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Print Print 2024-03-13

Aurangzeb unveils his approach to IMF lending

  • Says Pakistan is eager to negotiate a larger and the longest Extended Fund Facility (EFF) of the IMF programme to achieve macroeconomic stability in the country
Published March 13, 2024

ISLAMABAD: Pakistan is eager to negotiate a larger and the longest Extended Fund Facility (EFF) of the International Monetary Fund (IMF) programme to achieve macroeconomic stability in the country.

This was stated by Finance Minister Muhammad Aurangzeb during an interaction with a group of media persons, however, he did not specify the amount Pakistan would be looking forward to requesting the Fund and stated it would be premature to specify it at this point in time.

Aurangzeb highlighted his priorities as finance minister and stated that GDP growth is directly linked to macroeconomic stability.

Pakistan to seek at least $6bn in new IMF loan programme

He further stated that Pakistan has invited the IMF team for the successful conclusion of the review. The opportunity would also be used to initiate preliminary talks on a larger and longest EFF programme.

The finance minister added that the EFF would entail implications on the budget, therefore, the Fund input, indeed, would be needed. Aurangzeb said his priority would be that preliminary talks are held on a blueprint (actions to be taken under the EFF) but the actual talks will be held with the Fund during the spring meeting.

He said inflation is a big issue but sounded optimistic that after the recent inflation number, the SBP policy rate would decrease in the near future.

He said the GDP growth path is through macroeconomic stability and therefore, the EFF is important for the country to achieve sustained macroeconomic stability. The IMF staff mission is arriving in Pakistan to hold talks with Pakistani authorities initially from March 14-18 and may be extended till March 21.

He said the ongoing fiscal year has been much better as opposed to the previous year and now there is a need to be in implementation mode to fix the structural problem of the economy. He said the first priority would be to plug leakages in the Federal Board of Revenue (FBR) through end-to-end digitisation as this would bring about transparency. He added that plugging leakages would create fiscal space for the government, adding that the tax-to-GDP has to be improved to double digits and this could be made possible by using technology. The finance minister emphasised that the tax-to-GDP ratio can be increased by the available data after analysis.

In response to a question, he said wholesale, real estate, and agriculture are taxable sectors as how long the country would rely on taxes such as super tax.

He said the spade work has been done to a great extent with regard to implementation mode and the designer and partners have already been finalised.

He said Pakistan’s commercial inflows would materialise post extended fund facility as well as additional bilateral as the country has to move from deposits and rollovers. He further stated that on the external side, the role of the Special Investment Facilitation Council (SIFC) would be of importance to bring in investment as even friendly countries now want equity investment.

He said that fixing SOEs would also be important and the government’s priority would be to complete the transaction of Pakistan International Airlines (PIA) by the end of the ongoing fiscal year and added that “the government has no business to be in the business.”

He said the government would undertake the Public Sector Development Programme (PSDP) through public-private partnership while adding that Sindh has used, very effectively, the PSDP in public-private partnership.

Copyright Business Recorder, 2024


Comments are closed.

Usman Mar 13, 2024 08:45am
Digitalise FBR.Force people to use digital methods of payment and all retail shops should be forced to pay taxes.
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Tariq Qurashi Mar 13, 2024 09:29am
I think Mr. Aurungzeb has the basics right. Fixing our economy is not rocket science, but vested interests will make implementation a major challenge. Major reforms are desperately needed.
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Tariq Qurashi Mar 13, 2024 09:36am
It is very easy to loose sight of ones goals, when one is down in the weeds firefighting. A clarity of vision is a must. Our elites have ignored the private sector and enjoy living on borrowed money.
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Tariq Qurashi Mar 13, 2024 09:41am
India was in similar difficulty economically in 1991. Manmohan Sing's reforms liberated the private sector from all the red tape and bureaucratic constraints, and their economy never looked back.
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Aamir Mar 13, 2024 10:07am
Let's see if he can cut the wastage in the public sector, privatize and reign in defense expenditures. Taxes without doing this first are meaningless and would send a wrong signal to the nation.
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T Mar 13, 2024 11:58am
inaugrating the begging counter.
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Sumroo Mar 13, 2024 01:07pm
Two big issues...the dude is a Shaukat Aziz...clueless about economic picture....and then he is a free loyalty...on will he changes his nationality!
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Ch K A Nye Mar 13, 2024 02:13pm
Laudable ideas and intentions. He'll be hamstrung by the establishment and their political cronies and then thrown out when he resists kowtowing to the PDM 2.0
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mazhar Mar 13, 2024 02:14pm
please my id card tracking
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Johnny Walker Mar 13, 2024 02:45pm
Guy is on a 6 month contract, Either he surrenders his other nationalities or gets the chosen parliament to change the rules to continue as Fin Min? Keep watching. Anything is possible in this land.
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Az_Iz Mar 13, 2024 06:10pm
Not easy to turn things around quickly. Just like the caretaker govt, continue with incremental progress.
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Az_Iz Mar 13, 2024 06:26pm
Real estate taxes are progressive. Very little is collected in this area.
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Az_Iz Mar 13, 2024 06:28pm
Real estate taxes would get most , who escape paying their fair share.
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Pakistani1 Mar 14, 2024 12:24am
@Az_Iz, Miftah delievered and Shamshad built on that despite the attempts of Dar. Aurangzeb is completely untested. Lets hope he surprises us pleasantly.
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