- Inflation falls to single digits after a peak of 38%.
- Primary surpluses and reserves strengthen external reserves.
- Rating agencies are raising Pakistan’s outlook this year.
Finance Minister Muhammad Aurangzeb said Pakistan is moving away from aid-based support towards trade and investment-focused engagement, with an emphasis on deeper economic partnerships with Gulf Cooperation Council (GCC) countries.
In an interview with CNN Arabia AffairsAurangzeb said the strategic shift, which he said was clearly articulated by Prime Minister Shehbaz Sharif, reflects Pakistan’s renewed economic confidence and reform momentum, aiming for long-term economic sustainability.
He said Pakistan had remained on a comprehensive macroeconomic stabilization program over the past 18 months, producing what he described as “tangible and measurable” results. Inflation, which he said had peaked at an unprecedented 38%, fell to single-digit levels.
Aurangzeb also highlighted primary surpluses, a current account deficit “well within” targeted limits, a stabilized exchange rate and foreign exchange reserves improving to around 2.5 months of import cover, which he said reflects strengthening external buffers.
The finance czar cited two external validations of Pakistan’s improving prospects. He said all three international credit rating agencies had upgraded Pakistan’s rating and outlook this year, and Pakistan had completed the second review under the International Monetary Fund’s (IMF) Extended Financing Facility (EFF), with the IMF Executive Board granting approval earlier this week, developments he said reflected growing international confidence in Pakistan’s economic management and reform trajectory.
The Finance Minister said macroeconomic stabilization was achieved through a coordinated approach combining disciplined monetary and fiscal policies with an ambitious structural reform program. He said reforms were underway in the areas of taxation, energy, state-owned enterprises, public financial management and privatization to consolidate stability and lay the foundation for sustainable growth.
On taxation, the finance minister said Pakistan’s tax-to-GDP ratio improved from 8.8 percent at the start of the reform program to 10.3 percent in the last fiscal year, with a clear increase towards 11 percent.
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 integrating previously undertaxed but economically important sectors, including real estate, agriculture, and wholesale and retail trade, into the formal network.
He said the plan also includes strengthening compliance by reducing leakages through production monitoring systems and AI-based technologies, as well as people, process and technology reforms to transform tax administration.
In the energy sector, Aurangzeb highlighted efforts to improve governance in distribution companies, tap private sector expertise, advance privatization and reduce circular debt, which he said has long constrained the power sector. He said streamlining the tariff regime is key to making energy more competitive for industry, supporting industrial recovery and economic growth.
The senator acknowledged the long-standing support of GCC countries including Saudi Arabia, UAE and Qatar, highlighting their role in supporting Pakistan through funding, funding and cooperation with international financial institutions such as the IMF. He said relations are now moving towards a new phase focused on trade expansion and investment flows.
He said remittances continue to play a critical role in supporting the current account, with inflows reaching around $38 billion last year and expected to reach $41-42 billion this year, with more than half coming from GCC countries.
Looking ahead, Aurangzeb said Pakistan was 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 in concluding a free trade agreement with the GCC, saying discussions were at an advanced stage.
Reiterating the government’s focus, the Finance Minister said Pakistan’s future lies in promoting trade and investment partnerships rather than relying on aid, arguing that foreign direct investments in productive sectors would support higher GDP growth, generate employment and bring shared economic benefits to Pakistan and its partners.
He said the government is fully mobilized to translate this vision into reality.
