ISLAMABAD: Minister for Finance Muhammad Aurangzeb met World Bank Country Director Najy Benhassine on Tuesday and urged the international lender to support Pakistan in its economic reforms and development agenda, Radio Pakistan reported.
The talks in Islamabad came less than two months after the IMF approved a $7 billion bailout loan for Pakistan that is attached to tough economic reforms. The IMF is pushing Pakistan to continue prudent fiscal and monetary policies, and to mobilize revenue from untapped tax bases.
Pakistan’s $350 billion economy has struggled for decades with boom-and-bust cycles, needing 23 IMF bailouts since 1958.
“During the meeting, the Finance Minister highlighted the importance of collaboration with the World Bank to support Pakistan’s economic reforms and development agenda,” Radio Pakistan reported. “The Finance Minister reiterated the government’s commitment to fiscal discipline, sustainable growth, and efficient resource utilization.”
The discussions focused on the establishment of a robust and transparent tax policy framework to enhance revenue mobilization and improve compliance while ensuring equitable taxation, the report said.
The World Bank team also offered technical assistance to streamline the budget-making process, adopt modern practices to improve transparency and accountability in public financial management, and put in place an effective debt management mechanism to ensure fiscal sustainability and reduce risks.
Issues related to the Agricultural Income Tax Regime and GST harmonization in coordination with provinces and an enhanced focus on the active role of the National Tax Council also came under discussion.
“The Finance Minister expressed gratitude for the World Bank’s support and reaffirmed the government’s resolve to implement reforms aimed at sustainable economic progress,” the reported said, adding that the World Bank officials reiterated the lender’s commitment to assisting Pakistan in addressing economic challenges and achieving its developmental objectives.
The IMF, which approved the new bailout in September, has said the program will require “sound policies and reforms” to strengthen macroeconomic stability and address structural challenges alongside “continued strong financial support from Pakistan’s development and bilateral partners.”
The IMF said in its statement on approving the loan that Pakistan had taken key steps to restore economic stability with consistent policy implementation under the 2023-24 standby arrangement.
It added that growth had rebounded to 2.4 percent and inflation has receded significantly, falling to single digits, amid appropriately tight fiscal and monetary policies.
A contained current account and calm foreign exchange market conditions have allowed the rebuilding of reserve buffers, and the central bank of Pakistan has been able to reduce interest rates by 700 bps since June in four consecutive cuts.
Despite this progress, Pakistan’s vulnerabilities and structural challenges remain formidable and the tax base remains too narrow.
The South Asian country is the IMF’s fifth-largest debtor, owing the Fund $6.28 billion as of July 11, according to the lender’s data.
