During a virtual meeting, Finance Minister Muhammad Aurangzeb provided a comprehensive briefing to Fitch Ratings representatives regarding Pakistan’s recent Staff-Level Agreement (SLA) with the International Monetary Fund (IMF). Through the SLA, Pakistan aims to bolster its economic reform agenda and implement strategic measures to enhance its economic prospects as outlined by the Finance Division.
Minister Aurangzeb underscored the positive impact of the 9-month Stand By Agreement with the IMF on Pakistan’s macroeconomic indicators. Furthermore, he emphasized the key elements of the SLA designed to support Pakistan’s economic reform agenda and foster growth.
The IMF and Pakistan have recently reached a staff-level agreement on a $7 billion Extended Fund Facility (EFF). The program, spanning 37 months, is geared towards fortifying stability and promoting inclusive growth within Pakistan. However, the execution of the EFF is contingent upon approval by the IMF’s Executive Board and the timely confirmation of requisite financing assurances from Pakistan’s development and bilateral partners.
In his briefing, Minister Aurangzeb articulated Pakistan’s fiscal targets, including plans to enhance revenues and achieve a primary surplus of 1% of GDP by FY 2025. Moreover, he highlighted Pakistan’s robust economic position, citing foreign exchange reserves amounting to $9.4 billion, promising stock exchange performance, a 12.6% inflation rate in the CPI in June 2024, and a significant 7.7% rise in foreign remittances.
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The minister also underscored the government’s fiscal reforms, particularly its initiatives to broaden the tax base, which have resulted in a substantial 30% increase in tax collection during FY 2024 compared to FY 2023. Additionally, Aurangzeb detailed the registration of over 150,000 retailers as first-time taxpayers and highlighted Pakistan’s achievement of crossing the USD 3 billion mark in IT exports.
In response to the discussions, Fitch Ratings’ representatives expressed appreciation for Pakistan’s ambitious fiscal measures and the targets set by the government, while also acknowledging the improvements observed in economic indicators. The meeting provided a platform for the exchange of insights, paving the way for continued collaboration and support between Pakistan and global financial institutions.
