By Staff Reporter
ISLAMABAD: The government is in advanced talks to secure external financing assurances, a crucial step towards finalizing a $7 billion loan from the International Monetary Fund (IMF), said Finance Minister Muhammad Aurangzeb on Tuesday.
The country is racing against time to secure approval from the IMF’s Executive Board for the loan, essential for stabilizing its economy. In July, the IMF staff and Pakistani authorities reached a staff-level agreement, but the deal remains subject to approval by the IMF’s Executive Board and confirmation of necessary financing assurances from development and bilateral partners.
“We are in advanced stages of securing assurances for our external financing,” Aurangzeb said in a televised message. “We hope the IMF Executive Board will approve this program on time.”
The IMF’s Executive Board meeting schedule until September 4 was released, but Pakistan’s name was absent. This move has raised concerns about the loan’s disbursement timeline and the possibility that the loan may be delayed, just as Pakistan’s economy struggles to stabilize.
Pakistan seeks a rollover of $12 billion in loans from key allies, including China, Saudi Arabia, and the United Arab Emirates (UAE). Additionally, the country has requested an extra $1.2 billion loan from Saudi Arabia to address a $2 billion financing gap.
Prime Minister Shehbaz Sharif also expressed hope that the bailout program would receive approval from the lender’s executive board, hoping this would be the country’s “last” loan deal.
“All prerequisites and conditions for our program with the IMF are fully under supervision, and actions are being implemented to fulfill them. God willing, we hope all conditionalities and requirements of the IMF will be fulfilled on time,” Sharif told his cabinet on Tuesday.
“Our case will go to the [IMF executive] board for approval, and a new journey will begin. But we should keep in mind that this should be the last IMF program in Pakistan’s history, and the country should stand and run on its own feet.”
Meanwhile, at a news conference, Finance Minister Aurangzeb emphasized the need for increased tax collection, stating that around 43% of sectors in the economy pay less than 1% tax.
He asked wholesalers, retailers, and distributors to contribute to the country’s economy, saying, “We all must contribute; otherwise, we will keep going to the same place for more, and there, too, we don’t have much space.”
The minister said the tax-to-GDP ratio stands at 8.8%, which is unsustainable and needs to be increased to 15%. “We need to move this forward, and there is a basic reason for it — last year, we only increased our tax revenue by 29%, but we are still at 8.8% tax-to-GDP.”
Aurangzeb said there is no room left for avoiding taxes in the country, stressing that the current situation, where the salaried class and the manufacturing industry already contribute more than their fair share relative to their GDP contribution, cannot continue.
“How long will this country keep being run like this?” he asked. “So, my wholesalers, distributors, retailers — my brothers and sisters — I request once again, please take a step forward to contribute to the country’s economy.”
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