- Strengthening economic stability remains a top priority.
- Housing and the private sector identified as a key economic driver.
- The government is committed to politically supporting private companies.
ISLAMABAD: Finance Minister Mohammad Aurangzeb has reiterated the government’s commitment to fulfilling the International Monetary Fund (IMF) program and implementing structural reforms to stabilize Pakistan’s economy.
Speaking at an event in Islamabad, Aurangzeb highlighted progress in economic reforms, saying the current account deficit has narrowed, inflation has fallen to a 70-month low and The country’s economy is showing signs of recovery.
He noted that inflation had fallen to its lowest level in 70 months, underscoring the need to further strengthen the foundations of economic stability.
The finance minister said the government would provide policy support to strengthen private enterprise, particularly in the housing sector, which he identified as a key economic driver.
The Finance Ministry said inflation in Pakistan had reached its lowest level in six and a half years. The ministry also expects financial stability to improve in the coming months, citing the effects of ongoing reforms.
Despite this progress, challenges persist. Earlier this week, the Ministry of Finance admitted its failure to meet three targets of the $7 billion Expanded Financing Facility (EFF).
These included the first quarter revenue collection targets of the Federal Board of Revenue (FBR) and allocations for health and education. Provincial governments have also failed to meet the October 2024 deadline to align their farm income tax legislation with federal requirements.
The Federal Secretary of Finance, during a presentation before the Standing Committee on Finance of the National Assembly, highlighted these shortcomings.
He noted that while Punjab has adopted necessary tax reforms, Khyber Pakhtunkhwa’s legislation is awaiting approval from the Assembly. Taxation of agricultural income should begin on January 1, 2025.
To plug the budget deficits, the government plans to introduce a 5% federal excise duty (FED) on pesticides and fertilizers in the next fiscal budget.
Additionally, the federal and provincial governments agreed to redistribute spending responsibilities in accordance with the 18th Constitutional Amendment.
These include contributions to higher education, health and social welfare, as well as efforts to improve the collection of taxes on services, property and agricultural income.
Although progress on some IMF benchmarks has been slow, the government is optimistic that momentum will resume in reforming the economy and achieving long-term fiscal goals.