Strong Current Account Performance and Economic Outlook
Pakistan’s Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, highlighted the country’s strong current account performance during a recent address at the second edition of the Pakistan Banking Summit 2026. He emphasized that this stability is largely due to record remittance flows, which are expected to reach between $41 to $42 billion for the current fiscal year.
Aurangzeb also shared positive economic indicators from the previous fiscal year, noting that it ended on a strong note across various metrics. This included a primary surplus, an all-time low fiscal deficit, and a debt-to-GDP ratio well below 70 percent. The GDP growth for the last fiscal year reached 3.7 percent, driven by a robust rebound in the livestock and dairy sectors (LSM).
Export Trends and Foreign Exchange Reserves
While acknowledging a dip in overall exports, Aurangzeb pointed out that this decline is primarily concentrated in the food sector. In contrast, value-added exports, especially in textiles, have continued to show year-on-year growth. He expressed confidence that foreign exchange reserves will reach approximately $18.4 billion for the current fiscal year, surpassing earlier estimates.
The minister also discussed Pakistan’s efforts in accessing international capital markets. He noted that the Eurobond and Panda Bond have been significant milestones, with the latter being a long-term initiative. Aurangzeb admitted that not tapping into the second-largest and second-deepest capital market globally was a missed opportunity.
Stock Market Growth and Tax Policy Reforms
Regarding the Pakistan Stock Exchange (PSX), Aurangzeb stressed that the focus should be on activity drivers rather than just the numbers. He mentioned that the number of investors has grown, with a notable influx of Gen Z investors. Additionally, corporate profitability has returned to double digits.
Aurangzeb highlighted that this year’s budget was led by the Tax Policy Office, which has now been integrated into the Finance Division. The budget focused on export-led growth, the removal of advance tax and super tax, low-cost subsidized financing, and maintaining a stable tariff regime.
Tax Administration and Digital Transformation
He thanked the Prime Minister and Cabinet for their support and mentioned that a medium-term tax strategy is in the works. Aurangzeb also spoke about the new tax administration operating model introduced by Parliament. This model aims to minimize human intervention and leverage AI and technology for more efficient operations. Notices will be issued through this advanced system, marking a fundamental shift in tax administration.
Role of Banking Industry in Economic Growth
Aurangzeb emphasized the critical role of the banking industry in transitioning from stabilization to sustainable growth. Increased lending to small and medium enterprises (SMEs), exporters, agriculture, manufacturing, construction, and IT industries will be mission-critical. He acknowledged progress but noted that there is still a long way to go.
Privatization Efforts and Future Directions
On the topic of privatization, Aurangzeb mentioned that Pakistan International Airlines (PIA) is now under private sector management. Three discos have completed their roadshows, and 28 institutions have been handed over to the Privatization Commission. He praised the Pakistan Business Association (PBA) and sought further suggestions from the summit participants.
