KARACHI: Finance Minister Muhammad Aurangzeb on Tuesday defended a tough new budget as a necessary “signal” of the government’s long-term economic strategy, arguing that reforms were essential despite acknowledging widespread hardship across nearly all sectors.

In post-budget interviews on national television, the minister framed the measures as part of a grand plan developed under the constraints of an IMF programme, prioritising structural change over immediate revenue concerns.

“We have utilised our fiscal space, being in an IMF programme, we thought this budget in terms of signal,” Mr Aurangzeb said. “We have signalled what we want to do.”

A primary objective, he said, is expanding the tax base to include sectors that have previously avoided contributing to the national exchequer despite their role in the economy.

Says new budget is ‘long-term strategy’ developed under IMF programme; prioritises structural changes over immediate revenue concerns

“Segments which are contributing to GDP but not to the exchequer are not sustainable,” he said, adding that “everyone needs to step up”.

The government’s strategy hinges heavily on enforcement. The minister cited past success in plugging financial leaks, noting that enforcement actions worth 389 billion rupees had already been carried out to stop leakages.

He pointed to the comprehensive lifestyle information available through the national identity card (CNIC) system. “CNIC has every lifestyle data”, he said, indicating an intent to use it for tax purposes.

Mr Aurangzeb championed the administration’s tariff reforms as a critical step to boost exports and make local industry competitive, calling it Pakistan’s “East Asia moment”.

He acknowledged the transition would be “painful” but insisted it was a move in the right direction.

“Tariff reforms was the right thing to do; we didn’t think of it in terms of revenue loss. This is a proper five-year programme,” he said. “I’m the first one to say this is not enough, but it’s a right direction.”

Addressing criticism over lawmaker pay raises during a period of austerity, the minister justified the move as overdue, arguing lawmakers “needed this hike” and noting the private sector raises salaries annually.

He said the government tried to provide “maximum relief to middle class on their slabs” while imposing new taxes on the elite.

The minister also confirmed the government is reviving privatisation efforts, noting the process for PIA has been “relaunched.”

He announced plans to simplify the tax form for the salaried class from 800 columns to nine and said the prime minister has called for a National Finance Commission meeting to discuss fiscal pacts with the provinces.

Mr Aurangzeb also framed the petroleum development levy not as a revenue tool, but as a climate reform to discourage the use of fossil fuels. He linked the country’s future sustainability to tackling two “existential threats”: climate change and population growth.

He announced the tax policy office has now been moved from the FBR to the Finance Division to ensure a consistent and strategic vision.

Mr Aurangzeb emphasised that although the reforms are tough, they are essential for ensuring long-term stability.

Published in Dawn, June 11th, 2025