IMF report should not be considered a criticism but a guide for reforms, says Finance Minister

Islamabad: Finance Minister Senator Muhammad Aurangzeb says that the country cannot run with a nine percent tax to GDP ratio, increasing the tax net is the need of the hour, an agreement has been reached with the IMF, the economy is moving in the right direction, the IMF report should not be considered as criticism but as a guide for reforms.

Addressing a press conference in Islamabad, the Finance Minister said that the problem is not with the employees but with the corruption in the subsidy amount, no such grant can be approved that is not approved by the parliament, a staff level agreement has been reached with the IMF, the US Exim Bank has also returned to financing the Reko Diq project, this project will prove to be a game changer for the country.

Finance Minister Muhammad Aurangzeb further said that the balance of payments and current account are very important for sustainable development. The private sector is being encouraged. The Prime Minister directed to abolish the Export Development Surcharge. The summary has been sent to the federal cabinet for approval. The National Finance Commission will also meet next week. He pointed out a clear and decisive direction of the government’s policies, the center of which is comprehensive and export-oriented development led by the private sector.

He said that the decision to abolish the Export Development Surcharge is a practical example of this vision, which will not only provide relief to exporters but also increase competitiveness and lay the foundation for sustainable economic stability.

The Finance Minister said that on the instructions of the Prime Minister, approval has also been given to reforms in the governance structure of the Export Development Fund. While going ahead with the proposal of the private sector, the government has decided to completely abolish the 0.25 percent surcharge implemented since 1991. The summary in this regard has been sent to the cabinet. After approval, implementation will start immediately.

Statement on IMF Corruption Report

Referring to the IMF Governance, Diagnostic and Corruption Report, the Finance Minister said that this review was conducted at the request of the government itself, which is a testament to transparency and commitment to reforms. The report acknowledges significant progress in areas such as taxation, governance, public financial management and procurement, while most of the important reforms are already underway.

The Minister clarified that the IMF report should not be seen as a criticism but as a guide to accelerate the journey of reforms.

Senator Aurangzeb said that the government’s medium-term vision is to move from stagnation to sustainable and inclusive growth, which is based on increasing exports, remittances, private investment and productivity.

He said that from July to October, the country’s industrial activities saw a significant improvement, with cement production increasing by 16 percent, fertilizer by 9 percent, petroleum products by 4 percent, automobiles by 31 percent and mobile phone manufacturing by 26 percent. The growth rate of large-scale industry also remained at 4.1 percent compared to the negative performance of the previous year.

The Finance Minister, while mentioning the improvement in exports, said that overall exports increased by 5 percent and IT exports by more than 20 percent, while the IT sector achieved new highs for two consecutive months in September and October.

He said that the financial conclusion of the global financing worth $ 3.5 billion related to Reko Diq has been reached, which will generate about $ 2.8 to 2.9 billion in annual export earnings in the future.

Regarding remittances, the Finance Minister said that after a record level of $38 billion last year, remittances will exceed $41 billion this year, which will provide strong support to the current account.

He said that reforms are also underway in the import policy so that the competitiveness of industries can be increased by prioritizing the import of raw materials and intermediate goods and the old protectionist policies can be gradually eliminated.

The Finance Minister said that the Tax Policy Office has now become officially functional and will have full authority to prepare the budget and tax policy, while the FBR is being focused on tax enforcement and technology-based administrative reforms.

Regarding public finance, the Minister said that for the first time in nine years, the country’s debt has stabilized, while after the reduction in the policy rate, the burden of debt repayment has also started to decrease.

He said that Pakistan’s first Panda Bond will be issued by December or before the Chinese New Year, which will diversify the sources of funding and reduce costs.

The Finance Minister announced that the 11th NFC Award process is starting next week in which provincial Chief Ministers and finance teams will participate.

He expressed hope that like the National Fiscal Compact, this process will also progress in the spirit of Pakistan First.

On questions related to energy, taxes and competition, he said that the formal sector is facing high tax burden and tariffs, which can only be solved by expanding the tax base, improving implementation and eliminating leakages. Tax refunds have increased from Rs 200 billion to Rs 250 billion in five months, which is a testament to the facilitation for the industry.

Speaking on sugar and agricultural commodity governance, he said that sustainable reforms require the government to completely move away from imports, processing and trade and make the market transparent and competitive.

Senator Aurangzeb, while mentioning the growing interest of foreign companies in various sectors, said that significant progress has been made by global organizations in energy, mining, IT, telecom, construction, logistics and electric vehicle manufacturing.

He said that from Saudi Aramco to Barrick Gold, Chinese, Turkish and Emirati companies, including Google, are also going to open their offices in Pakistan, which will become a hub for technological and export activities in the future.

The Finance Minister said that Pakistan has emerged from the crisis of two years ago and is now moving towards a stable, export-oriented and investment-driven development model.

He assured that the agricultural sector, large industries, new economy, remittances and private investment will provide a strong and comprehensive economic structure in the future.

He also expressed his commitment to keep the media informed of the progress on a monthly basis.