ISLAMABAD: Finance Minister Muhammad Aurangzeb briefed global rating agencies for the second day running on Tuesday about the government’s efforts to stabilise macroeconomic indicators under a new staff-level agreement with the International Monetary Fund (IMF).

A virtual meeting via Zoom was held on Tuesday with representatives of Moody’s Ratings at the Finance Division to brief the global agency on the government’s steps outlined in the budget ahead of the IMF programme.

This was the second virtual meeting in as many days, following a meeting with the credit rating agency Fitch on Monday.

In February, Moody’s rating agency retained Pakistan’s long-term credit rating at Caa3, with a stable outlook, reflecting the dismal standing of a cash-strapped nation in global financial markets.

The agency also questioned the new government’s capacity to get a fresh loan contract with the IMF once the previous one expired in April.

On the sidelines of the World Bank Group-IMF spring meetings in Washington, Finance Minister Aurangzeb expressed hope that Moody’s investor service would raise Pakistan’s credit rating soon, citing strengthening economic fundamentals and a commitment to reform.

The minister briefed the agency’s representatives on the country’s economic outlook. He said the economy had shown resilience over the past few months, recalling that foreign exchange reserves had risen to $9 billion, CPI inflation had stabilised at 12.6pc, and remittances had recorded a robust increase of 7.7pc.

According to a press release, the minister emphasised a 30pc rise in tax collection in FY24 and outlined reforms to broaden the tax base, including new agricultural taxes and digital initiatives at the Federal Board of Revenue.

He noted that over 150,000 retailers had registered as first-time taxpayers, marking a significant stride towards broadening the tax base.

Ambitious targets

Mr Aurangzeb said the government had set ambitious targets to increase revenues by three per cent of GDP by FY27 and projected a primary surplus of 1pc of GDP. This demonstrates Pakistan’s commitment to fiscal sustainability and growth, he added.

He updated Moody’s representatives on the successful completion of Pakistan’s nine-month Standby Arrangement (SBA) with the IMF, emphasising its positive impact on macroeconomic indicators.

The finance minister said multilateral institutions had reposed confidence in the country by agreeing to finance its developmental projects. He apprised the agency of the recently finalised staff-level agreement (SLA) with the IMF for a medium-term programme.

Mr Aurangzeb underscored ongoing reforms in the energy sector and state-owned enterprises, including privatisation and rightsizing efforts aimed at improving operational efficiency and governance.

Published in Dawn, July 24th, 2024