Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, emphasized that the salaried class is paying more taxes, while 43% of the population contributes less than 1%, which is unsustainable. He stated that charity cannot run a country, and without paying taxes, the nation cannot move forward.
Speaking at a ceremony in Islamabad, the Finance Minister noted that the macroeconomic indicators of the country are headed in the right direction, with improvements in reducing deficits, increasing foreign exchange reserves, lowering inflation to 9.6%, and gradually reducing the policy rate. He highlighted that macroeconomic stability is crucial because it triggers the process of growth.
He mentioned that the country's main issue had been the depletion of foreign exchange reserves when import restrictions were lifted in the past.
Aurangzeb added that the standby agreement with the IMF has been successfully completed, and the country is now entering a new program. The new program will be approved by September 25. He stressed the need to increase the tax-to-GDP ratio to 13%, as the current 9% is not sufficient to move forward.
The minister pointed out that in the past, when agreements with the IMF were made, the agreed benchmarks were not implemented. This time, however, when the documents are released, everyone should read them, as there is no difference in the structural benchmarks.
He emphasized the importance of reforms in tax-to-GDP, the energy sector, and state-owned enterprises (SOEs), noting that it is a trillion-rupee issue. He added that if these matters are not addressed correctly, the country may have to turn to the IMF again.
Aurangzeb reiterated that the salaried class is paying more taxes, while 43% of the population is contributing less than 1%, which is unsustainable since charity alone cannot sustain a country.
The Finance Minister also spoke about advancing the digitization process, which will promote transparency and help control corruption by minimizing human intervention. The process of filing tax returns is being simplified, and he stressed that without paying taxes, the country cannot progress.
He also clarified that the government should not engage in businesses that the private sector can handle. Regarding public finances, efforts are being made to control expenditures, implement right-sizing measures, and transfer institutions that should no longer be under federal control to the provinces, as per the 18th Amendment.
Aurangzeb acknowledged the significant burden of pensions, stating that efforts have been made at the federal level to control the losses, with reforms already applied to civil servants and the military given a one-year period.
He also mentioned steps to reduce imports and focus on local alternatives, with subsidies being phased out. Export-based foreign investment is a priority for the government.
Lastly, Aurangzeb noted that Pakistan intends to benefit from international capital markets, including issuing panda bonds in China. More benefits will be drawn from international capital markets in the upcoming fiscal year.
He concluded by stating that the country is transitioning from stability to growth, with agriculture and information technology being the primary focus sectors. Additionally, the growing population and climate change are critical areas that need to be addressed alongside this progress.
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