Islamabad, January 28, 2025 – Finance Finance Minister Muhammad Aurangzeb on Tuesday announced a significant administrative shift aimed at streamlining tax administration and boosting revenue collection in Pakistan.
In a pivotal move, the government has transferred policy-making powers from the Federal Board of Revenue (FBR) to the Ministry of Finance. This strategic realignment is intended to allow the FBR to concentrate exclusively on its core responsibility of tax collection, thereby enhancing its operational efficiency and productivity, the minister explained.
During his address at the “Dialogue on the Economy,” organized by the Pakistan Business Council (PBC), Aurangzeb expressed optimism that the positive shifts in various economic indicators would contribute to a potential upgrade in Pakistan’s sovereign credit rating to the ‘single B’ category. He noted that the country had made significant strides in several key economic areas, such as inflation control and monetary policy. Inflationary pressures have subsided, and the State Bank of Pakistan (SBP) has reduced policy rates further, which is expected to lower Kibor rates and benefit the industrial sector.
The finance minister also highlighted that Pakistan’s foreign exchange reserves had reached a significant milestone of $13 billion, a figure deemed adequate to cover three months of imports. He underscored the importance of this milestone, stating that it marks a critical point for the economy, positioning Pakistan for a potential sovereign rating upgrade. Aurangzeb further stressed that this achievement, combined with strong remittance inflows, robust IT services exports, and diversification of exports, would provide a strong foundation for Pakistan’s economic future.
Looking ahead, Aurangzeb stated that the government is committed to fostering an environment conducive to export-led growth and strengthening remittance inflows. He emphasized that Foreign Direct Investment (FDI) is a key element in the country’s economic roadmap, asserting that every incoming FDI must be geared towards generating exportable surplus to support an export-driven economy.
Reflecting on his recent participation at the World Economic Forum (WEF), the minister spoke about the constructive discussions held with bilateral partners, financial institutions, and the IMF. These discussions spanned various important topics, including trade, tariffs, artificial intelligence, digitalization, and the evolving global economic landscape.
In another shift from traditional fiscal practices, the government has introduced a more inclusive and transparent budget planning process. Starting in January instead of the customary April, all government departments have been tasked with presenting their budget proposals, and external stakeholders like the PBC and other chambers of commerce have been invited to provide input.
Aurangzeb reiterated the government’s firm commitment to its medium-term program with the International Monetary Fund (IMF), a three-year plan that outlines the key economic objectives for the country. He stressed that while the government has made progress in stabilizing the economy, transitioning from stabilization to sustainable growth requires a fundamental transformation of Pakistan’s economic structure. This transformation is essential to avoid the recurring boom-and-bust cycles that have previously undermined economic stability.
He concluded by emphasizing the critical nature of the IMF program, underscoring the need for conscious and strategic decisions regarding taxation, energy policies, privatization, and public finance to safeguard Pakistan from future economic challenges.