Finance Minister Muhammad Aurangzeb said Reuters Pakistan is targeting about $1 billion in a formal request for financing from the International Monetary Fund facility that helps manage external shocks.
“We have formally requested consideration of this facility,” Aurangzeb said in an interview on the sidelines of the fall meetings of the International Monetary Fund and World Bank in Washington.
The International Monetary Fund approved a bailout for Pakistan last month, but has more financing available through the Resilience and Sustainability Fund (RST).
The country is also in talks with the Asian Infrastructure Investment Bank to boost credit for its planned panda bonds, with an initial issuance of $200-250 million.
Aurangzeb said Pakistan also hopes to complete the delayed privatization of Pakistan International Airlines (PIA) and outsourcing of Islamabad International Airport in November. Talk to Agence France-Presse At the World Bank headquarters in Washington.
During a previous interview with Agence France-Presse In April, Aurangzeb said he hoped the privatization of state-owned PIA would be completed by June 2024.
Speaking on Wednesday, the Finance Minister said the five-month delay was due to two factors: ensuring macroeconomic stability, and conducting due diligence on the parties involved.
“The reality is that when any foreign investor comes in, or even a domestic investor, who is going to invest a large amount of money, they want to make sure that the foundation is there,” he said, referring to macroeconomic factors.
Aurangzeb noted that potential bidders for both PIA and Islamabad Airport also need to be vetted, which is another factor in the delay.
“So it was the Cabinet that ultimately agreed to the extension in the timelines so that people can do their due diligence before submitting these applications,” he said.
Aurangzeb said Pakistan was late in paying current dividends and dividends when the current government came to power, and had taken steps to address this after making progress in macroeconomic stability.
The country came to the brink of default last year as the economy contracted amid political chaos following catastrophic monsoon floods in 2022 and decades of mismanagement, as well as a global economic downturn.
Inflation peaked at 38 percent, but has since fallen below seven percent, after the central bank maintained very high interest rates, amid other tough government measures, including an import ban to preserve foreign exchange.
Last month, the International Monetary Fund approved a $7 billion loan, the 24th loan Pakistan has received from the multilateral bank since 1958.
Aurangzeb praised the progress made in the country’s current account deficit and the stability of the rupee, whose value against the US dollar has declined by about 65% since 2020.
“In May and June, against the backdrop of macroeconomic stability and an increase in our reserves, we paid more than $2 billion to our existing international investors,” he said.
Pakistan’s total public debt currently stands at 69% of GDP, according to the International Monetary Fund, or approximately $258 billion.
Besides privatizing state-owned companies, the IMF deal for Pakistan also depends on increasing its tax base and reforming the country’s energy sector.
Aurangzeb said Agence France-Presse There was a common theme between the three main issues.
“Taxes, energy, state-owned enterprises: there is leakage, there is theft, there is corruption, right?” He said. “And we have to deal with all of that.”
But he denied media reports that the government was not serious about expanding its tax base, saying tax collections rose by 29% in the last fiscal year, which overlaps with the previous caretaker government, and was targeted to rise by another 40% in the last fiscal year. . Current fiscal year.
In a country of more than 240 million people, where most jobs are in the informal sector, only 5.2 million filed income tax returns in 2022.
“People who are not paying should start paying for the simple reason that we have reached a saturation point of people who are paying,” he said.
“The working class, that is, the manufacturing industry, has reached its saturation point. He added that this cannot go ahead.
He said the government was also committed to doing a better job of taxing certain sectors of the economy, such as real estate, retail trade, retail distributors and agriculture.