logo
Pakistani finance chief calls for coalition of developing nations to push for fair trade, financial reform

Pakistani finance chief calls for coalition of developing nations to push for fair trade, financial reform

Arab News26-03-2025

ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb has proposed the formation of a global coalition of developing nations to collectively advocate for fair trade and better representation in international financial institutions, while criticizing the global economy as unequal, according to an official statement issued on Wednesday.
The finance chief made these remarks during his address at the Boao Forum for Asia Annual Conference 2025, held in China.
The forum, often referred to as the 'Asian Davos,' is a high-level platform where leaders from government, business and academia across Asia and other continents gather to discuss pressing global and regional issues, with this year's conference — titled 'Asia in the Changing World: Towards a Shared Future' — running from March 25 to 28.
'Developing countries must unite to demand fair trade principles and improved representation in global financial institutions,' Aurangzeb said, according to a finance ministry statement, as they asked them to form a global coalition.
He said globalization's had led to general progress, but its benefits remained unevenly distributed.
'The global economy has undoubtedly driven economic growth,' Aurangzeb said, according to a statement released by Pakistan's finance ministry. 'However, it remains highly unequal and fragmented.'
'Such an economy primarily benefits developed nations, while countries in the Global South are often overlooked,' he added.
Highlighting the structural challenges faced by developing nations, Aurangzeb pointed to high tariffs, discriminatory trade practices and barriers to market access that limit their ability to participate fully in the global economy.
He also stressed the urgency of reforming the global sovereign debt system, urging multilateral institutions such as the G20 and the IMF to play a more constructive role in debt relief and financial justice.
'The G20 and IMF must reform the sovereign debt system to enable debt forgiveness and ensure financial fairness,' he said.
Calling for inclusive and sustainable growth, Aurangzeb advocated for stronger multilateral cooperation to promote equitable market access, enhance regional connectivity, and build a global economy that works for all.
'An inclusive global economy is not a choice but a necessity,' he said.
He also underscored the role of technology in closing the global equity gap, recommending the creation of international AI and fintech funds to support digital inclusion in developing countries.
'Technology should serve as a tool for equity,' he said.
The finance minister further called for sustainability and environmental justice to be integrated into globalization policies.
He stressed the need for increased climate financing and easier technology transfer to countries most vulnerable to the effects of climate change.

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Pakistan to unveil national budget today as it eyes sustainable growth
Pakistan to unveil national budget today as it eyes sustainable growth

Arab News

timean hour ago

  • Arab News

Pakistan to unveil national budget today as it eyes sustainable growth

ISLAMABAD: Pakistan's coalition government will unveil the national federal budget today, Tuesday, for the fiscal year till June 2026 with Islamabad eyeing sustainable economic growth and vowing to continue ahead with painful fiscal reforms to ensure that. The budget comes a day after the government unveiled the annual Economic Survey, a pre-budget document assessing the economy's trajectory over the past year, which said Pakistan's economy is expected to grow 2.7 percent in the outgoing fiscal year, missing Islamabad's 3.7 percent target. The budget every year highlights the government's plans to raise revenue, outlines its expenditures, states inflation and growth assumptions as well as allocations for several areas such as defense, education, health and other sectors of the economy. 'The Federal Budget for the next fiscal year will be presented in the National Assembly on Tuesday,' state broadcaster Radio Pakistan reported, adding that the lower house of parliament will meet at 5:00 p.m. for the session. 'Finance Minister Muhammad Aurangzeb will present the Federal Budget in the National Assembly and later he will lay a copy of the Finance Bill, 2025, containing the Annual Budget Statement before the Senate.' The budget comes as Pakistan undertakes efforts to navigate a tricky path to economic recovery. The South Asian country, which came to the brink of a sovereign default in June 2023, has since then undertaken painful macroeconomic reforms that it credits for gains such as a low inflation rate, increasing investors' confidence in the stock market and current account surpluses. Pakistan has vowed to stay the course of long-term reforms, which include widening the tax net, taking steps to privatize loss-making state-owned assets, slashing subsidies and undertaking reforms in energy and other vital sectors. An International Monetary Fund (IMF) team concluded its visit to Pakistan last month after discussions with authorities regarding the budget, broader economic policy and reforms under its ongoing $7 billion loan program for the country. The IMF last month approved the first review of Pakistan's loan program, unlocking a $1 billion payment. A fresh $1.4 billion loan was also approved under the IMF's climate resilience fund. The IMF's loan is vital for Pakistan which is trying to revive its debt-ridden economy. In a televised news briefing on Monday afternoon while releasing the Economic Survey, Aurangzeb reaffirmed the government's commitment to implementing IMF-backed structural reforms to transform the fundamentals of Pakistan's economy. 'The DNA of Pakistan's economy has to be fundamentally changed through tax and energy reforms that have started showing remarkable results,' he said. According to the survey, Pakistan's revenues rose sharply over the past year. It said tax collections increased by 26.3 percent to Rs9.3 trillion ($32.9 billion), while total revenues stood at Rs13.4 trillion ($47.5 billion). The primary surplus also improved to 3.0 percent from 1.5 percent. Government expenditure during this period rose to Rs16.3 trillion ($58 billion), with current and development spending increasing by 18.3 percent and 33 percent, respectively. On the external front, Pakistan recorded a sharp turnaround in its current account, moving from a $1.3 billion deficit to a $1.9 billion surplus, driven by improved exports and record remittance inflows.

Pakistan expects 2.7% economic growth in FY25 amid weak farm and industrial outlook
Pakistan expects 2.7% economic growth in FY25 amid weak farm and industrial outlook

Arab News

time13 hours ago

  • Arab News

Pakistan expects 2.7% economic growth in FY25 amid weak farm and industrial outlook

KARACHI: Pakistan's economy is expected to grow 2.7 percent in the outgoing fiscal year, missing the government's 3.7 percent target due to what analysts called weaker-than-expected performance in the agriculture and industrial sectors, as Finance Minister Muhammad Aurangzeb unveiled the annual Economic Survey on Monday. The survey, released ahead of the national budget on June 10, serves as a pre-budget document assessing the economy's trajectory over the past year. It outlines key indicators and policy challenges facing the country, which remains under an International Monetary Fund (IMF) program and is navigating a fragile recovery after a prolonged financial crisis. 'This has been a gradual recovery,' Aurangzeb told a televised news briefing in Islamabad, adding that the country's economic performance must be viewed in the larger global context. The finance minister said after contracting by 0.2 percent in FY23, Pakistan's economy grew 2.5 percent last year and is expected to expand slightly to 2.7 percent in the outgoing year. 'We plan to stay the course to ensure that we remain on the sustainable growth trajectory,' he added. Aurangzeb reaffirmed the government's commitment to implementing IMF-backed structural reforms to transform the fundamentals of Pakistan's economy. 'The DNA of Pakistan's economy has to be fundamentally changed through tax and energy reforms that have started showing remarkable results,' he said. The minister maintained staying in the IMF program would help Pakistan bring permanence to its hard-earned macroeconomic stability and reduce its economic vulnerability. 'Implementing a 37-month, US$7 billion IMF Extended Fund Facility (IMFEFF) has bolstered policy credibility and provided essential financial support to promote inclusive and reform-driven growth,' the Economic Survey also proclaimed. Analysts said Pakistan targeted 3.7 percent economic growth for the outgoing fiscal year but was forced to revise it to 2.7 percent last month due to underperformance in the agriculture sector. 'The government did fall short of its 3.7 percent GDP growth target for FY25 and primarily it was due to a major setback in the agriculture sector,' said Sana Tawfik, head of research at Arif Habib Limited. 'The agriculture sector posted a growth of just 0.6 percent so the situation was especially concerning in major crops,' she added. According to the survey, the agriculture sector is expected to grow by 0.56 percent, while the industrial and services sectors are likely to expand by 4.77 percent and 2.91 percent, respectively. Meanwhile, inflation has eased significantly, giving room for monetary easing. Aurangzeb called the inflation trend a 'fantastic story' for Pakistan, with the pace of price hikes slowing to a record low of 0.3 percent in April. Inflation is expected to settle at 4.3 percent in the outgoing financial year. The State Bank of Pakistan also cut its benchmark interest rate by over 1,000 basis points to 11 percent in FY25, with more easing likely ahead. 'This is the domain of the State Bank and the monetary policy committee so I don't want to comment on that,' Aurangzeb said. 'But I do expect where our core inflation is, where headline inflation is, there is room to do more.' On the fiscal side, the survey showed that the government managed to contain the deficit at 2.6 percent of GDP for July-March, compared with 3.7 percent during the same period a year ago. Revenues rose sharply, with tax collections increasing by 26.3 percent to Rs9.3 trillion ($32.9 billion), while total revenues stood at Rs13.4 trillion ($47.5 billion). Primary surplus also improved to 3.0 percent from 1.5 percent. Government expenditure during this period rose to Rs16.3 trillion ($58 billion), with current and development spending increasing by 18.3 percent and 33 percent, respectively. On the external front, Pakistan recorded a sharp turnaround in its current account, moving from a $1.3 billion deficit to a $1.9 billion surplus, driven by improved exports and record remittance inflows. 'The industry also struggled. If you look at the manufacturing sub-sector so LSM [large scale manufacturing] remained in the negative territory,' said Tawfik, noting that weak domestic demand, high inflation and elevated interest rates had weighed on performance. 'In short both demand and supply side factors combined dragged down the overall growth across key sectors of the economy,' she continued. Aurangzeb said the government was working to further reduce energy costs for local investors. 'On the energy side, as I said one-third of the tariffs, seven rupee is not a small amount and Mr. Leghari [power minister] is working on it day in and day out,' he said. Planning Minister Ahsan Iqbal last week said the government was targeting 4.2 percent growth in the next fiscal year starting July. Aurangzeb echoed this target, noting that growth would be driven by a rebound in agriculture and industry. 'This target would be achieved through growth in industries and agriculture that are expected to rebound on the back of government's favorable financial, tax and energy policies,' he said. Pakistan's multilateral and bilateral partners, including the IMF, World Bank, China, Saudi Arabia and the United Arab Emirates, remain supportive of the country's reform path. 'With respect to the Fund and multilateral partners I've already mentioned we are in a good place with them both in terms of the mission and the senior management of the Fund,' Aurangzeb said. 'The monetary institutions and our bilateral partners are standing by us as we move forward.' Shankar Talreja, an economist and director at Topline Research Ltd., expressed optimism about the outlook. 'There will be some natural rebound in important crops under the agriculture segment,' he said. 'Similarly, due to lower interest rates, industrial and services sectors will also post decent growth.'

Pakistan economy to grow 2.7 percent in FY25, economic survey shows
Pakistan economy to grow 2.7 percent in FY25, economic survey shows

Arab News

time18 hours ago

  • Arab News

Pakistan economy to grow 2.7 percent in FY25, economic survey shows

ISLAMABAD: Pakistan's economy is likely to expand 2.7 percent in the fiscal year ending June 2025 after growing 2.5 percent during the previous year, the government's economic survey showed on Monday, a day before the country's federal budget is unveiled. The government initially targeted 3.6 percent GDP growth, but lowered it to 2.7 percent last month. The IMF expects real GDP to grow by 2.6 percent in FY25 and for the economy to grow 3.6 percent in FY26. Prime Minister Shehbaz Sharif's government aims for 4.2 percent GDP growth next year, the country's planning minister said last week, amid competing priorities, including stimulating investment, maintaining a primary surplus, and managing defense expenditure amid heightened tensions with India. Pakistan's central bank, in a bid to encourage growth, cut its policy rate by more than 1,000 basis points in the current fiscal year. Its latest cut last month brought the key rate to 11 percent, resuming an easing cycle that had brought rates down from 22 percent after a brief pause in March. Pakistan had a current account surplus of $1.9 billion in the July to April period of the current fiscal year compared to a deficit of $200 million in the same period last year, the survey showed. 'Pakistan's economy has been globally acknowledged for achieving macroeconomic stabilization in the outgoing fiscal year,' Finance Minister Muhammad Aurangzeb said in his foreword to the survey. 'Pakistan is consistently advancing on an upward trajectory, built upon investment friendly reforms, enhanced domestic savings, and increased foreign direct investment, with GDP growth projected at 5.7 percent over the medium term,' he said. The economic survey, a key pre-budget document, comes at a time when Pakistan's economy is stabilizing but remains fragile as the country navigates reforms under a $7 billion International Monetary Fund program. Pakistan's federal budget for the next fiscal year starting July will be released on Tuesday. The government's total revenue for the first three quarters of the current year stood at 13.37 trillion rupees, the survey showed. Increasing revenue to trim the fiscal deficit, a key demand of the IMF program, is considered challenging for Islamabad. Other key performance indicators mentioned in the economic survey include fiscal deficit at 2.6 percent of GDP during the first three quarters of the fiscal year. Inflation was seen at 4.6 percent for the year.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store