Pakistan expects its economy to grow by more than 4% during the current fiscal year despite elevated international oil prices and inflationary pressures, while the government plans to privatise five to six state-owned entities that could generate more than $1 billion. Finance Minister Senator Muhammad Aurangzeb shared the outlook in an interview with Reuters on Monday on the sidelines of the World Bank Group-International Monetary Fund (IMF) Annual Meetings in Bangkok, Thailand. His remarks outlined the government’s expectations for economic growth, energy security, external financing and the continued implementation of structural reforms. The privatisation programme remains a central part of these efforts, with the government seeking to increase private-sector participation and reduce the financial burden associated with loss-making public enterprises.
Aurangzeb said Pakistan had secured sufficient fuel supplies to avoid shortages, despite elevated oil prices and uncertainty in international energy markets. He also pointed to the resilience of key economic sectors, including agriculture, as a factor supporting the country’s growth outlook. However, the government is closely monitoring inflationary pressures arising from higher commodity prices, particularly amid concerns about the potential economic consequences of a prolonged conflict in the Middle East. Pakistan remains exposed to regional instability because of its reliance on energy imports from Gulf countries, remittances from overseas workers and financial support from the region. Disruptions affecting these channels could place additional pressure on the country’s external accounts, making energy security and economic stability important considerations for policymakers.
The government’s growth projections come as Pakistan continues implementing economic reforms under its $7 billion, 37-month IMF Extended Fund Facility agreed in 2024. The programme includes measures aimed at strengthening public finances and increasing tax revenues, including taxation of agricultural income. These reforms form part of the broader effort to improve fiscal management and reduce the economy’s dependence on external financial support. Pakistan also continues to require foreign financing to strengthen its foreign exchange reserves and meet debt obligations. Against this background, the government is balancing its growth objectives with the need to manage inflation, maintain adequate external buffers and continue policy measures associated with the IMF programme.
On external financing, Aurangzeb said Pakistan was continuing discussions with the United States over a proposed $10 billion exchange stabilisation facility. He did not provide a timeline for concluding the negotiations but said securing the arrangement would offer additional support to the country. At the same time, he indicated that the absence of the facility would not create difficulties for Pakistan’s access to international markets. The proposed arrangement is part of the government’s broader engagement with international financial partners as it seeks to strengthen its financial position and maintain access to funding sources. Discussions are also continuing with the Export-Import Bank of the United States (EXIM) and the US International Development Finance Corporation (DFC), according to the Finance Minister’s comments to Reuters.
The financing discussions follow Pakistan’s recent staff-level agreement with the IMF, which could pave the way for approximately $1.21 billion in disbursements under the country’s existing loan programme and a climate-related financing arrangement. Such funding would provide additional resources within the framework of Pakistan’s ongoing engagement with the international lender. The availability and timing of any disbursement remain subject to the applicable approval and programme procedures. Meanwhile, the government’s efforts to secure support from international institutions and explore additional financing arrangements reflect the importance of maintaining external liquidity while meeting debt repayment obligations and supporting economic activity.
Privatisation is another major component of the government’s economic strategy. Aurangzeb said approximately a dozen state-owned entities were in the pipeline following the sale of Pakistan International Airlines in the previous year. The proposed transactions include state-owned power distribution companies and the outsourcing of airport operations. The government expects five or six of these initiatives to materialise during the current fiscal year, potentially generating proceeds exceeding $1 billion. The expected revenue will depend on the progress and completion of the planned transactions. The government is pursuing these measures as part of a broader effort to reduce the financial burden associated with public enterprises and expand the role of private investment in economic activity.
Aurangzeb said the government intended to create greater space for the private sector, with the state focusing on providing necessary support and facilitating an environment conducive to investment. The approach reflects the government’s stated objective of shifting more commercial activity towards private participation while retaining a role in establishing the policy and institutional conditions required for economic development. Power distribution companies and airport operations represent important areas within the planned programme, although the timing and financial outcomes of individual transactions will depend on their progress. Successful implementation could provide privatisation proceeds and change how selected public-sector operations are managed.
Pakistan’s economic outlook for the current fiscal year will depend on several factors, including international oil prices, domestic inflation, agricultural performance, external financing conditions and progress on structural reforms. The government’s target of growth above 4% reflects its expectations despite ongoing external risks, while the planned privatisation of five to six entities represents an effort to generate more than $1 billion and expand private-sector involvement. Continued engagement with the IMF, discussions with US financial institutions and efforts to maintain energy supplies remain part of the country’s broader economic agenda. The outcomes of these initiatives will shape the government’s ability to pursue its growth objectives while managing financing needs and fiscal pressures.
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