There is no Plan B when you are in IMF loan program: Finance Minister

ISLAMABAD: “There is no Plan B when a country is in the [International Monetary Fund] IMF loan program,” Finance Minister Muhammad Aurangzeb said while addressing ‘Leaders in Islamabad Summit’. He added that the final installment of the current loan program with IMF is likely to be released by the end of this month.

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In his address, he outlined Pakistan’s economic trajectory and the crucial steps being taken to ensure financial stability and growth. He highlighted the positive indicators in Pakistan’s economy, including the increase in foreign exchange reserves and robust growth in the agricultural sector, which has seen a 5 percent expansion.

He emphasised the necessity of reforms in the energy sector and underscored the importance of timely decision-making and implementation as essential practices for economic progress. Speaking on the ongoing IMF program, which he deemed necessary for stabilising the economy, the finance minister said that a long-term program with the IMF is necessary.

Addressing the issue of foreign investment, Aurangzeb expressed optimism, particularly regarding investment in the Pakistan Stock Exchange (PSX). Aurangzeb also shed light on the improvements in Pakistan’s financial reserves, contrasting last year’s meagre reserves of $3.4 billion, equivalent to only 15 days of imports, with the current reserve level of $8 billion.

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The federal minister said that Pakistan’s foreign exchange reserves are projected to reach $10 billion by June 2024.

Touching upon the matter of tax tribunals, Aurangzeb clarified that they fall under the jurisdiction of the executive and advocated for their improvement rather than resorting to the courts. He announced plans to expedite decisions in tax-related matters within the tribunals in the coming months.

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He reiterated the necessity of structural reforms and increasing the tax-to-GDP ratio, which currently stands at 9 per cent.

Aurangzeb also touched upon the government’s commitment to privatising loss-making state-owned enterprises (SOEs) and enhancing policy enforcement in taxation. He emphasised that strengthening the enforcement factor is crucial for achieving the desired tax ratio and ensuring economic stability.