Aurangzeb sees IMF bailout continuing despite ‘slippages’
ISLAMABAD: Despite missing certain IMF benchmarks, Finance Minister Muhammad Aurangzeb has asserted that the current programme will move forward. He confidently stated the International Monetary Fund will be engaged in good faith during the upcoming review to ensure no surprises arise.
The minister made the statement during a joint news conference at the FBR headquarters on Thursday, where journalists repeatedly questioned him about the tax shortfalls and how he plans to handle it ahead of the IMF review mission due in March under the $7 billion Extended Fund Facility for the release of next tranche.
State Minister for Finance and Revenue Ali Pervaiz Malik, Information Minister Attaullah Tarar and FBR Chairman Rashid Mahmood Langrial were also present.
Although the press conference was convened to brief the media on the implementation status of the FBR transformation plan, the finance minister was asked questions about tax shortfalls and their impact on the upcoming IMF review.
Says Fund’s mission, due in March, will be engaged in good faith to avoid surprises
The minister said he sees no difficulties with the upcoming review under the structural adjustment programme. “I am clear that the fund officials will consider our point of view if we talk with them in good faith and do not surprise them,” the minister remarked.
Mr Aurangzeb said that things would deteriorate if committed actions were not followed or agreements to undertake particular things were broken. He said that all initiatives, such as the digitalisation of the FBR and tax laws legislation introduced in parliament, demonstrate the government’s commitment to reforms.
The minister announced that his government did not backtrack on any measures suggested under the IMF programme. “We are taking all these measures to broaden and deepen the tax base. The results will be clear in the next six months”, he added.
“I am confident that we will continue with the IMF programme”, the minister asserted.
The minister said that tax collection fell short of the projected ambitious target. However, he said that revenues continued to rise over the past year. He also confessed that the 40pc increase in revenue collection in the current fiscal year was based on autonomous growth projections.
He categorically said that his government’s focus is on structural reforms. “We don’t want to set monthly tax collection targets,” he said, emphasising the goal is to make the economy fiscally sustainable.
Unlike previous governments, the minister said that the priority is not on implementing ad hoc tax measures to fulfil monthly revenue objectives. “We will manage the shortfall and plug the loopholes in the next six months,” he said.
Mr Aurangzeb said taxation reforms have a key role in fiscal stability. “The country has been languishing between 9-10pc in terms of tax-to-GDP ratio, but we have set a target of 13.5pc for the next three years to improve this standing.”
In response to Dawn’s query about agriculture income tax, the minister said the government has committed to IMF to start its collection from July 1, 2025. Punjab had already completed the legislation, while other provinces were in the process of approving bills.
Tax digitalisation
He said the phase-wise digitalisation plan approved by Prime Minister Shehbaz Sharif in September aimed at enhancing transparency and plugging into leakages was under execution.
He further said while bridging the tax gap and controlling tax leakages, every possible effort will be made to ensure that the commoner does not suffer.
Minister of State for Revenue Ali Pervaiz Malik stated that the government made a courageous move to put the economy on track. “We would surely look at the tax collection target, and the efforts to broaden the tax base would continue,” he resolved.
Published in Dawn, December 27th, 2024