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KARACHI: Pakistan intends to increase its tax-to-gross domestic product ratio from the existing 10.2 percent to 11 percent this year, Finance Minister Muhammad Aurangzeb said on Thursday, as Islamabad pushes for economic reforms.

Pakistan has lately introduced several reforms to ensure economic stability and to meet structural benchmarks under a $7 billion International Monetary Fund (IMF) program Islamabad secured last year.

The South Asian country has one of the lowest tax-to-GDP ratios in the region, despite a population of more than 240 million, and has often failed to meet its tax collection targets.

Speaking at the Atlantic Council in Washington, Aurangzeb outlined initiatives to bring agriculture, retail and real-estate sectors into the tax net, improve compliance through technology and AI-driven analytics.

“He reaffirmed the government’s commitment to raise the tax-to-GDP ratio from 10.2 percent to 11 percent this year, and to 13 percent over the medium term, ensuring fiscal sustainability,” the Pakistani finance ministry said.

In June, Prime Minister Shehbaz Sharif’s government set a record-high tax collection target of Rs14.13 trillion ($47.4 billion) for the fiscal year 2025–26, marking a 9 percent increase from the previous year. Officials say meeting this goal is essential to reducing reliance on external debt and ensuring long-term fiscal sustainability.

Since then, the prime minister has approved modern digital ecosystem for the revenue watchdog to increase its collection and the launch of simplified digital tax returns to increase compliance and widen the country’s narrow tax base.

Pakistan’s economy has lately shown some signs of stabilization under a $7 billion IMF bailout. The program helped ease fears of default, strengthen foreign reserves and stabilize the rupee after two years of severe fiscal stress.

Inflation has eased from record highs, and the government is moving ahead with privatization, tax and energy reforms, and digitalization drives, all aimed at restoring credibility among investors and lenders.

The finance minister said the government’s disciplined fiscal management has restored confidence, improved sovereign spreads and contributed to the first current account surplus in 14 years.

“On monetary and exchange rate policy, Senator Aurangzeb reaffirmed the government’s commitment to maintaining a competitive, market-based exchange rate under the oversight of the State Bank of Pakistan, adding that productivity gains and structural reforms are as vital as external price competitiveness in sustaining export growth,” the finance ministry said.

ISLAMABAD: Pakistan’s Senate Committee on National Food Security on Thursday approved an ordinance to create the National Agri-Trade and Food Safety Authority (NAFSA), aimed at attracting investment from ������Ƶ and other Gulf countries, as experts said agricultural exports could rise to $25 billion by adopting global best practices.

Agriculture accounts for about 19 percent of Pakistan’s gross domestic product, and the initiative is meant to align the country’s agricultural exports with international food safety and trade standards.

The reform follows years of criticism from trading partners over Pakistan’s failure to meet global sanitary and phytosanitary (SPS) requirements, rules that govern food safety, plant health and animal welfare, with the European Union (EU) repeatedly rejecting Pakistani consignments over compliance gaps.

Attending the committee meeting, Federal Food Security Minister Rana Tanveer Hussain said the government had worked extensively over the proposed authority, which he said would overhaul the agricultural export regulatory system.

“A board will be established for the authority in which all the provinces will be given representation as provinces are major stakeholders in Pakistan’s agriculture sector,” he said, adding that the director general will be appointed on merit with 20 years of relevant experience and educational qualification.

Speaking to Arab News, Ahsan Mehanti, CEO of Arif Habib Commodities, said the authority could support the country’s value-added agricultural exports.

“Pakistan’s agri exports go up to $8 billion [per annum],” he said. “Potentially, with global best practices, these exports can be over $25 billion in a short time with protection from flooding and proper technical and fertilizer use.”

Mehanti said Pakistan is planning to enhance agriculture exports to the Gulf countries in the near future.

Addressing issues such as the rejection of Pakistani exports by the EU over quality concerns, a government brief shared with the committee members said: “NAFSA will fill that gap by creating a single, modern regulatory framework to ensure quality, traceability and compliance.”

It added the authority would be responsible for regulating agricultural imports and exports to ensure that all traded goods meet quality and safety requirements.

According to a government document seen by Arab News, a 2024 inquiry into 72 rice export interceptions by the EU found Pakistan’s existing regulatory system, managed by the Department of Plant Protection (DPP) and the Animal Quarantine Department (AQD), was incapable of meeting global SPS compliance requirements.

“The steadily surging trend of the interceptions needs to be immediately checked by introducing a robust organizational apparatus in the form of NAFSA — an independent, SPS-compliant, efficient, corporate regulatory body,” the document said.

The new ordinance merges the DPP and AQD into NAFSA, transforming them into a corporate-style independent authority with administrative and financial autonomy.

Headquartered in Islamabad, NAFSA will be governed by a 19-member Board of Governors chaired by a government-appointed head.

Authorized officers under NAFSA will be empowered to inspect export goods, seize or detain shipments and prohibit unfit animal exports. They will also be able to transfer goods or animals to quarantine, conduct disinfection, testing and compliance surveys and seek police assistance when needed.

Violations such as exporting without certification, selling adulterated pesticides, importing diseased animals or failing to report plant diseases will attract penalties of up to Rs3 million ($10,800) and imprisonment of up to three years, depending on the severity.