Finance Minister Muhammad Aurangzeb on Sunday cautioned against pursuing a “gold rush” approach to economic growth and stressed that both the federation and provinces must contribute more revenue as the National Finance Commission (NFC) begins fresh discussions next week.
Speaking at a press conference, he said the upcoming NFC meeting on December 4 should move forward in the spirit of “Pakistan First,” similar to the consensus that allowed passage of the National Fiscal Pact and provincial legislation on agriculture income tax. He said the commission’s mandate required agreement on revenue, expenditure and governance, and there was no disagreement that Pakistan needed structural and institutional reforms, as highlighted by the IMF’s governance and corruption diagnostic assessment.
Aurangzeb noted that provinces had, for the first time, enacted agri income tax laws, though decisions on actual collection were still pending. He added that expenditures needed to be aligned with KYC-style requirements under anti–money laundering frameworks, as Pakistan had only recently exited the FATF watch list.
He said the revised terms of reference for the NFC would require both provincial and federal governments to present their respective positions on revenue and spending, adding that sustainable fiscal management was not possible with a tax-to-GDP ratio of 8–10 percent.
The minister said Pakistan must avoid consumption-led growth driven by liquidity expansion, arguing instead for export-led expansion and a private-sector-driven model. He highlighted the abolition of the 0.25 percent Export Development Surcharge (EDS), imposed in 1991, as a key move to support exporters. A summary is already before the cabinet for final approval.
He added that one of the prime minister’s private-sector working groups had recommended shifting the Export Development Fund’s operations to the private sector and suspending the EDS until governance issues are resolved.
Responding to a question on revenue shortfalls—estimated at about Rs580 billion in the first five months—Aurangzeb said performance should be viewed in terms of an 11 percent year-on-year revenue increase rather than targets.
On the IMF governance report, the minister said the assessment was prepared at Pakistan’s request after more than 100 meetings. He said it identifies 15 priority reforms, many of which—in taxation, procurement, public financial management and governance—are already under way. He said the findings reflect long-standing structural weaknesses and should be seen as a catalyst for future reforms, not criticism of current policy.
Aurangzeb said exports had strengthened overall, with a 5 percent increase in total exports and over 20 percent growth in IT services. The IT sector set monthly records in September and October.
He said the inclusion of the US Exim Bank in the $3.5 billion Reko Diq financing syndicate had paved the way for financial close, describing the project as transformational, with expected annual export earnings of $2.8–$2.9 billion after production begins.
He confirmed that Pakistan’s inaugural panda bond will be issued in December, or no later than the Chinese New Year, and projected remittances rising to over $41 billion this year from $38 billion last year.
