https://arab.news/b3rp4
- The finance minister shares the details of the national economy with representatives of Moody’s in a virtual meeting
- He also underscores the ongoing reforms in energy sector, privatization process and the new IMF staff-level agreement
ISLAMABAD: Pakistan has registered 150,000 retailers as first-time taxpayers and witnessed a 30 percent increase in revenue collection in the last fiscal year, the finance ministry said on Tuesday, as the country strives to broaden the tax net following the approval of a $7 billion International Monetary Fund (IMF) bailout program.
Pakistan’s narrow tax base and persistent issue of tax evasion have led to insufficient revenue collection, burdening the fragile national economy. This shortfall exacerbates the government’s tendency to run a high fiscal deficit, often financed through domestic and international borrowing, which increases the nation’s debt burden.
Earlier this month, Pakistan reached a staff-level agreement with the IMF for the $7 billion loan, the latest move to seek assistance from the global lender to keep the country’s economy afloat. The development came just days after the government presented its first federal budget of $67.8 billion, setting an ambitious tax collection target of $46.7 billion.
The ministry said in a statement that Finance Minister Muhammad Aurangzeb had a Zoom meeting with representatives of a global credit rating agency, Moody’s, in which he gave an overview of the country’s overall economy, highlighting the increase in forex reserves and remittances, and the decline in inflation.
“He also noted that over 150,000 retailers have registered as first-time taxpayers, marking a significant stride toward broadening the tax base,” the finance ministry said in an official statement. “He emphasized a 30 percent rise in tax collection in FY2024 and outlined reforms to broaden the tax base, including new agricultural taxes and digital initiatives at the Federal Board of Revenue.”
The statement said Aurangzeb mentioned the government aimed to increase revenues by three percent of GDP by FY2027, with plans for a primary surplus of one percent of GDP, demonstrating Pakistan’s commitment to fiscal sustainability and growth.
It added the finance minister updated Moody’s representatives about the successful completion of the country’s nine-month IMF stand-by arrangement secured last year, which had a positive impact on the country’s macroeconomic indicators.
He also highlighted multilateral institutions’ confidence in financing Pakistan’s developmental projects by referencing the recent IMF agreement.
The minister underscored ongoing reforms in the energy sector and state-owned enterprises, including privatization and rightsizing efforts aimed at improving operational efficiency and governance.
The statement said Moody’s representatives appreciated the comprehensive briefing and expressed confidence in Pakistan’s economic trajectory, underpinned by robust fiscal reforms and strategic initiatives.