ISLAMABAD: Finance Minister Muhammad Aurangzeb has reiterated the government’s commitment to meet the goals of the International Monetary Fund (IMF) program by pushing ahead with structural reforms aimed at stabilizing Pakistan’s economy.
Addressing an event in Islamabad, Aurangzeb outlined significant progress in economic recovery, a reduction in the current account deficit, a 70-month low in inflation, and positive signs of economic improvement.
He stressed the importance of maintaining this momentum, and the need to build on these achievements to strengthen the foundation for long-term economic stability.
The finance minister said the government would provide policy support to boost private enterprise, particularly in the housing sector, which he identified as a key economic driver.
The Ministry of Finance has said that inflation in Pakistan has reached its lowest level in six and a half years. The ministry also predicted an improvement in financial stability in the coming months, citing the impact of ongoing reforms.
Despite these achievements, challenges remain. Earlier this week, the finance ministry admitted to failing to meet three targets under the $7 billion Expanded Fund Facility (EFF).
These included the Federal Board of Revenue’s (FBR) revenue collection targets for the first quarter and allocations for health and education. Provincial governments also missed an October 2024 deadline to align their agricultural income tax legislation with federal requirements.
The Federal Finance Secretary pointed out these flaws during a briefing to the National Assembly’s Standing Committee on Finance.
He said that while Punjab has implemented the necessary tax reforms, Khyber Pakhtunkhwa’s legislation is awaiting the approval of the Assembly. Taxation on agricultural income is expected to start from January 1, 2025.
To bridge the fiscal gap, the government plans to introduce 5% Federal Excise Duty (FED) on pesticides and fertilizers in the next fiscal budget.
Additionally, the federal and provincial governments have agreed to redistribute spending responsibilities in accordance with the 18th Constitutional Amendment.
These include efforts to increase tax collection on services, property and agricultural income, as well as support in higher education, health and social security.
Although progress on some IMF benchmarks has been slow, the government is optimistic about recovering momentum in reforming the economy and meeting long-term fiscal targets.