Federal Minister for Finance and Revenue Muhammad Aurangzeb has acknowledged the heavy tax burden on the salaried class and hinted at revising the tax structure to provide relief.Â
Speaking at the “Dialogue on the Economy” event organized by the Pakistan Business Council (PBC), he stated that the government is committed to rationalizing tax slabs and simplifying tax filing procedures for salaried individuals. However, he clarified that while this is under consideration, no commitments can be made at this stage.
Aurangzeb emphasized that Pakistan remains on course with the International Monetary Fund (IMF) programme, which he described as essential for economic stability. While certain measures may be phased in or out in the upcoming budget, the government intends to maintain its commitments. He highlighted that budget preparations began in January, allowing ample time for consultations with business chambers and stakeholders, with feedback expected by March-April.
On economic stability, the finance minister noted that the State Bank of Pakistan’s (SBP) policy rate cut by 100 basis points has already reduced KIBOR rates to approximately 11 percent, fostering business confidence. He expressed optimism that Pakistan’s foreign exchange reserves, projected to reach $13 billion by the fiscal year’s end, would provide a crucial buffer, covering nearly three months of imports. If achieved, he said, this could help Pakistan secure an upgrade to a single B sovereign rating.
The minister outlined the government’s commitment to rightsizing the federal workforce, noting that about 150,000 vacant posts are being abolished as part of broader structural reforms. He stressed that the government remains focused on privatization efforts, particularly Pakistan International Airlines (PIA), and is determined to hand over state-owned enterprises (SOEs) to the private sector to improve efficiency.
Aurangzeb reiterated the need to enhance tax documentation and revenue collection, citing Rs9.7 trillion in cash circulation that remains outside the formal economy. To address this, the government has shifted tax policy-making authority from the Federal Board of Revenue (FBR) to the Ministry of Finance, allowing the FBR to focus solely on tax collection. He reaffirmed that agriculture income tax is also being pursued, with Punjab and Khyber Pakhtunkhwa already moving ahead while discussions continue with other provinces.
Foreign Direct Investment (FDI) remains a key pillar of the government’s economic strategy, with an emphasis on ensuring that investments contribute to exportable surplus and bolster the country’s external trade position. He pointed to strong remittance flows, IT services exports, and diversification efforts as critical to sustaining economic momentum.
Discussing global economic engagement, Aurangzeb highlighted Pakistan’s participation in the World Economic Forum (WEF), where discussions with bilateral partners, international banks, and the IMF focused on trade, tariffs, artificial intelligence, digitalization, and economic policy. He stressed that moving from stabilization to sustained growth requires fundamental economic restructuring to avoid past cycles of instability.
Aurangzeb reaffirmed that while the IMF programme remains a necessity, economic reforms—including taxation, energy pricing, privatization, and public finance—are essential for long-term sustainability. He stated that Pakistan is determined to implement policies that create a stable investment climate, facilitate business growth, and ensure fiscal discipline in the years ahead.
