Govt to unveil new economic plan

FinMin says nothing covert in talks with IMF Seeks to dismiss reports of new taxes Tax base to be expanded to co

ISLAMABAD:

As the country's economy took strides on the path to stability, Finance Minister Muhammad Aurangzeb said on Sunday that Prime Minister Shehbaz Sharif will soon present a new economic roadmap, indicating that no new taxes were being levied to meet any revenue shortfall.

Addressing a press conference in Islamabad, Aurangzeb highlighted that all the economic indicators were showing positive trajectory, adding that international financial institutions were impressed with the government measures and their confidence in Pakistan was increasing.

"The economy is moving in the right direction due to government initiatives. Stability is coming; foreign exchange reserves are increasing; Inflation has come down from 38% to 7% and policy rates have also been reduced," the minister told the media persons.

The minister's press conference came after the government shared its $7 billion bailout reform agenda with the International Monetary Fund (IMF) during an unscheduled visit by the fund's mission last week.

The mission held talks in Islamabad within six weeks of approving the funding for the loan. Aurangzeb said that there were no covert talks with the IMF delegation, adding that the confidence of international financial institutions in Pakistan was increasing.

"The IMF was surprised how the Pakistani economy recovered in 14 months. IMF has welcomed the reduction in deficit and turning it into a surplus in just 14 months," he said. The four chief ministers have assured cooperation for the improvement of the economy," he added.

Meanwhile, Aurangzeb said in a recorded video statement broadcast by Pakistan Television (PTV) that the government discussed its $7 billion bailout reform agenda with the IMF during an unscheduled staff visit last week and indicated that no new taxes were being imposed.

The talks in Islamabad came within six weeks of the IMF approving the bailout, an unusual move as it is rare for the IMF to discuss reforms ahead of a review of the reform plan under the loan programme. A first review of Pakistan's reforms was due in the first quarter of 2025.

After wrapping up the visit, the IMF had said that it was encouraged by Islamabad's reaffirmed commitment to the economic reforms under the Extended Fund Facility (EEF) to reduce vulnerabilities. The mission did not state the weaknesses.

However, reports had suggested that "some major lapses" prompted the IMF's visit, including a shortfall of nearly Rs190 billion in revenue collection during the first quarter of the current fiscal year and an external financing gap of $2.5 billion.

The review stoked fears that Pakistan might need to impose new taxes to bridge the shortfall. But Aurangzeb said the shortfall would be met only with the enforcement to get people to pay their taxes, implying there would not be any new revenue measures.

"We are going to be very firm on compliance and enforcement," he said, adding that all the sectors would have to play their role in contributing towards the economy. "We discussed reforms in taxation, energy sector, privatisation of loss-making state-owned enterprises (SOEs) and public finance."

The minister also told the press conference that reforms were under way in all sectors to achieve the fixed goals for the improvement in the economy. In this regard, he stressed that all sectors would have to play their role. "The tax net is being expanded," he said.

"Steps are being taken to further improve the economy under the leadership of Prime Minister Shehbaz Sharif," Finance Minister Aurangzeb told reporters. "The prime minister will present the economic roadmap soon," he added.

Speaking about the environment issues, particularly the climate change, the minister described it as a major challenge. "We will have to work together to deal with the negative effects of climate change," the minister added.

(WITH INPUT FROM REUTERS)