Pakistan has reiterated the critical role of robust institutions, credible policies, and proactive reforms in addressing sovereign debt vulnerabilities while ensuring sustainable economic growth and maintaining social spending. Speaking at the AlUla Conference for Emerging Market Economies 2026, jointly organized by the Government of Saudi Arabia and the International Monetary Fund, Finance Minister Senator Muhammad Aurangzeb stressed that effective debt management goes beyond simply controlling its size. He highlighted the need to prevent liquidity pressures from escalating into solvency crises, while simultaneously keeping development and climate objectives on track.
Referencing Saudi Finance Minister Mohammed AlJadaan, Aurangzeb emphasized that macroeconomic stability remains a prerequisite for durable growth—a lesson Pakistan’s recent experience has reinforced. The minister provided an overview of Pakistan’s fiscal progress over the past three years, pointing to disciplined macroeconomic policies, institutional reforms, and a proactive debt management approach. These measures have helped reduce Pakistan’s debt-to-GDP ratio to approximately 70% from 74%, stabilized external debt levels, and generated tangible savings in interest costs.
Key strategies implemented by Pakistan include extending debt maturities, making early repayments, and strengthening domestic revenue mobilization. Aurangzeb noted that reforms aimed at broadening the tax base and digitizing revenue collection have raised the tax-to-GDP ratio to around 12%, demonstrating a stronger institutional capacity to manage public finances effectively.
The finance minister also highlighted Pakistan’s commitment to transparency and sustainable financing. Initiatives such as the institutionalization of Debt Sustainability Analysis aligned with IMF-World Bank standards, the introduction of Green Sukuk, and the Sovereign Sustainable Financing Framework have reinforced the country’s risk management practices. These measures have enhanced engagement with creditors and improved market confidence, positioning Pakistan as a proactive participant in global debt governance in line with the G20 Common Framework.
Senator Aurangzeb stressed that managing debt sustainably requires enhanced global coordination, strong cooperation with creditors, and frameworks that integrate climate considerations. He argued that these measures are essential for emerging economies like Pakistan to manage debt effectively without compromising development priorities or economic growth objectives.
The AlUla Conference provided a platform for Pakistan to showcase its progress in fiscal and debt management, demonstrating a clear trajectory toward stronger institutional governance, disciplined macroeconomic planning, and sustainable financing strategies. By combining fiscal prudence, transparent debt practices, and climate-aligned initiatives, Pakistan aims to mitigate sovereign risk, build investor confidence, and support long-term growth prospects.
Concluding his remarks, Aurangzeb emphasized that institutional strength, credible policies, and strategic reforms are key pillars for emerging markets to navigate economic challenges, maintain financial stability, and foster sustainable development. Pakistan’s approach, he noted, reflects a commitment to global best practices while ensuring that domestic growth and social priorities remain protected.
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