ISLAMABAD: Finance Minister Muhammad Aurangzeb stated that the approval of the staff-level agreement for a new bailout package by the International Monetary Fund (IMF) Executive Board is dependent on $12 billion debt profiling by allied countries.
Minister Seeks Re-profiling of $5 Billion and $4 Billion Foreign Deposits from Saudi Arabia and China. Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb held a press conference at PTV Headquarters in Islamabad.
Moreover, Finance Minister Muhammad Aurangzeb announced that Pakistan is seeking the re-profiling of $5 billion from Saudi Arabia and $4 billion from China as part of its foreign deposit strategy. The government has already begun the process of re-profiling debt, he stated.
Furthermore, Aurangzeb also mentioned that China has pledged support in securing IMF approval for a new loan and confirmed that Pakistan is negotiating a $600 million loan from Chinese banks.
The approval of a staff-level agreement for a new $7 billion bailout package with the IMF is contingent on the re-profiling of $12 billion in foreign deposits, including $5 billion from Saudi Arabia, $4 billion from China, and $3 billion from the UAE. This agreement, reached earlier this month, awaits the IMF Executive Board’s decision, expected by late August.
Addressing tax issues, Aurangzeb mentioned the introduction of the Tajir Dost Scheme, a fixed tax ranging from Rs100 to Rs60,000 per month, aimed at bringing un-taxed sectors into the tax net. He noted that the FBR had identified 4.9 million potential tax evaders and that a central system would be implemented to improve tax collection efficiency.
Aurangzeb also spoke about addressing fake invoices and simplification of tax forms, and he mentioned plans for a 20% to 25% reduction in ministry expenditures to achieve budgetary savings.
On the topic of debt related to Chinese Independent Power Producers (IPPs), Aurangzeb revealed that the government is pursuing an extension in the debt maturity period and will hire a Chinese consultant to achieve these objectives. Pakistan is requesting a five to eight-year extension on the $15.4 billion owed to Chinese IPPs.
Additionally, Aurangzeb clarified that Pakistan is not seeking debt restructuring or a haircut but rather an extension of debt maturity. Discussions about re-profiling the power sector debt with China have been ongoing, following a high-level delegation visit.
The minister highlighted that Beijing has praised Pakistan’s efforts to secure the IMF program and reaffirmed support for obtaining IMF approval. Aurangzeb emphasized the importance of simultaneously engaging with both China and the U.S. due to their significance for Pakistan.
Regarding the $600 million commercial loan from Chinese banks, the government plans to issue a Panda Bond with an initial $150 to $200 million.
Aurangzeb acknowledged that high interest rates, electricity prices, and increased taxes have worsened economic conditions, partly due to the previous government’s failure to maintain the IMF program. He stressed the necessity of seeking IMF assistance and noted that Price Monitoring Committees are now tracking prices to prevent exploitation.
On local IPPs, the minister indicated that while plans to reduce tariffs are underway, the agreements must be honored to achieve favorable outcomes.