Aurangzeb optimistic about economic trajectory amid positive indicators

Finance Minister Muhammad Aurangzeb expressed confidence about Pakistan’s economic trajectory during the Economic Coordination Committee (ECC) meeting on Wednesday.

Highlighting the key economic indicators, the minister noted a significant current account surplus, rising foreign exchange reserves, and declining inflation rate as evidence of improving macroeconomic stability.

Pakistan’s current account posted a surplus after 10 years, he said.

“This comes on the back of a 35% increase in remittances YoY,” said Aurangzeb, adding that remittances are expected to hit $35 billion by the fiscal year-end.

“Moreover, Roshan Digital Account (RDA) inflows have crossed $9 billion,” he said.

Aurangzeb noted that the country’s foreign exchange reserves, once covering only two weeks of import cover have increased to 2.6 months of import cover.

“We are optimistic that by the end of this fiscal, the forex reserves will touch 3 months of import cover.

“This is an important indicator for the rating agencies, as we want to move towards a single B rating,” the finance minister stated.

Aurangzeb said the inflation rate declined to 4.9% in November, the lowest in 6.5 years, whereas, the policy rate has reduced to 13% following the Monetary Policy Committee’s (MPC) decision.

On Monday, the MPC of the State Bank of Pakistan (SBP) reduced the key policy rate by 200 basis points to take it down to 13%. This was the fifth successive cut since June 2024 when the rate stood at 22%.

Aurangzeb, on Wednesday, shared that the KIBOR rate “is a little below 12%.”

“Large companies are now borrowing at KIBOR minus rates, which is even below double digits,” he said.

The minister shared that industrial participants look at this as a positive development. “Their debt servicing cost has been halved,” he said.

The finance minister reiterated that the macroeconomic stability “ultimately has to help out the real economy”.

Citing the recent OICCI survey, Aurangzeb said that business confidence has been growing.

“Macroeconomic stability is the foundation, which will pave the way forward for sustainable growth,” the minister said, adding that the government is confident that the progress would continue, paving the way for sustainable growth.