Pakistan's economy is stabilising following key structural reforms, Finance Minister Muhammad Aurangzeb said on Monday while presenting the Economic Survey for FY2024–25.
He outlined improvements across fiscal, monetary, and governance sectors, projecting FY26 as a potential “turnaround year.”
Aurangzeb said the government had course-corrected from a previously unsustainable path by introducing reforms in taxation, debt management, and the energy sector.
In particular, he highlighted improved governance in power distribution companies, where private sector professionals were inducted onto boards, contributing to what he termed “remarkable recoveries,” despite persistent system losses.
He attributed a major easing in debt servicing costs—approximately Rs800 billion saved this fiscal year—to a sharp cut in the policy rate. He said overall savings were close to Rs1 trillion.
“Debt servicing remains the single largest expense item,” he noted.
Aurangzeb also announced that 24 state-owned enterprises (SOEs) are slated for privatisation in the next fiscal year, after efforts to stem Rs800 billion in annual losses. “We’ve stopped the bleeding,” he said.
According to Aurangzeb, Pakistan’s external account recorded a surplus of $1.9 billion during July–April FY25, driven by strong growth in IT exports.
He said remittances are projected to reach $37–38 billion by year-end, up from $27 billion two years ago, and that the government is no longer a “desperate borrower.”
He said improved macroeconomic fundamentals have lifted investor sentiment, with Pakistan’s foreign exchange reserves rising to $16.64 billion as of May 27.
Of this, the State Bank held $11.5 billion and commercial banks $5.14 billion. Aurangzeb noted that Fitch Ratings had upgraded Pakistan’s sovereign rating from CCC+ to B– with a stable outlook.
He credited enhanced revenue mobilisation efforts for a doubling in the number of individual tax filers. Aurangzeb said the government retired Rs2.4 trillion in treasury bills in FY25 and raised Rs610 billion through a newly introduced two-year zero-coupon bond.
These efforts extended the average maturity of domestic debt from 2.9 to 3.5 years.
The KSE-100 index posted a 50% return in the outgoing fiscal year, gaining 78,000 points, which Aurangzeb said reflected renewed investor confidence in the economy.
The finance minister presented a mixed performance across sectors. Agriculture grew just 0.56% in FY25 due to lower output of major crops, though rice exports improved.
He acknowledged issues such as limited storage capacity and poor farmer financing, and said the government is looking to reduce middlemen and enhance market access.
The construction sector expanded 6.6%, services 2.9%, and large-scale manufacturing (LSM) remained weak but showed signs of stabilisation.
LSM output rose 1.8% year-on-year in March 2025, though it fell 4.6% month-on-month.
Electricity generation capacity reached 46,605 MW, with 55.7% from thermal sources and 24.4% from hydropower. Total consumption was recorded at 80,111 GWh, with nearly half used by households.
Aurangzeb said petroleum demand rose 7% in July–March, with transport accounting for 80% of usage.
He also outlined climate initiatives, including the launch of the Recharge Pakistan Project with $77 million in funding and the introduction of the country’s first Carbon Market Policy at COP29.
Over 5,000 federal cost centres were tagged under a new Climate Budget Tagging initiative to track climate-related expenditure.
Aurangzeb confirmed that the International Monetary Fund (IMF) had approved an additional $1.4 billion under the Resilience and Sustainability Facility (RSF), while acknowledging progress made under the ongoing Extended Fund Facility (EFF).
In the social sector, he said the Benazir Income Support Programme disbursed Rs593 billion in FY25 to assist vulnerable households.
Aurangzeb said, “We need to first stop the bleeding and then address legacy issues.” He reiterated the government’s commitment to sustained reforms and growth-focused policies in the upcoming fiscal year.
Pakistan’s installed electricity generation capacity rose to 46,605 MW in FY2024–25, up 1.6% from 45,888 MW last year, according to the Economic Survey.
However, this increase has deepened the burden on consumers, who pay Rs 2.5–2.8 trillion annually in capacity payments to idle power plants producing no electricity.
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