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Finance Minister Urges Parliament to Help Government Increase Tax Revenue

Muhammad Aurangzeb says government working to rid country of interest-based banking system and replace it with Islamic banking

by Staff Report

Photo courtesy National Assembly of Pakistan

Finance Minister Muhammad Aurangzeb on Tuesday urged Parliament to help the government increase tax revenue and improve the country’s energy security.

Speaking on the flood of the Lower House, he stressed that all Pakistanis must pay taxes. Noting that the country’s current tax-to-GDP ratio was a mere 9 percent, he said the incumbent government must improve it by implementing structural reforms. This has been a longstanding demand of the International Monetary Fund (IMF), which the finance minister has already approached to secure a new extended fund facility with a view toward stabilization and prosperity.

According to the minister, Pakistan’s foreign exchange reserves have climbed from $3.4 billion to $8 billion over the past year. He reiterated that he expected this to improve further to $10 billion after the receipt of $1.1 billion from the IMF as part of the final tranche of the ongoing $3 billion Standby Arrangement.

On inflation, citing data provided by the State Bank of Pakistan (SBP), Aurangzeb said it had declined from a peak of 38 percent to 20.7%. The central bank, he stressed, expected this to decline to 5-7% within two years.

During his address, the finance minister also addressed the implementation of the Federal Shariat Court’s directives to end the interest-based banking system in Pakistan and replace it with Islamic banking. “Verdict has arrived to end interest-based system and we are working to implement it,” he said, noting several lawmakers had delivered speeches in the House seeking the same. Delivered in 2022, the FSC verdict gave the government until 2027 to fully implement an interest-free banking system across Pakistan.

Aurangzeb also emphasized the importance of promoting agricultural growth to achieve GDP growth of 5-6% annually, in addition to harnessing the potential of the local livestock sector. He highlighted bumper crops in the past year, noting this had also yielded a positive impact on the industrial sector. He said the government was focusing on three key areas for transformation: tax, energy, and reforms in state-owned enterprises.

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