Trade Gap
LAHORE: Finance Minister Muhammad Aurangzeb recently addressed the Lahore Chamber of Commerce & Industry (LCCI), urging the business community to collaborate with the government in resolving Pakistan’s trade deficit with the United States.
The minister highlighted the ongoing challenges posed by the tariffs imposed by the Trump administration, which include a 10% base tariff that remains in effect despite a temporary 90-day relief period.
Minister Aurangzeb stressed that while the tariff issue is significant, the real concern is the trade imbalance between Pakistan and the US, which needs to be addressed with the help of business insights. He called for proposals and ideas from the business sector on how to boost exports and facilitate imports from the US to balance the trade deficit.
As the US is Pakistan’s largest trading partner, he emphasized that it is crucial for the business community to step forward and assist the government in overcoming this challenge. To further this goal, the government plans to send a high-level delegation to the US for constructive discussions with US authorities. The delegation will include representatives from the business community to ensure the inclusion of their perspectives.
Regarding the privatization of state-owned enterprises (SOEs), the finance minister shared that 24 SOEs have been transferred to the privatization commission.
Additionally, a committee, which he heads, is reviewing the restructuring of ministries and their attached departments. Minister Aurangzeb noted that the real challenges do not lie within the ministries themselves but in the over 400 departments attached to them, which are draining public funds due to corruption and inefficiencies.
On agricultural matters, the minister proposed the deregulation of crop prices instead of maintaining fixed support prices. He also emphasized that Pakistan’s economic growth could be significantly driven by the IT and mineral sectors.
Reflecting on a recent successful minerals conference, he noted that global interest in Pakistan’s mineral resources and IT potential is growing, with the government focusing on removing barriers to attract both local and foreign investment.
In terms of industrial growth, the minister underlined the importance of reducing financing costs, power tariffs, and improving taxation policies. He noted that under Prime Minister Shehbaz Sharif’s leadership, the country’s economic direction is being steered toward clear goals, and positive results are expected soon.
The government has also addressed challenges related to profit repatriation for foreign investors, which has boosted investor confidence.
Minister Aurangzeb acknowledged that the salaried class is shouldering a heavy tax burden, as income tax is being deducted at the source. He assured that the government intends to offer relief to this segment of the population. Additionally, he expressed that if the tax-to-GDP ratio reaches 13%, broader relief could be offered to various sectors of the economy.
LCCI President Mian Abuzar Shad praised the government’s efforts to combat inflation and reduce the policy rate. He also urged the government to ensure timely disbursement of tax refunds, particularly to exporters, to maintain liquidity, encourage investment, and sustain economic activity.
He pointed out that the Federal Board of Revenue (FBR) often delays refunds beyond the required 72-hour processing period under the FASTER system. Minister Aurangzeb suggested that if refunds are not released within 15 days, the FBR should pay exporters with a markup to compensate for the delay.
