangzeb made this announcement as part of the reforms tied to the $7 billion loan agreement with the International Monetary Fund (IMF). The IMF Executive Board recently approved the loan, with the State Bank of Pakistan receiving the first tranche of approximately $1.03 billion under the 37-month Extended Fund Facility (EFF) program. During a press briefing, Aurangzeb stated that following federal cabinet approval, a rightsizing committee decided to scrap 60% of the vacant posts, a move aimed at reducing government expenditures significantly. The Capital Administration and Development Division (CADD) will be dissolved as part of this initiative. A government spokesperson confirmed that several high-ranking officials would also face job cuts. “The rightsizing committee has reviewed six ministries, with one ministry approved for dissolution and two others set for merging,” the spokesperson noted. As part of broader reform efforts,
For homegrown economic reform agenda, he said, we will always consult our thinktanks in country and take foreign
Fazl urges electoral reforms for genuine polls to ensure true public representatives ISLAMABAD
STAFF REPORT
JUI-F newly-elected Chief Mualana Fazlur Rehman on Sunday expressed serious concerns about the parliament’s capability to make significant legislation and emphasised the need for genuine elections to ensure that true representatives of the people are elected. “There is a need for consensus among political parties, including the Pakistan Tehreek-e-Insaf (PTI), to draft proposed electoral reforms”, the JUI-F chief emphasized while talking to media person following the intra-party elections in which he was elected unopposed. Fazl claimed that it was need of the hour that new general elections should be held in the country and true representatives of the public should be allowed to come in the parliament. Shedding light on intra-party election, Fazl noted that JUI conducted member registration every five years, followed by elections, with the recent polls marking the
final stage of organisational restructuring. He highlighted that the party’s president and general secretary were also elected unopposed. He reiterated that despite repeated claims of election mandate theft, JUI remains firmly grounded in the public sphere. He criticised the current Parliament, asserting that it does not deserve to enact significant amendments, arguing that changes should not come from what he termed a “fake parliament.” He stressed that amendments should not focus on individual personalities. The JUI-F chief lamented the lack of legitimate governance at both the federal and provincial levels, describing the existing administrations as “false governments.” He called for judicial reforms and urged constitutional avenues to protect fundamental rights. He said that the government wanted to impose martial law in the country with proposed amendment that was why JUI-F did not support the government. Fazl said that PPP and JUI-F were in talks over proposed document of the
amendments, saying the PTI too was preparing new amendments bill. He said the JUI-F would not compromise on rule of law and the supremacy of the constitution, urging all the stake holders to share their proposed documents with each other. He said the government was also brining new amendments. The JUI-F claimed that the Khyber Pakhtunkhwa was burning and all tribal areas were facing war-like situation, adding that the people of tribal areas were more concerned after their merger with KP. He blamed that US officer asked the government to merger these districts with the KP and he questioned how US can dictate the government to do so. He told media that he had held meeting with General Bajwa and others and had advised them against the merger. He reiterated his stance that the merger was premature and called for a referendum to correct what he sees as a mistake. According to Fazlur Rehman, the people of FATA should be asked what they want through a referendum.
creased to align with higher rates for Re-gasified Liquefied Natural Gas (RLNG), thereby discouraging their use. In contrast, the power minister stressed the necessity of ensuring connectivity to the national grid before cutting gas supplies and supported the idea of raising tariffs. The petroleum minister cautioned that the Power Division should have established timelines for connecting captive power plants to the grid, warning that disconnecting gas—mandated by an International Monetary Fund (IMF) structural benchmark— could adversely affect the textile industry and the broader economy. Despite these warnings, the committee concluded that gas pricing should be leveraged to transition industries to grid-based power, agreeing to notify captive power producers about the gas disconnection, set for early 2025. The Petroleum Division in-
formed the ECC that the government has been encouraging industries to transition away from gas for several years. The 2005 Natural Gas Allocation and Management Policy established a merit-based order for gas supply, which has undergone multiple revisions. In 2018, the textile sector received subsidies for RLNG, which were subsequently increased but ended in July 2023. This left industries reliant on indigenous and RLNG resources, per the ECC’s November 2023 decision. The textile sector has heavily invested in captive power generation to ensure uninterrupted production, especially during periods of power instability. These plants not only generate electricity but also produce steam essential for industrial processes. However, the government’s push to phase out gas-based captive power has created significant obstacles.
Textile sector faces challenges as govt withdraws gas supply to captive power plants PROFIT
MONITORING DESK
The textile industry is grappling with significant challenges following the government’s decision to cut off gas supplies to captive power plants, pushing these facilities to connect to the national power grid. Reports indicate a lack of consensus among power and petroleum ministers regarding this critical issue. During a recent Economic Coordination Committee (ECC) meeting, the Petroleum Division highlighted the government’s ongoing strategy to reduce the use of natural gas for captive power generation. The division proposed a revision of the gas supply priority order to minimize consumption by these plants. The Minister of State for Finance and Revenue supported this proposal, suggesting that gas tariffs for captive power should be in-
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the cabinet committee on institutional reforms recommended not only the elimination of vacant positions but also a ban on contingency recruitment and the outsourcing of non-core services, such as cleaning, which may lead to a gradual phase-out of many lower-grade positions. In a meeting chaired by Prime Minister Shahbaz Sharif, the finance minister presented recommendations for rightsizing federal government departments. The Ministry of Finance has been tasked with overseeing the cash balances of other federal ministries. Aurangzeb emphasized that these measures, alongside the IMF bailout package, aim to bring economic stability to the country. He also highlighted the need to expand the tax net, noting that only 14% of retailers are currently registered for sales tax. He warned that the government would have to block utility services for nonregistered individuals, indicating that all tax exemptions have been revoked. To enhance the efficiency of the Federal Board of Revenue (FBR), the government plans to hire 2,000 chartered accountants and tax audit experts to improve auditing capabilities. These reforms represent a significant step towards addressing the country’s economic challenges and streamlining government operations.
advice into consideration as we go forward. “it is neither offence nor defence.
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IMF upgrades Pakistan’s economic growth forecast to 3.2% PROFIT
NEWS DESK
The International Monetary Fund (IMF) has revised its economic growth forecast for Pakistan to 3.2%, while also projecting a decline in inflation to single digits. This announcement comes with a warning from the IMF executive board to pursue growth targets responsibly to maintain debt sustainability. In a statement following the approval of a $7 billion loan package, IMF Deputy Managing Director Kenji Okamura noted improvements in Pakistan’s economic landscape, highlighting a return to growth, doubled reserves over the past year, and a marked decrease in inflation. However, he cautioned that significant structural challenges remain, necessitating continued efforts to bolster Pakistan’s economic resilience. The IMF’s recent Article IV consultation culminated in the approval of a 37-month Extended Arrangement, with the first tranche of $1.02 billion disbursed on Friday. The IMF’s growth projection surpasses that of the Asian Development Bank (ADB), while the Pakistani government has set a slightly higher target of 3.5% for this fiscal year. Additionally, the IMF expects average inflation to decrease to 9.5% by the end of the fiscal year, significantly lower than the government’s target of 12% and a notable reduction from the IMF’s previous forecast of 15%. This drop provides the State Bank of Pakistan with the potential to lower its current policy rate of 17.5%. Despite these positive developments, IMF directors have urged caution, emphasizing that ambitious growth projections must not compromise debt sustainability. The IMF anticipates an increase in the debt-to-GDP ratio from 69.2% to 71.4% this fiscal year, even as it sets a primary budget surplus target of 2% of GDP. While the executive board welcomed progress toward a fairer tax system, it stressed the importance of broadening the tax base and improving tax administration for additional revenue mobilization. The board acknowledged Pakistan’s strides in policymaking under the standby arrangement, which has contributed to renewed economic stability. The IMF forecasts that gross official foreign exchange reserves will rise from $9.4 billion to $12.8 billion by June of next year, although this amount remains below the minimum requirement to cover three months of imports.