The Government of Pakistan is anchoring its long-term economic agenda on sustained macroeconomic stability, comprehensive structural reforms, and private-sector-led growth, Adviser to the Finance Minister Khurram Schehzad stated during his keynote address at a seminar titled ‘Pakistan Economic Outlook: FY2027 and Beyond,’ organized at a local hotel in Lahore.
Addressing an audience of prominent economists, corporate leaders, and financial sector experts, including Dr. Ali Hasanain, Ali Khizer, and Khurram Husain, Mr. Schehzad outlined the trajectory of Pakistan’s economic recovery over the past two to three years, highlighting significant improvements across key economic indicators while detailing forthcoming policy frameworks aimed at institutionalizing long-term growth.
Reviewing the macro-fiscal landscape, Mr. Schehzad underscored the transition from a period of severe economic contraction and external vulnerability to structural stabilization. He noted that real Gross Domestic Product (GDP) growth recovered from negative territory to reach 3.7 percent, driven by notable real sector expansions. Agricultural growth rose to 2.89 percent, surpassing its historical 25-year average, while Large-Scale Manufacturing (LSM) recorded a four-year high growth rate of 6.1 percent, and the services sector expanded by 4.4 percent. On the fiscal front, consolidated management has successfully contained the fiscal deficit to less than 1 percent of GDP over a nine-month period, with projected deficits stabilizing near 3 percent, down from 8 percent in 2022. Concurrently, the primary balance achieved a record surplus, and the total debt-to-GDP ratio decreased from 75 percent to 68 percent, reflecting a disciplined fiscal trajectory aligned with statutory debt management principles.
Highlighting external sector resilience, Mr. Schehzad emphasized that the current account deficit has been contained to less than $150 million, down from $17.5 billion in 2022, while headline inflation decelerated to 7.5 percent. Gross foreign exchange reserves managed by the State Bank of Pakistan expanded from a critical low of $3 billion in early 2023 to $18 billion, providing over three months of import cover.
Crucially, he pointed out that this reserve accumulation was achieved primarily through organic inflows rather than external debt accumulation, as overall public external debt remained stable near $100 billion. Key contributors to this balance-of-payments improvement include record inflows through Roshan Digital Accounts—surpassing $13 billion with average monthly inflows rising to $300 million—alongside strong performances in Information Technology (IT) exports, which reached $4.6 billion, and freelance earnings totaling $1.76 billion. This improved external profile was validated by international credit rating agencies, including S&P upgrading Pakistan’s rating to 'B' with a stable outlook.
Turning to institutional and structural execution, Mr. Schehzad detailed progress across eleven core reform areas designed to reduce the state's footprint in commercial operations and foster free-market competition. On state-owned enterprise (SOE) restructuring, he highlighted the initiation of 28 privatization transactions, including the successful bidding process for Pakistan International Airlines (PIA) and ongoing privatization procedures for First Women Bank, House Building Finance Corporation (HBFC), and power distribution companies (DISCOs). To complement energy sector divestments, the government is introducing a Competitive Trading Bilateral Contract Market (CTBCM) framework to end monopoly purchasing structures. In tax administration, the Federal Board of Revenue is rolling out a completely faceless, multi-tiered digital operating model to eliminate discretionary assessment powers. Additional structural initiatives include rightsizing federal ministries, liquidating inefficient state entities like PASCO and PWD, shifting civil service pensions to a defined-contribution model, and enacting tariff deregulation to remove protectionist barriers and lower intermediate input costs for exporters.
Mr. Schehzad emphasized that fiscal policy measures are structured to incentivize private capital formation and industrial expansion. Private sector credit expanded by 1.46 trillion rupees, a 15 percent year-on-year increase, supported by an agricultural credit flow of 2.7 trillion rupees. Reflecting renewed corporate confidence, the domestic equity market facilitated 11 Initial Public Offerings (IPOs) in a single year, marking a 20-year high, while corporate registrations exceeded 43,000 annually. To accelerate export competitiveness, the government implemented tax relief measures in the national budget, including the removal of the super tax for corporate entities with profits under 500 million rupees, a reduction in turnover tax to 1.25 percent, and reduced energy tariffs for off-peak industrial consumption. Furthermore, an export refinancing facility offering concessional credit at 4.5 percent was approved by the Economic Coordination Committee (ECC) to support small and medium-sized exporters.
Outlining future strategic direction, the Adviser announced that the government is finalizing two flagship long-term frameworks: a Comprehensive Industrial Policy to drive manufacturing competitiveness, and a Medium-Term Tax Policy designed to provide multi-year policy predictability for domestic and international investors.
Addressing queries regarding social safety nets, poverty mitigation, and employment during the interactive session, Mr. Schehzad clarified that short-term fiscal measures are combined with targeted social safety net expansion evidenced by an increased allocation to the Benazir Income Support Programme (BISP) to shield vulnerable segments during economic transition.
He concluded by reiterating that sustainable job creation and structural poverty reduction remain directly contingent upon facilitating private enterprise, scaling industrial efficiency, and maintaining consistent macroeconomic policy execution.
