Pakistan on strong economic trajectory despite challenges, says Aurangzeb

WEB DESK: A senior government official has described the current period as a “proud moment for Pakistan and a great moment for the global economy,” highlighting steady progress in key economic indicators even amid regional uncertainties.

In an interview with senior journalist Asma Sherazi on Faisla Aapka on June 16, the official expressed confidence in the country’s economic direction, noting that the outgoing financial year had ended on a positive trajectory.

He pointed to upward revisions in growth estimates and proactive fiscal measures outlined in the recent budget.

Growth and Market Sentiment

The official said the government had revised this year’s growth estimates to between 3.4 and 3.7pc, while targeting 4pc for the next financial year. Post-conflict inflation remained in double digits, leading to a rise in the policy rate from 10.5pc to 11.5pc, he added.

He noted strong private sector interest, citing 11 initial public offerings (IPOs) this year as evidence of improving market sentiment. “If people are going into the stock market, why would they go? Because achieving growth is not a difficult task,” he remarked.

The official stressed that local investors must lead the way, drawing parallels with past privatisation efforts.

He expressed optimism about further privatisation of DISCOs and anticipated foreign investment from China, the United States, and GCC countries, particularly in minerals, mining, agriculture, and information technology.

Tax reforms and sectoral focus

Addressing taxation, the official highlighted several reforms aimed at easing the burden and improving the business environment.

He said the super tax had been abolished from the sixth slab and reduced from 10pc to 8pc in the subsequent slab. The fixed tax regime for the IT sector was maintained to support exports.

“We have kept special focus on SMEs and agriculture as well,” he said. On the construction sector, he announced a reduction in transaction taxes, clarifying that the move was intended to boost activity rather than benefit real estate speculation.

He acknowledged a 7pc increase in the petroleum levy but justified it as necessary to meet defence requirements given the country’s security situation. “We have two active borders… So we needed these extra funds for our defence,” he explained.

The official also underlined long-term opportunities, including enhanced trade with neighbours such as Iran once sanctions ease, while noting that financial settlement mechanisms were being finalised.

He projected that IT exports would grow to $4.5b, with the government providing a supportive ecosystem for the private sector, particularly for the youth.

Concluding the interview, he said expectations remained high but public sentiment was positive, and the government was committed to structural reforms. “As soon as fiscal space is available, we will remove it, Insha’Allah,” he added regarding certain tax measures.

Sanctions relief and trade readiness

The minister indicated that the impending decision on international sanctions against Tehran would be pivotal for Islamabad’s economic strategy.

“The Iran–US agreement is a matter of pride for Pakistan. The markets have responded positively, and perhaps that is one reason why the policy rate was not changed,” Mr Aurangzeb said, explaining the central bank’s recent monetary policy stance.

He noted that the government is closely monitoring global developments ahead of the weekend.

“We have to see on Friday how many sanctions on Iran are lifted after the agreement. If the sanctions are removed, both the Government of Pakistan and Pakistani exporters are fully prepared,” he added.

Addressing potential banking and legal hurdles that have historically impeded bilateral trade with Iran, the finance minister maintained a cautious but optimistic approach.

He stated that the government would thoroughly examine the issue of financial guarantees and act accordingly. Refusing to prematurely disclose specific policy interventions, he remarked, “I do not want to talk about certain measures at this stage.

We will assess the situation after the agreement and then comment.” He added that if developments progressed in the right direction, the best possible framework would become available to Pakistan.