Aurangzeb urges Fitch to improve Pak rating

ISLAMABAD: While refusing to comment on political predictions made by Fitch on Pakistan’s political landscape, the minister for finance on Monday made all-out efforts to convince them to improve rating after witnessing upward trends in macroeconomic figures.

Federal Minister for Finance and Revenue Senator 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 on Monday. The meeting was also attended by senior officials of the ministry. In the beginning of the online session, minister for finance refused to comment on the political predictions made by the Fitch in its recently launched report. According to official announcement made by Ministry of Finance stating that the finance minister provided an extensive update on Pakistan’s current economic landscape starting with the successful completion of Pakistan’s 9-month Standby Arrangement with the International Monetary Fund (IMF), emphasising 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.

Addressing fiscal reforms, Muhammad Aurangzeb emphasised 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 been 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 privatisation and rightsising of federal government entities to streamline operations and improve governance.

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) finalised in July 2024 with the IMF for a new medium-term programme aimed at bolstering Pakistan’s homegrown economic reform agenda. The federal minister apprised the Fitch representatives of salient features of the new programme which includes setting a target of 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.

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.