‘IMF exit strategy in place’: Aurangzeb updates PBC on twin deficits progress

KARACHI: Federal Finance Minister Senator Muhammad Aurangzeb briefed the members of Pakistan Business Council (PBC) on the improvement in the twin deficits and listed the measures the government is undertaking to ensure that this IMF programme becomes the last such programme.

During his visit to PBC in Karachi, the Finance Minister appreciated the sacrifices that the formal sector had to make in the front loaded tax measures under the program and assured that, as and when the fiscal space permits, this burden would be eased.

During a wide ranging discussion on the economy during the Finance Minister’s visit to the PBC, Chairman PBC Shabbir Dewan appreciated the significant progress the country has made over the past nine months in achieving economic stability.

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This was echoed by PBC members who between them pay a third of direct taxes, generate 40 percent of exports and employ millions in their extended value chains.

The minister, who was accompanied by Khurram Shehzad, Advisor to the Finance Minister, lauded the quality of PBC’s research and its objective advocacy, especially on taxation and through its Make-in-Pakistan theme. He specially commended PBC’s report that differentiated between good FDI and bad FDI.

Members offered recommendations on promoting exports, especially of non-traditional goods by encouraging the unleashing the significant under utilised capacity.

On Textiles, PBC urged the government to negotiate lower tariffs on export of apparel to the US that is made from US cotton of which Pakistan is now the largest customer. Review of the Export Facilitation Scheme to allow domestic industry to supply exporters without levy of sales tax was recommended as was the reduction in the 2.0 percent withholding tax on export receipts on exports of low margin items.

On import substitution, the minister lauded the progress made by the FMCG sector on indigenizing inputs. However he was opposed to protection without a sunset clause and favoured supporting those that achieved a certain percentage of export sales.

On taxation, the unlevel playing field versus the informal sector was highlighted by members and the minister requested support from the formal sector to identify such evaders. He also shared the progress on transforming the FBR and infusing it with technology to broaden the tax base.

In closing the discussion, the minister requested the PBC CEO Ehsan Malik to summarize the discussion and share the members’ proposals.

Copyright Business Recorder, 2024