Finance minister highlights fiscal consolidation, rising tax revenues and stronger foreign exchange reserves, while the IMF urges fair and predictable tax reforms to support sustainable economic growth.
ISLAMABAD: Finance Minister Senator Muhammad Aurangzeb has said Pakistan’s twin deficit has declined from a combined 12.5% of gross domestic product (GDP) to 2.6%, reflecting progress in macroeconomic stabilisation and fiscal consolidation.
Addressing a two-day high-level workshop on “Reforms for a Modern and Growth-Friendly Tax System in Pakistan” on Tuesday, Aurangzeb said the country had recorded its lowest fiscal deficit in 22 years during the last fiscal year and achieved primary surpluses for three consecutive years.
The workshop was organised by the Ministry of Finance and the International Monetary Fund (IMF), bringing together government officials, international tax experts, development partners and private-sector representatives.
Aurangzeb said the Federal Board of Revenue’s (FBR) tax-to-GDP ratio had increased from 8.8% to 10.3%, while tax revenues had risen by 40% over the past two fiscal years. He attributed most of the improvement to stronger enforcement, alongside new tax policy measures.
The government would continue broadening the tax base, curbing revenue leakages and simplifying the taxation system, he added. He also stressed the importance of predictable tax policies, stronger taxpayer confidence and coordination between federal and provincial governments.
The minister said Pakistan must move beyond stabilisation towards sustainable, export-led growth rather than consumption-driven expansion that could trigger repeated boom-and-bust cycles.
He also highlighted improvements in foreign exchange reserves, which had recovered from around two weeks of import cover to more than three months, without a comparable increase in external debt.
Meanwhile, IMF Middle East and Central Asia Department Director Jihad Azour urged Pakistan to pursue broad-based, fair and predictable tax reforms to sustain economic stability, encourage private investment and generate inclusive growth.
Azour said Pakistan had made significant progress in restoring macroeconomic stability and rebuilding confidence, but stressed that the next challenge was to translate these gains into stronger and more durable economic growth.
He identified credibility, growth, fairness and implementation as key priorities, emphasising that tax policy and administration must advance together.
Azour urged policymakers to develop practical measures, clear implementation priorities and effective follow-up mechanisms, saying the workshop could help establish a coherent roadmap for Pakistan’s tax reforms.