Finance Minister Muhammad Aurangzeb has forecast that Pakistan’s current account will remain in surplus throughout the fiscal year 2024-25, offering a more optimistic outlook than the central bank’s latest projection.
The State Bank of Pakistan (SBP), in its half-yearly report for FY25, estimated that the current account could either show a modest surplus or slip into a deficit of 0.5 per cent of GDP by the end of the fiscal year.
Speaking at a pre-budget seminar organised by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in Karachi on Wednesday, Aurangzeb expressed confidence that the balance would stay in the positive zone. He also outlined the government’s fiscal strategy, with a focus on expanding the tax base and encouraging business activity.
The minister said Pakistan’s tax-to-GDP ratio is expected to increase to 10.6 per cent in FY25, with a target to raise it further to 13.5 per cent over the next three years. The improvement, he added, would come through a series of structural tax reforms.
“This will be the last International Monetary Fund (IMF) programme for Pakistan,” he said, stressing the government’s commitment to sustainable economic reform.
Aurangzeb noted that while the government is keen to provide tax relief to both businesses and the salaried class, its room to manoeuvre is limited under the IMF programme. Still, he said, the authorities were exploring options to support economic activity in the next fiscal year (FY26).
He added that independent experts had been engaged to help prepare the upcoming budget, aiming to align it with global standards and ensure better fiscal management.
Aurangzeb pointed to three major hurdles facing the economy: high taxation, elevated energy costs, and expensive borrowing. However, he said the cost of borrowing had started to ease, with the key policy rate falling by 10 percentage points since June 2024. The Karachi Interbank Offered Rate (KIBOR) has now dropped to around 12 per cent, making financing more accessible for businesses.
“We are heading in the right direction, but there’s still more work to do,” he said, reiterating the government’s commitment to identifying areas where further tax relief could be extended.
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