New Delhi

Pakistan is focusing to finalise both the delayed privatisation of its flag carrier and the outsourcing of Islamabad's international airport in November, the country's finance minister said on October 23, according to a detailed report by Agence France-Presse (AFP).

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Muhammad Aurangzeb, who took office earlier this year, spoke to AFP at the World Bank's headquarters in Washington, where he is attending the annual meetings of the International Monetary Fund and the World Bank. During an earlier interview with AFP in April 2024, Aurangzeb had stated that he hoped the privatisation of the government-owned Pakistan International Airlines (PIA) could be completed by June 2024. Still, the process got delayed.

Speaking On October 23, the finance minister stated that the five-month delay was due to two factors: ensuring macroeconomic stability, and doing the proper due diligence of the interested parties. "The reality is, when any foreign investor comes in, or even the local investor, who are going to put in a substantial amount of money, they want to ensure that the foundation is there," he said, referring to macroeconomic factors.

Aurangzeb further noted that potential bidders for both PIA and Islamabad airport also required scrutiny, is another factor in the delay. "Therefore it's ultimately the cabinet which approved the extension in the timelines so people can do their due diligence before they make these submissions," he mentioned.

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Pakistan was nearly on the brink of default

Aurangzeb said Pakistan had been behind on existing profit and dividend repayments when the current government took office, and had taken steps to remedy that after making progress on macroeconomic stability.

The country was nearly on the brink of default last year as the economy shrank amid political chaos following catastrophic 2022 monsoon floods and decades of mismanagement, along with a global economic downturn.

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Inflation in the country peaked at 38 per cent but has since dropped to less than 7 per cent, after the central bank maintained sky-high interest rates, amid other government tightening measures, including import bans to preserve foreign exchange.

Past month, the IMF approved a $7 billion loan, Pakistan's 24th such payout from the multilateral lender since 1958. Aurangzeb touted progress on the country's current account deficit and the stabilisation of the Pakistani rupee, which has depreciated against the US dollar by about 65 per cent since 2020.

"In May and June on the back of this macroeconomic stability and building up on our reserves, we paid more than $2 billion to our existing international investors," he explained. Pakistan's gross public debt currently stands at 69 per cent of GDP, according to the IMF, or roughly $258 billion.

Tax collection has hit a saturation point

Alongside privatizing state-owned enterprises (SOEs), Pakistan's IMF deal also rests on increasing its tax base and reforming the country's power sector. Aurangzeb told AFP there was a common theme between all three major issues.

"Tax, power, SOE: There's leakage, there's theft, there's corruption, right?" he said. "And we have to deal with all of that."

But he dismissed media reports that the government was not serious about broadening its tax base, saying that the tax take had risen by 29 per cent in the last fiscal year, which overlapped with a prior caretaker government and was targeted to rise by a further 40 per cent in the current fiscal year.

In a nation of more than 240 million people where most jobs are in the informal sector, only 5.2 million filed income tax returns in 2022.

"People who are not paying up, they need to start paying for the simple reason that we have reached a saturation point of the people who are paying," he said.

"The salaried class, the manufacturing industry, reached a saturation point. And this cannot go forward," he added. The government was also committed to doing a better job of taxing certain sectors of the economy, he said, naming real estate, retail, retail distributors, and agriculture.

These changes are expected to bring positive results for the economy of the nation and help it in bringing its debt down.