ISLAMABAD: Pakistan’s Finance Minister Muhammad Aurangzeb has warned that the cash-strapped country will continue to seek an IMF bailout if it fails to increase tax revenues, media reports said on Monday.
The Pakistan Muslim League-Nawaz (PML-N) leader is based in the UK. Financial Times The paper said he was “relatively confident” he would reach a staff-level agreement this month with the Washington-based global lender for an estimated $6 billion to $8 billion in loans.
But Aurangzeb said, “This will not be the last fund programme unless we increase tax revenues.”Last month, the federal government passed a Rs 18,877 billion tax increase budget for 2024-25, sparking protests from the opposition, who branded it an International Monetary Fund-driven document and harmful to the people.
Weeks after sharply slashing fuel prices ahead of the Eid-ul-Adha festival, Pakistan’s cash-strapped government increased fuel prices sharply for the next two weeks as a new fiscal year began on July 1.
Those affected by the tax hike will mostly be salaried workers, who make up a relatively small part of Pakistan’s informal economy, as well as some retail and export businesses, Geo News reported.
The budget also suggests punitive measures against tax evaders, such as restricting access to mobile phones, gas and electricity, and flying abroad.
“We don’t even have five years left in our plan,” Aurangzeb warned as he presented a budget to revive the country’s struggling economy. “We have to show results and start implementing in the next two to three months,” he said.
Referring to the KSE 100 index, the finance minister said the trend is positive and investors are showing confidence in the stock market.
Still, he said the government faces significant challenges to put Pakistan on a path of long-term growth and debt sustainability.
According to a Geo News report, the country’s debt has skyrocketed since the mid-2000s as authorities did not invest loan proceeds in productive and export-oriented sectors.
Instead, the country continues to depend on imports and Islamabad is being forced to borrow money to repay existing and accumulating debts, Aurangzeb said.
“We need to create loan repayment capacity,” the finance minister said. “As long as this economy remains import-based, the moment the economy booms, dollars will dry up. [and] We have to kneel down and turn to the lender of last resort,” said Sharif, who recently visited Saudi Arabia, the United Arab Emirates and China to solicit investments on top of IMF programmes. This will be Pakistan’s 24th investment with the IMF.
Published July 8, 2024 12:30 IST
