Govt to sign National Financial Pact, bring provinces into IMF program: Aurangzeb

Finance Minister Muhammad Aurangzeb said on Sunday that the federal government would sign a National Financial Pact with the provincial governments formally involving them in the IMF bailout program. The pact would help boost tax collection efforts to reach a tax-to-GDP ratio of 14 percent, moving toward the 18 percent figure seen across the border. The minster, at the joint press conference, briefed on efforts made by the country to stabilize its economy as it posted some of the first results from the recent approval of the IMF bailout of $7 billion.

In his words, structural reforms and macroeconomic stabilization are really key to the improvement of the financial health of the nation. “He said foreign exchange reserves currently cover two months of imports; the Pakistan Stock Exchange is hitting record highs, he said. He also added that inflation is now easing, leading to a drop in the central bank’s key lending rate. The government has rejected several offers for T-Bills and bonds at auction to demonstrate its growing financial strength, he said.

The Finance Minister said that state-owned enterprises need reforming and so does the energy sector, but among efforts to make the government’s effectiveness better-such as eradicating 60 percent of the vacant posts-and save costs.

Many issues are being faced by the tax system, which was recognized by Aurangzeb. He announced that the property and vehicles will not be allowed to purchase for non-filers. Tax audits are increased, and there is planning of FBR to recruit 2,000 experts regarding an estimated Rs. 7 trillion tax evasion. The government has targeted losses due to smuggling at Rs. 750 billion.

Regarding inflation and fuel prices, which are lowering the Finance Minister asked the provincial governments to activate committees on price control so that the consumers can enjoy the fruits of these betterment. He added that the door on tax exemptions is closed as the government aims at broadening of the tax base to treat all equally.