In a crucial meeting held Saturday in Lahore, Pakistani finance ministers conveyed to the business community that providing economic relief in the current fiscal environment is not feasible. This announcement has left many business owners and industry leaders concerned about the future of their operations amid ongoing economic challenges.
Pakistan’s federal minister Muhammad Aurangzeb said that despite realizing the issues faced by businesses in Pakistan, keeping in view the ground realities, it was not possible to provide them any relief from the recent budget measures.
Addressing the business community at the FPCCI Lahore, he said the government was starved of finances and at a tax-to-GDP ratio of 9.5 percent, we cannot expect to move up, adding the government intends to increase the tax-to-GDP ratio to 13 percent in the next two years.
The finance minister conceded that not receiving perks or salaries by the ministers was not enough, we have two reduce our expenses, close unnecessary government departments and privatise the bleeding state-owned entities. He said to increase revenues, we will have to introduce transparent reforms where every segment of the society is taxed equally on the same income, adding that resistance to reforms would be tackled prudently.
He said the government was tackling numerous issues realising well that high markup impeded investors. However, he stressed that this issue relates to the State Bank of Pakistan and its monetary committee periodically reviewing the situation. He said the current low inflation level has created a cushion and the central bank would act accordingly in its next monetary policy review.
The finance minister made it clear that many traders have registered under the new scheme and all traders would have to pay their tax dues according to the rates fixed by the Federal Board of Revenue (FBR). He said the power rates cannot be reduced immediately, adding that there are various reforms and restructuring needed in the power sector, including renegotiations with IPPs, some which was done by the last PTI government.
He said transparent private sector boards of power distribution companies are in the offing. After their formation, power distribution would be handed either to the private sector or operated through public-private partnership. The government, he added, has great respect for domestic investors and they will be facilitated by systematically reducing their costs.
Pakistan’s economy has been facing significant hurdles, including high inflation, a depreciating currency, and a mounting fiscal deficit. Businesses across the country have been advocating for government intervention to help mitigate these issues and provide a buffer against the economic downturn.
