Finance Minister Muhammad Aurangzeb on Monday expressed optimism that Pakistan will successfully meet its tax collection target for the fiscal year 2024-25. During a televised interview on Bloomberg’s program, The Asia Trade, Aurangzeb highlighted that Pakistan’s tax-to-GDP ratio had risen to 10.8% by December 2024.
Aurangzeb emphasized that the country is on track to achieve its tax collection goals, stating that reaching the target is essential for Pakistan’s fiscal sustainability. He reaffirmed the government’s commitment to expanding and deepening the tax base to improve revenue collection and economic stability.
In July 2024, Pakistan signed a 37-month, $7 billion Extended Fund Facility (EFF) with the International Monetary Fund (IMF) to promote economic stability and inclusive growth. In September, the IMF Executive Board approved the EFF, enabling Pakistan to receive the first tranche of Special Drawing Rights (SDR) worth $760 million, equivalent to $1.03 billion. Aurangzeb confirmed that the IMF mission for the first official review of the program is expected to arrive between mid to late February 2025.
Discussing macroeconomic indicators, Aurangzeb stated that the government aims for a GDP growth rate of 3-3.5% this fiscal year, with plans to increase it to 6% within the next two to three years. The government’s primary focus is to transition the economy to an export-led model, which he believes is crucial for sustainable growth.
Aurangzeb expressed confidence in further credit rating upgrades for Pakistan during the ongoing fiscal year. He noted that all three major credit rating agencies had improved their outlook on Pakistan over the past 8-10 months. However, he emphasized the need for Pakistan to return to the single B category to regain access to the international capital market.
Aurangzeb shared plans to tap into the Panda bond market and the Chinese capital market, acknowledging past missed opportunities in this regard. Pakistan is preparing to launch its inaugural Panda bond issue within six to nine months, aiming to raise $200-250 million. China International Capital Corporation Limited (CICC) has been appointed as an advisor for this initiative.
Currently in Hong Kong, Aurangzeb is attending the 18th Asian Financial Forum (AFF), where he is engaging with senior officials from leading Asian financial institutions. He is also meeting prominent members of the Pakistani community in Hong Kong to discuss opportunities and challenges.
The AFF serves as a significant platform for finance and business leaders to address key issues affecting the global economy from an Asian perspective, and Aurangzeb’s participation underscores Pakistan’s commitment to strengthening its economic ties in the region.