Finance Minister Muhammad Aurangzeb on Monday said Pakistan’s economy has entered a phase of stabilisation, as the government pushes ahead with broad-based structural reforms across taxation, energy, privatisation, and digitalisation to shift towards sustainable and inclusive growth.
Addressing a press conference alongside key cabinet members, Aurangzeb cited recent credit rating upgrades by global agencies and a staff-level agreement with the International Monetary Fund (IMF) as validation of Pakistan’s improving economic fundamentals.
The finance minister said that the government has “made significant progress in respect to macroeconomic stability”.
“Pakistan’s credit rating upgrade from three global credit rating agencies, alongside a staff-level agreement with the IMF, is the external validation that we are moving in the right direction”.
The press conference was led by Aurangzeb, Federal Minister for Power Awais Ahmad Khan Leghari, Federal Minister for IT & Telecom Shaza Fatima Khawaja, Advisor to PM on Privatisation Muhammad Ali, to highlight the progress made under the government’s economic reform agenda across key sectors including taxation, energy, privatization, Digital Pakistan, public finance, rightsizing of government, and fiscal and debt management.
He said that the government now intends to move towards “sustainable and inclusive growth”.
The finance minister said that it is time to leverage this macroeconomic stability alongside geopolitical tailwinds “into trade and investment flows”.
He said that external reforms in various sectors, including energy, SoE, and privatisation, are currently being implemented.
“These are the areas consistently highlighted by analysts, think tanks, and our bilateral and multilateral partners,” he added.
To a query, Aurangzeb admitted that Pakistan’s trade deficit has increased by 9%. ”However, remittances are providing us with a cushion. We expect remittances to hit $41-42 billion by the end of this fiscal year,” he said.
Aurangzeb said the current account deficit, which stands at $0.5 billion, remains “very manageable”.
Taxation reforms
On taxation reforms, Federal Board of Revenue (FBR) Chairman Rashid Mehmood Langrial shared that Pakistan’s tax-to-GDP ratio has increased by 1.49% in the last year.
Pakistan’s tax-to-GDP ratio is targeted to grow to 18% by 2028, which includes provincial revenue and PDL [petroleum development levy], which is a 5.79 percentage point increase from 2025, he said.
“Of this 18% tax-to-GDP ratio, 15% would be made up by FBR and 3% from provinces,” said Langrial. “There is a lot of soul searching, which has to take place on the provincial level,” he added.
The FBR chief said that the number of individual tax filers increased by 18% this year compared to last year, an increase from 4.9 million to 5.8 million. “This is a significant increase,” he said.
Langrial said that despite a massive tax shortfall of nearly 275 billion in July-October 2025-26, the government does not intend to impose contingency measures.
FBR provisionally collected Rs3,837 billion during July-October (2025-26) against the assigned target of Rs4,109 billion.
Langrial, citing data, said that the income tax gap of top 1 percent income earners is Rs1.2 trillion, while the total income tax gap stands at Rs1.7 trillion.
Energy sector
On energy sector reforms, Federal Minister for Power Awais Ahmad Khan Leghari said the incumbent government targets to reduce electricity rates for consumers.
The minister said that Pakistan’s energy cost stands at Rs9.97 per unit, which is internationally competitive. However, the capacity payments remain high.
He said the government targets to operationalize CTBCM [Competitive Trading Bilateral Contract Market] in January-February. “This is going to be the biggest reform in Pakistan’s history”.
Under the CTBCM, the government would no longer purchase electricity, he said.
“For the first time in history, a plan is in place to eliminate Rs1.2 trillion circular debt in the next six years,” Leghari said.
The minister said the government is aggressively rolling out automation in the power sector. “In the next three years, the entire landscape of metering in Pakistan will be overhauled,” he said, adding that via automatic metering, consumers would be provided a pre-paid billing facility.
Leghari said that the government renegotiated agreements with Independent Power Producers (IPPs) to reduce costs.
Privatisation front
On privatisation reforms, Advisor to PM on Privatisation Muhammad Ali said the government remains committed “at the highest level” on this front.
“Commitment and capacity building are already in place,” Ali said, adding that his ministry is “working on as many transactions as possible”.
On the privatisation of the state-owned First Women Bank Limited (FWBL), which was sold to the Abu Dhabi-based International Holding Company (IHC), Ali said FWBL was sold at a valuation of Rs5 billion — a premium of nearly 60%.
“Through FWBL privatisation, IHC, a major entity in the UAE, will enter Pakistan,” he said.
On the privatisation of Pakistan International Airlines (PIA), Ali admitted that the government failed in its initial attempt to sell the national carrier, which occurs in these complex transactions.
“Currently, we have changed the transaction structure and remain actively engaged with investors. At this time, our buyers, including Pakistan’s top groups, are conducting due diligence,” he said.
The PIA privatisation is in its final stages, with the bidding process expected to be completed by the end of 2025, he said.
“We want to see a turnaround of PIA,” he said.
It is pertinent to mention that four companies, namely Arif Habib Limited, Fauji Fertiliser Company (FFC), Air Blue, and Lucky Group, have participated in the privatisation process of PIA.
On House Building Finance Corporation (HDFC), the adviser shared that the government remains in talks with an entity and has sought offers from them. He added that the privatisation of DISCOs is also underway.
Ali said that the government does not intend to sell its major airports.
“Through privatisation, we want to create a market-based economy in Pakistan,” he said.
On right-sizing, Coordinator to the Prime Minister on Rightsizing, Salman Ahmed said 54,000 vacant posts were abolished, leading to a saving of Rs56 billion. He said PAASCO is in the process of winding up.
He said 20 ministries have undergone the right-sizing process.
During the press briefing, Federal Minister for IT & Telecom Shaza Fatima Khawaja said the country is moving towards a cashless economy.
Meanwhile, Secretary of Finance Imdad Ullah Bosal said that last year the government bought back debt to the tune of Rs1.52 trillion. “This year till August, we bought back Rs1.1 trillion, which has led to a saving of Rs120 billion in interest payment,” he said.
Bosal said the government is expected to issue Panda bonds in the coming months.
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