KARACHI – Federal Minster for Finance and Revenue Muhammad Aurangzeb on Friday said that the government is working on a two pronged implementation strategy to carry out structural reforms for enhancing Tax to GDP ratio.
The minister, while addressing Gong ceremony at Pakistan Stock Exchange in Karachi and later talking to media persons said that in the first phase of the strategy short to medium term measures would be taken for “closing the gaps, stemming the leakages and the losses while the second one was introducing structural reforms in the medium to long term.”
He said that finance ministry was working with law ministry and FBR to remove leakage in tax revenue, execution of track and trace system and digitising its operations to ensure transparency and operational efficiency for enhancing tax collections.
The minster informed that cases amounting to around Rs1.7 trillion were under litigation in tribunals and government wanted that such cases be decided in the next three months. The law ministry and the attorney general for Pakistan were requested to play their role in the regard, he added.
Terming end-to-end digitalization of tax system as necessary for bringing transparency and confidence building of the tax payers, the minister said that bringing the under-taxed and non-taxed sectors into the fold and digitization will result into additional revenue generation.
Referring to FBR’s digitalization, Aurangzeb said that the Request for Proposal (RFP) for a world class consultant having experience in emerging markets like Pakistan would be issued in the next month.
Highlighting improvement in economic sector the minister said that economic indicators has turned positive as Gross Domestic Product was showing recovery mainly due to 5% growth in agriculture sector, stock market returned to profitability while headline inflation is gradually declining.
The growth momentum in agriculture and livestock sectors is expected to continue as estimates suggest a bumper wheat crop this season while improvement is also being anticipated in large scale manufacturing (LSM) and services sectors, he hoped.
Stand by arrangement with IMF finalised during previous regime of Prime Minister Shehbaz Sharif helped government’s efforts for economic stability while we are hopeful that staff level agreement would be reached out by the end of the fiscal year, he said.
On a query about Extended Fund Facility, the finance minster said that Pakistan was ready to initiate discussions with IMF for entering into “a larger and longer program”.
However there haven’t been any final discussions with the Fund yet and request to enter the EFF will be further formalized and details of the deal might be discussed during the spring meetings in Washington next month, Aurangzeb added.
Highlighting the role of private sector in economic development, he said the importance of capital market in promoting economic development is fundamental and the government, in coordination with the relevant departments as well as stakeholders, will further focus on capital market to enhance market efficiency, transparency and investor protection.
Aurangzeb urged the private sector to lead the economic recovery in the country while the government will ensure policy framework and policy continuity. Underscoring the significance of Chinese investment in Pakistan and partnership with local companies, the finance minister called for increasing cooperation between Pakistan Stock Exchange and Chinese stock exchanges as “it will not only help us here in Pakistan in deepening, widening the capital markets based here, but also in executing CPEC phase 2.”
The minister further informed the media persons that matters pertaining to privatization of PIA and outsourcing of airports had entered into advanced stages and we wanted to take it to the finish line by end of the current financial year.
‘REDUCING OPERATIONAL EXPENDITURE’
Federal Finance Minister Muhammad Aurangzeb, Friday, called for maintaining fiscal discipline through reduced operational expenditures and also advocated for a public-private partnership model to foster national development.
He expressed the views in a significant meeting held here at the State Bank of Pakistan to deliberate on pivotal economic strategies and reforms. Governor SBP Jameel Ahmed, Chairman Pakistan Banks’ Association Zafar Masud, and high-ranking officials from various Pakistani banks attended the meeting.
The meeting was a profound step towards aligning financial institutions with Pakistan’s broader economic goals, underlining the need for strategic collaboration and robust implementation of reform initiatives, said a statement received here.
The minister opened the discussion highlighting the robust start to the year, with a notable 5% growth in agriculture, spearheaded by a bumper rice crop. Aurangzeb acknowledged the visible signs of macroeconomic stability depicted by a narrowing current account deficit and exchange rate stability.
Underscoring the objectives of sustaining the stability and its transition into a permanent state, the finance minster emphasized the synergy between the industrial sector and energy resources, alongside ongoing dialogues with the Ministry of Energy. He lauded the caretaker government for maintaining fiscal discipline and re-framed the “IMF program as Pakistan program” aimed at reinforcing Pakistan’s economic foundation. He also called for proactive implementation and ownership of the reform agenda.
The Minister stressed the importance of broadening the tax net to include under-taxed and untaxed sectors, particularly service providers, and addressed the critical issue of energy theft, advocating for streamlined governance and eventual privatization of power distribution companies.
He commended the State Bank for its decisive actions against illegal exchange operations and its support for the Pakistan International Airlines (PIA) through issuance of necessary NOCs, acknowledging the positive reception of the airport outsourcing plan.
The discussion with the banking sector leaders focused on the essential roles banks must play in supporting priority sectors like agriculture, SMEs, and technology, through appropriate incentives and infrastructure development. The dialogue also covered the government’s dedication to enhance ease of doing business, requiring legal and procedural amendments, and a push towards a digitized economy.
Governor SBP Jameel Ahmed remarked on the banking sector’s potential to significantly support agriculture and SME financing and emphasized the integration of the tech sector into formal banking through improved service delivery.
The minister while concluding the meeting, called for fiscal discipline through reduced operational expenditures, and advocated for a public-private partnership model to foster national development. He urged every societal segment to contribute to this collective progress. Also, Muhammad Aurangzeb on Friday said that with significant improvements in key economic indicators the economy in year 2024 commenced on a better note. The minister also highlighted the completion of the International Monetary Fund (IMF) review and the potential for future relations with the fund, said a statement issued here.
