• Vows to bolster exports by increasing investment in key sectors; recognises high interest rates as a barrier to growth
• Emphasises structural reforms for taxation, energy sector
• Promises equal opportunities for women in economy

LAHORE: Finance Minister Muhammad Aurangzeb on Sunday straightaway rejected the concept of strategic and essential state-owned enterprises (SOEs), stating that all SOEs, regardless of their categorisation, will be handed over to the private sector to run.

“There is no such thing as strategic SOEs. I am chairing the cabinet committee on SOEs,” explained the minister while addressing a pre-budget conference organised by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

“In the meeting to be held on Monday (today) afternoon, we will instruct various ministries to hand over all [SOEs] to the private sector, as there is no distinction regarding strategic SOEs,” said Mr Aurangzeb.

The finance minister’s stance on strategic SOEs showcases a clear divergence from Deputy Prime Minister and Foreign Minister, Ishaq Dar, who, just last Friday, differentiated between the strategic SOEs and others, calling them as profit- and loss-making SOEs.

Mr Dar, presiding over a meeting of the Cabinet Committee on Privati­sation, reportedly stated that the government would limit its business to strategic and essential SOEs under its domain, but their number would be reduced from 40 after scrutiny. He also prioritised the privatisation of loss-making SOEs, while profit-making ones could be considered for divestment.

The apparent disagreement between the current finance minister and the former one on the issue of privatising the SOEs has emerged at a time when the government is all set to start dialogue with an IMF mission from Monday (today).

Addressing the business community at the FPCCI conference on pre-budget proposals, the finance minister expressed satisfaction over both domestic and foreign investments in Pakistan.

“Domestic and foreign investors are beginning to show a level of trust in terms of the way we are moving forward,” he said.

He commended Prime Minister Shehbaz Sharif for successfully concluding the nine-month standby agreement with the IMF during his previous administration.

Mr Aurangzeb emphasised the importance of structural reforms in taxation, energy, and SOEs, along with privatisation. He highlighted the need to enhance the tax-to-GDP ratio through stricter enforcement of laws and regulations and combating power theft for a competitive energy sector.

According to him, the reforms to improve tax-to-GDP ratio couldn’t be achieved by the previous governments.

The second aspect he said is competitive energy, which, according to him, can only be achieved by addressing issues such as power theft and other leakages in the power sector.

“For this, we are prepared to change the BoD [Boards of Directors] of all power distribution companies [Discos],” he maintained.

The minister dispelled the impression of favouring foreign investors and clarified that boosting the country’s economy relies on local investors, including women entrepreneurs.

He said that to overcome the difficult economic conditions, the private sector must be encouraged. He deemed the demand for a uniform tariff by industries justified, emphasising that industrial development is impossible with interest rates of 25-26 per cent.

However, he asserted that there will be no compromise on expanding the tax net.

To stimulate exports, the minister pledged to increase investments through policy-level reforms, particularly in agriculture, IT, and small industries. He noted that economy is currently stable, with inflation gradually decreasing.

In response to a question, the finance minister assured that women would also be given equal opportunities in economic activities at the government level. He welcomed proposals from the FPCCI members and panellists for the upcoming budget, promising to consider them.

Published in Dawn, May 13th, 2024