Pakistan’s economic reforms on right path, says finance minister
Federal Finance Minister Muhammad Aurangzeb has emphasized that the ongoing IMF programme is, in fact, Pakistan’s own economic reform agenda.
Addressing a press conference, he stated that Pakistan needs the IMF programme and is committed to making tough decisions to stabilize the economy.
The minister acknowledged that previous governments had avoided difficult but necessary economic decisions. However, he noted that the country’s economy is now moving in the right direction. He pointed out a consistent increase in remittances from overseas Pakistanis, expressing optimism that if the trend continues, remittances could reach $36 billion annually.
Highlighting key economic developments, Aurangzeb said the opening of local letters of credit (LCs) and boosting exports are critical for sustaining economic progress. He emphasized that inflation has been on a downward trend, and it is the government’s responsibility to ensure that the benefits of reduced inflation reach the general public.
He mentioned that prices of 36 out of 51 essential commodities have remained relatively stable and that a markup rate of 12% has positively impacted the industrial sector. He added that, in his opinion, there is room for a further reduction in interest rates.
Discussing investor confidence, the minister noted the importance of new investors entering the stock market. Referring to Eid-related economic activity, he revealed that approximately Rs. 870 billion worth of economic transactions took place during the holiday period, which reflects an increase in purchasing power and consumer confidence.
Aurangzeb confirmed that Pakistan had met all benchmarks required for the Staff-Level Agreement with the IMF and claimed that structural reforms achieved under this programme were unprecedented in the country’s history. He said the current IMF programme could be Pakistan’s last if difficult policy reforms are fully implemented.
On tax reforms, he said the government is on the right track in broadening the tax base. The number of new tax filers has increased, and in the future, taxpayers will be able to file taxes from home using simplified, technology-based systems. He highlighted the recent reduction in electricity tariffs since June 2024 as a major relief for consumers.
He appreciated the role of the energy minister in driving structural reforms and revealed that Rs. 105 billion has been collected from new tax filers. Additionally, there has been an increase in the sale of cars and motorcycles. The government is also working to expand the tax net, with the current tax-to-GDP ratio at 10.6%, and aims to raise it to 13% within the next three years.
Aurangzeb clarified that the IMF mission is currently not in Pakistan and reiterated that the Federal Board of Revenue (FBR) is solely focused on tax collection. So far this fiscal year, tax collection has increased by 32.5%. He also noted that Pakistan would receive $1 billion from the IMF in phases, and recent talks with Chinese officials have been positive.
Speaking on foreign relations, the finance minister described the United States as Pakistan’s most significant strategic and trade partner. He announced that the Prime Minister has formed a high-level committee on tariff reforms, which will soon present its recommendations. Pakistan will also send a delegation to Washington to present its position on key trade and economic matters.