Federal Minister for Finance Muhammad Aurangzeb on Wednesday said that interest payments on debt remain the government’s largest expenditure, while inefficiencies in state-owned enterprises had been causing annual losses of around Rs1 trillion.
Addressing the Pakistan Policy Dialogue in Islamabad, the finance minister said that Pakistan’s remittances stood at $38 billion in the previous fiscal year and are expected to exceed $41 billion during the current financial year.
He said the government is actively pursuing structural reforms, including the transformation of the Federal Board of Revenue. Aurangzeb stated that compliance and enforcement measures are being strengthened to ensure implementation of tax laws, while reforms are also underway in the energy sector.
The finance minister said local investors had participated in the privatisation process of Pakistan International Airlines. He added that 24 institutions have been handed over to the Privatisation Commission. Aurangzeb said state-owned entities were wasting nearly Rs1 trillion annually, which led the government to shut down organisations such as Utility Stores, PWD and PASCO due to corruption in subsidy distribution.
He said excessive duties damage the economy, stressing the need to rationalise duties and reduce the cost of doing business. Aurangzeb noted that although debt servicing is the government’s largest expense, savings of Rs850 billion were achieved on interest payments last year, with further savings expected in the current fiscal year.
The finance minister announced that the government would launch Panda Bonds within the next two weeks. Citing a survey, he said 73 per cent of investors are in favour of investing in Pakistan. He acknowledged that the trade deficit has increased but said the current account remains within the targeted range.
Aurangzeb said the performance of large-scale manufacturing remained positive in the first quarter of the current fiscal year. He added that private sector credit has increased to Rs1.1 trillion, while 135,000 new investors have entered the Pakistan Stock Exchange. Over the past 18 months, stock market investment has grown by 41 per cent.
Highlighting the digital economy, the finance minister said Pakistan has the world’s third-largest freelance workforce and stressed that it is the government’s responsibility to provide systems and platforms for youth. He said population control is essential to achieve the target of a $3 trillion economy by 2047, noting that development is not possible with an annual population growth rate of 2.55 per cent.
He said debt repayments did not decline automatically but were the result of deliberate planning, adding that savings are being redirected towards priority and development projects. Aurangzeb said investment is continuing both locally and internationally, including in the Chinese market, and currency conversion would bring a benefit of 2.5 per cent. He added that international rating agencies have expressed confidence in Pakistan’s reform agenda, while the IFC has completed a major $3.5 billion investment.
Discussing the Reko Diq project, the finance minister said exports would begin in 2028, with $2.8 billion expected in the first year. He also said the IFC invested $400 million in the Telenor transaction, reflecting growing investor confidence in Pakistan.
Speaking on the occasion, Adviser on Privatisation Muhammad Ali said past economic mismanagement discouraged private investment and increased debt. He said privatisation is not an ideological agenda but a tool to correct market failures and emphasised the need for a mindset shift for a modern economic reset.
Minister of State for Power Musadik Malik said sustainable prosperity can only be achieved through increased productivity and equal opportunities. He criticised policies that favour elite groups through subsidised energy and tax exemptions, calling for greater support for small industries and youth.
Planning Minister Ahsan Iqbal said Pakistan, despite being a nuclear power and exporting JF-17 aircraft, still lags behind in global competitiveness. He pointed out that while China and Vietnam have surged ahead in exports, Pakistan’s exports remain around $40 billion. He said progress in universities, highways and industry is significant, but more reforms are needed to compete globally.