Pakistan can’t be run sans taxes: Aurangzeb

ISLAMABAD –Finance Minister Muhammad Aurangzeb stated on Tuesday that the country could not be run on charity since revenues were required for the effective operation of governmental affairs.

He was speaking during a ceremony in Islamabad. The finance minister stated that the government would obtain a staff-level agreement with the International Monetary Fund (IMF) by the end of this month, and that the government would then approach the global lender about climate money.

“Pakistan has been listed as one of the countries most affected by climate change. Pakistan would also need to pursue population control measures in addition to climate action, he said.

He stated that because bureaucracy was everywhere, he believed that private sector progress in all fields was important.

Pakistan to strike a fresh $7 billion loan agreement with the IMF.

Pakistan is poised to strike a staff-level agreement with the International Monetary Fund (IMF) on a new $7 billion loan to strengthen its economy and pay down its debts.

Earlier this year, the IMF approved the immediate delivery of the final $1.1 billion tranche of a $3 billion bailout for Pakistan. Finance Minister Muhammad Aurangzeb stated that the government intended to seek a long-term loan to help stabilize the economy following the completion of the bailout package.

The new financing agreement will last for 37 months. It aims to strengthen fiscal and monetary policy, as well as reforms to broaden the tax base, improve state-owned enterprise management, strengthen competition, ensure a level playing field for investment, boost human capital, and scale up social protection through increased generosity and coverage in a major welfare program, according to the IMF.

“The program aims to capitalise on the hard-won macroeconomic stability achieved over the past year by furthering efforts to strengthen public finances, reduce inflation, rebuild external buffers and remove economic distortions to spur private sector-led growth,” said Nathan Porter, the chief of the IMF’s Pakistan missions.
The accord requires approval by the IMF’s executive board.

Pakistan’s new coalition government submitted its first budget to parliament last month, offering a salary raise of up to 25% for government employees and setting an ambitious tax collection target.

The finance minister stated that Pakistan intends to collect 13 trillion rupees ($44 billion) in taxes, which is 40% more than in the current fiscal year.

Aurangzeb also stated that the administration will ensure that the number of taxpayers increases. Only roughly 5 million Pakistanis pay taxes.

Analysts said the new budget of approximately $68 billion, up from $50 billion in the previous fiscal year, was intended to qualify for a long-term IMF loan of $6 billion to $8 billion to assist stabilize the economy. In 2023, Pakistan nearly defaulted on its foreign loans.