TRADE & ECONOMY
Finance Minister Muhammad Aurangzeb expressed optimism on Thursday that Pakistan is nearing an agreement with the International Monetary Fund (IMF) for a $6 billion Extended Fund Facility (EFF) this month. Addressing journalists after briefing the National Assembly’s Standing Committee on Finance & Revenue, Aurangzeb highlighted that the government has fulfilled almost all prior actions required by the IMF.
Aurangzeb disclosed that discussions are underway to enhance the IMF package by incorporating a Climate Resilience Facility (CRF), aimed at bolstering Pakistan’s defenses against climate change impacts. While the initial EFF size remains to be finalized, he indicated plans to approach IMF staff for CRF augmentation following the first quarterly review.
Regarding provincial cooperation on fiscal matters, Aurangzeb noted that all provinces have agreed in principle to the introduction of an income tax on agriculture. However, detailed consultations are essential due to the provincial jurisdiction over this subject.
During the committee meeting, former finance minister Syed Naveed Qamar acknowledged the historical reluctance towards agricultural taxation, emphasizing the need for cautious steps in implementing such reforms.
Aurangzeb also discussed macroeconomic improvements facilitated by the IMF program, citing recent approvals for infrastructure projects like the Dasu Dam by the World Bank as evidence of restored multilateral financing confidence.
The finance minister addressed concerns about inflation and monetary policy, indicating a potential reduction in the State Bank’s policy rate amidst global economic trends. He assured that import restrictions are not in place and dismissed assumptions of currency devaluation.
On fiscal measures, Aurangzeb highlighted recent tax reforms targeting real estate, developers, and retailers, while acknowledging pressures from various sectors seeking tax exemptions. He mentioned the elimination of presumptive tax and adjustments affecting exporters, stressing ongoing efforts to address exporters’ concerns and expedite tax refunds.
In a parliamentary inquiry, Aurangzeb confirmed the introduction of a contributory pension system for civil employees starting July 1, with plans to extend this reform to the armed forces in the next fiscal year.
Finance Secretary Imdadullah Bosal provided insights into Pakistan’s unemployment rate estimates, highlighting discrepancies among various international organizations.
The developments underscore Pakistan’s ongoing efforts to stabilize its economy through structural reforms and international cooperation.