Pakistan Poised for Growth Phase After Macroeconomic Stability, Says Finance Minister

Finance Minister Muhammad Aurangzeb stated on Monday that Pakistan is on the verge of entering a growth phase, following two years of macroeconomic stabilization. The minister voiced optimism that the growth trajectory will be sustainable, avoiding the boom-and-bust cycles of the past.

“We have achieved macroeconomic stability,” Aurangzeb commented during the inauguration of the PHC Job Fair and Education Expo 3.0 at the Karachi Expo Centre.

“The nation is moving towards a phase of sustainable expansion,” he added.

Pakistan’s economy expanded by 2.7% in FY25, improved from 2.5% in FY24, after contracting by 0.21% in FY23. The government has set an economic growth target of 4.2% for the current fiscal year 2025-26.

Positive Economic Indicators

Aurangzeb highlighted the positive performance of the Pakistan Stock Exchange (PSX) and listed companies, attributing it to improved economic fundamentals. He noted that companies are reporting strong financial results.

He mentioned that three major global credit rating agencies—Fitch, S&P, and Moody’s—have upgraded Pakistan’s credit rating, indicating a consensus after a considerable period.

“This serves as a vote of confidence, signaling that we are progressing in the right direction.”

The return of stability was attributed to coordinated efforts by the government and the central bank. The government focused on fiscal responsibility, while the central bank implemented a prudent monetary policy, contributing to increased foreign exchange reserves, a market-based rupee-dollar exchange rate, and a reduction in the interest rate to 11% over the past year, driven by a significant decrease in inflation.

Focus on Export Competitiveness

“Enhancing export competitiveness is essential. The government is streamlining exporter tariffs to foster sustainable economic growth. The World Bank views these tariff reforms as a pivotal opportunity for Pakistan, akin to East Asia’s growth moment.”

Regarding growth, he clarified, “There is no immediate acceleration.”

“We must strive for sustainable and inclusive growth, as rapid booms are not beneficial. We have experienced numerous boom-and-bust cycles. Overly aggressive attempts to accelerate the economy have historically led to difficulties.”

The minister noted that financial costs are trending positively.

“Energy costs are also beginning to align in the right direction. The rationalization of taxes depends on available fiscal capacity.”

Aurangzeb emphasized the government’s commitment to broadening the tax base and reducing tax rates for the manufacturing sector and salaried individuals to alleviate their burden. However, he observed the absence of the corporate sector at the expo, stressing that as Pakistan transitions from stability to sustainable growth, the private sector must take the lead.