In an effort to transform its economic landscape, the Government of Pakistan is taking significant steps to transition to an interest-free economy Adhering to the recent directives of the Federal Shariat Court (FSC). Federal Minister for Finance and Revenue, Muhammad Aurangzeb, in a parliamentary session on Tuesday. The government’s commitment to phasing out interest-based financial systems and fostering Islamic banking across the nation was discussed.
The discussion was sparked by a motion from MQM-P lawmakers Mustafa Kamal, Aasia Ishaque, and Hassan Sabir. Who stressed the urgency of abolishing interest-based financial practices within five years. Responding to this. Minister Aurangzeb expressed that the government is actively working to eliminate interest-based systems as mandated by the FSC Signaling a paradigm shift towards Islamic financial principles.
Focus on Agriculture and IT
Minister Aurangzeb also highlighted the promising growth prospects in agriculture and information technology. Which are poised to be pivotal in Pakistan’s economic resurgence. He projected that IT exports are expected to exceed $3.3 billion this fiscal year Demonstrating sectoral growth. Furthermore, the agriculture sector is targeted to grow at a rate of 5 to 6 percent annually, bolstered by successful crop yields that have also positively impacted the industrial sector.
In a broader economic context, Pakistan has seen a substantial improvement from the previous year. Minister Aurangzeb pointed out that upon assuming office, the foreign exchange reserves were a mere $3.4 billion, sufficient for only 15 days of imports. This figure has impressively risen to over $13.3 billion. The expected disbursement from the International Monetary Fund (IMF) is anticipated to bolster these reserves further.
The Pakistan Stock Exchange (PSX) recently hit an all-time high, crossing the 72,000 mark. A testament to growing investor confidence in the country’s financial markets. This uptick in market sentiment is reflective of the broader economic stability being fostered by the government’s policies.
Reduction in Deficits and Tax Reforms
Significant steps have also been taken to reduce the current account deficit by 74 percent to $1 billion and trimming the trade deficit by 24.9 percent over the last nine months of the current fiscal year.
On the policy front, the government is focusing on three critical areas for economic reform: taxation, energy, and state-owned enterprises. Efforts are underway to enhance the tax-to-GDP ratio, which currently stands at 9 percent. Through stringent tax enforcement and broadening the tax base.
International Support and Economic Outlook
Minister Aurangzeb also acknowledged the continued support from international allies, which is crucial for Pakistan’s economic stability and growth.
These strategic shifts towards an interest-free economic model and the strengthening of key sectors like agriculture and IT are foundational to Pakistan’s goal of achieving sustainable economic development and resilience.
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