ISLAMABAD: Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb reaffirmed the government’s resolve to carry forward the reforms agenda, aiming at broadening of the tax base and rightsizing of the federal government to achieve macroeconomic stability what he called ‘basic hygiene’ for sustainable growth.
In a televised message, the minister said 43 percent of sectors in the economy were paying less than 1 percent tax, curtailing the tax to GDP ratio to as low as 8.8 percent adding that this ratio needed to be lifted up to over 13 percent.
The minister requested all the potential taxpayers to come forward and contribute in country’s economy. He particularly requested wholesalers, retailers and distributors to contribute in the economic uplift of the country, adding the government would try its best to bring simplicity in tax system and accommodate their recommendations.
However, the minister stated in clear terms that government was not going to take back its decision as it would be counterproductive and create difficulties for other sectors. “One thing I want to be very clear, this is not going to be taken back, because if we do this, the other sectors, who are annoyed, would go in further difficulties.”
The minister, who is also Chairman of High-Powered Committee on Rightsizing of the Federal Government, also expressed resolve to right-size different ministries and autonomous bodies to bring down the size of federal government.
He said six ministries have been given two weeks to prepare implementation plan for rightsizing, keeping in view their employees, resources, properties and litigation matters. “Once the programme is executed, other ministries would be taken for the same process.”
He said, ministries and autonomous bodies were given opportunity to share their performance and justify what they have contributed in national economy. He said, the government would need to bring legislative changes in Civil Servant Act 1973 with the help of coalition partners to carry forward the rightsizing process smoothly.
Aurangzeb also shared positive developments related to economy, saying that the measures taken by the government during the past six months have started yielding real results in terms of macroeconomic stability.
He said foreign exchange reserves were more than two months of import cover and stood at over $9 billion dollars. “Currency is also stable whereas the twin deficits, particularly the Current Account Deficit is in check.”
He said these positive developments resulted in the clearance of all the backlog of the past 18 to 24 months in terms of import LCs, import contracts, dividends or profit remittances that had stopped.
The finance minister said the inflation which peaked up to 38 percent has come down to 9.6 percent in September 2024 as it was recorded at 23.7 percent last year. As long as inflation comes down, the policy rate would go down accordingly, hence help economy, particularly industrial sector.
Sharing performance of remittances sector, the minister said, remittance remained all time high in July 2024.
Talking about international acknowledge of measures taken by the government, he said, two rating agencies Fitch and Moody’s both had increased our rating by one notch. This is an external recognition that the economy has been put in the right direction.
Commenting on the shortfall of around Rs.98 billion in revenues, the minister said the government paid around $132 billion in refunds to the exporters, showing 44 percent year-on-year growth.
On external financing, the minister said Pakistan had already signed a Staff Level Agreement (SLA) with International Monetary Fund (IMF) and was in the advanced stages, expecting the agreement to be signed by the IMF executive board.
He also expressed the hope that it would be the last IMF programme provided the structural reforms were carried forward and country put on its own feet.
