Finance Minister Aurangzeb discusses interest rates, inflation, IMF plan

Muhammad Aurangzeb, Pakistan’s new finance minister, has stated that the government will request an extended fund facility from the International Monetary Fund. Additionally, he stated that when inflationary pressures lessen, the policy rate will decrease. For the first time since taking power, Aurangzeb told reporters that the IMF team would be in Pakistan from March 14–18 and would stay till March 21.

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The second review of the stand-by agreement is the visit’s formal goal, but the administration also wants to start talking about an EFF program. Aurangzeb did not, however, state how much the rescue package would be.

In addition, the minister said that the current fiscal year was better than the previous one and that in order to ensure that structural problems in Pakistan’s economy are resolved, the government would need to be in “implementation mode.”

He stated that the tax to GDP ratio will need to be raised into the double digits and that fixing “leakages” in the tax system is a top concern. The minister went on to say that “wholesale, real estate, and agriculture” are taxed industries and that it was impractical to rely solely on high taxes as a long-term plan.

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In addition, Aurangzeb stated that given the recent data on inflation, the interest rate—which is currently the highest in Pakistani history—will probably decline. The minister added that a public-private partnership will be used by the government to carry out the Public Sector Development Programme.