Pakistan's finance minister defends McKinsey's tax digitalization contract

Finance Minister Muhammad Aurangzeb defended the hiring of the US-based consulting firm McKinsey & Company during a National Assembly session on Monday. Lawmakers had raised concerns about the selection of an international company for the digitalization of Pakistan's tax system. Aurangzeb stressed that McKinsey was chosen through a "transparent competitive" process. He explained that seven parties applied for the project, which aims to transform the tax authority's operations by enhancing technology and reducing corruption. The minister noted that McKinsey is helping design and implement the project but clarified that it would not cost the national treasury anything, as the Gates Foundation is funding it. During the session, Aurangzeb projected that foreign remittances could rise to between $35 billion and $36 billion this year, up from around $30 billion last year. He detailed efforts to encourage remittances through formal channels by educating overseas workers about available options and collaborating with financial institutions. In addition, the National Assembly extended two ordinances for 120 days, covering income tax amendments and the Federal Board of Intermediate and Secondary Education. New bills related to anti-dumping duties and extradition were also introduced. Regarding government employees' salaries, the minister clarified that there were no current plans to revise pay scales, despite some news reports. Instead, he mentioned that increasing rental limits for state employees was under consideration. Aurangzeb also reported improvements in the current account deficit, which has decreased over recent years. The government's fiscal measures and stabilization policies have contributed to this improvement, leading to a surplus in the current account during the first seven months of the current fiscal year. He noted an increase in the State Bank of Pakistan's foreign exchange reserves, which rose significantly over the past year.