Pakistan is prioritizing fiscal discipline, strategic use of debt, and export-driven growth as central pillars of its economic strategy, positioning the country for sustainable development amid a challenging global environment.
Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, shared these views while speaking at a high-level panel discussion at the World Economic Forum in Davos titled “How Can We Unlock New Sources of Growth? – Weight of Global Debt,” according to a press release issued on Tuesday.
The panel brought together leading global financial figures, including Anne Walsh, Managing Partner and Chief Investment Officer of Guggenheim Partners; Ronald P. O’Hanley, Chairman and CEO of State Street; and Jennifer Johnson, Chief Executive Officer of Franklin Templeton. The discussion was moderated by Joumanna Bercetche, Anchor at Bloomberg News.
During his remarks, Senator Aurangzeb emphasized that debt, when deployed productively, can serve as a catalyst for economic growth. He explained that Pakistan’s borrowing strategy is focused on investments that generate exportable goods and services rather than funding consumption, thereby supporting sustainable repayment and long-term economic expansion.
Highlighting the challenges faced by emerging economies that do not issue reserve currencies, the finance minister stressed the importance of market efficiency, prudent borrowing practices, and careful management of foreign exchange risks. He noted that these factors are critical for maintaining macroeconomic stability in a volatile global financial environment.
The minister outlined key fiscal achievements, including a reduction in Pakistan’s debt-to-GDP ratio from 75% to 70%, the achievement of a primary surplus, and a sharp decline in inflation from a peak of 38% to single-digit levels. He also pointed to the easing of monetary conditions, with the policy rate reduced from over 22% to 10.5%, placing Pakistan on a more favorable point in the interest rate cycle.
Senator Aurangzeb further discussed ongoing debt management reforms, such as liability management operations and debt buybacks. He added that Pakistan plans to access the Chinese capital market through its first-ever Panda bond, which is intended to be structured as a green bond to support sustainable financing objectives.
On climate resilience, the finance minister noted that strengthened fiscal buffers enabled Pakistan to finance relief efforts for recent floods through domestic resources, reducing dependence on international aid.
He also highlighted the role of public-private partnerships and capital markets in financing development, citing Pakistan’s largest-ever syndicated financing of $3.6 billion for a major copper mining project. The project is expected to generate approximately $2.8 billion in annual exports starting from 2028.
In addition, Senator Aurangzeb underscored Pakistan’s growing potential in information technology, freelancing, and digital services, stressing that capacity building and effective execution are essential to translate opportunities into sustainable economic gains.
Concluding his remarks, the finance minister said that economic success depends not on the availability of debt or funding, but on how wisely and effectively financial resources are deployed to generate long-term economic value.
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