Prime Minister Shehbaz Sharif on Tuesday said his government’s top priority is to ensure macroeconomic stability and move towards growth.
The remarks came while the PM was addressing the Tax Excellence Awards-2024 ceremony.
On the recently completed second review of the International Monetary Fund’s (IMF) Stand-By Arrangement (SBA), the prime minister said he expects the last tranche of funds would be released next month (April).
“However, we need to ink another IMF programme, while ensuring economic growth and creating job opportunities for the masses.”
The PM believed that despite being under an IMF programme, no one is stopping the country from achieving growth in agriculture and IT and expanding our traditional and non-traditional export base.
The prime minister, however, admitted that there are some limitations under the IMF programme. “The IMF programme is crucial for ensuring macroeconomic stability, however, we need to accelerate our economic growth and create job opportunities,” he said.
On the bulging debt situation, the prime minister said that to get rid of these massive loans, combined efforts are required to boost industry, export-led growth, agriculture and Information Technology (IT).
The prime minister said the federal and provincial governments want to solve the issues of the business community by eliminating redtape, delays and inefficiencies and creating enabling circumstances for the business community.
“The government’s role is of a catalyst and create such policy instruments, which pave the way for the country’s progress. If the economy is strong only then the nation’s voice is heard,” he said.
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The prime minister said competitive energy prices are essential for economic growth. “We need to put a collaborative effort to move towards competitive energy and divert from producing energy from costly imported oil,” he said.
On FBR restructuring, the PM shared consultants will be appointed next month (April). “However, it will take time to digitize the institute completely,” he said.
The prime minister said Rs2.7 trillion remains under litigation in various tribunals, appellants, and high courts. “We need to appoint qualified heads at the tribunals,” he said.
“Secondly, our tax-to-GDP ratio is among the lowest in the region i.e. 9%, the prime minister shared.
“We need to plug in leakages in our system,” he said. “Otherwise, imposing more taxes was nothing but a futile exercise,” he said.
The PM said he remains in favour of reducing tax slabs and expanding the tax base. “We need to bring in an innovative tax policy, and work is being carried out in this regard.”
The prime minister said the government would ensure timely disbursement of export refunds.
Earlier, addressing the Tax Excellence Awards-2024 ceremony, Federal Minister for Finance Muhammad Aurangzeb on Tuesday called for a departure from the “import-led subsidy-supported businesses” and “accelerate the rate of export-led growth”.
On the business front, the Finance Minister highlighted two issues.
“Firstly, the private sector has to lead the country. Secondly, import-led subsidy-supported businesses are not sustainable anymore. We have to accelerate export-led growth,” he said.
Aurangzeb urged the business community to improve their operational productivity. “The government is responsible for providing the policy framework, providing policy continuity, competitive energy and skill development,” he said.
“For any country’s development and growth, direct taxes on the domestic side, and exports on the external front are the levers of growth and development,” said Aurangzeb.
“(However) in Pakistan’s case both flows have been range bound, and therefore underwhelming. Thus, to redress this issue on an urgent basis is critical,” he noted.
“On the FBR (Federal Board of Revenue) side, we have gone into implementation and execution right away, both in terms of restructuring and appointing consultants for design and implementation in terms of end-to-end digitization.
Aurangzeb said end-to-end digitisation is essential to plug the leakages in the system.
“Going forward, the structural reforms through end-to-end digitization aims to increase revenue and improve transparency and client experience,” he said.
“It is ultimately, the superior client experience which is going to restore the trust and confidence of the people of Pakistan in this institution, and also it will address some of the aspects of operationalizing the social contract,” he added.
Raising tax collections and increasing the tax base remains one of the key challenges of the incumbent government.
Official reports revealed that the FBR’s revenue collection fell short by 1.3% and 4.5% in January and February 2024, respectively.
The missing tax collection target during March 2024 may force the government to introduce a mini-budget which will bring more hardships for the public. However, during recent meetings between the FBR and IMF, the FBR team claimed that there would be no mini-budget.
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