IMF Staff Level Agreement Likely This Month: Finance Minister Aurangzeb

Finance Minister Muhammad Aurangzeb on Thursday told the National Assembly Standing Committee on Finance and Revenue that a staff-level agreement with the International Monetary Fund (IMF) will likely be reached by the end of this month. Aurangzeb presented a comprehensive briefing on the current economic situation and said all indicators are trending positively, with significant improvements observed in May and June. He also assured that the Pakistani Rupee would remain stable in the coming days. Finance Minister said the new budget taxes have so far met with resistance from various sectors, particularly real estate, development, and retail. He did acknowledge that taxation on sub-sectors is a provincial matter and thanked all Chief Ministers for their cooperation. Aurangzeb reported that all refunds amounting to Rs. 52 billion had been completed by June 2024. He voiced uneasiness on the topic of non-filers, stating that a mere two or three percent tax would not suffice and that legal action would be pursued against them. Despite these challenges, foreign investment is flowing into the stock market, and efforts are underway to reduce interest costs on loans. The Finance Minister highlighted plans to increase the tax-to-GDP ratio from 9.5 percent to 13 percent. A new contributory pension system for civil pensioners was launched on July 1, with a similar system for the armed forces set to begin on July 1, 2025, Aurangzeb added. To curb expenses, five ministries have been selected for cost reduction, with recommendations expected by early August before other ministries undergo review. Aurangzeb expressed optimism about the ongoing negotiations with IMF, predicting the finalization of a staff-level agreement within the current month. He also confirmed that there are currently no restrictions on Letters of Credit (LCs).