ISLAMABAD: Finance Minister Muhammad Aurangzeb has expressed serious concerns over the lack of improvement in tax collection and warned that the current IMF program won’t be the last one.
The government needs to significantly boost tax revenue, he emphasized in an interview with an international media outlet, as he expressed hope of reaching a deal with the Washington-based International Monetary Fund.
Aurangzeb expressed confidence in reaching a staff-level agreement with the IMF this month, as Islamabad is seeking a bailout package ranging between $6 billion and $8 billion.
“But it will not be our last fund program if we don’t increase our tax revenues,” the finance minister stated. He highlighted that the budget he announced meets IMF conditions but has generated severe backlash from low-income groups and salaried classes.
“I empathize with the pain people will feel,” he said. “I was one of the highest taxpayers, at least in the banking sector,” he added.
“We do not have five years for our program,” Aurangzeb said. “We have to start showing results, start delivering, in the next two to three months.”
“The direction of travel is positive, and investors are showing confidence in the stock market,” said Aurangzeb, referring to the KSE-100 index, one of Asia’s best-performing year-to-date.
However, the government faces a considerable challenge in putting Pakistan on the path to longer-term growth and debt sustainability, he acknowledged.
The finance minister noted that the country remains reliant on imports, forcing Islamabad to borrow to pay off existing and accumulating debts.
“We need to create the capacity to repay loans,” Aurangzeb said. “As long as this economy stays import-based, what happens is the moment it heats up, we run out of dollars, and we have to go back to the lender of last resort on our knees.”
“It’s about time we get real,” Aurangzeb said, pointing to Gulf investors’ demands for equity and board seats. “The ball is in our court to provide bankable, investable projects.”
The finance minister also criticized the Federal Board of Revenue (FBR) for its reputation for corruption.
“People don’t want to deal with the tax authority because of corruption, harassment, and demands for speed money, facilitation money,” Aurangzeb said. “That’s not sustainable.”
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