Reforms and boost export-led growth: Pakistan committed to leveraging private sector: Aurangzeb
ISLAMABAD: Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb said that the government is committed to leveraging private sector expertise to fast-track structural reforms and promote productivity and export-led economic growth.
Senator Muhammad Aurangzeb said this while having a meeting on Monday with a high-level delegation from Deloitte, led by Richard Longstaff, Managing Director and Head of Energy, Critical Minerals, and Sofyan Yusufi, Partner at Deloitte Risk and Financial Advisory Government and Public Services.
The meeting was a follow-up to earlier discussions held on the sidelines of the IMF/ World Bank Spring Meetings 2025 in Washington DC, where avenues for collaboration in critical minerals, energy sector reforms, privatization, and the operationalisation of the Country Partnership Framework (CPF) were explored.
Welcoming the Deloitte team to Pakistan, the Finance Minister appreciated their continued engagement and interest in supporting Pakistan's development priorities. He
The meeting focused on the operationalisation of the CPF and leveraging Deloitte's technical advisory and global experience for Pakistan's ongoing initiatives, which should be outcome based and standardised, streamlined project development in different sectors, including health, climate, energy, mining and minerals and the public-private initiatives.
The delegation apprised the Minister of their upcoming meetings with key stakeholders, including officials from the World Bank (WB), Asian Development Bank (ADB), and the Economic Affairs Division (EAD).
The Finance Minister shared insights from his recent meeting with World Bank President Ajay Banga, highlighting Pakistan's commitment to responsible and transparent utilisation of financing.
He reaffirmed that the government is focused on two overarching national priorities climate resilience and population management both of which are being supported through significant funding, including the recently approved Resilience and Sustainability Facility (RSF) of $1.3 billion. 'At this stage of our reform journey, what Pakistan needs is not financing, it is strategic, tactical support and global expertise from our bilateral and multilateral partners,' remarked the Minister.
The meeting also included an in-depth discussion on structuring future collaboration and defining key priority areas where Deloitte's assistance could be instrumental.
The Deloitte team expressed strong appreciation for the positive economic indicators emerging from Pakistan and reiterated their commitment to working closely with the Government of Pakistan to support its reform and development agenda.
The meeting concluded with both sides agreeing to maintain close coordination in the weeks ahead and to work jointly on identifying actionable, high-impact, outcome based initiatives that align with Pakistan's economic development and transformation vision.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
10 hours ago
- Express Tribune
Cashless economy at crossroads
Listen to article As Pakistan's informal economy swells to $140 billion, Prime Minister Shehbaz Sharif faces a choice between incentivising people by offering lower taxes to encourage digital payments or imposing higher costs on cash transactions for government payments and utility bills. An expert committee on the cashless economy, made up of public and private sector representatives, recently submitted recommendations to the PM. Their approach centres around a "carrot and stick" policy. If the PM chooses incentives, he will have to lower sales tax and petroleum levies. But if he opts for penalties, people will pay more when making payments to the government or buying fuel and other utilities. Finance Minister Muhammad Aurangzeb is set to announce the new budget on June 10. It will be clarified whether the government will focus on incentivising digital payments or punishing cash use. Previous punishment policies targeting non-filers with higher taxes have failed to deliver results. "It is up to the government whether to incentivise digital payments or punish cash users," said a committee member in background talks. The committee offered four key recommendations, presenting both options to the government. The first calls for mandating acceptance of digital payments by empowering district authorities to enforce the use of the RAAST QR code — an instant payment method — at all retail outlets. Local authorities should ensure the presence of RAAST QR codes and penalise merchants for inactivity. The committee expects that within a year, one million active RAAST QR codes could be operational if enforced effectively. "The solution lies with QR codes, not credit cards," said a committee member. "There are only 2 million credit cards and 50,000 card readers, but Pakistan has five million retail outlets." Merchants charge 1.5% fees on credit card payments, but only 1% on RAAST payments, the member added. The committee estimated that the informal economy makes up 35% of the economy, translating to $140 billion today. The government must choose to incentivise or punish, but past experience shows punishments don't work. One major recommendation is to reduce the sales tax on digital payments from 18% to 5%, along with a three-year tax audit break for digital transactions. The committee also proposed eliminating customs duties on digital payment-related equipment. They believe these incentives could double digital transactions within six months. When the committee approached the Federal Board of Revenue (FBR) about tax cuts, the FBR said the International Monetary Fund (IMF) would oppose it. However, the IMF told the committee it had no objection and threw the ball back in FBR's court. On the punishment side, the committee suggested making cash payments more expensive. They recommended imposing a surcharge on over-the-counter government payments, capping cash-on-delivery payments, and removing sales tax incentives on cash-on-delivery. One punitive proposal is to increase petrol prices by 1% or Rs3 per litre for cash payments. With 12,000 petrol stations nationwide and 70% of customers on motorcycles, this could be a significant deterrent. The committee believes the punishment policy could cut cash circulation by 2% of GDP, about Rs2.6 trillion. It also suggested that all government paymentssuch as those to Benazir Income Support Programme (BISP) beneficiaries or contractorsshould be made digitally. This would require mandatory installation of RAAST QR codes at all government payment points within six months and creating digital wallets for every government disbursement, starting with BISP. If successful, this could add 20 million new bank accounts within 18 months, the committee said. The government introduced the non-filer category in 2013 to broaden the tax base. However, over 12 years, it has become a tool to extract higher taxes rather than expand the base. Utility bills are also being used to collect taxes, hurting sectors like telecommunications. The telecom industry demands exemption from withholding tax deductions, similar to the banking sector. Telecom companies face deductions on thousands of transactions, such as electricity bills for cell towers. This raises compliance costs and administrative burdens. Verifying tax claims on these bills is also difficult for authorities, adding to the operational load. The industry argues withholding tax on telecom services should not be treated as a minimum tax, which applies even during loss-making years. Current harsh recovery measures disrupt business and undermine taxpayer confidence. CMOs pay advance or withholding tax on hundreds of thousands of transactions, including electricity bills and imports. Maintaining documents and handling audits demand significant effort and cause verification issues. They want the 4% withholding tax on telecom services to be adjustable rather than a minimum tax. The shift from adjustable income tax to minimum tax has effectively turned income tax from direct to indirect, the industry said. The sector also demands removal of the 10% advance income tax on auctions or renewals of telecom licenses. This advance tax raises business costs and capital expenses, hindering 4G/5G expansion and rural coverage. Further, the telecom sector wants the 75% advance tax on non-filers abolished, along with measures like SIM blocking, which have not produced meaningful results. Operators would need costly and time-consuming billing system upgrades to manage two tax rates. Since telecom services are essential, SIM blocking could deprive people of basic access. In April 2024, mobile operators were ordered to block SIM cards of over 500,000 non-filers. The Finance Act 2024 increased the advance income tax rate for non-filers to 75%. Additionally, non-compliance carries penalties of Rs50 million for the first offence and Rs100 million for subsequent violations. These punishments have failed, with the FBR shifting responsibility onto others. The withholding tax under Section 236 rose from 10% to 15% in the 2021 supplementary Finance Act. It applies only to tax filers, yet most telecom consumers are non-filers. The industry wants this rate reduced to 12.5% in the next budget.
Business Recorder
10 hours ago
- Business Recorder
DDT scheme has small positive impact on textile exports: World Bank
ISLAMABAD: Pakistan's Duty Drawback of Taxes (DDT) scheme had a small positive impact on aggregate textile exports, which masks substantial reallocation across products and induced an increase in exports of products eligible for the highest rebate rates at the expense of non-eligible, and of lower-rebate rate products, says the World Bank. The bank in its 'Industrial Policy under Constraints: Evidence from Pakistan's Export Subsidy Schemes' report, stated that the scheme induced an increase in strategic misreporting at the border for non-eligible products. For each $1 spent on the DDT schemes, only $1.1 were generated as additional exports, the bank added. Business & investment: Shift to higher tariffs restricts exports growth for Pakistan: WB The scheme is considered a key export promotion policy adopted by the Pakistani government for the textile sector, which accounts for 55 percent of total exports. Prior to 2010, the subsidy scheme was implemented intermittently, with extremely limited budget allocations and frequent interruptions in disbursements. At the end of 2014, the government launched a trade policy aimed at boosting textile exports, which involved a substantial increase in the budget allocated to the scheme. Over the period 2017-2020, funds allocated to the scheme reached about one percent of the total federal budget. The scheme targeted specific products and adopted heterogeneous rebate rates across eligible products, the bank added. Analysis of exporters' transactions data reveals that the effects are partially explained by a shift in exporters composition, as entrants are less likely to be specialised in low-rate products while firms that exit the export market are those more likely to be specialised in lower-rate and non-eligible products. The report said that strategic behavior, however, had a small overall impact on recorded exports, and does not explain the larger reallocation. Results have broad implications and suggest that interventions targeted at specific products can lead to unintended reallocations, particularly if firms face capacity or financial constraints. The concentration of the export base into fewer products that increases the vulnerability of exports to product-specific shocks, should be weighed against the small aggregate effect of the scheme when evaluating the overall impact of this intervention, it added. The study combines an event-study approach to exclude the presence of pre-trends with a synthetic control method to estimate the effects of the DDT scheme on Pakistani textile exports. Using product-level data, we show that products in different eligible categories were on similar trajectories before the introduction of the scheme. Synthetic control estimates show that while the DDT scheme had only a small positive overall impact on textile exports, it induced re-allocation across products within the textile sector. More specifically, the policies induced an increase in exports of products eligible for the highest rebate rates at the expense of non-eligible or lower-rate products. The bank stated that targeting export subsidies towards specific products might impact negatively other products, especially in a context where firms face capacity constraints. This could lead to an inefficient allocation of resources, as firms may divert attention and resources from non-subsidised to subsidised products, potentially harming overall export performance. These findings underscore the importance of monitoring the effects of such interventions. A careful assessment of the capacity constraints faced by firms, along with an assessment of the features of the products to target, is crucial in the design of export subsidy schemes to ensure balanced and sustainable growth in the export sector. The report stated that Pakistan has long been implementing measures to support exports. Traditionally, export promotion schemes were limited to five so-called 'zero-rated sectors': textiles, sports goods, surgical goods, leather and carpets. Over the last decade, however, there has been a growing consensus on the need for a level playing field, advocating for wider accessibility of these schemes. Hence, two main modalities have emerged. Copyright Business Recorder, 2025
Express Tribune
14 hours ago
- Express Tribune
Need for water reservoirs
Listen to article Pakistan is in a realpolitik puzzle in terms of its water scarcity. The issue has aggravated since India unilaterally suspended the 1960 Indus Water Treaty, and went on to deny the lower riparian state its due of lifeline. Likewise, on the domestic front, the nation is engaged in a debate on how to overcome the pestering shortage of the essential commodity, as India has virtually stopped water discharges from Chenab River into Pakistan, resulting in a decrease from 35,000 cusecs to about 3,100 cusecs. Last but not least, India is also laying its hands on altering capacity at hydroelectric projects in the Occupied Jammu and Kashmir to adversely impact Pakistan's share of downstream water. All that is needed at this juncture is to marshal a new water policy, and come up with enough reservoirs for self-sufficiency in electricity and agriculture; and that requires increased water storages and efficient water usage. Prime Minister Shehbaz Sharif was on the mark as he called for building new reservoirs, and completing the ongoing Diamer-Bhasha Dam. The proposed dam, initially estimated at Rs479 billion, has been in limbo for six years; its timely commissioning will provide 6.4 maf water. But that is just one instrument of water holding. Pakistan needs to build many more such reservoirs, as has been done by Iran, India and Turkiye over the last few decades. The tongue-in-cheek call from the PM that other reservoirs to store water must be considered in national interest might have a referral to Kalabagh Dam, and other projects, that fell pretty to political bickering. Now is the time for greater inter-provincial coordination on a masterplan to secure water needs by eulogising indigenous geological potential. While Pakistan has launched a successful diplomatic offensive to browbeat India on its water terrorism, the need is to effectively take it up in the lawfare domain too. Pakistan must knock at relevant international courts, and raise the IWT's suspension with the World Bank too. Pakistan has a genuine and lawfully-ordained stance, and all it needs is professional cajoling to put down India on its hegemonic mat.
