Pakistan sees trade boost, renewed confidence amid global turmoil

ISLAMABAD: Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, on Monday highlighted Pakistan’s key reform priorities while participating in a high-level panel discussion at Harvard University titled “Pakistan’s Economic Agenda: Stability, Reform and What Comes Next,” held as part of Pakistan Conference 2026.

The minister described the ongoing Middle East conflict as one of the most significant supply shocks the global economy has witnessed in recent years, requiring careful and calibrated policy management.

He said Pakistan’s immediate priority in recent weeks had been to ensure uninterrupted energy supplies across critical sectors despite limited strategic reserves, achieved through coordinated efforts among key ministries and institutions.

Aurangzeb noted that the government initially introduced a blanket subsidy to shield the public from rising energy costs, which has since transitioned into full price transmission supported by targeted subsidies, in line with available fiscal space.

The finance minister emphasized that Pakistan has managed the situation relatively well compared to many countries, avoiding severe supply disruptions and maintaining law and order.

On the external front, he underscored strong debt management, stating that the recent Eurobond repayment was a “non-event,” and expressed confidence in Pakistan’s ability to meet upcoming external obligations on time.

Highlighting emerging opportunities amid the crisis, Aurangzeb pointed to a significant surge in transit flows through Karachi Port, which in just a few weeks exceeded the entire volume recorded in 2025. He also noted progress toward operationalizing Gwadar Port.

He further highlighted a record monthly inflow in March under the Roshan Digital Account initiative, describing it as a sign of renewed confidence among overseas Pakistanis.

At the same time, the minister stressed that while remittances remain important, they cannot serve as a sustainable long-term growth model. He emphasized the need to focus on export-led growth and expansion in trade in services as more durable drivers of economic resilience.

Aurangzeb observed that Pakistan has long understood the “what” and “why” of economic reforms, but the real challenge lies in the “how,” particularly in ensuring timely decision-making and effective implementation.

He noted that delays in taking difficult but necessary decisions have historically hindered progress, contributing to recurring economic cycles and repeated reliance on IMF programmes.

Reaffirming the government’s commitment to structural reforms, he highlighted efforts to improve tax administration, broaden the tax base, and increase the tax-to-GDP ratio, which has shown progress but remains below desired levels.

He also outlined ongoing transformation within the Federal Board of Revenue, focusing on digitization, automation, and data-driven systems to reduce human discretion and improve efficiency.

The minister emphasized the need to move away from a model of perpetual subsidies for industry, advocating instead for competitiveness and export-led growth. In this regard, he pointed to recent trade liberalization measures, including tariff rationalization, aimed at enhancing efficiency and integration into global markets.