LAHORE (Web Desk/Dunya News) – Finance Minister Muhammad Aurangzeb on Sunday made it clear that the government would extend facilities and hold talks, but would remain on track to expand tax net which was a must for Pakistan.
Setting out the government priorities, the finance minister said they would have to work on proving tax-to-GDP ratio, swift privatisation of lossmaking state-owned enterprises (SOEs) and overhauling the energy sector.
Read more: Govt working on retirement, pension reforms
Addressing a pre-budget seminar, Aurangzeb said an International Monetary Fund (IMF) team had reached Islamabad and the two sides would start talks for a new loan programme tomorrow (Monday).
Pakistan is eyeing a larger and longer IMF programme to stabilise and revive its economy. The finance minister had told a press conference last week that the dialogue would determine the size and scope of the new deal. However, it was earlier reported that the government wanted a three to four year bailout package of $6 billion and $8 billion.
He told the gathering that the government had to expand the tax net to boost the tax-to-GDP ratio – currently around 9 per cent which is one of the worst in the world – for which they were readily available for consultations.
Read more: Govt considers phasing out tax exemptions in next budget
To argue his case, the finance minister reminded the gathering that the salaried class was already paying their taxes. Previously, he had noted that the salaried could not further burdened, calling it unsustainable.
Both Prime Minister Shehbaz Sharif and Aurangzeb have repeatedly mentioned that their aim is to enhance the tax-t-GDP ratio to around 15pc in the next four to five years.
And on Sunday, the finance minister again urged the businessmen, especially traders, to join the club and list themselves among the taxpayers.
When it comes to the economic reforms, Aurangzeb warned that Pakistan was currently applying for 24th IMF programme and would require 25th as well, if structural reforms were not introduced.
Meanwhile, the finance minister again stressed the need for privatisation and also talked about public-private partnership, as he dispelled the impression that the government was only focusing on foreign investors.
Progress has to be made in privatisation, if economic stability of the country is the desire, Aurangzeb said.
In his speech, the finance minister covered a variety of subjects, including the rupee exchange rate and interest rates, which, he added, were determined by the State Bank of Pakistan.
Last week, he had told a press conference that the interest rate cuts were not far away owing to the consistent decline in inflation, which is now 17.6pc, and he expected the rate cut cycle to start soon in the next few months.
The remarks came as the central bank’s Monetary Policy Committee is scheduled to meet on June 10, where the market is now expecting a sizeable rate cut.