Minister outlines bold fiscal reforms, eyes Rs3.5tr revenue boost

ISLAMABAD: Minister of State for Finance Ali Pervez Malik said on Tuesday that the government had implemented additional taxation measures to generate Rs3.5 trillion in additional revenue, an unprecedented achievement in the country’s history.

He emphasised that the government has devised a plan to achieve its objectives, including rightsizing ministries and departments, and requiring provinces to contribute to social protection programs.

Malik highlighted that, despite allocating Rs600 billion for social protection, only one percent is currently utilised in Islamabad, necessitating increased provincial contributions.

The minister mentioned that the government is planning to rightsize ministries and divisions, with the prime minister announcing the closure of the PWD. He underscored that the PWD managed development projects worth Rs100-200 billion, which have now been shelved. The government plans to announce the rightsizing of ministries and departments in the coming weeks, following a meeting chaired by the finance minister that lasted over two hours on Tuesday.

Malik indicated that many redundant organisations will be curtailed and devolved, with decisions to be made shortly by the National Economic Council (NEC). He acknowledged the imbalance in fiscal shares and responsibilities between the federal government and provinces, stressing the need for consultation to resolve these issues. He confirmed that pension reforms will be implemented, acknowledging the challenges involved but stating that there are no other options.

Speaking at a news conference, Minister Ali Pervez Malik addressed concerns that international development partners doubted the country’s ability to generate revenue through enforcement measures.

He emphasised that the government had to take stringent revenue measures across all taxes.

Regarding the Public Sector Development Programme (PSDP), Malik explained that the government had made the difficult decision to curtail it to restrict revenue measures to existing levels. He mentioned the government’s plans to reduce its footprint by vigorously pursuing the privatisation programme, including PIA privatisation and outsourcing Islamabad’s airport. Consultations with the World Bank are ongoing to develop a roadmap for pre-privatisation and post-privatisation scenarios for DISCOs (distribution companies). Consumer protection measures will also be ensured during the privatisation of DISCOs.

Malik concluded by stating that the government aims to increase the tax-to-GDP ratio by one percent annually over the next five years.