Govt implements tax and digital overhauls

November 27, 2025 (MLN):  The  government is pressing forward with a sweeping reform programme centered on the shift of tax policy from the FBR to the Ministry of Finance, forming the backbone of a broader agenda aimed at strengthening macroeconomic stability, improving competitiveness and restoring fiscal balance.

Finance and Revenue Minister Senator Muhammad Aurangzeb, speaking at the Pakistan Business Council’s Dialogue on the Pakistan Economy in Islamabad, detailed ongoing reforms in taxation and digital transformation.

Discussion also included key matters like state-owned enterprise restructuring, debt management, government right-sizing, digital payments, investor confidence building and external financing  according to a  press release issued.

He said Pakistan has consolidated macroeconomic stability and that early signs of recovery are emerging, reflected in improved output from cement, fertilizer, automobiles, mobile phone manufacturing and large-scale manufacturing.

Citing an OICCI survey, he noted a marked improvement in investor sentiment, with more respondents now recommending Pakistan as a viable FDI destination.

Renewed interest from global companies in energy, mining, technology, logistics and automotive sectors, he added, signals strengthening confidence in Pakistan’s economic direction.

The Minister emphasised that reforms are shifting from design to operationalisation.

With tax policy now housed in the Ministry of Finance, a fully operational Tax Policy Office and an Advisory Council of academicians and later private-sector representatives are being established.

He said year-round engagement with chambers and sectoral bodies will replace once-a-year budget discussions, ensuring data-driven, analytically aligned policy development.

On state-owned enterprises and government restructuring, he reported substantial progress: half of all federal ministries and attached departments have been reviewed, 54,000 vacant posts abolished saving Rs56 billion annually and several entities merged or closed.

While acknowledging complex HR, legal and financial challenges, he reaffirmed the government’s resolve to proceed despite institutional and political hurdles.

He identified Digital Pakistan as a top national priority, monitored weekly by the Prime Minister.

The initiative combines digital payments adoption, digital public infrastructure, digitisation of government payments and efforts to transition Pakistan from a heavily cash-based to a documented economy.

Clear targets have been set for merchant digitization, financial inclusion and technology-enabled transparency in government processes.

On debt management, Senator Aurangzeb highlighted significant improvements.

The Debt Management Office is being upgraded to international standards, contributing to an extended average debt maturity of four years, reduced refinancing risks and lower debt servicing costs.

He also noted the new contributory pension scheme operational since July 2024 has already enrolled over 9,000 new government employees, alongside parametric reforms that slow rising pension-related fiscal pressures.

Looking ahead, he shared the inaugural session of the 11th NFC Award will be held on 4 December, expressing confidence in constructive engagement with provinces.

He confirmed Pakistan is preparing for its first-ever Panda Bond issuance, expected before the Chinese New Year, and highlighted progress on the Pakistan Virtual Asset Regulatory Authority, aimed at bringing crypto-related activities into a formal, well-regulated framework.

During the interactive session, the Minister projected 3.5 % GDP growth this year, around 4 % in the next two to three years, and the potential to reach 6–7 % over the medium term, contingent on sustained momentum across agriculture, manufacturing and services.

He also reported stable remittances through formal channels, strong Roshan Digital Account inflows and improved institutional flows under SCRA after the introduction of a lock-in period to curb short-term arbitrage.

Responding to concerns over high taxes, energy tariffs and expensive financing, Senator Aurangzeb acknowledged industry challenges.

He said easing monetary conditions should help reduce borrowing costs but encouraged corporates to diversify funding sources and use capital markets for longer-tenor, more competitive financing.

Furthermore, stressed that structural issues in taxation and energy are under active review, with mechanisms in place to monitor the impact of tariff adjustments.

On questions about security-related investor concerns, he reiterated that national security is non-negotiable. Stability, security and repatriation of profits, he said, remain basic hygiene conditions for attracting global investment.

The government, he assured, will continue to review policies transparently and remain open to business community feedback.

Senator Aurangzeb concluded by reaffirming the government’s commitment to evidence-based policymaking, private-sector partnership and the uninterrupted continuation of reforms to place Pakistan on a sustainable path toward economic revival and long-term growth.

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