Pakistan’s economy has returned to a growth path, with gross domestic product (GDP) expanding by 3.7% in fiscal year 2026 and growth of around 4% expected in fiscal year 2027, according to Finance Minister Senator Muhammad Aurangzeb. The minister said the recovery was being supported by improving industrial and agricultural activity as the government’s economic priorities shift from stabilisation towards sustainable growth driven by investment and exports. He shared these views during a conversation with Michael Kugelman of the Atlantic Council on the sidelines of the International Monetary Fund (IMF) and World Bank Group Annual Meetings 2026 in Bangkok, Thailand, where he discussed Pakistan’s economic performance, ongoing reforms and role in international financial institutions.
Aurangzeb stressed that the government intends to build a more sustainable economic growth model based on investment and exports rather than consumption-led expansion. The shift follows a period in which economic stabilisation remained a central policy priority. According to the minister, the next stage of the government’s strategy involves strengthening the foundations for long-term economic activity by encouraging private investment, improving productivity and expanding opportunities for export-oriented businesses. The emphasis on investment-led growth reflects the government’s stated objective of improving economic resilience and reducing reliance on expansion driven primarily by domestic consumption.
Tax collection and revenue reforms were also central to the minister’s remarks. Aurangzeb said tax collection had increased by 40% over two fiscal years, raising Pakistan’s tax-to-GDP ratio to approximately 10.3%. He attributed the improvement to digitalisation and structural reforms aimed at strengthening revenue mobilisation. A higher tax-to-GDP ratio can provide governments with greater capacity to finance public services and development spending, although sustained progress depends on the effectiveness of tax administration, compliance and the breadth of the tax base. The minister’s comments indicate that revenue mobilisation remains a key part of the government’s efforts to strengthen public finances and support its wider economic programme.
Pakistan’s participation in international financial forums was another focus of the discussion. Aurangzeb highlighted the country’s chairmanship of the Borrowers’ Platform Governing Council and said Pakistan would assume the chairmanship of the Group of 24 (G-24) on November 1, 2026. These roles provide opportunities for Pakistan to participate in discussions on development financing, sovereign debt and issues affecting developing economies. The minister described the appointments as a boost to the country’s voice in international financial discussions, as governments and financial institutions continue to address financing requirements, debt sustainability and economic development challenges.
The finance minister also discussed Pakistan’s return to international capital markets and efforts to diversify financing sources. He highlighted the country’s Panda bond issuance and renewed access to the Eurobond market, alongside the government’s work to improve debt sustainability. Diversifying funding sources can help reduce reliance on individual borrowing channels and broaden access to investors, while the terms of financing remain important for managing repayment obligations and borrowing costs. The government’s broader financing strategy includes efforts to improve debt management and establish arrangements that can support long-term economic requirements without creating excessive pressure on future budgets.
Privatisation and private-sector participation were also highlighted as important elements of the government’s reform agenda. Aurangzeb said work was continuing on the privatisation of power distribution companies and the outsourcing of airports, with interest from private-sector participants and foreign investors increasing. These initiatives form part of efforts to attract investment and improve the operation of public assets and services. Their outcomes will depend on the terms of individual transactions, regulatory arrangements and the ability to attract investors capable of meeting operational and financial requirements. The government has presented greater private-sector involvement as a way to support investment and improve efficiency across selected areas of the economy.
The minister also outlined the government’s social protection priorities, including an allocation of Rs838 billion for the Benazir Income Support Programme (BISP). The programme provides support to eligible vulnerable households, making it an important component of the government’s social assistance framework. Aurangzeb said targeted assistance would continue alongside a broader focus on employment, education and skills development. These priorities reflect the government’s stated intention to maintain support for vulnerable groups while pursuing economic reforms. Balancing fiscal discipline with social spending remains an important consideration as Pakistan seeks to improve public finances and promote more inclusive economic opportunities.
Digitalisation and technology adoption were also discussed as part of the government’s plans to improve economic efficiency and access to financial services. Aurangzeb highlighted efforts to expand digital payments and financial inclusion while promoting the adoption of artificial intelligence and the development of technology skills. Wider use of digital payments can help make transactions more accessible and improve the traceability of financial activity, while technology skills can support workforce development and business productivity. The minister’s remarks placed these initiatives within the broader economic agenda, linking digital transformation with transparency, efficiency and the creation of new economic opportunities.
Pakistan’s economic outlook will depend on how effectively the government sustains the recovery while implementing its reform programme. The reported GDP growth of 3.7% in fiscal year 2026 and the expectation of around 4% growth in fiscal year 2027 provide the basis for the government’s stated outlook, but continued progress will require investment, stronger exports, revenue mobilisation and stable economic conditions. The policy agenda described by Aurangzeb combines fiscal reforms, capital market access, privatisation, social protection and digital development. Together, these areas represent the government’s approach to moving beyond short-term stabilisation towards a growth model intended to support investment, economic resilience and more sustainable development.
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