ISLAMABAD: Finance Minister Muhammad Aurangzeb emphasized Pakistan’s strategic shift away from aid-based support towards trade- and investment-led engagement, particularly with Gulf Cooperation Council (GCC) countries, to ensure long-term economic sustainability. In a recent interview with CNN Business Arabia, Aurangzeb outlined the government’s vision, driven by Prime Minister Shehbaz Sharif, which reflects Pakistan’s renewed economic confidence and ongoing reform momentum.
Aurangzeb explained that over the past 18 months, Pakistan had implemented a comprehensive macroeconomic stabilization program that had yielded tangible results. He highlighted that inflation had been reduced to single-digit levels from an unprecedented 38%, and fiscal targets, including primary surpluses, had been met successfully. The finance minister noted that the country’s current account deficit had remained well within targeted limits, and foreign exchange reserves had stabilized, now covering around 2.5 months of imports.
The finance minister pointed out that two key international validations underscored Pakistan’s improving economic outlook. “All three international credit rating agencies have upgraded Pakistan’s ratings and outlook this year,” he said, adding that the country had also completed the second review under the IMF Extended Fund Facility, with the IMF Executive Board granting approval earlier this week.
These developments demonstrate growing international confidence in Pakistan’s economic management and reform trajectory, Aurangzeb emphasized.
Aurangzeb stressed that Pakistan’s macroeconomic stabilization had been achieved through a disciplined approach combining monetary and fiscal policies with ambitious structural reforms. He mentioned key areas of reform, including taxation, energy, state-owned enterprises, public financial management, and privatization, all aimed at consolidating stability and laying the foundation for sustainable growth.
The finance minister also highlighted significant progress in improving Pakistan’s tax-to-GDP ratio, which had increased to 10.3% during the last fiscal year. The government aims to raise this ratio to 11%, he said, through reforms aimed at widening the tax base by formalizing previously undertaxed sectors such as real estate, agriculture, and wholesale and retail trade.
We are leveraging technology and artificial intelligence to reduce leakages and deepen tax compliance, Aurangzeb stated, outlining the government’s efforts to modernize tax administration through people, processes, and technology reforms.
Additionally, the finance minister underscored efforts to improve governance in power distribution companies, reduce circular debt, and rationalize tariff regimes to make energy more competitive for industry. Rationalizing the tariff regime is essential to enabling industrial revival and fostering economic growth, he emphasized.
The finance minister expressed his gratitude for the longstanding support of GCC countries, including Saudi Arabia, the United Arab Emirates, and Qatar, acknowledging their critical role in supporting Pakistan through financing, funding, and cooperation at international financial institutions, such as the IMF.
Pakistan’s relationship with GCC countries is evolving into a new phase, one that focuses on trade expansion and investment flows, said Aurangzeb. He highlighted that remittances from the GCC countries, which reached approximately $38 billion last year, continue to play a crucial role in supporting Pakistan’s current account. These inflows are projected to rise to $41-42 billion this year, with more than half of the remittances originating from GCC countries.
Aurangzeb emphasized that Pakistan is actively engaging with GCC partners to attract investments in priority sectors, including energy, oil and gas, minerals and mining, artificial intelligence, digital infrastructure, pharmaceuticals, and agriculture.
In his interview, Aurangzeb expressed optimism about the ongoing discussions regarding a Free Trade Agreement (FTA) with the GCC, describing the talks as being in an advanced stage. He reiterated that Pakistan’s future lies in fostering trade and investment partnerships rather than relying on aid. We are fully committed to translating this vision into reality, the finance minister concluded.
Aurangzeb also emphasized the critical role of foreign direct investment (FDI) in supporting higher GDP growth, creating employment opportunities, and delivering shared economic benefits for Pakistan and its partners. “FDI is the key to unlocking Pakistan’s potential and creating a sustainable and prosperous future,” he said, outlining the government’s commitment to implementing policies that will make Pakistan an attractive destination for global investors.