Economy on Path of recovery, IMF program on track: Aurangzeb

September 03, 2024 (MLN): While sharing the promising developments today, Finance Minister Muhammad Aurangzeb stated that the journey to economic recovery is yielding positive results as key indicators show improvement.

During a televised address, he assured that IMF approval will be on time once the IMF program is approved, the implementation plan will be set in motion.

The Minister expressed hope that this will be Pakistan's last IMF program, with provincial chief ministers on board to ensure its success.

Aurangzeb highlighted that Pakistan now has enough foreign exchange to cover more than two months of import bill, with the Current Account Deficit (CAD) remaining intact.

The backlog, including import Letters of Credit (LCs), has been cleared, marking a significant step forward.

As a result of the collective efforts of all stakeholders, Inflation has dropped to 9.6%, compared to 27.4% in August 2023.

The policy rate is also on a downward trend, which is expected to spur growth in the industrial sector, he added.

Foreign remittances have remained at an all-time high, and global credit rating agencies like Fitch and Moody's have improved Pakistan's ratings, reflecting the growing confidence in the country's economic management.

While these are positive signs, the minister emphasized that Pakistan still has a long way to go.

He stressed the importance of maintaining the right direction to ensure sustained economic stability.

"Macroeconomic stability is the basic hygiene of any economy," he noted, urging for continued recognition of this critical phase.

On the fiscal front, the Federal Board of Revenue (FBR) reported a 29% year-on-year increase in tax collections, pushing the tax-to-GDP ratio to 8.8%.

However, Aurangzeb pointed out a significant imbalance as 43% of economic sectors pay less than 1% of the total tax, with the salaried and manufacturing classes shouldering a disproportionate burden.

He called on wholesalers and retailers to contribute their fair share, making it clear that the government will not back down on its digitization and enforcement efforts, which are expected to show an impact by September.

He also mentioned that Rs132 billion in refunds have been paid to exporters.

The minister reiterated the government's commitment to rightsizing the federal workforce, with ongoing reviews of autonomous bodies aimed at reducing the number of employees.

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