Finance Minister Muhammad Aurangzeb speaks during an interview with Reuters at the 2025 IMF and World Bank Annual Spring Meetings in Washington, DC, US, April 25, 2025. Photo: Reuters/File
ISLAMABAD:
Finance Minister Muhammad Aurangzeb has projected Pakistan’s economic growth between 3.5 and 4 percent for the current fiscal year, despite the severe impact of recent monsoon floods that devastated farmlands, displaced more than four million people and killed more than 900 across the country.
In an interview with Bloomberg, the finance minister said initial assessments showed damage to the country’s rice and cotton sectors, adding that more detailed damage assessments would be made in the coming months.
“This will affect our GDP growth figure,” he said. “My own opinion is that it will still be above 3.5% in the first few days, but between 3.5 and 4.”
Before the floods, the Pakistani government projected economic growth of 4.2% for the fiscal year ending next June.
“For us, climate change is not academic,” he said. “We are living it and the recent floods are actually a reflection of that.”
Pakistan’s economy has been stabilizing after a near default on public debt two years ago. The country will receive around $1.2 billion in loans from the International Monetary Fund after signing a staff-level agreement with the IMF, following a successful review of its $7 billion loan program.
The third tranche of the loan is expected to help boost the country’s $407 billion economy, which has stabilized after it narrowly avoided a public debt default two years ago.
The IMF estimates that the country’s economy will grow between 3.25% and 3.5% in the fiscal year to June despite the destructive monsoon rains.
Pakistan predicts inflation could cross the upper limit of its 5%-7% target range this year, cooling from a record 38% two years ago.
Meanwhile, Pakistan and the United States have taken steps to rebuild military and economic ties after years of tension.
Economic ties have grown with a trade deal that imposed a 19% tariff on Pakistani goods, lower than regional peers and well below the 50% tariff on rival India, Bloomberg reported.
The Finance Minister also said Pakistan planned to issue its inaugural tranche of yuan-denominated debt – known as Panda bonds – in late November or early December.
The issuance of 250 million dollars is key to diversifying the country’s financing channels, he stated. “We have tapped the US dollar market, we have tapped the euro, we have tapped the Islamic sukuk, but we had not tapped into the second largest and deepest capital market in the world,” he said.
