Pakistan’s new Finance Minister Muhammad Aurangzeb has confirmed that the country will look to the International Monetary Fund for an Extended Fund Facility. He also said that the policy rate will come down as inflationary pressures ease.
Speaking to media representatives for the first time since assuming office, Aurangzeb said that the IMF team would be in Pakistan from March 14-18 and could extend its visit to March 21.
While the official purpose of the visit is the second review of the stand-by agreement, the government also hopes to begin a discussion on an EFF program.
However, Aurangzeb did not specify what the size of the bailout package will be.
The minister also described the ongoing fiscal year as better than the previous one and added that the government would have to be in ‘implementation mode’ to make sure that structural issues in Pakistan’s economy are addressed.
He said that addressing ‘leakages’ in the tax system is a priority and the tax to GDP ratio would have to be brought into double digits.
The minister added that it was unrealistic to rely on super taxes as a long term strategy and said ‘wholesale, real estate, and agriculture’ are taxable sectors.
Aurangzeb also said that the interest rate, which is currently the highest in Pakistan’s history, will likely come down in light of recent inflation numbers.
The minister also said that the government will go about the Public Sector Development Programme through a public’ private partnership.
