Finance Minister holds post-budget press conference

Finance Minister Muhammad Aurangzeb flanked by Information Minister Attaullah Tarar, Minister of State for Finance Bilal Azhar Kayani, Finance Secretary Imdadullah Bosal, FBR Chairman Rashid Mahmood Langrial and Fiscal Policy Bureau Chief Najeeb Memon addressed a post-budget press conference on Saturday.

The Finance Minister said that last year, when discussions on economic stability were held, the government had committed to moving from stability to growth.

He said this budget delivers on that commitment, with measures taken to move from economic stability to economic growth.

Aurangzeb said steps have been taken in the budget to promote exports, including abolition of advance tax and proposed abolition of super tax for all exporters.

A subsidy of Rs 70,000-71,000 million has been provided to ensure an enabling environment for exporters, who will also have access to 4.5 per cent financing.

He added that tariffs on imports of raw materials have been reduced to reduce production costs.

“We have made significant progress and you have read and heard the budget speech,” Aurangzeb said, adding that the main themes of the budget are export-led growth and enabling factors.

“We have done everything possible to ensure that all these areas are in a conducive environment,” he said.
In fiscal matters, the advance tax was eliminated, said the Minister of Finance, adding that in terms of supertax, “we have decreased from 10 to 8%, which is also a very significant direction.”

He noted that when he spoke to Prime Minister Shehbaz Sharif and the Cabinet yesterday, they specifically ordered that the super tax for all exporters be abolished.
“This is not just a question of taxes, it is also a question of financing,” said the Finance Minister, “we are taking this refinancing plan to a different level.”

“For this, we have provided a subsidy of Rs 71 billion during this budget so that this funding remains available to Pakistani exporters at 4.5%,” he said. He continued: “In terms of the official rate and inflation, it is at 4.5%.”

Expressing his gratitude to the Governor of the State Bank and those who spoke to the banks, Aurangzeb stated that it is a very important feature that this financing is available at 4.5%, which he stated is in trillions.

Discussing cost reduction in terms of intermediate goods and raw materials, the Finance Minister stated that the mentioned financing mechanisms are “how we can increase export competitiveness.”

He added that “our focus continues to be on goods, which is very important, how to reduce the goods trade deficit.”

He also noted that services are becoming more important, particularly IT services, adding that total exports of goods and services will reach $4.5 billion next year.

For this reason, he said that the 0.25% FDR should be maintained for the IT industry and the self-employed.

“We made an effort to liberate the lower segments of the salaried class,” Aurangzeb said, from 5% to 1% and from 15% to 13%. “But the reality is that the top slabs and especially the surcharge element are all in front of you,” he added.

“If we were to carry this budget in favor of business, of growth, of construction, obviously, housing construction plays a very important role and the transaction taxes that we have reduced, you have already seen it,” he said.

When talking about agriculture, he said: “This has increased by 15% year on year and has exceeded 2 trillion, which is the overall agricultural financing.”

The Finance Minister also talked about the Zarkhez-e Plan, which he said was introduced in this fiscal year and is fully digital.

“The most important thing is that it has no guarantees; for small farmers, it is not about supporting someone as an individual or mortgaging someone’s house,” he said, adding that the scheme was introduced for small farmers and is going in the right direction.

Additionally, he talked about the Prime Minister’s agricultural loan, particularly for the youth, the total amount of which amounts to Rs 262 billion. Of this amount, Rs 125 billion was allocated to agriculture, the Finance Minister said.

Read: Achakzai questions state policies, Shehbaz promises response in National Assembly

He also spoke about Pakistan’s need for value-added machinery, which he said is not manufactured in the country. “We can get it from China or other countries, which will help us increase performance,” he said.

“In all these aspects, customs duties, additional customs duties and regulatory duties have been reduced to zero,” the Finance Minister noted.

Calling agriculture “one of the key principles of growth,” Aurangzeb went on to discuss what he saw as issues of deepening and broadening.

To elaborate, he said, he made reference to “digital monitoring and other things that are happening right now,” and said he especially mentioned that additional income is being received from this.

Discussing the new tax operation model, Aurangzeb noted that the government wants to take it towards automation. “We want to move towards AI,” he said, adding: “We are reducing human intervention.”

Moving on to discuss the expansion, the Finance Minister stated that the retail plan is mentioned in the budget.

“We made a great effort in this budget, especially what was said about only talking about economic stability, economic growth, where is that?” Aurganzeb said and added: “So this time, we have extensively utilized the fiscal space that was available.”

Although he noted that “there is more to do,” he said, “I will say it again: the response we have received is that we are moving toward economic growth.”

He added that the budget will play a fundamental role in this regard.

Minister of State for Finance Bilal Azhar Kayani noted that “at its core, this is the budget of the wage class, this is the budget of industrialists, this is the budget of exporters, this is the budget of the construction sector.”

Kayani added that “this is the budget of the person who wants to build their own house and does not have the means to do so.”

“These are other parts of our economy that need resources so that our economy can move forward,” the minister said, noting that the budget aims to reduce the burden on citizens.

He stated that the Prime Minister, the Minister of Finance and the entire economic team “have always admitted that very few people carry the weight of this tax on their shoulders.”

“Wage class is at the top of the list,” Kayani said, adding that “that’s why it has always been said that the government will give relief to wage class when it gets the chance.”

Kayani also discussed the reduction of minimum and advance taxes for exporters, “either the elimination of the first six brackets of the super tax and the last bracket had to be reduced from 500 million to 10% to 8%.”

“These were basically the main demands of our exporters and our formal industry,” he said.

He continued: “When we talk about reducing the tax burden, we have not limited that consultation and, as a result, in speaking with our business community, the real problems that arose for us, to reduce the tax burden, the main levers that were identified were addressed by the government.”

He noted that a week before the budget, Prime Minister Shehbaz held a detailed meeting with all houses of the country, including the FPCCI. “Be it Lahore, Karachi, Quetta, Peshawar, Faisalabad, Sialkot,” he said, “everyone from their respective areas that are part of our economy brought their problems.”

He added that a separate meeting was held with other industry leaders, including the Pakistan Business Council. “As a result of these consultations, we not only provided relief measures in this budget, but we also continue to make improvements throughout the year.”

Talking about taxes affecting the social sector, Kayani mentioned the GST exemption for the Pink Tax or the GST exemption for contraceptives. “These are also important requirements for us in terms of population control and women’s reproductive health, which were met by Prime Minister Shehbaz’s government.”

Kayani further discussed the GST exemption for the shipping industry. “During this war and conflict, we realized the importance of having our own maritime fleet and how strategically important it is for you,” he said, noting that this is why the issue remained in the spotlight.

“In terms of export financing and housing allocations, under the Benazir Program to support the income of weaker sections, more than 10 million households have benefited from women,” the minister said.

He added that this is a public budget, and since the public supported the Prime Minister in a difficult time, the stabilization phase, the improvement that he had promised, has begun. “This will provide jobs, trade, exports for all and increase the purchasing power of our brothers and sisters.”

On Friday, the Finance Minister unveiled a Rs 18.8 trillion federal budget, proposing to significantly roll back punitive taxes imposed on the salaried class and the real estate sector, while deepening economic liberalization.

Read more: Rs 18.8 trillion disbursement aims to boost growth

The expansionary budget of Rs 18.8 trillion was 20% or Rs 3.1 trillion higher than the revised outlay of the outgoing fiscal year, signaling the government’s intentions to shift gears from consolidation to spending.

Despite significant contributions from four provinces, the federal government has announced a deficit of Rs 7 trillion, larger than this fiscal year and to be covered by more borrowing. The government also plans to raise $23.4 billion in foreign loans, including $2 billion through euro and panda bonds.