Finance Minister Muhammad Aurangzeb proposed on Tuesday raising the retirement age and restructuring pension payments to alleviate the financial strain on the economy.
Addressing a press conference in Islamabad alongside Information Minister Attaullah Tarar and Law Minister Azam Nazeer Tarar following a cabinet meeting, the minister stated that the country’s economy was gradually stabilizing.
Among the positive economic indicators outlined by the finance minister were foreign exchange reserves surpassing $9 billion, currency stabilizing, and inflation decreasing to 17% from 38%. He mentioned discussions with investors from the UK and Europe, upcoming IMF consultations, and plans for structural reforms including increasing the tax-to-GDP ratio by hiking the tax rate from 9% to 13% to 14%.
The finance czar also mentioned addressing deficits in state-owned enterprises through privatization. Law minister Azam Nazeer Tarar also underscored the importance of economic stability for the country to progress and emphasized the correlation between political and economic stability. “It is about now or never. Perform or perish,” the law minister said.
Regarding pension reforms, Tarar mentioned plans to retain experienced employees to reduce financial burden, with legislation encompassing various sectors and a committee formed by Prime Minister Shehbaz Sharif tasked with this initiative.
“International institutions talking about Pakistan’s economy is a proof and certificate of positive economic indicators,” he added.
Last month, the finance czar projected the forex reserves to reach “anywhere between $9 billion to $10 billion” by the end of June.
Aurangzeb said that the country’s economy was steadily advancing in the right direction, underlining the government’s commitment to accelerate momentum towards achieving both economic growth and comprehensive social development.
He highlighted the government’s proactive stance in fostering foreign direct investment within the country, citing recent engagements with various nations, including the Kingdom of Saudi Arabia. He expressed optimism regarding substantial future collaboration, anticipating vital involvement from Saudi Arabia in the days ahead.
Separately, the IMF has asked Pakistan to impose additional taxes of around Rs1.3 trillion in the next budget which, if accepted, would take the Federal Board of Revenue’s (FBR) annual target to a whopping Rs12.3 trillion.
According to sources, the global lender is asking to recover half of the additional taxes from salaried and business individuals.
The sources said that the IMF shared its final Tax Diagnostic report with the government in which it has retained the recommendation that deals with reducing the number of income tax slabs for the salaried individuals to four. If the government accepts the recommendation, it will massively increase tax burden on the salaried and business individuals.
The sources said discussions on the IMF’s demand for the additional taxes of around Rs1.3 trillion or 1% of GDP would take place during the upcoming mission-level talks with the IMF for the next bailout package.
