FinMin Aurangzeb says IMF programme essential for macroeconomic stability

ISLAMABAD – Finance Minister Senator Aurangzeb states that the IMF program is essential for macroeconomic stability.

Addressing a press conference, the finance minister stated that due to governmental measures, the inflation rate has decreased from 38% to 12%, and foreign exchange reserves have reached $9 billion. 

He emphasized that economic stability is returning to the country, with the World Bank approving $1 billion for the Dasu Dam.

Aurangzeb mentioned that the biggest current challenge is macroeconomic stability. He warned that if macroeconomic stability falters, the economy could suffer significant damage.

He further explained that consultations with the IMF regarding the budget have been ongoing, with positive progress being made in the IMF program, which he deemed essential for macroeconomic stability. A long-term program with the IMF is being negotiated, and an agreement is expected by July. He expressed a desire for this to be the final IMF program.

The finance minister indicated plans for reforms in the energy and petroleum sectors. While a levy of up to 70 rupees on petroleum products is possible, it will not be immediately applied.

He also outlined a goal to increase the tax-to-GDP ratio to 13% over three years, as the current ratio of 9.5% is unsustainable. The plan is to raise it to 10.5% next year.

Aurangzeb noted that the previous Finance Minister Miftah Ismail’s proposal to tax retailers should have been implemented earlier. Currently, 42,000 retailers have been registered.

He announced the implementation of a new pension scheme starting tomorrow, with the Armed Forces receiving a one-year exemption to review their organizational structure.

Regarding the Public Sector Development Program (PSDP), cuts have been made, and a shift towards public-private partnerships, similar to those in Sindh, will be pursued.

On the topic of taxes, the Finance Minister acknowledged that new taxes are pressuring people, particularly salaried individuals. He promised relief for salaried individuals once there is financial flexibility.

Aurangzeb revealed that corruption amounting to Rs 750 billion in sales tax has been exposed. Reducing human involvement in the Federal Board of Revenue (FBR) will help decrease corruption. The Prime Minister held a meeting on FBR digitization, and the backlog has been cleared by the end of May, demonstrating a potential 30% growth. The FBR is expected to meet its target of Rs 9.3 trillion.

Consultations with provinces on revenue and expenditure have begun, urging provinces to manage their expenses and incorporate projects exclusive to them in their annual plans.