Pakistan’s government has launched a far-reaching, home-grown reform agenda designed to overhaul the nation’s fiscal landscape, with the most significant change being the transfer of tax policy control from the Federal Board of Revenue (FBR) to the Ministry of Finance in a bid to restore economic stability.
Unveiled by Finance Minister Muhammad Aurangzeb on Wednesday at the Pakistan Business Council’s Dialogue, the comprehensive plan targets critical sectors to enhance competitiveness and correct fiscal imbalances. The minister pointed to early signs of economic recovery, citing improved performance in the cement, fertiliser, and automotive industries, alongside a rebound in large-scale manufacturing.
Aurangzeb detailed profound structural changes in taxation, which include the creation of a dedicated Tax Policy Office and an Advisory Council. The new approach emphasizes the digitalisation of the tax system and continuous engagement with business chambers to ensure policies are reviewed and adapted throughout the year.
Significant progress was also reported in restructuring state-owned enterprises. The minister announced that half of all federal ministries and departments have been right-sized, resulting in the elimination of 54,000 vacant positions and achieving annual savings of Rs. 56 billion.
In a move to tackle mounting pension liabilities, a new contributory pension scheme has been introduced, which has already enrolled over 9,000 government employees. Reforms in debt management are also underway, aiming to extend average debt maturities and lower refinancing risks to control the cost of debt servicing.
Looking ahead, Aurangzeb outlined several key priorities, including the first session of the 11th NFC Award and the issuance of Pakistan’s inaugural Panda Bond before the Chinese New Year. To provide immediate relief to exporters, the 0.25% Export Development Surcharge (EDS) has been abolished.
The government is also moving to formalise cryptocurrency-related activities through the operationalisation of the Pakistan Virtual Asset Regulatory Authority. Furthermore, the Digital Pakistan initiative will focus on expanding digital payments and improving transparency in government functions.
Investor sentiment appears to be improving, as reflected in a recent OICCI survey showing stronger recommendations for Pakistan as a foreign investment destination. The finance minister noted the growing engagement of multinational firms like Google, which intends to set up technical and export hubs in the country.
Aurangzeb projected a national growth rate of approximately 3.5% for the current fiscal year. He expressed optimism that this could increase to 4% in the next two to three years and potentially reach 6-7% over the medium term, provided there is sustained momentum in the agriculture, manufacturing, and services sectors.