Emphasizing a shift away from consumption-driven expansion, Aurangzeb outlined a structural reform agenda focused on taxation, energy, and private-sector investment to avoid repeating historical boom-and-bust cycles.
Speaking at the Lahore University of Management Sciences (LUMS) at a policy dialogue titled From Stabilisation to Growth: Pakistan’s Long-Term Reform Agenda,
Finance Minister Muhammad Aurangzeb explicitly ruled out a return to economic models fueled by liquidity and consumption. He cautioned that such approaches have historically triggered balance-of-payments crises and forced the country into cycles of instability. We are very clear: no matter how much pressure there is, we are not going to go for liquidity-fuelled, consumption-led growth,
he said during the event organized by the American Business Forum (ABF). Remarks were also delivered at the gathering by Habib Group Vice Chairman Salman Burni, former State Bank governor Raza Baqir, and ABF President Osman Khalid Waheed.
The minister emphasized that the government’s current strategy prioritizes structural changes to ensure durable economic health. The most recent budget sought to steer the economy toward export-led growth through steps such as cutting tax brackets, abolishing super taxes, and offering export financing at 4.5 percent, he observed. Salman Burney, vice-chair of Habib Group and former managing director of GSK Pakistan, added that current economic pressures had prompted local businesses to focus more heavily on energy efficiency and productivity.
Stabilization Gains and Export Targets
Aurangzeb highlighted significant progress in macroeconomic indicators, noting that Pakistan successfully reduced its twin deficits from 12.5 percent of GDP at the start of the reform process to 2.6 percent by the end of the last fiscal year. The current account deficit has narrowed to approximately 0.1 percent of GDP, supported by remittances and IT exports. Foreign exchange reserves have also improved, now providing more than three months of import cover compared to just two weeks during the height of the crisis. The minister also noted that Pakistan has received three credit-rating upgrades since April of last year.
The government is now focusing on export-led expansion, particularly in the IT sector. To further assist exporters, the government has shifted decision-making for the Export Development Fund away from bureaucratic control toward the private sector.
Tax System Reforms and IMF Engagement
At a workshop in Islamabad titled Reforms for a Modern and Growth-Friendly Tax System,
Aurangzeb highlighted that the Federal Board of Revenue’s tax-to-GDP ratio has increased from 8.8 percent to 10.3 percent. He noted that tax revenues have grown by forty percent over the last two fiscal years.
During the workshop, Azour acknowledged Pakistan’s progress in rebuilding confidence and external buffers but noted that the next challenge is to translate stabilization into stronger, durable growth. He emphasized the importance of building a more productive economy led by a stronger private sector.
Pakistan Targets Seven Percent Annual Economic Growth
The path to sustained growth remains a subject of discussion among stakeholders. Dr. Hasanain highlighted that Pakistan needs to target annual economic growth of at least seven percent and pursue deeper structural reforms.
Aurangzeb signaled that the government would continue these reforms to maintain stability and strengthen the economy. Pointing to conversations held at international gatherings in London and New York, alongside the joint annual meetings of the World Bank and the International Monetary Fund in Bangkok, he observed that worldwide economic conditions continue to stay unpredictable. Despite these global pressures, the finance minister maintained that Pakistan’s economy is moving in the right direction, supported by a shift from blanket subsidies to targeted support for the population.