Germans urged to tap into manufacturing

ISLAMABAD: Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb has reaffirmed Pakistan’s strong commitment to macroeconomic stability, structural reforms, and investor facilitation during a meeting with a delegation of German investors and businessmen led by German Ambassador to Pakistan Ina Lepel.

During the meeting held here on Wednesday, the Finance Minister outlined the government’s steady progress in restoring fiscal and external stability, achieving a stable currency and moderating inflation, and securing renewed confidence from international financial institutions and credit rating agencies.

He emphasized that Pakistan’s economic strategy now rests on deep structural reforms — particularly in taxation, energy, privatisation, and public finance — aimed at building a sustainable and competitive economy.

Aurangzeb briefs German envoy over IMF review mission

Highlighting improving investor sentiment, ongoing privatisation efforts, and plans to re-enter international capital markets, Senator Aurangzeb invited the German business community to explore the growing opportunities in Pakistan’s key sectors, especially technology, energy, and manufacturing.

Welcoming the delegation, the Finance Minister appreciated the role of the Pakistan-based AHK German Bilateral Chamber of Commerce in bringing together both established and new German investors to explore Pakistan’s evolving business landscape.

He briefed the delegation on Pakistan’s recent macroeconomic progress and reform momentum, sharing insights from his recent visit to Washington DC, where he attended the IMF-World Bank Annual Meetings and held extensive discussions with multilateral institutions, global investors, credit rating agencies, and international counterparts.

Senator Aurangzeb highlighted that Pakistan continues to consolidate its gains on the macroeconomic stability front. The currency remains stable, foreign exchange reserves currently provide about two and a half months of import cover, and are projected to reach three months by the end of the fiscal year. Inflation is expected to remain within the range of 5 to 7 percent for the ongoing fiscal year, supported by a downward trend in the policy rate.

He underscored that Pakistan’s economic progress has been externally validated by three major credit rating agencies, including Fitch, S&P, and Moody’s, all of which have upgraded the country’s outlook in recent months. The IMF’s staff-level agreement announced last week, following a comprehensive review mission, further reflects international confidence in Pakistan’s policy direction.

The Minister emphasized that Pakistan’s economic stabilization must be accompanied by deep structural reforms in key areas, including taxation, energy, state-owned enterprises, privatization, and public finance. He stated that broadening and deepening the tax base remains a top priority, with the tax-to-GDP ratio targeted to increase from 10.2% to 11% this fiscal year, and up to 13% in the coming years.

On the energy sector, Senator Aurangzeb stressed the government’s commitment to sustainable reform and privatization aimed at reducing losses and improving recoveries. He mentioned that 34 state-owned enterprises have been handed over to the Privatization Commission, with significant progress already achieved, including the recent successful acquisition of a state-owned entity by a UAE conglomerate.

The privatization of Pakistan International Airlines (PIA) is progressing, with four large international conglomerates currently undertaking due diligence.

He further highlighted ongoing reforms in public finance, including restructuring of pensions and rationalization of the federal government’s footprint through closure of some non-performing entities, politically difficult but fiscally essential steps.

Senator Aurangzeb also discussed Pakistan’s re-entry into international capital markets, including plans to issue the inaugural Panda Bond in China’s deep capital market and to return to the Eurobond market under the Global Medium-Term Note (GMTN) program in 2026.

He emphasized that Pakistan’s improving macroeconomic fundamentals, coupled with positive geopolitical developments and renewed engagement with key partners, including Europe, China, the United States, and Gulf countries, are creating a favourable environment for foreign direct investment and business-to-business partnerships.

Senator Aurangzeb also responded to various questions from the German delegation, elaborating on the government’s ongoing initiatives to promote IT exports, facilitate the repatriation of profits and dividends by foreign companies, and strengthen investor confidence in Pakistan’s economic trajectory.

Copyright Business Recorder, 2025