Finance Minister Briefs Moody’s on Pakistan’s Economic Reforms and Stability

ISLAMABAD: Muhammad Aurangzeb, the Federal Minister for Finance and Revenue, engaged virtually with Moody’s Rating Agency (Moody’s) on Tuesday. The discussion centered on Pakistan’s macroeconomic prospects, the government’s reform plans, and overall financial resilience.

According to an official statement from the Finance Division, the Minister for Finance and Revenue, accompanied by Minister of State for Finance Bilal Azhar Kayani, the Governor of the State Bank of Pakistan, and high-ranking officials from the Finance and Revenue Divisions, along with other relevant ministries, briefed Moody’s. The briefing highlighted the nation’s increasingly stable economy, reform initiatives, and renewed engagement with global markets.

The finance minister updated the Moody’s team on the notable advancements Pakistan has achieved in enhancing its economic stability and establishing a foundation for sustainable and inclusive expansion.

The statement highlighted the successful conclusion of the final IMF review under the Stand-By Arrangement, which included the allocation of the second tranche, alongside advancements within the Resilience and Sustainability Facility (RSF). These milestones have significantly bolstered confidence in Pakistan’s economic management.

The minister emphasized several structural reforms implemented by the government to ensure lasting stability. These encompassed responsible fiscal policies in the recent budget, tariff and trade liberalization aimed at boosting exports, and focused efforts to streamline spending. Ongoing talks with the United States regarding preferential tariff benefits were also mentioned as showing encouraging progress.

The meeting further detailed Pakistan’s renewed involvement with global financial markets, including successfully securing $1 billion in commercial funding from the Middle East, plans for a debut Panda bond issuance, and the country’s intention to explore opportunities in the Eurobond and other global debt markets as credit ratings improve.

Aurangzeb and his team presented convincing evidence of macroeconomic improvement, citing a significant decrease in inflation, a reduction in the policy rate, stabilization of the exchange rate, a current account surplus, and a rise in foreign exchange reserves, which exceeded $14 billion by the end of June. Enhanced remittance inflows and export results were also mentioned as indicators of strength and restored investor trust.

The Moody’s team received an extensive overview of Pakistan’s reform efforts, with particular attention to enhancing the tax-to-GDP ratio via technology-driven improvements to tax administration, system digitization, and stronger enforcement strategies.

The minister stressed that the government, under the direct supervision of the prime minister, who holds frequent meetings on tax reform, is taking actions to broaden the tax base, address revenue leakages, and strengthen compliance. He noted that the Rs2 trillion revenue increase achieved this year was the result of independent initiatives, and the government is determined to achieve a tax-to-GDP ratio of 13 to 13.5 percent in the coming years.

The finance minister also responded to questions from the Moody’s team and reaffirmed Pakistan’s dedication to continuing macroeconomic reforms, particularly in privatization, restructuring state-owned enterprises (SOEs), and government right-sizing.

Aurangzeb conveyed his optimism that the positive macroeconomic indicators and reform advancements would be well-received by rating agencies, which would further reinforce Pakistan’s position to access international markets and deepen its external sector stability.

He affirmed that Pakistan is prepared to continue its path of resilience, reform, and recovery to stimulate sustainable, inclusive, and export-focused economic growth.