ISLAMABAD - Representatives from Fitch Ratings have appreciated the ambitious targets and fiscal measures adopted by the government of Pakistan and acknowledged the improvement in economic indicators.
Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb had a zoom meeting with the representatives from Fitch Ratings led by Senior Director Thomas Rookmaker, Directors Asia Pacific Sovereign Krisjanis Krustins and Jeremy Zook. The meeting was also attended by senior officials of the ministry.
The finance minister provided an extensive update on Pakistan’s current economic landscape starting with the successful completion of Pakistan’s 9-month Stand By Arrangement with the International Monetary Fund (IMF), emphasizing its positive impact on the country’s macroeconomic indicators. He highlighted Pakistan’s foreign exchange reserves reaching $9.4 billion, robust stock exchange performance, and CPI inflation at 12.6% in June 2024. He noted a 7.7% rise in foreign remittances. Addressing fiscal reforms, Minister Muhammad Aurangzeb emphasized the government’s efforts to broaden the tax base, citing a substantial 30% increase in tax collection during FY 2024 compared to FY 2023. Furthermore, more than 150,000 retailers have registered as first time tax payers. The IT exports crossed the figure of $3 billion. He reiterated the government’s commitment to further improve the tax-to-GDP ratio as part of ongoing fiscal consolidation measures. The discussions encompassed ongoing reforms in the energy sector and state-owned enterprises, including privatization and rightsizing of federal government entities to streamline operations and improve governance.
The federal minister informed the rating agency about multilateral institutions’ confidence in financing Pakistan’s projects and briefed them about Pakistan’s Staff-Level Agreement (SLA) finalized in July 2024 with the IMF for a new medium-term program aimed at bolstering Pakistan’s homegrown economic reform agenda. The federal minister apprised the Fitch representatives of salient features of the new programme which includes setting a target of increasing revenues by 1.5% of GDP in FY2025 and by 3% over the coming 3 years. A primary surplus of 1% of GDP will also be achieved for FY2025.
