Pakistan targets over 4pc economic growth, $1bn-plus from privatisation

Speaking to Reuters on the sidelines of the annual meetings of the International Monetary Fund (IMF) and World Bank in Bangkok on Monday, Aurangzeb said Pakistan had secured adequate fuel supplies and avoided shortages, while critical sectors, including agriculture, continued to perform steadily. He expressed confidence that the economy would grow by more than 4% in the current fiscal year.

However, he said the government was closely monitoring inflation because rising prices could have a knock-on impact on commodity costs. Pakistan's economy remains vulnerable to a prolonged conflict in the Middle East due to its dependence on energy imports from Gulf countries, remittances and regional financial support.

The country also relies on external financing to strengthen its foreign exchange reserves and meet debt repayment obligations. After a period of severe economic turmoil, which was exacerbated by the Covid-19 pandemic, Pakistan's economy has shown signs of recovery with support from a $7 billion, 37-month loan programme agreed with the IMF in 2024.

The Extended Fund Facility includes measures such as increasing tax revenue from agricultural income. Following the privatisation of Pakistan International Airlines last year, Aurangzeb said around a dozen more state-owned entities were in the pipeline for privatisation.

These include state-owned electricity distribution companies and plans to outsource airport operations. The finance minister said he expected five to six of these transactions to be completed during the current fiscal year, potentially generating more than $1 billion in proceeds.

Privatisation is considered an important test of Pakistan's commitment to economic reforms under its IMF programme. Officials have previously warned that retaining loss-making state-owned enterprises could place additional pressure on public finances.

Aurangzeb said the government wanted the private sector to lead the country's economic development, adding that the state's role was to support investment and create an environment conducive to business activity. Aurangzeb said Pakistan was continuing discussions with the United States over a proposed $10 billion exchange stabilisation facility, which could provide additional financial support to the country.

He made the remarks as the US-Israeli-led war with Iran and its economic consequences, including inflation and financial hardship, were expected to feature prominently during the IMF and World Bank meetings being held outside Washington for the first time in three years.

Pakistan reached a staff-level agreement with the IMF last week, potentially paving the way for around $1.21 billion in financing under the Extended Fund Facility and a climate programme. The finance minister did not provide a timeline for the conclusion of negotiations with the United States over the proposed facility.

Aurangzeb said securing the facility would provide significant assistance to Pakistan. However, he maintained that failure to obtain it would not create problems for the country's access to international financial markets. The discussions are in addition to ongoing talks with the Export-Import Bank of the United States and the US International Development Finance Corporation.