ISLAMABAD: The International Monetary Fund (IMF) reiterated its appreciation for Pakistan’s policies that restored economic stability over the past year in its latest statement on Friday, while emphasizing the need to increase revenue by broadening the tax net.
The IMF approved a 37-month, $7 billion loan program for Pakistan this week, recognizing the government’s commitment to implementing the stringent economic reforms it had recommended.
The government has already announced plans to improve its tax-to-GDP ratio and is reforming the revenue generation system by incorporating more integrated, automated technology to enhance efficiency and compliance.
“The implementation of sound policies over the past year has been critical to restore economic stability, reduce near-term risks and rebuild confidence,” IMF Deputy Managing Director Kenji Okamura said while highlighting continued structural challenges that require government’s attention.
He emphasized continued fiscal consolidation in the ongoing financial year and beyond through enhanced revenue mobilization.
“Increasing revenue mobilization by broadening the tax base, removing special sectoral regimes, and placing a fairer burden on previously undertaxed sectors (including industrialists, developers, and large-scale agriculture), will enhance fairness and efficiency and create needed space for essential investments in human capital, infrastructure, and social spending,” he added.
The IMF statement also highlighted “insufficient” spending on health and education, saying it had made it difficult to address “persistent poverty” in the country.
Federal Minister for Finance and Revenue Muhammad Aurangzeb said this week the government wanted to eliminate the “non-filer” category by taking punitive actions against those who previously paid nominal amounts on various transactions to avoid filing tax returns.
He pointed out that measures were being taken to improve tax compliance and enforcement, which had previously remained weak.
The minister also said the government aimed to widen the tax net by incorporating the agriculture, retail and wholesale sectors, saying its “hand has been forced.”
IMF emphasizes broadening tax base while praising Pakistan’s commitment to economic reforms
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IMF emphasizes broadening tax base while praising Pakistan’s commitment to economic reforms
- A top lending agency official asks government to place ‘fairer burden on previously undertaxed sectors’
- IMF highlighted ‘insufficient’ health and education spending, says it makes it difficult to address poverty
IMF hails Pakistan privatization drive, calls PIA sale a ‘milestone’
- Fund backs sale of national airline as key step in divesting loss-making state firms
- IMF has long urged Islamabad to reduce fiscal burden posed by state-owned entities
KARACHI: The International Monetary Fund (IMF) on Saturday welcomed Pakistan’s privatization efforts, describing the sale of the country’s national airline to a private consortium last month as a milestone that could help advance the divestment of loss-making state-owned enterprises (SOEs).
The comments follow the government’s sale of a 75 percent stake in Pakistan International Airlines (PIA) to a consortium led by the Arif Habib Group for Rs 135 billion ($486 million) after several rounds of bidding in a competitive process, marking Islamabad’s second attempt to privatize the carrier after a failed effort a year earlier.
Between the two privatization attempts, PIA resumed flight operations to several international destinations after aviation authorities in the European Union and Britain lifted restrictions nearly five years after the airline was grounded following a deadly Airbus A320 crash in Karachi in 2020 that killed 97 people.
“We welcome the authorities’ privatization efforts and the completion of the PIA privatization process, which was a commitment under the EFF,” Mahir Binici, the IMF’s resident representative in Pakistan, said in response to an Arab News query, referring to the $7 billion Extended Fund Facility.
“This privatization represents a milestone within the authorities’ reform agenda, aimed at decreasing governmental involvement in commercial sectors and attracting investments to promote economic growth in Pakistan,” he added.
The IMF has long urged Islamabad to reduce the fiscal burden posed by loss-making state firms, which have weighed public finances for years and required repeated government bailouts. Beyond PIA, the government has signaled plans to restructure or sell stakes in additional SOEs as part of broader reforms under the IMF program.
Privatization also remains politically sensitive in Pakistan, with critics warning of job losses and concerns over national assets, while supporters argue private sector management could improve efficiency and service delivery in chronically underperforming entities.
Pakistan’s Cabinet Committee on State-Owned Enterprises said on Friday that SOEs recorded a net loss of Rs 122.9 billion ($442 million) in the 2024–25 fiscal year, compared with a net loss of Rs 30.6 billion ($110 million) in the previous year.
