The finance minister, in his address on the increasing global debt burden on developing economies, stated that Pakistan’s biggest issue has been the twin deficits in the current and fiscal accounts.
He explained that the primary reason for the fiscal deficit is the unsustainable tax-to-GDP ratio, which stands at 9 to 10 per cent. Efforts are currently underway to increase this ratio to 13 per cent, the Finance Minister added.
The government is focused on reducing its expenditures and minimizing the volume of debt repayments, the Minister further emphasized. He also shared that Pakistan’s debt-to-GDP ratio has decreased from 78 per cent to 67 per cent.
While acknowledging that borrowing itself is not problematic, the Finance Minister clarified that the crucial aspect lies in the proper utilization of loans. He suggested that loans should be used to enhance productive capacity and promote exports.
Muhammad Aurangzeb concluded by noting that Pakistan’s economic growth has experienced fluctuations over the years, indicating the challenges the country has faced in maintaining stable economic progress.
Read more: Tax-to-GDP ratio to reach 13pc in three years, vows Aurangzeb
Earlier on December 26, last year, Finance Minister Muhammad Aurangzeb vowed to take Tax-to-GDP ratio to 13 per cent in three years in Pakistan.
He was addressing a news conference alongside Minister for Information and Broadcasting Attaullah Tarar and Minister of State for Finance Ali Pervez Malik in Islamabad.
Muhammad Aurangzeb said taxation reforms have a key role in fiscal stability. He said the country has been languishing between 9-10 per cent in terms of tax to GDP ratio but we have set a target of 13.5 per cent for next three years to improve this standing.
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