Finance Minister Muhammad Aurangzeb on Sunday derided long marches and sit-ins as “self-inflicted pain,” warning sustained road blockages can cause a daily loss of Rs. 120 billion to the national exchequer.
The video statement issued by the minister follows plans by three separate groups to march on Islamabad this week. The Pakistan Tehreek-e-Insaf is seeking the release of its incarcerated founder, former Prime Minister Imran Khan, while the Jamaat-e-Islami is seeking the abolition of the petroleum development levy. The Pakistan Kissan Ittehad has also announced a march, demanding the resignation of Punjab Chief Minister Maryam Nawaz over her government’s agricultural policies.
Referring to the planned protests, Aurangzeb said they were difficult to understand at a time when Pakistan had made considerable efforts to achieve economic stability. He warned that disruption to economic activity risks undermining the country’s transition from stability to economic development.
He noted Pakistan’s foreign exchange reserves had reached $21.4 billion, the highest level in the country’s history, while the country was striving to reduce expenditures. He stressed that the fiscal deficit had declined significantly and the current account was in surplus. Remittances, he explained, were continuously increasing while exports were also moving in the right direction. He hoped this pace of economic growth would accelerate further.
According to the minister, GDP growth reached 3.7% during the last financial year, while economic growth was expected to exceed 4% during the current fiscal year. He said large-scale manufacturing was undergoing a recovery, while corporate profits and investment in the stock market had also increased.
Aurangzeb said 11 initial public offerings (IPOs) were conducted last year, compared with five in the first two months of the current year, describing the increase as a sign of confidence in the country’s business and investment environment. He said the government had set a goods export target of $32.9 billion for the current year and expected goods exports to increase by around 6%.
He said the average daily export volume was around $90 million, warning that in the worst-case scenario, strikes could reduce daily exports by up to 50%. He said the government expected I.T. exports and services to rise from $4.6 billion to $5.5 billion, adding I.T. exports stood at around $811 million during the first two months of the current fiscal year.
He stressed that disruptions to internet connectivity could be extremely damaging to I.T. exports, noting the sector had been affected by up to 80% in past worst-case scenarios.
Daily losses
According to Aurangzeb, disruption to economic activity could undermine Pakistan’s growth journey and result in billions of rupees in losses. He estimated that the services sector could suffer losses of around Rs. 86 billion per day from disruption, while the industrial sector could face losses of approximately Rs. 25 billion daily.
He also estimated that disruption could result in around Rs. 17 billion in revenue losses, while putting the overall daily loss at Rs. 120 billion.
The finance minister said the immediate burden of economic disruption would fall on ordinary people and daily-wage workers, while small shopkeepers and businesses would also be directly affected.
He noted tax revenues had increased by around 40% over the past two years, while Pakistan had attracted $311 million in direct foreign investment during the current period. He said economic stability was a basic condition for attracting foreign investment, adding foreign investment increased once confidence among domestic investors was restored.
The minister also highlighted the challenges posed by tensions in the Middle East, saying it was affecting global trade through supply-chain disruptions and higher freight and insurance costs. He stressed the need to continue the country’s journey from stability toward growth, exports and investment.
He called for problems to be resolved through negotiations and consensus, saying economic stability and the momentum of growth should not be put at risk.