Islamabad: The International Monetary Fund’s (IMF) Resident Chief in Pakistan, Mahir Binji, has identified debt as a primary challenge facing Pakistan’s economy. Speaking at a conference organized by the Pakistan Retail Business Council on Thursday, Binji underscored the significant burden posed by the country’s debt levels, attributing this issue primarily to Pakistan’s insufficient tax collection capabilities and its struggles in generating adequate revenue.
Binji emphasized that the traditional sectors are disproportionately bearing the tax burden, with formal sectors facing financial pressure. He noted that several specific industries are not contributing their fair share to national revenues, exacerbating the fiscal strain on the economy.
In a related address, Finance Minister Muhammad Aurangzeb spoke to the Business Council, cautioning that the country cannot afford excessive concessions. He announced a comprehensive plan for right-sizing the economy and highlighted that while the retail sector accounts for 19 percent of the economy, it only contributes one percent to taxes. Aurangzeb detailed plans to leverage artificial intelligence to increase tax revenues, acknowledging the disproportionate tax load on manufacturing, services, and salaried sectors. He stressed the necessity for all sectors, including agriculture, real estate, and retail, to be integrated into the tax net.
The Finance Minister further stated the need to document 9,400 billion rupees in cash and announced the government’s intention to proceed with the privatization of the national airline. Aurangzeb assured that the process of right-sizing all institutions would be completed by June 30. He expressed confidence in the direction of the economy, citing reforms that have boosted tax collections and affirmed the government’s awareness of its economic objectives. Aurangzeb pledged that all necessary measures would be taken to ensure sustainable economic stability, noting that foreign reserves currently cover two months of imports, while the Karachi Inter-Bank Offered Rate (KIBOR) has decreased from 23 percent to 11 percent.
These developments come as the government continues to navigate complex economic challenges, seeking to balance fiscal responsibilities with growth imperatives.
