ISLAMABAD: Finance Minister Muhammad Aurangzeb on Tuesday acknowledged the "disproportionately high burden" faced by Pakistan's salaried class, hinting at potential tax reforms aimed at reviewing the current tax slabs.

Speaking at the "Dialogue on the Economy" event organized by the Pakistan Business Council (PBC), Aurangzeb noted that, in his personal opinion, the salaried group is heavily burdened by taxes. "The reality is that we do need to think about the various tax slabs that we have. However, I cannot make any commitment around that," he said. The finance minister emphasized the government's intention to simplify the tax filing process for salaried individuals, aiming to make their lives easier. He added that the budget process for the upcoming fiscal year had already been initiated in the first week of January, allowing for time to discuss potential reforms in detail. Aurangzeb also revealed that consultations with business chambers would begin in February, with feedback expected by March-April. He acknowledged that the government is bound by its commitments under the International Monetary Fund (IMF) program, suggesting that some reforms may need to be phased in or out as a result.

The finance minister outlined that the budget for the fiscal year 2025-26 would be presented in the first week of June 2025, as per a Finance Division circular. In addition to tax reforms, Aurangzeb touched on the country's overall economic performance, asserting that all economic indicators are moving in the right direction. He referred to the recent decision by the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP), which reduced the policy rate by 100 basis points (bps) to 12%. This reduction marks the sixth consecutive cut since June 2024, when the policy rate was 22%. The minister expressed confidence that the reduction in interest rates would bolster business confidence. Aurangzeb also spoke about the SBP's projection to reach $13 billion in foreign exchange reserves by the end of the current fiscal year, describing it as "a very important milestone."

This would provide Pakistan with nearly three months of import cover, which, according to the finance minister, could trigger a re-rating of the country to a single B category. He attributed this positive outlook to strong remittance flows and growing exports in the IT services sector. Discussing the IMF program, the finance minister reaffirmed the government's commitment to its obligations, stating that the government would stay firm with its commitments.  He also noted that the government is focused on reducing its expenditure and implementing rightsizing policies to streamline the public sector. The overall message from Aurangzeb was one of cautious optimism, as the government seeks to balance its international commitments with the need to address the concerns of Pakistan's salaried class and business community.