Finance Minister Muhammad Aurangzeb hints at further policy rate reduction

Pakistan's Federal Finance Minister Muhammad Aurangzeb has suggested that the policy rate may be reduced to a single digit.

Speaking to the media after a pre-budget discussion with the Islamabad Chamber of Commerce and Industry (ICCI) leadership, Aurangzeb mentioned that the IMF team will review Pakistan's economic performance in the coming weeks.

The central bank has already slashed interest rates by 1,000 basis points, from a high of 22% in June last year to 12% in January.

January's inflation rate was recorded at 2.41%, the lowest in nine years.

Aurangzeb highlighted that Pakistan has successfully met the IMF’s economic reform targets, with Sindh Province passing a law to impose income tax on agricultural income.

Punjab and Khyber Pakhtunkhwa have already enacted similar legislation, and Balochistan is expected to follow suit soon.

Aurangzeb called on the private sector to play an active role in Pakistan's economic turnaround, while the government remains committed to providing a supportive framework.

He expressed optimism about the country's economic direction, citing increased investments and solid performance of existing investments.

The finance minister emphasized the government's role in providing a stable policy framework and continuity, which he believes is crucial for attracting further investment.

The government has initiated the budget-making process for the fiscal year 2025-26, aiming to achieve economic stability and align the national budget with its economic vision, "Uraan, Pakistan."

The Federal Board of Revenue (FBR) has solicited tax-related proposals from stakeholders to broaden the tax base, introduce progressive taxation, and simplify tax laws. Aurangzeb announced that the government will extend support to the capacity building and financing of SMEs.

Minister of State for Finance Ali Pervez Malik said the prime minister will soon announce a reduction in power tariffs and will meet with the business community to address their concerns.

Chairman FBR Rashid Mehmood Langrial assured that the business community’s problems concerning his department will be addressed transparently.