Iran-US war pushed inflation up, says Aurangzeb

Finance Minister Muhammad Aurangzeb has said Pakistan had managed to bring inflation down to single-digit levels, but the rate increased amid the Iran-US war.

Addressing an event in Karachi, the finance minister said the country’s major economic indicators were showing positive trends. He added that the Federal Board of Revenue (FBR) had achieved its revenue target for September as well as the target set for the first quarter of the fiscal year.

Aurangzeb said Pakistan’s economy was moving in the right direction and progressing towards sustainable stability. He expressed optimism that the country’s credit rating could improve to B+ by the end of the year.

The minister also highlighted the government’s plans to develop emerging areas of the economy, including artificial intelligence and Web3. He said comprehensive measures were being taken to encourage investment and create a more favourable environment for businesses.

According to Aurangzeb, foreign companies have shown growing interest in investing in Pakistan. He said investors from Türkiye and Saudi Arabia were also exploring opportunities in the country, while the government was working to provide them with all possible facilities.

The finance minister stressed the importance of political stability for economic growth. He urged political stakeholders to sit together, hold discussions and move forward.

Aurangzeb warned that even a single day of disruption to economic activity could result in losses of around Rs120 billion. He said political stability was therefore essential for maintaining the momentum of economic activity and attracting investment.

He also questioned how long salaried individuals and the corporate sector could continue carrying a heavy share of the tax burden. The government, he said, now needed to focus more strongly on enforcement and broadening compliance.

Aurangzeb further said Pakistan’s foreign exchange reserves had reached a strong level, equivalent to around three months of imports.

While discussing inflation, the finance minister attributed the recent increase to the impact of the Iran-US war, saying the government had previously succeeded in bringing inflation into single digits.

He maintained that the overall economic direction remained positive, with the government focusing on fiscal improvement, investment, revenue collection and long-term economic stability.