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Federal Finance Minister Mohammad Aurangzeb recently suggested that there may be opportunities for further reductions in interest rates. Speaking at an event hosted by the Karachi Chamber of Commerce, Aurangzeb emphasized the crucial role of effective macroeconomic governance in fostering economic growth. He noted that structural issues in the economy often lead to balance of payment problems, particularly as growth accelerates.
Aurangzeb highlighted the importance of contributions from all sectors of the economy, including retail, construction, and real estate. He stressed that addressing structural challenges requires a collaborative effort from various economic sectors.
The minister also touched on the issue of agricultural taxation, indicating that it is a matter for provincial governments. He expressed hope that provincial authorities would take action to implement agricultural taxes, which he believes are necessary for broader economic stability.
While discussing monetary policy, Aurangzeb pointed out that the State Bank of Pakistan holds the authority to make decisions regarding interest rates. However, he conveyed optimism about the possibility of gradual rate cuts, which could support economic activity.
In his address, Aurangzeb urged banks to reconsider their lending practices. He discouraged securing loans against personal assets such as houses or cars and instead encouraged banks to focus on lending to farmers and small businesses. This shift in lending priorities aims to stimulate economic activity and support key sectors of the economy.
The Finance Minister also referenced ongoing efforts to streamline government operations, mentioning a report on ministry downsizing from Imran Khan’s tenure that had not been acted upon. He underscored the need for every sector to contribute to the tax base to prevent placing undue financial burdens on salaried individuals.
Additionally, Aurangzeb revealed that the Sindh Chief Minister has agreed to advance legislation aimed at taxing the agricultural sector. This move is seen as a crucial step toward achieving economic stability and ensuring a fair distribution of tax responsibilities.
In conclusion, Aurangzeb reiterated the need to address balance of payments issues and increase monthly exports to $4 billion. These measures, he believes, are essential for sustaining economic growth and stability.
