Pakistan asks authorities to revise revenue strategy to reduce country’s debt

ISLAMABAD: Prime Minister Shehbaz Sharif on Saturday asked Federal Board of Revenue (FBR) officials to re-evaluate and revise their strategy to enhance revenue collection to rid Pakistan of a massive public debt of $242 billion, Sharif’s office said.
The statement came hours after Pakistan reached a staff-level agreement with the International Monetary Fund (IMF) for a new $7 billion loan deal. Islamabad agreed in exchange to conduct further unpopular reforms, including widening the South Asian nation’s chronically low tax base.
Pakistan last year came to the brink of default as the economy shriveled amid political chaos, catastrophic 2022 floods and decades of mismanagement. The nation was saved by last-minute loans from friendly countries as well as support from the IMF, but its finances remain in dire straits with high inflation and staggering public debts.
Presiding over a meeting of officials at the FBR headquarters, Sharif called the revenue watchdog the “backbone” of the country’s economy and urged that sectors which were not paying taxes must be brought into the tax net.
“The prime minister issued the directives to immediately release Rs2 billion to develop the Web Based One Customs (WeBOC) System on modern lines,” Sharif’s office said in a statement.
He said the process of FBR’s digitization had begun and it would be completed in the most “comprehensive and coordinated manner,” promising full support to the revenue collection body in acquiring the latest technology.
Officials informed the participants that 4.9 million taxable persons had been identified in the country by using modern technology, according to the statement. PM Sharif directed increasing the tax base and bringing these persons into the tax net immediately.
During the 2024-25 fiscal year beginning on July 1, Sharif’s government aims to raise nearly $46 billion in taxes, a 40 percent increase from the previous year. It has used more unusual methods, including blocking 210,000 mobile connections, to compel people to file their tax returns. Islamabad also aims to reduce its fiscal deficit by 1.5 percent to 5.9 percent in the coming year.
But Pakistan’s public debt of $242 billion remains a huge problem for the South Asian country and servicing it may swallow up half of the country’s income in 2024, according to the IMF.