- Inflation falls to single digits from its peak of 38%.
- Primary surpluses and reserves strengthen external reserves.
- Rating agencies upgrade Pakistan’s prospects this year.
Finance Minister Muhammad Aurangzeb said Pakistan is moving away from aid-based support towards trade and investment-driven engagement, focusing on deeper economic partnerships with Gulf Cooperation Council (GCC) countries.
In an interview with CNN Business ArabiaAurangzeb said the strategic shift, which he said has been clearly articulated by Prime Minister Shehbaz Sharif, reflects Pakistan’s renewed economic confidence and momentum for reforms, aimed at long-term economic sustainability.
He said Pakistan has been on a comprehensive macroeconomic stabilization program for the past 18 months, achieving what he described as “tangible and measurable” results. Inflation, which he said had reached an unprecedented high of 38%, has fallen to single-digit levels.
Aurangzeb also highlighted primary surpluses, a current account deficit “well within” expected limits, a stabilized exchange rate and foreign exchange reserves that improved to around 2.5 months of import coverage, which he said reflected strengthening external reserves.
The finance czar cited two external validations of Pakistan’s improving prospects. He said all three international credit rating agencies have upgraded Pakistan’s ratings and outlook this year, and that Pakistan has completed the second review under the International Monetary Fund’s (IMF) Expanded Fund Facility (EFS), with the approval of the IMF Executive Board earlier this week, developments he said signal growing international confidence in Pakistan’s economic management and reform record.
The Finance Minister said macroeconomic stabilization has been achieved through a coordinated approach that combines disciplined monetary and fiscal policies with an ambitious structural reform agenda. He said reforms are being carried out in the tax, energy, state-owned enterprises, public financial management and privatization sectors to consolidate stability and lay the foundation for sustainable growth.
On taxes, the Finance Minister said Pakistan’s tax-to-GDP ratio has improved from 8.8% at the start of the reform program to 10.3% in the last fiscal year, with a clear path towards 11%.
He said the government’s goal is to achieve a level of tax collection that ensures fiscal sustainability in the medium and long term by broadening the tax base and bringing previously undertaxed but economically significant sectors into the formal network, including real estate, agriculture, and wholesale and retail trade.
He said the plan also includes deepening compliance by reducing leakages through production monitoring systems and AI-enabled technologies, along with reforms in people, processes and technology to transform tax administration.
In the power sector, Aurangzeb highlighted efforts to improve governance in distribution companies, bring in private sector expertise, advance privatization and reduce circular debt, which he said has long constrained the power sector. He said that rationalizing the tariff regime is essential to make energy more competitive for the industry, supporting industrial revival and economic growth.
The senator acknowledged the long-standing support of GCC countries, including Saudi Arabia, the United Arab Emirates and Qatar, and highlighted their role in supporting Pakistan through financing, financing and cooperation in international financial institutions such as the IMF. He said the relationship is now evolving into a new phase focused on expanding trade and investment flows.
He said remittances continue to play a key role in supporting the current account: inflows reached around $38 billion last year and are expected to rise to $41-42 billion this year, with more than half originating from GCC countries.
Looking ahead, Aurangzeb said Pakistan is engaging GCC partners to attract investments in priority sectors including energy, oil and gas, minerals and mining, artificial intelligence, digital infrastructure, pharmaceuticals and agriculture. He also expressed optimism about progress on a Free Trade Agreement with the GCC, saying discussions were at an advanced stage.
Reiterating the government’s direction, the Finance Minister said Pakistan’s future lies in fostering trade and investment partnerships rather than relying on aid, arguing that foreign direct investment in productive sectors would support higher GDP growth, generate employment and deliver shared economic benefits for Pakistan and its partners.
He said the government is fully mobilized to turn the vision into reality.
