ISLAMABAD: Minister of State for Finance Bilal Azhar Kayani on Thursday called for greater alignment between federal and provincial governments and devolution of resources and powers to the local level, saying development spending must translate into visible improvements in people’s lives.

“Pakistan’s recent economic gains were important but “not enough”, stressing that the key challenge was to break the recurring cycle of foreign exchange reserve depletion after periods of economic growth,” said the minister while addressing the ninth edition of the Leaders in Islamabad Business Summit, organised by Nutshell Group under the theme “The Next Move”.

Stronger federal-provincial coordination, a fair distribution of resources under the National Finance Commission (NFC) and empowering local governments were essential for delivering better public services, he added.

He said Pakistan’s recent economic gains were important but “not enough”, stressing that the country must break its recurring cycle of economic boom and bust, particularly the pattern of foreign exchange reserves falling whenever growth picked up.

Kayani said the incumbent government had achieved the country’s highest-ever foreign exchange reserves, regained access to the international bond market after a gap, and secured improvements in sovereign credit ratings from two rating agencies.

“Economic achievements are important, but are they enough? Absolutely not,” he said, adding that Pakistan had repeatedly entered IMF programmes following economic shocks to restore macroeconomic stability and fiscal discipline.

“The real challenge is to break the cycle of declining foreign exchange reserves,” he said, stressing that reserves must continue to rise after economic stability is achieved.

On fiscal federalism, Kayani said the previous year’s development spending amounted to around Rs3.2 trillion by provinces compared with approximately Rs1.1 trillion by the federal government, underscoring the need to ensure that resources and responsibilities were aligned.

He said greater powers should be devolved to the local level so that issues could be resolved closer to the people.

Kayani also stressed the need for a fair NFC distribution, saying weakness in any one province would ultimately affect the entire country. Turning to the economy, he said effective policymaking was not possible without private-sector participation and that continued consultation between the government and businesses was essential for sustainable economic stability.

He said the government had consulted the private sector while creating fiscal space in the budget and had reduced tax rates where possible in line with business priorities.

The minister said the government was focusing on the export sector and working to resolve its issues. He also highlighted measures relating to taxation of businesses, employees and IT exports.—TAHIR AMIN