Pakistan economy to grow over 4%, says Aurangzeb

The Pakistan economy is on track to grow over 4% this fiscal year despite costly oil, Finance Minister Muhammad Aurangzeb said on Monday.

Speaking in Bangkok on Monday, Aurangzeb said Pakistan had secured enough fuel to avoid any shortages. Key sectors such as agriculture were also holding up, he added.

“So I’m still quite clear that we should clock north of 4 percent,” the minister said. His comments came during an interview at the yearly gathering of the International Monetary Fund and the World Bank.

At the same time, he said the government was watching inflation closely. According to Aurangzeb, rising prices have a “knock-on impact” on commodity costs.

Privatisation could raise over $1 billion

Meanwhile, the government is pressing ahead with privatisation. Together, the planned deals could bring in more than $1 billion, Aurangzeb said.

The minister said he expected “five or six of these” sales to close before the fiscal year ends. Roughly twelve firms sit in the queue overall. They include government-owned electricity distributors, while airport management may also pass to private operators.

The push follows last year’s sale of the national flag carrier, Pakistan International Airlines. In addition, privatisation remains a key test of reform credibility under the IMF programme.

Officials have previously warned that failing to sell loss-making state firms would put fresh pressure on public finances. For that reason, the government sees these sales as central to its plans.

“We are quite clear that we want the private sector to lead the country,” Aurangzeb said. In his words, the state’s role is to support the private sector and help build the wider ecosystem.

Pakistan economy gains IMF support

The Pakistan economy has regained some stability after a period of severe turmoil worsened by the Covid-19 pandemic. A $7 billion, 37-month IMF programme, signed in 2024, has supported that recovery.

That programme, known as the Extended Fund Facility, includes tough steps such as raising tax revenue from farm income. Last week, Pakistan struck a staff-level deal with the IMF that could release about $1.21 billion through the facility and a climate fund.

In addition, the government is still in talks with Washington on a proposed $10 billion exchange stabilisation facility. Aurangzeb did not give a time frame for concluding the negotiations.

“If it comes through, this will be a great help for us,” he said. However, he stressed that failure would not hurt the country’s access to markets.

The facility comes on top of ongoing talks with the Export-Import Bank of the United States and the US International Development Finance Corporation.

Gulf war risks remain

Even so, the Pakistan economy faces real risks from a long conflict in the Middle East. With 255 million people, the country depends heavily on energy imports from the Gulf, on remittances and on regional financing.

It also depends on external funding to strengthen its foreign exchange reserves and meet debt payments. This year, the eighth month of the Iran war is set to dominate the IMF and World Bank talks. For the first time in three years, the meetings take place outside Washington.