FBR No Longer Responsible for Federal Budget Preparation, Confirms Finance Minister

In a significant policy shift, Finance Minister Muhammad Aurangzeb announced on Monday that Pakistan’s Tax Policy Office will no longer operate under the Federal Board of Revenue (FBR) and will instead come under the Ministry of Finance.

“The Tax Policy Office has now moved into the Finance Division. FBR has nothing to do with the policy. The next year’s budget to be presented in 2026 (for FY27) will be led by the Finance and Tax Policy Office, not the FBR,” Senator Aurangzeb stated while addressing a workshop titled ‘Unlocking Capital Market Potential for Banks’, organized by the Securities and Exchange Commission of Pakistan (SECP) and the Pakistan Banks Association (PBA).

The finance minister also revealed that the government is finalizing an industrial policy aimed at creating an enabling environment to accelerate industrialization. He credited Haroon Akhtar, Special Assistant to the Prime Minister, for spearheading efforts to push the policy through the cabinet for approval.

“This is an important element of how we are going to move from stability to sustainable growth. These underlying pillars are going to be critical,” Aurangzeb said. He added that the government has already introduced policies in recent months for tariffs, electric vehicles, a cashless economy, and the digital sector.

Aurangzeb highlighted the government’s focus on tariff reforms, particularly for export industries, as part of its broader strategy to enhance competitiveness. He emphasized the need to reduce customs duties, additional customs duties, and regulatory duties over the next four to five years.

“This is essential to improve export competitiveness and to eliminate the protection we’ve provided to certain industries for far too long,” he said.

Aurangzeb clarified that the reforms are a home-grown initiative, developed with the assistance of institutions like the World Bank, and not influenced by the International Monetary Fund (IMF).

“I want to be very clear: the IMF has nothing to do with this. Tariff reforms are entirely a government-driven agenda to make our industries more competitive,” he asserted.

The minister acknowledged resistance from the finance ministry and FBR, which fear that reducing tariffs will hurt revenue collection. However, he urged policymakers to adopt a long-term perspective.

“We have to get out of this short-term thinking. If we are to grow and support competitiveness, we need to focus on what’s right for the country over the next four to five years,” he said.

Aurangzeb expressed disappointment over the absence of the corporate sector at the workshop, despite its critical role in developing capital markets. He emphasized that corporations are key players in mobilizing funds through debt and equity in the capital markets.

To address this gap, the finance minister proposed the formation of a Capital Market Development Council to mobilize funds for development through domestic capital markets, such as the Pakistan Stock Exchange (PSX).

“The council should include key stakeholders like the SECP, the State Bank of Pakistan, PBA, corporations, insurance companies, and provincial representatives, as much of the execution power now lies with the provinces,” he suggested.