Latest news with #MohammadAurangzeb
Business Recorder
2 days ago
- Business
- Business Recorder
Hoping against hope for a ‘bold budget'
EDITORIAL: The finance minister, Mohammad Aurangzeb, is describing the upcoming budget as a 'bold budget.' However, the FBR (Federal Board of Revenue) is attempting to impose regressive and lazy taxes through the backdoor measures that can be called anything but certainly not bold. The tax machinery remains fixated on extracting revenue without broadening the tax base, and in doing so it is, in fact, strangling the formal economy. A glaring example is the government's last-minute attempt to impose a Capital Value Tax (CVT) on movable assets such as cash and gold — a move rightly objected to by the IMF (International Monetary Fund). The government's mindset appears to be to offer relief through populist measures, while making up the revenue shortfall with ad hoc, irrational proposals. There remains no considerable effort to expand the tax base or bring the under-taxed and untaxed segments into the net. Simultaneously, the government is proposing to increase the withholding tax (WHT) rate on income from bank deposits and investments in mutual funds — while also attempting to apply CVT on cash. Such steps will only push the economy further into informality, encouraging people to withdraw funds from the banking system and divert savings into gold, foreign currency, or even hide the money under their mattresses. Pakistan's tax system is already highly regressive, with one of the highest sales tax rates and widespread application of Federal Excise Duty (FED) and WHT (Withholding Tax) across transactions of various goods and services running in parallel with sales tax and federal excise duty in VAT mode. A sizeable portion of income tax is collected at the import stage. Now, the proposal for a wealth tax adds another layer of burden, not reform, but regression. Previously, the government imposed CVT on foreign assets, including those declared under the amnesty scheme — despite the explicit promise that, upon paying the specified tax, wealth would be accepted as legitimate. The government later backtracked on this commitment, and the CVT, therefore, is now being challenged in court. Those who declared their wealth feel betrayed, while those who did not are reaping the benefits. Now, even those who have fully declared and paid taxes on their assets are being pushed toward informality. The kind of taxes FBR is proposing will only deepen the grey areas of the economy. Needless to say, Pakistan already suffers from an abysmally low savings rate, which translates into low investment. The savings-investment gap perpetrates current account deficits, triggering recurring balance of payments crises. Regressive tax measures will only worsen this trend by discouraging savings. The continuation of high-income taxes, including super taxes, is also a significant deterrent to investment and capital formation. The talk of a wealth tax causes further uncertainty and dampens investor confidence. The core issue is that the government seems intent on taxing everything that is documented — merely plugging in numbers wherever feasible. This mindset, along with coercive tactics, erodes trust between the state and the taxpayer and undermines efforts to broaden the tax base. Domestic investors and family business groups are shifting their wealth abroad. Salaried professionals are seeking jobs outside Pakistan. Talent and capital are both leaving the country. This outflow seriously threatens privatisation efforts, especially since history shows that when domestic investors have earned returns — such as in the case of IPPs — the state has reneged on its commitments. Foreign investors, on the other hand, have at times been spared the same treatment. This disparity has made local investors reluctant to bid for Discos unless backed by foreign partners — yet foreign interest remains weak, as seen in the case of KE shareholders who have not received a single rupee as dividend in 20 years. The government urgently needs to improve investor sentiment and foster an enabling environment for investment. However, the current approach — milking the formal sector to implicitly subsidise the informal one — is exacerbating the problem. If the government genuinely wants to be bold, it must do the right things: build trust, broaden the tax net equitably, and create policies that support sustainable, inclusive economic growth. Copyright Business Recorder, 2025
Business Recorder
29-04-2025
- Business
- Business Recorder
Aurangzeb highlights Pakistan's economic turnaround
ISLAMABAD: Federal Minister for Finance and Revenue, Senator Mohammad Aurangzeb, while speaking at Pakistan Conference 2025 at Harvard University, said that Pakistan had reached a pivotal moment of economic recovery and transformation. 'After inheriting an economy facing significant challenges—from contracting GDP to depleting reserves—we have stabilized the fundamentals, restored confidence, and reignited growth,' he said at the conference titled 'Bridging Divides, Building Tomorrow: Pakistan's Path to Inclusive Growth and Governance.' The Pakistan Conference is an annual flagship event that brings together policymakers, academics, business leaders, and students to discuss Pakistan's economic, political, and social trajectory, according to a press release issued by finance ministry here Monday. Organized by Harvard students with support from university research centers, the event is the largest student-led conference on Pakistan in the United States. The conference serves as a vital forum to advance collaborative solutions, promote global engagement, and showcase the creativity and resilience of the Pakistani people. Pakistan eyes to replicate Indonesia's nickel success with copper, says Aurangzeb Aurangzeb highlighted key achievements including a historic reduction in inflation to 0.7%, the lowest in 60 years; foreign exchange reserves doubled; a 3% currency appreciation; and a current account surplus exceeding $1 billion in March 2025. Pakistan also witnessed a 44% increase in Foreign Direct Investment (FDI), a 24% rise in IT exports, and record-high remittances projected at $38 billion. For the first time in 24 years, Pakistan achieved a fiscal surplus, with the highest primary fiscal surplus in two decades. Fitch has upgraded Pakistan's credit sovereign credit rating to B- with a stable outlook. Emphasizing that 'stability is not an end but a means to an end, ' the Finance Minister outlined the government's strategy including maintaining fiscal discipline, controlling inflation, and pushing ahead with deep structural reforms in energy, taxation, governance, and the management of state-owned enterprises. He flagged major growth opportunities in Pakistan's rich mineral resources, expanding IT sector, green energy initiatives, and the country's youthful entrepreneurial population. Strengthening human development, he emphasized, is critical to sustaining high, inclusive growth.
Business Recorder
28-04-2025
- Business
- Business Recorder
Aurangzeb highlights economic turnaround
ISLAMABAD: Federal Minister for Finance and Revenue, Senator Mohammad Aurangzeb, while speaking at Pakistan Conference 2025 at Harvard University, said that Pakistan had reached a pivotal moment of economic recovery and transformation. 'After inheriting an economy facing significant challenges—from contracting GDP to depleting reserves—we have stabilized the fundamentals, restored confidence, and reignited growth,' he said at the conference titled 'Bridging Divides, Building Tomorrow: Pakistan's Path to Inclusive Growth and Governance.' The Pakistan Conference is an annual flagship event that brings together policymakers, academics, business leaders, and students to discuss Pakistan's economic, political, and social trajectory, according to a press release issued by finance ministry here Monday. Organized by Harvard students with support from university research centers, the event is the largest student-led conference on Pakistan in the United States. The conference serves as a vital forum to advance collaborative solutions, promote global engagement, and showcase the creativity and resilience of the Pakistani people. Pakistan eyes to replicate Indonesia's nickel success with copper, says Aurangzeb Aurangzeb highlighted key achievements including a historic reduction in inflation to 0.7%, the lowest in 60 years; foreign exchange reserves doubled; a 3% currency appreciation; and a current account surplus exceeding $1 billion in March 2025. Pakistan also witnessed a 44% increase in Foreign Direct Investment (FDI), a 24% rise in IT exports, and record-high remittances projected at $38 billion. For the first time in 24 years, Pakistan achieved a fiscal surplus, with the highest primary fiscal surplus in two decades. Fitch has upgraded Pakistan's credit sovereign credit rating to B- with a stable outlook. Emphasizing that 'stability is not an end but a means to an end, ' the Finance Minister outlined the government's strategy including maintaining fiscal discipline, controlling inflation, and pushing ahead with deep structural reforms in energy, taxation, governance, and the management of state-owned enterprises. He flagged major growth opportunities in Pakistan's rich mineral resources, expanding IT sector, green energy initiatives, and the country's youthful entrepreneurial population. Strengthening human development, he emphasized, is critical to sustaining high, inclusive growth.
Arab News
14-04-2025
- Business
- Arab News
IMF mission to conclude Pakistan governance and corruption assessment today
KARACHI: An IMF team visiting Pakistan to undertake a Governance and Corruption Diagnostic Assessment (GCDA) will conclude its mission today, Monday, an official with direct knowledge of the review said. IMF staff reached a deal with Pakistan for a new $1.3 billion arrangement last month and also agreed on the first review of the ongoing 37-month bailout program. Pending board approval, Pakistan can unlock the $1.3 billion under a new climate resilience loan program spanning 28 months. The IMF will also release $1 billion for the South Asian nation under its $7 billion bailout program, which would bring those disbursements to $2 billion. 'Following a scoping mission in February, an IMF team is in Pakistan until April 14 [Monday] to undertake a Governance and Corruption Diagnostic Assessment (GCDA),' an official privy to the negotiations told Arab News, requesting anonymity as he was not authorized to speak to the media. 'A press release will be issued at the conclusion of the mission.' The IMF bailout program, secured mid-year in 2024, has played a key role in stabilizing Pakistan's economy and the government has said the country is on course for a long-term recovery. The GCDA is a detailed assessment tool used by the global lending agency to identify governance vulnerabilities in areas such as fiscal management, financial oversight and the rule of law. It is designed to support targeted reforms to improve transparency, accountability and institutional performance. The IMF conducted the preliminary phase of the assessment in February at the request of the Pakistani government. Following the visit, it praised the country's commitment to governance reform. A second review began on Apr. 4. A separate technical team from the IMF is also scheduled to visit Pakistan this week to hold discussions with senior officials from the Federal Board of Revenue (FBR) regarding taxation proposals for the upcoming budget of 2025-26. 'The visit … will see talks focused on expanding the country's narrow tax base, with a particular emphasis on bringing retailers and other untaxed sectors into the tax system,' Profit, a top Pakistani business publication, reported last week. 'One of the key issues on the table will be the government's desire to reduce tax rates for salaried individuals, a move the IMF will likely evaluate as part of broader fiscal discussions.' A high-powered Pakistani delegation, led by Finance Minister Mohammad Aurangzeb, will participate in the upcoming annual spring meetings of the IMF and World Bank in Washington from April 21-26.
Express Tribune
27-03-2025
- Business
- Express Tribune
FM unveils plan to raise $200m via Panda bonds in China
Finance Minister Senator Mohammad Aurangzeb during an interview with VOA. SCREENGRAB Listen to article Finance Minister Muhammad Aurangzeb hinted that Pakistan may issue Panda Bonds in Yuan this year to tap into China's extensive capital market. Speaking in an interview with China's CGTN during the Boao Forum for Asia, Aurangzeb said Pakistan was ready to engage the Chinese interbank bond market after previously issuing debt only in Western markets. 'I have been advocating and I am very keen that Pakistan… go for an inaugural Panda bond,' he said. 'We are very hopeful that during this calendar year, we will do that.' Panda bonds are yuan-denominated debt instruments issued by foreign entities in China. They offer an opportunity to attract investment from Chinese financial institutions including banks, asset managers and insurers. Aurangzeb noted that while Pakistan had experience with issuing dollar and euro bonds, this would mark its first entry into the Chinese debt market. The move is part of a broader effort to diversify funding sources and reduce reliance on Western markets. The government is seeking to bolster its foreign exchange reserves and stabilise its economy after recovering from a prolonged economic crisis that nearly pushed the country into sovereign default two years ago. In January, the finance minister said the Panda bond issue would target around $200 million. His announcement comes after major credit agencies upgraded Pakistan's sovereign ratings, enhancing the country's prospects of returning to global bond markets. The finance chief added that Pakistan was leveraging its improved macroeconomic indicators and looking to build deeper financial ties with Beijing.
