Key Takeaways:
– Over 150,000 retailers have been registered as first-time taxpayers.
– A 30% increase in tax collection reported for fiscal year 2024.
– Significant achievements include IT exports exceeding US$3 billion and foreign exchange reserves reaching US$9.4 billion.
Major Milestone in Tax Base Expansion
Finance Minister Muhammad Aurangzeb revealed that over 150,000 retailers have been registered as taxpayers for the first time. This announcement was made during a virtual meeting with Fitch Ratings officials, including Senior Director Thomas Rookmaaker and Directors Krisjanis Krustins and Jeremy Zook.
Significant Increase in Tax Collection
During the fiscal year 2024, there was a notable 30% increase in tax collection compared to the previous year. This improvement underscores the government’s dedication to enhancing Pakistan’s tax-to-GDP ratio through continued fiscal consolidation efforts.
Economic Achievements and Indicators
Aurangzeb highlighted several key economic successes:
– IT exports have surpassed US$3 billion.
– Foreign exchange reserves have increased to US$9.4 billion.
– The stock exchange has shown strong performance.
– Consumer Price Index inflation stood at 12.6% in June 2024.
– Foreign remittances have risen by 7.7%.
Post-IMF Arrangement Economic Landscape
The discussion also covered Pakistan’s economic situation following the completion of a 9-month Stand-By Arrangement with the International Monetary Fund (IMF). Aurangzeb credited this arrangement for positive shifts in the country’s macroeconomic indicators.
Key elements of the new IMF program include ambitious revenue targets, aiming for a 1.5% increase in GDP by fiscal year 2025 and a 3% increase over the next three years. The goal is to achieve a primary surplus of 1% of GDP.
Reforms and Future Goals
Reforms in the energy sector and state-owned enterprises were discussed, focusing on privatization and rightsizing to improve operations and governance. The Finance Minister also informed Fitch Ratings about the confidence of multilateral institutions in financing Pakistan’s projects. He highlighted a new Staff-Level Agreement with the IMF for a medium-term program aimed at reinforcing economic reforms.
Ambitious Revenue Targets
Key elements of the new IMF program include ambitious revenue targets, aiming for a 1.5% increase in GDP by fiscal year 2025 and a 3% increase over the next three years. The goal is to achieve a primary surplus of 1% of GDP.
Positive Outlook
Fitch Ratings representatives acknowledged the government’s ambitious fiscal targets and noted improvements in Pakistan’s economic indicators, indicating a positive outlook on the nation’s fiscal health and economic management strategies.
