Government presents roadmap for tax, energy and technology reform

The chief ministers announced a series of far-reaching reforms in the areas of taxation, energy, privatization and digital governance, aimed at stabilizing Pakistan’s economy and improving state efficiency.

Finance Minister Muhammad Aurangzeb, alongside Federal Ministers Awais Leghari and Shaza Fatima Khawaja, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial and Finance Secretary, addressed a joint press conference in Islamabad on Monday.

Langrial reported a significant increase in the number of filers. He said the total income tax gap stands at Rs1.7 trillion, with the top five percent of taxpayers accounting for Rs1.2 trillion. He noted that Prime Minister Shehbaz Sharif personally reviews the performance of the FBR every Tuesday, ensuring accountability and results.

He added that the FBR has intensified its crackdown on the tobacco sector, where two law enforcement officers were killed during operations, and the Rangers are providing support on the ground. The FBR chairman also said that the institution had undergone significant governance reforms, including categorization of officers into groups A, B and C based on their integrity and performance, and the FBR had been freed from political and administrative interference.

Langrial said digitalization initiatives have significantly increased revenues, especially in the sugar sector, which generated an additional Rs75 billion. The tax collected from retailers increased from Rs 82 billion to Rs 166 billion,” the FBR chairman said. He added that sales tax revenue increased by Rs42 billion, while income tax revenue increased by Rs43 billion, reflecting the impact of technology-driven tax enforcement.

The Minister of Finance announced that the meeting of the National Finance Commission would be held soon. Initially scheduled for September, it was postponed due to recent flooding, he said.

Electricity price

Energy Minister Awais Leghari said the government had inherited an expensive power system, citing rupee depreciation and capacity charges as the main causes. “The cost of electricity is Rs 9.97 per unit, which is in line with global standards,” he said, adding that the government, under the leadership of the Prime Minister, has reduced industrial rates by Rs 16 per unit.

Leghari announced that excess electricity would be offered to consumers at Rs 7.5 per unit and a new electricity market system would become operational by January or February next year. “The government will no longer purchase electricity directly,” he said, marking a historic move away from the electricity purchasing sector.

He also revealed that the government is close to eliminating 1.2 trillion rupees of circular debt without burdening consumers, and that through negotiations with power producers, 3.6 trillion rupees in additional payments until 2058 have been avoided. “These reforms prevented an increase of Rs 6 per unit in electricity tariffs,” he said.

Privatization campaign

Adviser to the Prime Minister on privatization, Muhammad Ali, said the government’s privatization program was being implemented with renewed vigor. “The results of privatization will soon manifest themselves in actions rather than promises,” he said.

He confirmed that Pakistan International Airlines (PIA) is at the top of the privatization list, with four consortia currently in the bidding process, and that the aim is to complete the privatization by the end of the year. “Our goal is to make PIA a global airline operated by investors who want to expand and modernize it,” he added.

Ali further said that talks were underway for the privatization of the House Building Finance Corporation (HBFC). He said the resizing of 20 ministries has been completed, work continues on nine other ministries and 10 ministries have been referred to a high-level committee for review. The government has already cut 54,000 unnecessary positions, saving 56 billion rupees, and plans further cuts. PASSCO and Utility Stores Corporation, two loss-making entities, are in the process of being dissolved.

“Nearly 300 public institutions have been subject to due diligence,” he said, “and while unproductive organizations are being closed, important ones such as the National Archives of Pakistan and the Pakistan National Council of Arts (PNCA) are being strengthened. » He added that in a recent meeting chaired by the Prime Minister, recommendations regarding 150 institutions were presented and none were rejected.

Cashless economy

Minister of Information Technology Shaza Fatima Khawaja briefed the media about the government’s Digital Nation Pakistan initiative. She said Prime Minister Shehbaz Sharif was holding regular meetings for the transition to a cashless economy, for which three high-level committees were formed.

The minister announced the creation of a national digital exchange layer, a unified platform where data from all relevant government agencies will be integrated. “This system will widen the tax net and help prevent tax leaks,” she said.

She further revealed that the pilot project of the national data exchange layer will be launched in December, and the national database and registration authority will work quickly to complete the system.

The IT minister added that Pakistan’s current economy, estimated at $400 billion, could potentially double to $800 billion, half of which would go to the informal sector. She added that by June 2026, the digital payment system will be expanded to two million users. Pakistan’s current account deficit stands at $500 million, but officials say it remains manageable thanks to increased remittances, Finance Minister Muhammad Aurangzeb said.

IMF loan

The government has decided to remove the last obstacle to obtaining the next tranche of $1.2 billion from the International Monetary Fund (IMF), according to sources at the Ministry of Finance.

The government has assured the IMF that it will publish the diagnostic report on governance and corruption before November 15, the sources said. They added that Pakistan had already fulfilled all other conditions before the IMF Executive Board meeting. The IMF has insisted on the rapid release of the diagnostic report on governance and corruption, and the technical aspects of the report are being finalized, according to the sources.

The IMF Executive Board meeting is expected to take place in December, during which Pakistan’s $1.2 billion tranche will be approved. The disbursement includes $1 billion under the IMF program and $200 million for climate finance, the sources added. The Executive Council meeting will be convened only after the report is released, they said.

According to sources, the report identifies administrative weaknesses and corruption risks within government institutions. It also highlights concerns about weak rule of law and other governance issues. Reforms to address institutional weaknesses will also be proposed in the report, and a formal implementation framework will be shared with the IMF, the sources said.

The report’s initial release date was set for July, then postponed to August 2025, the sources revealed. During recent negotiations on the economic review, the government requested additional time from the IMF.

Aurangzeb stressed the importance of ongoing structural reforms, warning that their failure could hamper Pakistan’s efforts to secure relief from IMF conditions. “These reforms could not be implemented earlier. We are pursuing them now, and their completion will help Pakistan get IMF assistance,” he said.

The Finance Secretary also highlighted reforms to retirement benefits for armed forces personnel, noting that early retirement is common in the military. He added that a direct contribution pension scheme had been introduced in a neighboring country but was later abandoned. Pakistan is currently working on implementing a similar direct contribution pension system for armed forces employees, he said.