Aurangzeb Tries to Convince Fitch to Improve Pakistan’s Rating

Federal Minister for Finance and Revenue 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 representatives from Fitch Ratings appreciated the ambitious targets and fiscal measures adopted by the Government of Pakistan and acknowledged the improvement in economic indicators. 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 percent in June 2024. He noted a 7.7 percent rise in foreign remittances. 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 program which includes setting a target of increasing government revenues by 1.5 percent of GDP in FY 2025 and by 3 percent over the coming 3 years. A primary surplus of 1 percent of GDP will also be achieved for FY 2025. Addressing fiscal reforms, Aurangzeb emphasized the government’s efforts to broaden the tax base, citing a substantial 30 percent increase in tax collection during FY 2024 compared to FY 2023. Furthermore, more than 150,000 retailers have registered as first-time taxpayers. 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 meeting was also attended by senior officials of the Ministry.