Finance Minister Muhammad Aurangzeb. Photo courtesy Ministry of Finance
Finance Minister Muhammad Aurangzeb on Saturday reiterated hopes of Pakistan and the International Monetary Fundy (IMF) reaching a staff-level agreement for an extended facility by mid-July, stressing implementing much-needed economic reforms was necessary to achieve prosperity.
Speaking with journalists at the Pakistan embassy in Washington at conclusion of a weeklong visit to Washington, he said he expected an IMF team to visit Pakistan around mid-May to finalize the terms of the new extended loan arrangement. “The new program’s draft will take form later. By mid-May, we will begin delving more into the specifics of the project,” he added.
Referring to the ongoing $3 billion Stand-by Arrangement (SBA) as a successful program, he hoped its final tranche of $1.1 billion would be disbursed shortly after the IMF Executive Board approves it in its next meeting.
“The direction for reforms of the economy is clear,” he maintained. “The ball is in our court and we will have to work hard. Efforts to access the Chinese markets are underway. Improvement in taxation system will multiply tax collections. We are bringing digitization in the Federal Board of Revenue (FBR) system as well,” he said, noting the government had prepared short, medium, and long-term strategies to expand the tax net.
“It’s quite clear that there’s a gap between policies and implementation,” he said on why Pakistan had been unable to address this issue in the past. “For instance, litigation in the tribunals, manned by the FBR and the law ministry, took forever,” he said, noting they were asked to decide all pending cases within 3-4 months, “even if it goes against us.”
The government, he said, was also expediting the process for identifying people who lived beyond their means, and would make efforts to bring them into the tax net.
On privatizing loss-making state-owned entities (SOEs), he said the process of privatizing PIA would be finalized by the end of June or early July, with plans for the Islamabad airport to follow shortly after. “The government has no business being in business,” he said. “We expect the bids for PIA to come in the next two to three weeks, and by the end of June or early July, we can move it to the investors,” he said, adding the airports in Karachi and Lahore would follow after Islamabad.
Aurangzeb said providing energy—petrol, gas, electricity—to both domestic and commercial consumers was necessary for uplifting the economy. “If we cannot get this right, we cannot increase our exports,” he warned, adding that the government was taking steps to curb electricity theft and move distribution to the private sector. “The direction is very clear,” he reiterated.
On the recent visit of a high-level Saudi delegation to Pakistan, he said the Gulf kingdom would invest $5 billion in the country, adding some of the transactions would be carried out in next few days. He also claimed “big” investors had hinted at investment in Pakistan.