Recently, Pakistan secured approval for a $7 billion loan programme from the International Monetary Fund (IMF) after months of delays and demands for imposing additional taxes and tariffs. This loan presents an opportunity for the government to reform economic policies and implement strong measures against tax evasion and illicit trade, which could significantly boost the economy. However, this will only be possible with unwavering political will and effective systems of accountability. Finance Minister Muhammad Aurangzeb recently stated that the country’s economy could potentially be worth more than $700 billion – double the current estimate of $325 billion – and that there is over Rs7 trillion in annual tax evasion.
Similarly, he estimated that smuggling costs the government Rs750 billion annually. These figures highlight the critical financial challenges Pakistan is currently facing. Without addressing these significant losses, the country will struggle to achieve financial stability. Ensuring a conducive business environment and a consistent approach to combating tax evasion and illicit trade is crucial for sustaining economic growth and preventing further damage to the country’s economy.
Usama Ghulam Rasool
Karachi