FinMin promises PIA sale, Panda Bond by year-end

Pakistan has consolidated its macroeconomic stability through strong fiscal discipline, improved foreign exchange reserves, and falling inflation, while aiming to sustain a growth rate of around 3.5% despite recent flooding, Finance Minister Muhammad Aurangzeb said in an interview with CGTN America.

He said the country had made significant progress since the International Monetary Fund (IMF) approved the $7 billion loan programme last year, with all global rating agencies upgrading Pakistan's outlook. "We have consolidated gains on the macroeconomic front. Our foreign exchange reserves now stand at two and a half months of import cover, inflation has fallen to single digits, and the policy rate has been halved," he said. Fitch, S&P, and Moody's have all upgraded Pakistan this year for the first time in nearly three years.

Aurangzeb said the IMF's second review under the Extended Fund Facility had been successfully completed and a staff-level agreement reached, reflecting the Fund's confidence in Pakistan's reform efforts. "We are grateful that the IMF management continues to repose trust in Pakistan's authorities, especially on structural reforms in taxation, energy, public finance, and privatisation," he said.

He added that Pakistan had re-entered commercial markets after two and a half years, securing financing from Middle Eastern banks and planning to issue its first Panda bond before year-end. "We even repaid a $500 million Eurobond last month without market concern, which shows growing confidence," he said, adding that Pakistan was well-positioned to repay another $1.3 billion due in April next year.

Aurangzeb said the government had revived the stalled privatisation process. "This year, we completed the first transaction, a small bank purchased by a UAE-based conglomerate that will expand and digitise its operations," he said. The government is also confident the national airline will be privatised before the fiscal year ends.

He acknowledged that climate change and floods posed serious challenges to recovery, particularly in the agriculture sector. "Climate change is an existential issue for Pakistan. Our rice and cotton crops have been affected by flooding across three major rivers," he said. Despite losses, he remained optimistic. "We grew by 3% last year and had estimated a little over 4% growth this year. Given the floods, we now expect around 3.5%," he said.

Referring to Prime Minister Shehbaz Sharif's recent visit to Beijing and meetings with President Xi Jinping and Premier Li Qiang, the minister said the two countries had formally launched CPEC Phase 2, focusing on industrial cooperation and private sector investment.

"Phase 1 was about infrastructure. Phase 2 is about monetising that infrastructure through Special Economic Zones and private-sector partnerships," Aurangzeb said. He noted that 24 joint venture agreements were signed during the PM's visit, marking a shift from MoUs to tangible projects. "Our role is to ensure a conducive ecosystem for these ventures to thrive," he said.

The new phase will prioritise investment in mining, agriculture, IT, AI, and pharmaceuticals, including local vaccine production with Chinese partners. He cited the Service Long March venture, a tire manufacturing partnership between Pakistan's Service Group and China's Long March, as a model of success. "About 80% of its products are exported, and it could become the first Pakistan-China joint venture to list on the Hong Kong Stock Exchange," he said.

Aurangzeb highlighted digital reforms, noting that AI-led monitoring raised the tax-to-GDP ratio from 8.8% to 10.2%. He said trade diversification was underway with tariff arrangements with the US and growing engagement with Central Asia.

He also reaffirmed Pakistan's support for President Xi's Global Governance Initiative, emphasising multilateral cooperation and sovereign equality.