Pakistan must shift to sustainable, export-led growth: FM

According to Mettis Global, Finance Minister Muhammad Aurangzeb told the Pakistan Tax Conference that the twin deficit ended last fiscal year at 2.6 per cent of GDP, down from a cumulative 12.5 per cent when the macro-stability push began. He credited fiscal consolidation for the gain, noting that the fiscal deficit last year was the lowest in 22 years and that primary surpluses have now been recorded for three years running. FBR tax revenue as a share of GDP climbed to 10.3 per cent from 8.8 per cent, while revenues rose 40 per cent over the past two fiscal years.

Of the 1.5 per cent gain in the tax-to-GDP ratio over a period of two and a half years, he said 0.9 per cent came from enforcement that stopped leakage, theft and corruption, and 0.6 per cent from new policy measures. Looking ahead, he said, enforcement will play a larger part and the focus will move to widening the tax base.

On growth, he said the economy has moved from a contraction of 0.3 per cent to around 3.7 per cent. The priority now is sustainable, export-led growth, he said, and booms driven by liquidity and consumption will not be repeated. Reserves once stood at two weeks of import cover but have since climbed above three months, the highest level in the country's history.