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- The minister said he was “relatively confident” of receiving aid from the International Monetary Fund.
- Said Pakistan must start demonstration and delivery in the next 2-3 months.
- Severely criticized the Federal Board of Revenue for its corrupt practices.
ISLAMABAD: Finance Minister Muhammad Aurangzeb on Sunday warned that Pakistan will continue to seek a bailout from the International Monetary Fund (IMF) if it fails to increase tax revenues.
The Treasury secretary said he was “relatively confident” a staff-level deal could be reached this month with the global lender for an expected loan of $6 billion to $8 billion.
“But this will not be our last fund plan if we don’t raise tax revenues,” the finance minister said in an interview. Financial Times.
The Indian federal government last month submitted a Rs 18.877 trillion tax budget for fiscal year 2024-25 (FY25) aimed at increasing public revenue and meeting the International Monetary Fund’s call for improved tax collection.
The budget aims to raise 1.3 trillion rupees by July next year, about 40% more than this fiscal year, to ease a crushing debt burden that has seen 57% of government revenue gobbled up by interest payments.
The tax increases target mainly salaried workers, who make up a small part of Pakistan’s informal economy, as well as some retail and export businesses. The budget also threatens punitive measures against tax evaders, including restrictions on mobile phones, gas and electricity supplies, and foreign flights.
“We don’t have a five-year plan,” Aurangzeb warned after delivering a budget aimed at reviving the country’s ailing economy. “We have to start showing, start delivering results in the next two or three months,” he said.
“Things are looking up and investors are confident in the stock market,” Aurangzeb said, referring to the KSE-100 index, one of Asia’s best performers so far this year. However, he said the government still faced huge challenges in putting Pakistan on a path to long-term growth and debt sustainability.
Pakistan’s debt has soared since the mid-2000s as authorities have failed to invest large amounts of loans received from international bondholders and countries including China and the Gulf states into productive export-oriented industries. Instead, the country remains dependent on imports, forcing Islamabad to borrow money to repay existing and accumulated debts, Aurangzeb said.
“We need to build up the capacity to repay the loans,” the finance minister said. “As long as this economy remains dependent on imports, then once the economy heats up, ‘we’re going to run out of dollars, (and) we’re going to have to go to the lender of last resort.’”
Pakistani Prime Minister Shehbaz Sharif recently visited Saudi Arabia, the United Arab Emirates and China to seek investments beyond IMF programs, which would be Pakistan’s 24th engagement with the multilateral lender.
“It’s time for us to face reality,” the finance minister said, pointing to Gulf investors’ demands for equity and board seats. “It is our responsibility to provide bankable, investable projects.”
He also attacked the Federal Board of Revenue’s reputation for corruption. “People don’t want to deal with the tax authorities because of corruption, harassment, because there are demands for quick money, convenience fees,” Aurangzeb said. “This is not sustainable.”
He added: “I understand the pain that people are feeling, at least in the banking industry, and I am one of the highest taxpayers.”
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