Aurangzeb eyes fresh staff-level agreement with IMF by end of this fiscal year

  • Finance minister says imposition of super tax, windfall tax not sustainable
Published March 29, 2024

Federal Minister for Finance and Revenue Muhammad Aurangzeb on Friday said the government is hopeful of signing a staff-level agreement (SLA) on a new “larger and a longer programme” with the International Monetary Fund (IMF) by the end of this fiscal year.

“We are hopeful that by the time we wrap up this fiscal year i.e. end June to early July, we reach at least a staff-level agreement with the IMF,” Aurangzeb said while talking to reporters at the Pakistan Stock Exchange (PSX) where a gong ceremony was held to welcome the finance minister.

The Federal Minister, however, did not disclose the size of the upcoming programme, saying that talks are yet to be held.

“It is too premature to talk about the size. However, we need a 3-year programme, at least,” he said.

IMF-WB meetings in April: Talks on privatisation likely

Aurangzeb expressed the upcoming IMF bailout could be the last for the country “only if structural issues are fixed”.

The former HBL CEO said the government intends to collect Rs9.4 trillion in revenue.

We will start the discussion on the contours of the programme during the Spring Meetings in Washington. We will go there around 14-15 April, and then the rest of the discussion will come through when they are back here in Islamabad: Finance Minister Muhammad Aurangzeb

“Excluding debt servicing, the government needs to lower its operational expenses and move the PSDP towards public-private enterprises.

“This will make the space available for the government. Moreover, if the government manages to curb leakages, the Rs2.4 trillion funds made available would move towards the marginalised population and supporting the domestic consumer and the industry,” he said.

On tax machinery reforms, Aurangzeb informed that on April 8, a request for proposal (RFP) will be issued to hire a consultant for the Federal Board of Revenue’s (FBR) digitisation.

“By the end of April, we will appoint that consultant,” he said.

Aurangzeb opined that the imposition of super taxes and windfall taxes is not sustainable.

The Federal Minister shared that the government intends to promote three sectors i.e. SMEs, agriculture and technology.

“We need to support these sectors through increase financing,” he said.

Responding to a query on exchange rate, Aurangzeb said the policy and exchange rate are the purview of the State Bank of Pakistan (SBP).

“We believe that the inflation rate will move downward during the year, due to base rate effect, and we are hoping that the policy rate will follow,” he said.

On the economic model, Aurangzeb said the government intends to move towards an export-based model by mobilising the already existing structures.

“Apart from textiles, agriculture and technology are our levers.”

Addressing PSX

Addressing the business community at the PSX, Aurangzeb said the economy started in a better way in 2024 with improvement in key economic indicators.

“Wheat crop estimates are looking very good and will help both on the export side and import substitution,” he said.

Export of flour made from imported wheat allowed

Moreover, the current account has narrowed down significantly, exchange rate has stabilised and headline inflation is moving downwards, he said.

“This is on the back of microeconomic stability which was ushered in when Prime Minister Shehbaz Sharif signed the nine-month SBA (Stand-By Arrangement) in his previous administration, and then I give full credit to the caretaker administration and Dr Shamshad for following up in a very disciplined manner during their tenure,” he said.

“With that in mind and ensuring that this stability moves towards permanence, we requested during the SLA discussion with the IMF that we enter into a larger and longer programme, and it is good to see that the IMF was very receptive to that request.

“We will start the discussion on the contours of the programme during the Spring Meetings in Washington. We will go there around 14-15 April, and then the rest of the discussion will come through when they are back here in Islamabad.”

Talking to reporters, separately, the minister said that “these discussions will go into end-April and May”.

Aurangzeb stressed that the Extended Fund Facility (EFF) is crucial to execute the “structural reform agenda.”

“The thought process is that we get into the implementation phase right away and we have gone into the implementation phase in the last few weeks with a two-pronged strategy,” he shared.

“The short- to medium-term strategy revolves around closing the gaps, stemming the leakages and the losses. While the second strategy is to phase in structural reforms in the medium to long-term.”

The Federal Minister also said that the Finance Ministry is working with the Law Ministry and the FBR to remove leakages in tax revenue and bring more people into the tax net.

Aurangzeb shared that funds to the tune of Rs1.7 trillion remain stuck in various litigations.

“Will try to make decisions in three months,” he said.

Aurangzeb said reforms are needed in the energy sector.

On the privatisation programme, Aurangzeb said work on privatisation of PIA has been initiated.

“Aleem Khan cannot do the privatisation program alone. Other ministries also have to work together for privatisation,” he said.

The government will focus more on the capital market to enhance market efficiency, transparency and investor protection, he said.

The Federal Minister also appreciated the Chinese partnership and its stake in Pakistan’s capital market.


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Francis Mar 29, 2024 11:55am
Get a new pic of him. He's still got the HBL badge.
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John Mar 29, 2024 02:04pm
Few days ago he was not citizen of the land...that speaks volumes about his loyalty!
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Riz Mar 29, 2024 02:37pm
@Ijaz Durrani, why do we have to believe in your baseless allegations? When they Granted Bails to absconders, then they weren’t stalwarts?
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Atlash ali Mar 29, 2024 04:04pm
I am a student of 1st year and, I need a bike to go to the college.
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Sumru Mar 29, 2024 05:00pm
@John, In a land where there is no rule of law...anything goes...for a right price!
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Munir Khan Mar 29, 2024 09:01pm
Just wondering how much he's getting paid now? HBL CEO to a minister, does it involve pay rise or is it a free service to the country?
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Ahmad Mar 29, 2024 09:08pm
Shame on PTI. This guy is taking a single rupee as his salary per year. Meanwhile PTI is spending 1CR per day on social media propagating fake news.
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