KARACHI: Finance Minister Muhammad Aurangzeb stated on Saturday that the nation has suffered greatly over the past ten years due to the mounting weight of state-owned enterprises (SOEs), which has cost it Rs6 trillion.
The minister urged the government to privatize these state-owned enterprises (SOEs) during a speech at the Overseas Investors Chambers of Commerce and Industry (OICCI), but he did not provide an explanation for why the government was unable to take this step.
Pakistan International Airlines’ attempt at privatization failed because, despite creating enthusiasm about the airline’s possible success, the government was unable to find a suitable buyer. It has also abandoned the plan to sell out Pakistan Steel Mills (PSM).
Although the government has been outspoken about the enormous financial burden that the SOEs place on the national coffers, it has been unable to privatize any of the publicly owned companies that are losing money, such as Pakistan Railways, PIA, etc.
According to him, the Rs6 trillion loss was around half of the Rs12.9 trillion tax collection goal for FY25.
anticipates receiving approximately $35 billion in remittances in FY25.
According to the minister, privatizing public firms as quickly as feasible is the only way to control these losses. According to him, these SOEs cause losses of almost Rs2.2 billion per day, which undermines attempts to keep the fiscal deficit under control.
According to the minister, deregulation, liberalization, and privatization are the best course of action. Mr. Aurangzeb did not, however, specify how long it will take to get rid of these companies that cause losses.
Remittances are surging.
As he discussed raising remittances, the minister was in a good mood. According to him, the nation anticipates remittance inflows of roughly $35 billion for the current fiscal year.
From July to October, Pakistan received $11.85 billion in remittances, or $2.962 billion on average each month. The nation got $2.859 billion in September and $3.052 billion in October, indicating an increase in remittances.
In FY24, the nation got $30.25 billion, a 13.3 percent decrease from the year before.
According to financial analysts, the increased remittances are the consequence of stable exchange rates and a campaign against illicit currency trading. According to the minister, the government has no control on the rate of change. The currency rate stayed steady with very minor swings over the current fiscal year, which increased industry and trade confidence and made exporters feel at ease. According to him, supply and demand for dollars determine the exchange rate.
Since the previous backlog was cleared by transferring out $2.2 billion from Pakistan between July and May of FY24, he stated there are no restrictions on sending out profits and dividends from the nation. For businesses that operate in Pakistan, the outflow of income and dividends from foreign capital has been a major worry. The government progressively permitted the profit to be repatriated, especially during the second half of FY24. There was just a $331 million profit outflow in FY23.
According to the minister, banks are now allowed to help international businesses repatriate their earnings and profits.
In order to help close the trade imbalance, the minister stated that the government is open to attracting foreign investment to the export-led industry.
However, he stated that when economic growth reaches 4 percent, the current account deficit increases. In the first four months of FY25, the current account is in surplus, and the average growth rate over the last three years is 1.7 percent.
In order to increase investor trust, SBP Governor Jameel Ahmed emphasized how the central bank has been openly collaborating with OICCI to resolve the worries of foreign investors, particularly with regard to dividend remittance.
Over the past ten years, OICCI members have spent $22.6 billion, surpassing the nation’s total foreign direct investment of $19 billion. According to OICCI President Yousaf Hussain, these investments have contributed one-third of Pakistan’s tax revenue.
The reclassification of petroleum products as tax-exempt was identified as a risk to the Brownfield Refining Policy, potentially jeopardizing $6 billion in investments, according to OICCI Secretary General M. Abdul Aleem, who also stated that the outstanding tax refunds of OICCI members exceed Rs100 billion, impeding operations.
