No state pension for new employees from next fiscal
- Sara Habib
- November 8, 2024
- 11:45 am
- 26
- Business, Current Affairs
This week, Finance Minister Muhammad Aurangzeb announced major pension reforms for Pakistan. He spoke at "The Future Summit - What Matters Now" and shared new policies for public-sector employees. Starting next year, new government employees will not receive state-funded pensions. Instead, they’ll contribute to their pension funds from their monthly salaries.
These reforms aim to lower government spending on pensions. Currently, the federal pension bill is around Rs800 billion to Rs1 trillion each year. With this change, Pakistan's pension spending could see a significant drop. This move is essential for the government’s budget and economic health.
Growth in Remittances and Economic Outlook
In addition to pension changes, Aurangzeb highlighted Pakistan’s improving remittance growth. He projected that overseas Pakistanis would send $34 billion home this fiscal year, up from $30.25 billion last year. This increase in remittances could help stabilize Pakistan’s economy further.
Aurangzeb also emphasized the importance of the private sector in driving economic growth. He believes reducing government involvement in certain sectors is beneficial. This shift allows the private sector to lead, creating more jobs and boosting economic development.
The minister is optimistic about Pakistan’s future credit rating. He expects global credit agencies to upgrade the country's rating from a “C” category to a “B” this fiscal year. This improvement would open up new economic opportunities.
Focus on Private Sector and Lending Rates
Aurangzeb explained the importance of affordable lending rates for businesses. The Karachi Inter-Bank Offered Rate (Kibor) recently fell to 13%, making borrowing more affordable. Companies can now access funds at lower costs. This drop followed a reduction in the central bank's policy rate to 15%.
Lower borrowing rates help businesses grow. Reduced lending costs benefit businesses, especially in industries with high operating expenses. This financial support is a relief for industries that have struggled with high borrowing costs in recent years.
Aurangzeb shared his views on population growth. Pakistan’s population rate of 2.55% is a significant concern. He explained that this growth creates challenges for health, education, and infrastructure. He also urged the government to focus on climate resilience to combat issues like the 2022 floods.
UAE Consul General Dr. Bakheet Ateeq Al Rumaithi also spoke at the summit. He surprised the audience by speaking in Urdu. He promised strong support for Pakistan. UAE will continue to help Pakistan's economy and invest more.
Pakistan is moving toward economic stability. These reforms and international support mark a new chapter. Aurangzeb’s policies aim to build a stronger, sustainable future for Pakistan.
