Finance Minister Muhammad Aurangzeb has said Pakistan’s economy is now firmly on a recovery path, projecting stronger growth and easing inflation in the next fiscal year, while warning that external geopolitical risks remain a key uncertainty.
In an interview with Bloomberg Television, he said the economy is expected to expand by around 4% in fiscal year 2026-27, with average inflation likely to decline to 8.2%, compared to 11.7% in the previous period. He attributed the improved outlook to stabilization measures implemented over the past two years.
Aurangzeb said macroeconomic conditions have strengthened, highlighting a reduced fiscal deficit and the achievement of a primary surplus. He added that foreign exchange reserves have improved to cover roughly three months of imports, though he stressed that long-term stability depends on shifting toward export-led growth rather than consumption-driven expansion.
The remarks come shortly after the federal budget 2026-27 introduced targeted tax relief for businesses alongside fiscal tightening measures aimed at maintaining discipline while encouraging investment. The government has set a revenue target of Rs. 15.3 trillion for the year, which the finance minister described as ambitious but achievable.
He said the budget represents a transition from stabilization to sustainable growth, focusing on stronger revenue collection, improved public finances, and conditions for long-term investment and export expansion.
Pakistan’s fiscal deficit has narrowed to its lowest level in nearly two decades, supported by spending restraint, tax reforms, and measures under an International Monetary Fund International Monetary Fund supported program. The improved fiscal position also contributed to a recent $1.3 billion disbursement from the lender.
Despite the improving indicators, the finance minister cautioned that tensions in the Middle East remain a major external risk, particularly for energy prices and external account stability.
He reiterated that maintaining macroeconomic stability remains the government’s top priority as it attempts to lock in recent gains and steer the economy toward more durable, export-driven growth.
