Pakistan’s government is committed to transforming its economic structure by shifting from an aid-driven model to one led by investment, said Finance Minister Mohammad Aurangzeb. Speaking at the event “Pakistan: From Stabilisation to Sustainable Growth via Structural Reforms,” hosted by Jihad Azour, Director of the Middle East and Central Asia Department at the IMF, Aurangzeb stressed the necessity of executing comprehensive reforms, including expanding the tax base, energy reforms, and privatization of state-owned enterprises (SOEs). He emphasized that Pakistan must address its energy issues and bring untaxed and undertaxed sectors into the tax net to achieve sustainable growth.
Aurangzeb explained that the country’s historical reliance on imports has caused recurring boom and bust cycles, underscoring the need to pivot the economy towards export-led growth. He emphasized the importance of reforming Pakistan’s economy for its long-term viability, as external financial assistance is no longer a feasible solution. “Our focus must shift from aid dependency to investment-driven growth,” he added.
The finance minister reiterated that the government’s role should be limited to providing a stable policy framework, allowing the private sector to lead the country’s growth. He also revealed that the government plans to eliminate the term “non-filer” from the tax system and enforce stronger compliance measures.
On fiscal policy, Aurangzeb mentioned that the government is moving loss-making SOEs toward privatization and reducing the size of the federal workforce by leaving 150,000 positions unfilled, which will positively impact the budget. He also highlighted the urgent issue of unfunded pension liabilities.
In a Bloomberg interview, Aurangzeb noted that China had responded positively to Pakistan’s request for debt restructuring under the Belt and Road Initiative, though discussions remain in the early stages. The minister highlighted the recent stability brought about by a $7 billion IMF loan and the rollover of $16 billion in debt from international partners, including China. He underscored the need to maintain fiscal discipline to raise the tax-to-GDP ratio from under 10% to 13.5%, with a focus on broadening the tax base in sectors such as retail, real estate, and agriculture.
Aurangzeb also urged development partners to collaborate on key challenges facing developing countries, particularly climate change, population growth, and child malnutrition. At the G-24 Ministers and Governors meeting, he called for addressing the debt burdens of developing nations, climate action, and increased representation of these countries in global financial institutions.
During his meetings with Makhtar Diop, Managing Director of the International Finance Corporation (IFC), Aurangzeb discussed projects such as Islamabad airport bids, raising local currency through offshore bonds, and privatizing energy distribution companies and housing finance institutions. He also extended an invitation for Diop to visit Pakistan.
Participating in the Vulnerable Twenty (V20) Ministerial Dialogue, Aurangzeb outlined Pakistan’s Climate Prosperity Plan, calling for global financial reforms to ensure that debt contributes to climate resilience. He urged Multilateral Development Banks to expand grant and concessional financing opportunities and supported the IMF’s official recognition of the V20 as an intergovernmental group.
