Finance Minister Muhammad Aurangzeb on Sunday said the recent International Monetary Fund (IMF) report highlighting financial irregularities in Pakistan was “not a criticism” but a “catalyst to accelerate long-awaited reforms.”
The publication of the document, a precondition for the IMF’s approval for disbursing The next $1.2 billion loan tranche in December found that institutional weaknesses, lack of transparency in state functions, preferential treatment for select businesses, and inefficiencies in public sector transactions were major constraints to growth. He also called for a series of reforms over the next three to six months to help lift the growth rate to 5-6.5 percent over the next five years.
The report sparked criticism of the government and opposition parties called for an investigation into the “worst financial scandal in Pakistan’s history.”
However, Aurangzeb said during a press conference in Islamabad today that the government itself had requested and facilitated the assessment to strengthen institutional reforms.
He argued that the report recognized significant progress in sectors such as taxation and governance, and that many of its priority recommendations “were already in process.”
The Finance Minister further said that the government was committed to implementing the remaining recommendations as part of broader institutional reforms essential to sustaining Pakistan’s economic recovery.
He said Pakistan’s structural challenges had been building up for decades and institutional reform was essential to sustain economic stability.
The Finance Minister described the report “not as a criticism, but as a catalyst to accelerate long-delayed reforms.”
Exports increase 5 percent
During the press conference, Aurangzeb outlined the government’s shift towards an “inclusive growth strategy, driven by the private sector and exports.”
The Finance Minister highlighted the recent abolition of the Export Development Surcharge (EDS), a levy in place since 1991, as a “key demonstration of the government’s commitment to boosting export competitiveness”.
Aurangzeb noted that this, along with reforms to strengthen the governance of the Export Development Fund (EDF), “reflects a strong policy direction focused on empowering exporters, removing outdated distortions and enabling the private sector to drive economic expansion.”
He said the decision had already been outlined for cabinet approval, after which its implementation would formally begin.
Aurangzeb highlighted that export performance had strengthened, with total exports increasing by five percent and IT services exports growing by more than 20 percent year-on-year.
“It’s very important that we move forward on this in a sustainable way,” he said. “Exports are helping us.”
The minister further described IT as an important pillar of Pakistan’s emerging “new economy”, along with emerging sectors such as minerals and mining.
He highlighted the successful $3.5 billion Reko Diq syndication, led by IFC and now financially closed, which is expected to generate almost $3 billion annually in future exports.
The ministry added that remittances remain a key strength of the economy.
“[Remittances] they are going from strength to strength. Last year, it was 38 million dollars, which was a big increase compared to the previous year,” he said, addressing the press. “God willing, at least this year we will exceed 41 million dollars. “This $3 billion delta will help in terms of our current account discussion as we move forward.”
According to the press release, Aurangzeb reiterated the importance of a reformed tariff regime that prioritizes raw materials and intermediate goods, reduces long-standing protection and helps domestic producers achieve global competitiveness in the next 4-5 years.
“As for our tariff regime, it is simple: the protections that we have granted for the longest time have to go, because that is the only way we are going to be internationally competitive,” he explained.
Regarding the economy in general, the ministry highlighted the statistics from July to October:
- Cement production increased by 16 pieces.
- Fertilizer production increased by 9%
- Petroleum products increase by 4%
- Car production increases by 31 percent
- Mobile phone manufacturing increases 26%
The ministry added that overall large-scale manufacturing (LSM) grew 4.1 percent year-on-year during the first quarter of this year, a significant setback from last year’s contraction.
Progress in reforms
Meanwhile, Aurangzeb highlighted important progress in fiscal policy, digitalization, state-owned enterprise reform, pensions, energy and debt management, the ministry added.
“Confirmed that the new Office of Fiscal Policy is now operational under the Finance Division and has begun its work with the advisory board, shifting the development of next year’s budget to a more consistent, analytical and private sector-informed framework,” the press release added.
The Finance Minister announced that Pakistan’s domestic debt has stabilized for the first time in nine years and debt servicing costs have begun to decline.
“It also confirmed that Pakistan’s inaugural Panda Bond, backed by ADB (Asian Development Bank) and AIIB (Asian Infrastructure Investment Bank) and approved by China’s central bank, will be issued before December or before the Chinese New Year,” the ministry said.
Aurangzeb further announced that the 11th NFC Award process will begin next week, with the participation of provincial leaders.
He also expressed confidence that discussions on revenue, expenditure and governance reforms will be conducted in the spirit of “Pakistan First”, as demonstrated in the National Fiscal Compact.
Answering questions on taxes and energy, Aurangzeb reaffirmed the government’s commitment to broaden the tax base, reduce leakages, improve compliance and ensure equity between the formal and informal sectors, the ministry added.
“Tax refunds have increased from Rs 200 billion to Rs 250 billion over the comparable five-month period, indicating strong support for the industry,” the press release reads. “He also highlighted that lasting reform in areas such as the sugar sector requires complete deregulation and the withdrawal of the government from its market influencing functions.”
The Finance Minister also highlighted the renewed interest of global investors in Pakistan, highlighting commitments from major international firms including Aramco, Wafi, Gunvor, Turkish Petroleum, Barrick Gold, Citizen Metals, Nova Minerals, BYD, Chery, NWTN Motors, Abu Dhabi Ports and Google, which recently announced plans to establish an office in Pakistan as a future technical and export hub.
“In his concluding remarks, the minister emphasized that Pakistan has overcome the crisis conditions of two years ago and is now firmly pursuing a stable future, driven by exports and investment,” the press release read.
“Agriculture, large-scale manufacturing, remittances, the ‘new economy’ and private investment will play central roles in building a more resilient and inclusive Pakistan. He reaffirmed the Government’s commitment to maintain regular monthly contact with the media to ensure transparency and public confidence in the reform process.”
