Finance Minister Muhammad Aurangzeb on Wednesday stressed that planned tariff reforms that would reduce import duties were the key to an export-led economy in Pakistan.<\/p>\n
He made the remarks during a post-budget press conference where he expanded upon the federal budget<\/a> proposed yesterday for the upcoming fiscal year.<\/p>\n Maintaining an aggressive stance on fiscal consolidation, as required by the Int\u00adernational Monetary Fund (IMF), Aurangzeb yesterday still managed to offer some notional relief<\/a> to the salaried class in the federal budget for FY2025-26, along with incentives for the real estate and construction sectors to revive the struggling industrial sector and stimulate economic growth.<\/p>\n Addressing a media briefing in Islamabad today, Aurangzeb reiterated the significance of the tariff reforms under the National Tariff Policy<\/a>.<\/p>\n \u201cPeople ask us that the revenue will decline but if we have to take this country forward towards an export-led discussion [\u2026] I want to go into the details of the steps we have taken,\u201d he said.<\/p>\n The minister noted that additional customs duties were removed in four \u201clines\u201d, while they were reduced in 2,700 tariff lines, which were \u201cdirectly linked with those raw materials on the basis of which exporters will benefit\u201d.<\/p>\n He stressed these measures were just for the upcoming year and more will be taken gradually.<\/p>\n Expanding further on the topic while answering a query. Aurangzeb said: \u201cThis is an East Asia moment for Pakistan. Whatever was available in the fiscal space is the direction of travel. We have tried to reduce tariffs. This is not the eventual end state.\u201d<\/p>\n<\/p>\n At the outset of the press conference, the reporters voiced their concerns about not being given a technical briefing yesterday by the Federal Board of Revenue (FRB) on the Finance Bill 2025, which details the legislation for the proposed measures under the budget.<\/p>\n Subsequently, they walked out of the conference room in protest.<\/p>\n However, flanked by FBR Chairman Rashid Mahmood Langrial and Finance Secretary Imdadullah Bosal, Aurangzeb soon continued with his press conference in the presence of some journalists.<\/p>\n Concluding his address, Aurangzeb acknowledged the \u201cworry\u201d caused to reporters and said he \u201cregretted if there was anything of the sort\u201d, referring to the journalists not being briefed.<\/p>\n However, the minister added, he and the FBR chairman \u201chad been appearing before you in terms of having these types of discussions\u201d. \u201cWe will continue to accelerate this,\u201d he affirmed, hinting at a plan of engagements with journalists every four to six weeks.<\/p>\n Addressing journalist Mehtab Haider, who spearheaded the journalists\u2019 concerns, Langrial acknowledged that there used to be a \u201ctechnical briefing\u201d but this time it was decided that Aurangzeb would hold an \u201cessential briefing\u201d.<\/p>\n \u201cIts name is technical briefing but practically, the same questions are raised during it, [\u2026] which makes the ministerial press conference slightly less meaningful.<\/p>\n \u201cBut if you want, we would hold a separate technical session with you,\u201d the FBR chairman told the journalists.<\/p>\n \u2018Salaries and pensions linked with inflation\u2019<\/p>\n On salaries and pensions, the finance czar stressed the need for a benchmark.<\/p>\n \u201cIf we are saying the inflation is declining, similarly, the salary or pension has to benchmarked with inflation. This is not just the rule in Pakistan but across the world.\u201d<\/p>\n The minister also pointed out the connection between pay and inflation when asked why the minimum wage of Rs37,000 was not to be increased in the upcoming year.<\/p>\n \u201cGo to the industries and get their feedback on minimum wage. I think we are in a good place,\u201d he asserted.<\/p>\n Echoing his remarks from yesterday, Aurangzeb stressed that the government tried to give relief \u201cas much as possible\u201d while considering the fiscal space. He also pointed out the 0.5pc reduction in super tax for the corporate sector.<\/p>\n Detailing the measures proposed for property buyers and sellers<\/a>, he said: \u201cSelling side still gets capital gains but the buying side should get some relief.\u201d<\/p>\n The minister also termed the mortgage financing \u201cas important as the fiscal side of things and what we have to do on the taxation side\u201d.<\/p>\n Speaking on the agricultural sector, Aurangzeb said an additional tax on fertilisers and pesticides was a \u201cbenchmark\u201d but it was negotiated with the International Monetary Fund (IMF) on the directions of Prime Minister Shehbaz Sharif that it was a \u201ccritical input into agriculture\u201d and should not be imposed.<\/p>\n \u201cAgain, this is a step in the right direction\u201d, the minister asserted.<\/p>\n Aurangzeb acknowledged that additional taxes and measures were also talked about last year. \u201cWe had to impose those as when we were speaking to international institutions, they were not agreeing with our stance that there can be enforcement in this country,\u201d he said.<\/p>\n<\/p>\n Expressing the aim to reach a tax-to-GDP ratio of 10.9pc by the next year, the minister said additional taxes were around Rs312m of the total 2.2tr target. \u201cWe have two ways \u2014 either we ensure enforcement or we introduce additional measures of up to Rs 400 to 500bn. This is why we will go to the parliament to help us out with the enabling amendments and legislation.\u201d<\/p>\n The minister added: \u201cWe have laws, legislation and taxes but we were not able to enforce it, so in this fiscal year, we have worked on enforcement, which has exceeded Rs400 billion.\u201d<\/p>\n Responding to a query, Aurangzeb underscored the need to reduce the role of the middleman in the agricultural sector and increase the financing for small farmers. \u201cIt is very critical [\u2026] that we have a policy in the devolved subjects.\u201d<\/p>\n He noted that the relevant measures were underway, hence the growth target was decided considering that.<\/p>\n Acknowledging that past concerns about the government expenditures not reducing were the \u201cright pushback\u201d, the minister highlighted that the figure had gone up by just 1.9pc in the outgoing fiscal year.<\/p>\n \u201cWe have reduced subsidies and debt-servicing costs, and increased some expenditures because this country needed those. But this is our response to those people who are paying taxes in this country that \u2018why are you not bringing the government expenditures under control\u2019,\u201d Aurangzeb asserted.<\/p>\n He pointed out that whatever the government was giving was doing so \u201cby taking loans as we start with a deficit\u201d, adding that if the expenditures were not reduced, then the loans would keep surging.<\/p>\n \u2018NA, Senate heads\u2019 salaries hiked after 9 years\u2019<\/p>\n Asked about a recent increase<\/a> in the salaries of the Senate chairman and the National Assembly speaker, the minister claimed that the last time their salaries were \u201cadjusted\u201d was in 2016. He emphasised that the hike was \u201call of a sudden\u201d as it had not been done for the past nine years.<\/p>\n Responding to a question on how the federal government could delink population from the National Finance Commission (NFC) award, Auranzgeb asserted, \u201cEverything will be done in consultation with provinces.\u201d<\/p>\n<\/p>\n He added, \u201cNothing will be done [without them], including the national fiscal pact which we signed with the provinces.\u201d<\/p>\n The minister also acknowledged a lack of implementation in suggested measures: \u201cOver the past 10 years, I\u2019ve been looking at the state of economy, first in the private sector and now in this job. I have never seen anything going up go downwards.<\/p>\n \u201cI could be wrong; maybe it might have happened in some year,\u201d he added. \u201cIt starts with acknowledgement, the undue burden that we had, as the prime minister has said before as well,\u201d Aurangzeb said.<\/p>\n \u201cThe things that had never been reversed before have now been put into reversal, but that\u2019s not the eventual end state,\u201d the finance czar highlighted.<\/p>\n He made it clear that the segments that have been under undue burden, \u201cwhether it\u2019s the formal sector, the beneficiary sector, the salaried class\u201d, the government should at least give a signal that it was \u201cserious\u201d. \u201cThis is just signalling in my perspective from the right direction,\u201d the finance minister said.<\/p>\n Aurangzeb noted that the government had taken two \u201cvery concrete measures\u201d to bring the cash-based economy of Rs9.4tr or more towards documentation.<\/p>\n Answering a query on circular debt, the FBR chairman highlighted the revisions last year for power firms\u2019 contracts. He stated that the power sector wanted \u201cmajor reforms toward cheap credit and an enabling environment\u201d.<\/p>\n When asked what the rationale was for the tax on solar panels, Langrial explained that solar comes in two forms: assembled and less assembled.<\/p>\n \u201cThe one which added value in Pakistan already had an 18pc tax rate. The assembled one from abroad did not, so the local assembly was at a disadvantage.<\/p>\n \u201cWe also closed the door for future local assembling, so this was not an option and we have to create a level playing field,\u201d the FBR chairman said, asserting that incentives were unimportant now that the technology had become cheaper.<\/p>\n \u201cThe payback period was two years, so we are ending these anomalies.\u201d<\/p>\n Asked what the youth was being offered under the proposed budget, Aurangzeb underscored the need for the government to provide an \u201cenabling environment for the youth\u201d.<\/p>\n Noting that freelancers earned $400 million last year, he said it was important to provide them with education.<\/p>\n \u201cThe coders are now earning $8 to 10 per hour; we hope they reach $100 per hour rate,\u201d he said, urging the private sector to lead that goal.<\/p>\n Responding to a question on bond repayments, the finance czar stated that the first instalment of Eurobonds<\/a> worth $500m was due in September, while the next was due in March. \u201cWe are prepared and willing to pay.\u201d<\/p>\n