FinMin emphasizes reforms to tackle tax evasion at Pakistan Banking Summit

February 24, 2025 (MLN): The reform process in Pakistan continues as efforts are being made to curb tax evasion and corruption.

This was said by Federal Finance Minister Muhammad Aurangzeb while addressing the 1st Pakistan Banking Summit, where he highlighted ongoing economic reforms, tax evasion control, and financial sector advancements.

He confirmed the arrival of the International Monetary Fund (IMF) technical mission in Pakistan, which will stay for 3 days to discuss climate financing.

Another IMF team is expected next month for bailout package negotiations.

Muhammad Aurangzeb further stressed the need to establish a framework for digital assets.

Aurangzeb emphasized the need for collaboration between the banking and capital markets.

Chairman of the Pakistan Banks Association (PBA), Zafar Masood, addressed the Banking Summit, emphasizing the critical role of the banking sector in the economy.

He cautioned the Federal Board of Revenue (FBR) against actions that could push the sector toward default.

Addressing concerns about tax policies, Aurangzeb noted that the FBR's role would be limited to tax collection, while the Ministry of Finance would handle policy-making.

He also highlighted corruption issues in GD clearance and efforts to rectify them through a faceless system. Work on agricultural taxation was also mentioned as a priority.

He highlighted that the banking sector collected Rs30 billion in government revenue in a single day and remains the top taxpayer in Pakistan, surpassing the oil and gas sector in tax contributions.

He urged businesses seeking loans to document themselves properly and expressed concerns over the impact of the windfall tax on banks.

The minister disclosed that discussions had been held with rating agencies, including a visit from Fitch’s team last week.

He reiterated that the ministry has decided against directed borrowing.

He further revealed that he had suggested shutting down the Small and Medium Enterprises Development Authority (SMEDA), but Prime Minister Shehbaz Sharif decided to keep it under government oversight.

He also pointed to the Green Project, stating that there are significant financing opportunities in this sector.

He urged financial stakeholders to learn from international practices rather than relying solely on local expertise.

He noted that the banking sector is making progress on farmer cards and solar financing schemes.

The emerging market had performed well over the past 25 years, with a promising outlook for the future.

He stressed that finance ministers agree on focusing on controllable economic factors, with an emphasis on production-based growth.

He reiterated the need for the government to formulate policies while the private sector drives business.

He emphasized the importance of privatization and financial management improvements, confirming plans to revive Pakistan International Airlines (PIA) for privatization.

Discussing foreign trade, he mentioned that Pakistan is strengthening its commercial ties with Azerbaijan and Turkey, while trade relations with India remain subject to geopolitical considerations.

The finance minister reaffirmed the government's commitment to economic reforms and sustainable development.

Muhammad Aurangzeb identified population growth and climate change as major challenges for Pakistan's economic stability.

He remarked that economic stability efforts had been seen before and called for a structural shift in the economy’s "DNA" to ensure sustainable growth.

He stressed that future economic growth would depend on exports, with responsibilities shared across all sectors.

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