Pakistan's Economic Struggle: Calls for Tax Reforms Amid IMF Agreements

Pakistan's Finance Minister Aurangzeb warns of continued IMF dependency if taxes are not increased. He hopes for a USD 6-8 billion IMF agreement. Aurangzeb highlights issues like corruption in tax collection and public protests against the new tax-heavy budget, calling for government reforms.

Pakistan's Finance Minister Muhammad Aurangzeb has issued a stark warning, stating that the country will remain trapped in the International Monetary Fund (IMF) cycle if it does not raise taxes, ARY News reported on Monday. Aurangzeb underscored that the 'upcoming IMF programme will not be our last fund programme if we don't bring our tax revenues up.'

Aurangzeb is optimistic that Pakistan will achieve a staff-level agreement with the IMF this month, estimating the deal to be worth between USD 6-8 billion, according to ARY News. He conceded that government dependency on imports has triggered a vicious cycle of debt and borrowing, highlighting the urgent need to bolster the nation's capacity to repay its loans, ARY News stated.

The Finance Minister also pointed out the lack of public trust in the Federal Board of Revenue (FBR) driven by corruption and harassment, which discourages tax compliance. Aurangzeb stressed that the government must exhibit significant progress in the next two to three months to address the financial hurdles facing the country.

In related developments on July 6, employees of a private company protested against the newly announced 'tax-filled' budget for 2024-25, which further strains the already inflation-affected salaried class of Pakistan. Hundreds of employees gathered in Islamabad's Blue area, with the company's president arguing that the recently imposed taxes are unbearable for the working populace. Protestors urged the government to retract the new taxes, highlighting that the unaddressed burden will compel citizens to consider leaving the country. Last month, the Finance Minister and other government officials were unable to adequately respond to journalists' inquiries about the budget during a press briefing session in Islamabad, where criticism of the government's fiscal policies and their adverse effects on ordinary citizens was strongly voiced. (ANI)

(With inputs from agencies.)