Finance Minister Muhammad Aurangzeb has outlined the government’s economic strategy, acknowledging the challenges facing the country while highlighting key initiatives. He added that the army would have to revise its service structure.

During a briefing to the Standing Committee on Finance, Aurangzeb addressed the country’s economic situation, emphasizing that the macroeconomic situation improved during the previous fiscal year, with stable foreign exchange reserves.

He acknowledged the delay in the IMF program in 2023, which led to a decline in foreign exchange reserves and the value of the rupee.

Aurangzeb expressed confidence in the country’s economic prospects, stating that the improving macroeconomic situation has garnered support from international organizations. He also highlighted the positive performance of the stock exchange and the overall positive economic indicators.

The Minister emphasized the need to increase the tax-to-GDP ratio from the current 9% to 13%. He stated that while all sectors desire a better economic environment, no one wants to be the first to face difficult measures.

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Aurangzeb highlighted the government’s efforts to broaden the tax net, including the implementation of agricultural income tax, with thanks to the provincial finance ministers for their cooperation. He also explained the rationale behind the IMF’s demand for taxes based on actual income, stating that it is the correct approach.

The Minister assured the committee that the government is working to restore public confidence in the FBR and is striving to achieve the IMF’s tax revenue targets.

Aurangzeb acknowledged the significant burden of debt and interest payments on government expenditures. He announced plans to promote public-private partnerships for development projects and implement a voluntary pension scheme for new employees to address the rising pension costs.

The Minister also emphasized the need for the military to restructure its service structure, granting them an additional year to complete the process. He announced the government’s decision to eliminate five ministries and the Public Works Department (PWD) due to its financial losses.

Aurangzeb stated that negotiations with the IMF are progressing positively and a deal is expected this month. He also clarified that there are no restrictions on LCs and that income tax and sales tax are levied on electricity bills.