Finance minister sees 3.5 percent growth this year, 4 percent over next two to three years

Imran Ali Kundi

Publishing date: 27 November 2025

Published in: The Nation

Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb has said that the government is pushing ahead with a wide-ranging and irreversible reforms agenda aimed at strengthening economic stability, improving competitiveness and restoring fiscal balance.

Speaking at the Pakistan Business Council’s Dialogue on the Pakistan Economy, the finance minister outlined key measures underway in taxation, digital transformation, state-owned enterprise restructuring and debt management as part of a coordinated effort to place Pakistan on a more sustainable economic footing. The minister noted that Pakistan has consolidated gains on the macroeconomic stability front and that early signs of economic recovery are becoming visible. He referred to positive trends in key sectors such as cement, fertilizer, automobiles, mobile phone manufacturing and large-scale manufacturing.

He also cited a recent OICCI survey, which reported a significant improvement in investor sentiment, with a notable rise in the proportion of respondents recommending Pakistan as a viable destination for foreign direct investment. The minister highlighted renewed interest from global companies across energy, mining, technology, logistics and automotive sectors, describing these as meaningful indicators of improving confidence in Pakistan’s economic direction.

Senator Aurangzeb stated that the government is now focused on moving from the design of reforms to their operationalisation. He underlined the broad transformation underway in Pakistan’s taxation system, driven by a comprehensive digitalisation agenda involving people, process and technology.

He informed participants that tax policy has been shifted from FBR to the Ministry of Finance, where a fully operational Tax Policy Office and an Advisory Council comprising academicians and later private-sector representatives are being established. The minister emphasised that continuous and year-round engagement with chambers and sectoral bodies will replace the previous once-a-year budget consultations, allowing for more evidence-based and analytically aligned policy development.

The finance minister shared detailed progress on state-owned enterprise and government restructuring, noting that half of all federal ministries and attached departments have already been reviewed under the right-sizing process. He reported the abolition of 54,000 vacant posts, resulting in annual savings of Rs56 billion, and outlined the mergers or closures of several ministries and organisations. While acknowledging the complexities arising from HR, legal and financial liabilities, he reaffirmed the government’s resolve to advance these reforms despite institutional and political challenges.

He identified Digital Pakistan as a key priority personally monitored by the Prime Minister on a weekly basis. The initiative brings together digital payments adoption, digital public infrastructure and the digitisation of government payments. The minister stressed the importance of transitioning Pakistan from a heavily cash-based to a documented economy, with clear milestones set for merchant digitisation, financial inclusion and technology-enabled transparency in government processes.

Senator Aurangzeb described improvements in debt management as another area of significant progress. He stated that the Debt Management Office is being modernised to international standards and that reforms have already contributed to extending Pakistan’s average time-to-maturity to four years, reducing refinancing risks and lowering overall debt servicing costs. He also mentioned the launch of a new contributory pension scheme that became operational in July 2024 and has already enrolled over 9,000 new government employees, accompanied by parametric reforms designed to slow the rate of fiscal pressure from pension liabilities.

Outlining forthcoming priorities, the minister announced that the inaugural session of the 11th NFC Award will be held on 4 December and expressed confidence that constructive engagement with provinces would continue the collaborative spirit established through the National Fiscal Pact. He also noted that Pakistan is working towards its inaugural Panda Bond issuance, which he hopes will take place before the Chinese New Year. The minister further confirmed progress on Pakistan’s regulatory framework for the emerging digital and crypto economy, with the operationalisation of the Pakistan Virtual Asset Regulatory Authority underway to ensure that crypto-related activities fall within a formal, well-governed structure.

The minister commended the Pakistan Business Council for presenting a comprehensive programme that spans both immediate macroeconomic priorities and Pakistan’s longer-term structural and existential challenges, including demographic pressures and climate vulnerability. He acknowledged the research-based capacity of the PBC and emphasised the importance of fact-driven analysis in formulating policy recommendations. During the interactive session with participants, the minister discussed Pakistan’s growth trajectory, stating that despite the impact of recent floods, Pakistan is expected to achieve around 3.5 percent growth this year. He projected growth of around 4 percent over the next two to three years, with the potential to move toward 6 to 7 percent over the medium term, provided that momentum in agriculture, manufacturing and services is sustained.

He also provided an update on remittances and external inflows, noting stabilised monthly inflows through formal channels, strong performance of the Roshan Digital Account and improved institutional flows under SCRA after the introduction of a lock-in period to curb short-term arbitrage behaviour. Responding to concerns regarding high taxation, energy costs and expensive financing, Senator Aurangzeb reiterated the government’s understanding of industry challenges. He noted that easing monetary conditions will help lower financing costs, but encouraged corporates to diversify beyond bank borrowing and utilise capital markets for longer-tenor, more competitive financing.

He reaffirmed the government’s commitment to addressing structural issues in taxation and energy and described ongoing review mechanisms designed to closely monitor the impact of recent tariff adjustments. Addressing questions related to the investment environment and security concerns raised by foreign investors, the minister underscored that there can be no compromise on national security and that fundamental issues of security, macroeconomic stability and repatriation of profits form the basic hygiene necessary for Pakistan to attract and retain global investment. He assured participants that the government will continue to review policy measures factually and transparently while remaining open to feedback from the business community. Senator Muhammad Aurangzeb concluded by reaffirming the government’s commitment to evidence-based policymaking, private-sector partnership and the continuation of irreversible reforms to place Pakistan on a sustainable path of economic revival and long-term growth.