Finance Minister Muhammad Aurangzeb has underscored Pakistan’s keenness to sign a significant International Monetary Fund (IMF) program, highlighting the necessity of addressing low economic growth and high inflation through stabilization policies.
In his first interaction with a group of journalists after assuming office, Aurangzeb emphasized the need for fully facilitating both local and foreign investors, believing that Pakistan can make significant strides through an inclusive approach. Aurangzeb pointed out that the era of cash deposits by friendly countries and the rollovers of external debt was over, stressing the importance of shifting away from temporary fixes to addressing deep-rooted economic issues.
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The minister expressed Pakistan’s readiness to enforce IMF prescriptions once again, stating that macroeconomic stability requires permanency and advocating for a large and longer-duration IMF program. However, he did not specify the duration or size of the loan Pakistan would seek for balance of payments support.
Aurangzeb’s remarks come ahead of an IMF team’s scheduled visit to Pakistan for policy negotiations on the last tranche of $1.1 billion. He indicated that discussions on the Extended Fund Facility (EFF) would likely take place during the upcoming visit, with detailed negotiations expected during the spring meetings in Washington. While the size of the loan program is not final, Pakistan aims to secure a large program. The government is also considering an IMF environment facility, although it will take time to mature.
Aurangzeb highlighted the importance of addressing inflation through macroeconomic stability, anticipating a gradual reduction in interest rates this fiscal year. He emphasized the role of the Special Investment Facilitation Council in attracting foreign investment and acknowledged the shift towards equity investments by friendly countries.
Regarding tax reforms, Aurangzeb mentioned plans to implement comprehensive digitization at the Federal Board of Revenue (FBR) to enhance transparency and curb leakages. He emphasized the need to tax untapped sectors like wholesale, retail, and agriculture and address the talent drain among the salaried class. Additionally, the government plans to push forward with the privatization agenda, with the Pakistan International Airlines (PIA) privatization process set to be expedited.
