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Tuesday, July 23, 2024  
17 Muharram 1446  

Pakistan’s reliance on IMF to continue unless it boosts tax collection, warns Aurangzeb

The budget aims to raise Rs13 trillion ($46.6 billion) in tax revenues
Pakistan’s Finance Minister Muhammad Aurangzeb did an interview with Financial Times. Reuters
Pakistan’s Finance Minister Muhammad Aurangzeb did an interview with Financial Times. Reuters

Pakistan’s Finance Minister Muhammad Aurangzeb has stated that the country will continue seeking financial assistance packages from the International Monetary Fund (IMF) if it does not significantly increase its tax revenues.

This statement comes shortly after the Pakistani president signed the federal budget for the current fiscal year, which has been criticized by opposition groups, trade organizations, and even the government’s allies for setting ambitious tax collection targets.

The budget aims to raise Rs13 trillion ($46.6 billion) in tax revenues by July 2025, representing a roughly 40% increase from the current financial year, Business Recorder reported.

Financial experts believe this tax-heavy budget is designed to satisfy the IMF, which has repeatedly called for Pakistan to implement tax reforms to stabilize its fragile economy.

According to Finance Minister Muhammad Aurangzeb, speaking to the British newspaper Financial Times, he is “relatively confident” that Pakistan will reach a staff-level agreement with the IMF this month for a loan that the government has estimated to be between $6-$8 billion.

However, Aurangzeb cautioned that this would not be Pakistan’s last IMF program if the country did not significantly increase its tax revenues.

Pakistan hopes this IMF bailout package will help stabilize its struggling economy, which has been plagued by double-digit inflation, slow growth, and dwindling foreign exchange reserves - making it one of the worst-performing economies in Asia.

“The direction of travel is positive, and investors are showing confidence in the stock market,” Aurangzeb said.

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“People don’t want to deal with the tax authority because of corruption, because of harassment, because of people asking for speed money, facilitation money. That’s not sustainable,” Aurangzeb noted.

“We need to create the capacity to repay loans,” Aurangzeb said.

The finance minister lamented how Pakistan’s economy was reliant on imports, stating that Islamabad had to borrow to pay off existing or accumulating debt.

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