Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb said the government was committed to maintaining macroeconomic stability and steering the economy from stabilization towards sustainable growth.
He stressed the need to stay the course on structural reforms and strengthen the private sector’s role through privatization and public-private partnerships (PPPs).
Addressing an event titled “Mobilizing Private Capital: National Strategic Dialogue on PPPs and Privatization” organized by the Asian Development Bank (ADB), the minister said Pakistan had made significant progress in addressing the structural twin deficit, which had declined from 12.5 percent of GDP to 2.6 percent over the last two and a half to three years.
He said progress on the fiscal side was driven by increased revenues following the transformation of the Federal Board of Revenue (FBR) in terms of people, processes and technology, with revenues growing by 40 percent over the last two years.
At the same time, he said, the government was working to reduce expenditures, including those related to running the civil government and debt servicing, while acknowledging that there was still a long way to go.
Aurangzeb said the FBR tax-to-GDP ratio had improved from 8.8 percent to 10.3 percent and needed to reach 11 to 12 percent in the short term. On the external side, he said the country’s position had been supported by strong remittance flows and growth in IT export services, which reached $4.6 billion last year, including $1.6 billion contributed by freelancers.
However, he said goods exports had remained broadly flat at around $30 billion and that this was an area requiring greater focus going forward.
The minister said reforms in the energy sector, state-owned enterprises (SOEs) and privatization were interlinked, adding that structural reforms in the energy sector were essential for progress on SOEs and privatization.
He said 27 transactions had been given to the Privatization Commission, while some SOEs that were “beyond repair” had been closed down, including Utility Stores Corporation, PASCO and PWD. He said debt servicing, reduction of public debt and pension reforms were also part of the government’s public finance reform agenda.
Aurangzeb said Pakistan had received three sovereign upgrades since April 2025, enabling it to return to international capital markets after a hiatus of about four years.
He said the order book for the latest $3 billion transaction was twice the amount issued, with a diverse investor base comprising Asian, Middle Eastern, European and US investors.
“This is a great vote of confidence in terms of our direction of travel as far as the economy is concerned,” he said.
Looking ahead, the minister said the government aimed to achieve economic growth of more than four percent during the current fiscal year and increase foreign exchange reserves from $18.4 billion as of June 30 to $21 billion by the end of the fiscal year. He said the government was closely monitoring the ongoing conflict and its potential impact on growth and inflation projections.
The minister said the government was also working to reduce its over-reliance on the banking system for borrowing needs by developing debt capital markets and diversifying the investor base, including insurance companies and other non-bank financial institutions.
He said the Ministry of Finance was working on a rupee-denominated, dollar-settled bond and was also exploring the possibility of tokenizing some existing Eurobond debt, following what Hong Kong had done.
Aurangzeb said greater participation of local investors and conglomerates in privatization transactions would send a strong signal to foreign investors, adding that conglomerates were increasingly willing to work together through consortiums.
On PPPs, he welcomed the decision to bring the relevant initiatives under one umbrella through the Privatization Commission, saying successful models from the provinces, particularly Sindh, could be used at the federal level.
He said the government was also seeking to facilitate private equity and venture capital investment, which involved taxation and regulatory aspects.
The minister stressed the need for a whole-of-government approach to mobilizing private capital, saying the government was fully behind both privatization and public-private partnership initiatives.
