The federal government has dismissed reports suggesting the introduction of a mini-budget or additional tax measures following the conclusion of the International Monetary Fund’s (IMF) staff visit to Pakistan. Finance Minister Senator Muhammad Aurangzeb confirmed that the visit, which took place from November 12 to 15, was productive and aimed at building confidence rather than assessing the economy for new fiscal policies.
In an interview with Geo News, Aurangzeb emphasized that the discussions with the IMF team, led by Nathan Porter, were constructive. He highlighted that although the discussions were largely virtual, certain issues required in-person talks, and that the government engaged in open, fact-based dialogue with the global lender.
IMF Visit: Focus on Building Confidence, Not Tax Increases
The IMF clarified that its visit was part of the regular process of engaging with countries undergoing semi-annual program reviews. The Fund’s mission was not focused on reviewing Pakistan’s economic situation but rather on strengthening mutual confidence and supporting ongoing reforms. The IMF delegation noted that the Pakistani authorities had committed to continuing fiscal and monetary discipline, broadening the tax base, and transferring more social and development responsibilities to provincial governments.
According to the IMF’s statement, the delegation emphasized the need for structural reforms in the energy sector to restore its viability, alongside efforts to mobilize untapped tax revenue. Finance Minister Aurangzeb echoed these points, noting that the IMF was encouraging Pakistan to focus on expanding its tax base, a challenge the country has faced due to an underdeveloped taxation system.
Setback in PIA Privatization, Continued Reforms
Finance Minister Aurangzeb also addressed the failure of the Pakistan International Airlines (PIA) privatization plan, calling it a “setback” for the government. However, he reaffirmed that the government would continue with its privatization agenda, not just for PIA but for other state-owned enterprises (SOEs) such as power generation companies (Gencos), distribution companies (DISCOs), and airports. He reassured that the process of privatizing these entities would proceed gradually.
On the power sector, the minister highlighted ongoing work to address transmission and distribution challenges, with Federal Minister Awais Leghari leading these efforts. He also addressed the progress on the National Fiscal Pact, a key reform initiative that had been delayed by a week or two. However, he stressed that the IMF had been understanding about the delay, and the pact had received support from the provinces, especially from Sindh’s Chief Minister Murad Ali Shah.
Government Rightsizing and Pension Reforms
Aurangzeb also discussed the government’s ongoing rightsizing efforts, which have seen 11 ministries undergo restructuring, with more to follow. He defended the government’s pension reforms, stating that civil servants would contribute to the pension system as part of broader reforms within the bureaucracy. He added that reforms to the pension scheme were not being neglected, contrary to some criticisms.
In conclusion, the finance minister underscored the collaborative nature of Pakistan’s discussions with the IMF, noting that the IMF had appreciated the government’s ongoing efforts toward economic reform and fiscal discipline. He expressed confidence that these measures would lead to stronger, more sustainable growth in the future.
