Pakistan poised to enter growth phase after stability, says finance minister

KARACHI: Finance Minister Muhammad Aurangzeb said on Monday Pakistan was poised to soon enter into a growth phase after having achieved macroeconomic stability over the past two years. The minister expressed confidence the growth momentum would sustain and not to fall into the typical boom-and-bust cycle this time.

“We have achieved macroeconomic stability,” Senator Aurangzeb said after inaugurating PHC Job Fair and Education Expo 3.0 held at Karachi Expo Centre on Monday.

“We will see the country moving towards sustainable growth.”

To recall, Pakistan recorded economic growth of 2.7% in FY25 compared to 2.5% in FY24 and a contraction of 0.21% in FY23. The government has set growth target at 4.2% for the current fiscal year 2025-26.

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“The Pakistan Stock Exchange (PSX) and companies listed at the bourse are doing well in the wake of improvement in economic fundamentals. Firms are announcing good financial results,” he said.

The minister said three global credit rating agencies, namely Fitch, S&P, and Moody’s, had upgraded Pakistan’s rating and they were on the same page after quite a long time.

“This is their vote of confidence that we are moving in the right direction.”

The return of stability was achieved as both the government and the central bank moved hand-in-hand. The government ensured fiscal responsibility and the central bank gave a prudent monetary policy, ensuring build-up in foreign exchange reserves, running a market based rupee-dollar exchange rate and cut half interest rate to 11% in the past one-year in the wake of significant reduction in inflation reading, according to the minister.

“There is a need to improve export competitiveness. The government is rationalising exporter tariffs to support sustainable economic growth. World Bank says the tariff reforms is the East Asia moment for Pakistan.”

As far as the growth was concerned, he continued, there is “no immediate switch”.

“We have to move forwards towards sustainable and exclusive growth because gold rush is not a good idea. We had faced a number of times the boom-and-bust cycle. The more we put feet on the paddle and tried to accelerate the economy (rapidly), we were in trouble,” he said.

Pakistan’s real GDP growth to accelerate to 3.5% by 2027, Fitch says

The minister said the financial cost was moving in the right direction.

“The energy cost is beginning to move in the right direction. Rationalisation of taxes depend on the availability of fiscal space.”

“The government is aiming to expand the tax net. We are trying to cut the tax rates for manufacturing sector and salaried class people to reduce their burden, Aurangzeb said. He, however, found the corporate sector missing from the expo, saying “as we move forward from stability to sustainable growth, it is the private sector which has to lead the country”.

Pakistan’s real GDP growth to accelerate to 3.5% by 2027, Fitch says