Pakistan’s finance chief, Muhammad Aurangzeb, made a clear policy shift at LUMS, rejecting liquidity‑driven, consumption‑led growth in favour of a sustainable, export‑led model. He reaffirmed the government’s commitment to tariff reforms that cut raw‑material costs for exporters.
Key Policy Moves
- Rejects liquidity‑fueled growth; prioritises export‑led expansion.
- Continues tariff reform, targeting lower input costs for exporters.
- Fiscal deficit slashed to a 22‑year low; twin deficits down to 2.6 % of GDP.
- IT exports surged to $4.6 bn, projected $5.5 bn this year.
- Energy supply secured; subsidies shifted to targeted support.
- External debt payments fell from $26.5 bn to $21.5 bn.
Historical Context
Pakistan’s past has been punctuated by cycles of import‑dependent growth that triggered balance‑of‑payments crises and IMF bailouts. The 2025 budget introduced measures such as super‑tax elimination and a 4.5 % financing rate for exporters to break this pattern. The tariff‑reform drive, now in its second year, aims to replace long‑standing protectionism with a competitive export framework, a move echoed at international forums in New York, London, Bangkok, and the IMF‑World Bank meetings.
What’s Next?
The focus on export competitiveness should spur job creation, especially in high‑value IT and manufacturing sectors. Continued tariff reforms and fiscal discipline are expected to restore investor confidence, potentially attracting a $4 bn dividend repatriation clearance and further IPO activity. Regional corridors and digital infrastructure investments will also be pivotal as Pakistan seeks to diversify away from oil‑dependent growth and mitigate climate‑driven demographic pressures.