Pakistan’s credit rating improves, tax-to-GDP ratio hits 8.8%: Aurangzeb 

ISLAMABAD: Finance Minister Muhammad Aurangzeb has said that international credit rating agencies have improved Pakistan’s rating, reflecting growing confidence in the country’s economic direction. 

Addressing a press conference, the minister said that the country’s tax-to-GDP ratio has reached 8.8 per cent during the current fiscal year and is expected to rise to 10.4 per cent by June 30. “This marks a significant improvement and demonstrates our commitment to fiscal discipline,” he said. 

Aurangzeb criticised speculation throughout the year about the possibility of a mini-budget. “People kept beating the drum all year about a mini-budget. But the fact is, no mini-budget was introduced this year,” he clarified. 

He said both the policy rate and inflation have declined in recent months, and that the federal government’s expenditure has increased by less than 2 per cent. This, he pointed out, was a stark contrast to the past when expenses often rose by 10 or 12 per cent annually. “A lot is being said about government spending, but let’s remember, the days are gone when the Prime Minister used a helicopter for everyday travel,” he remarked. “If we want to talk about cutting expenses, it must start from the top.” 

Commenting on reforms within the Federal Board of Revenue (FBR), the finance minister said steps were underway to digitise the system to bring transparency and reduce human intervention. “Reducing human involvement and embracing digitisation will curb corruption. We’re also introducing performance-based incentives for FBR staff,” he stated. 

Aurangzeb noted that discussions were held with various stakeholders on the process related to FATA and PATA. He added that income tax exemptions were still in place for these areas, while sales tax is being increased gradually. 

He concluded by saying that in the wake of the 18th Amendment, there was now a need to reassess certain matters at the federal level. 

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