Aurangzeb briefs Moody's on Pakistan's reform push, stable outlook

Pakistan is re-entering global financial markets amid signs of macroeconomic stabilisation, with plans for its first Panda bond and ongoing talks for preferential tariff access with the United States to support an export-led growth strategy, Finance Minister Muhammad Aurangzeb said on Tuesday.

In a virtual briefing with Moody’s Investors Service, the finance minister outlined the country’s macroeconomic turnaround, reform agenda, and external sector stabilisation efforts. 

Aurangzeb was accompanied by Minister of State for Finance Bilal Azhar Kayani and State Bank Governor Jameel Ahmad. The engagement, held at the Finance Division, was part of Islamabad’s broader outreach strategy to regain investor confidence and improve its sovereign credit profile.

According to an official statement, Aurangzeb highlighted Pakistan’s recent macroeconomic gains, including a sharp drop in inflation, monetary easing through a reduction in the policy rate, exchange rate stabilization, and a current account surplus.

He noted that foreign exchange reserves had crossed $14 billion by the end of June, aided by improved remittance flows and stronger export performance.

The minister informed Moody’s that Pakistan had successfully completed the final review under the IMF’s $3 billion Stand-By Arrangement (SBA), which included the release of the final tranche.

He also underscored progress under the Resilience and Sustainability Facility (RSF), terming both milestones as critical for restoring market credibility.

“The reform trajectory is firmly in place,” Aurangzeb said, pointing to recent budgetary measures aimed at fiscal consolidation, including expenditure rationalisation and a broadened revenue base. He reiterated that Pakistan is targeting a tax-to-GDP ratio of 13 to 13.5 per cent over the medium term.

The Rs2 trillion revenue gain achieved this fiscal year, the minister noted, had come from autonomous administrative efforts, not through new tax measures alone.

He stressed that tax reform remains a top priority under the direct oversight of the prime minister, with a focus on technology-driven enforcement, digitisation of tax systems, and plugging leakages.

The team also apprised Moody’s of ongoing discussions with the US regarding preferential tariff access for Pakistani exports, which Aurangzeb said were “making encouraging headway.”

The meeting served as a platform to showcase Pakistan’s re-engagement with global capital markets. The finance minister revealed that $1 billion in commercial financing had already been secured from financial institutions in the Middle East.

Additionally, Pakistan is actively working on launching its inaugural Panda bond — a renminbi-denominated bond to be issued in the Chinese market — and is exploring other international debt instruments, including a potential return to the Eurobond market, contingent on rating upgrades.

He added that Pakistan remains committed to key structural reforms, including the privatisation and restructuring of state-owned enterprises (SOEs), as well as right-sizing of the federal government.

Responding to queries, the minister reiterated that Pakistan is not looking for short-term fixes but is focused on building long-term, inclusive, and export-led growth, while expressing optimism that the reform momentum and macroeconomic stabilization would be reflected positively in future sovereign credit assessments.

“Pakistan is ready to carry forward this journey of resilience, reform, and recovery,” the finance minister concluded, signalling that the country was once again positioning itself as a credible investment destination.