ByFinance Minister Muhammad Aurangzeb has unveiled a transformative administrative reform to streamline tax policy and enhance revenue generation in Pakistan. In a groundbreaking move, the government has reallocated tax policy-making powers from the Federal Board of Revenue (FBR) to the Ministry of Finance. This strategic change aims to allow the FBR to focus solely on its core function—tax collection—thereby improving operational efficiency and maximizing productivity.
The announcement was made during the “Dialogue on the Economy,” organized by the Pakistan Business Council (PBC), where the minister elaborated on this shift and other critical developments in Pakistan’s economic framework. Aurangzeb shared his optimism about Pakistan’s economic trajectory, pointing to positive changes in key indicators that could potentially lead to an upgrade in the country’s sovereign credit rating to the ‘single B’ category.
Aurangzeb highlighted substantial progress in controlling inflation and refining monetary policy. He noted that inflationary pressures had eased, and the State Bank of Pakistan (SBP) had further reduced policy rates, paving the way for lower Karachi Interbank Offered Rates (Kibor). These measures are expected to benefit the industrial sector by reducing borrowing costs and improving liquidity.
Additionally, the minister announced a significant milestone in foreign exchange reserves, which have reached $13 billion, covering three months of imports. This development, coupled with robust remittance inflows, thriving IT service exports, and export diversification, lays a strong foundation for the country’s economic future. Aurangzeb underscored the importance of sustaining this momentum to secure a sovereign rating upgrade and achieve long-term economic stability.
The government has reaffirmed its commitment to fostering an export-led economy. Aurangzeb emphasized that every Foreign Direct Investment (FDI) must prioritize generating exportable surplus, aligning with the country’s economic roadmap. He also discussed the need to strengthen remittance channels and continue diversifying export markets to build a resilient economy.
Reflecting on his engagements at the World Economic Forum (WEF), Aurangzeb detailed his discussions with bilateral partners, financial institutions, and the International Monetary Fund (IMF). Topics such as trade liberalization, tariff reforms, artificial intelligence, and digitalization were central to these talks, all of which aim to integrate Pakistan more effectively into the evolving global economy.
Another significant reform announced by the minister involves a shift in the government’s budget planning process. Budget preparations, which traditionally began in April, will now start in January. This inclusive and transparent approach mandates all government departments to present their budget proposals earlier while encouraging input from external stakeholders like the PBC and chambers of commerce.
Aurangzeb reiterated Pakistan’s unwavering commitment to its medium-term economic program with the IMF. This three-year roadmap outlines critical objectives for transitioning from economic stabilization to sustainable growth. The minister stressed that achieving this transition requires a fundamental overhaul of Pakistan’s economic structure to break the cycle of recurring boom-and-bust patterns.
He concluded by emphasizing the importance of strategic policymaking in taxation, energy, privatization, and public finance to secure Pakistan’s economic future. Aurangzeb’s vision centers on ensuring that Pakistan not only stabilizes its economy but also achieves robust, sustainable growth that shields it from future challenges.
