Finance Minister projects foreign remittances to reach $36 billion

In Pakistan, on March 18, 2025, Finance Minister Muhammad Aurangzeb addressed the National Assembly regarding the hiring of McKinsey & Company for the digitalisation of the country's tax system. Amid concerns about the involvement of a U.S.-based company, he assured that McKinsey was chosen through a transparent and competitive process among seven applicants, aimed at enhancing the transparency, efficiency, and integrity of the tax authority. The initiative seeks to improve client service and trust in the tax system, with support from the Gates Foundation, which is funding the project. The minister also provided projections for foreign remittances, anticipating an increase to between $35 billion and $36 billion this year, up from approximately $30 billion the previous year. Aurangzeb emphasized that the digitisation of the tax system is part of a broader government strategy to transform the tax authority by focusing on people, procedure, and technology. He explained that McKinsey's role includes assisting in the design phase and overseeing implementation to ensure the project successfully addresses corruption and reduces human intervention. The finance minister highlighted the importance of this project as a means to bring credibility back to the tax system and as a necessary step towards improving governance in the country. In addition to the tax administration updates, he also mentioned ongoing efforts regarding the current account deficit, which has significantly reduced in recent years due to stabilisation policies implemented by the government and the State Bank of Pakistan. This included a decrease from 5.4% of GDP in fiscal year 2018 to a projected current account surplus during the first seven months of fiscal year 2025, largely driven by robust remittances. Aurangzeb noted that the foreign exchange reserves of the State Bank have been on an upward trajectory, increasing from $4.4 billion in fiscal year 2023 to $11.4 billion by the end of January 2025. Moreover, the finance minister addressed rumors regarding salary revisions for government employees, clarifying that he did not mention any pay scale revisions during the session. He reiterated the government’s commitment to addressing both economic challenges and improving the credibility of its institutions. The proposed ordinances, including the Income Tax (Amendment) Ordinance and others, aim to further enhance governance and operational efficiency within the administration.