Pakistan raises $3 billion as fiscal deficit falls to 22-year low

Pakistan has returned to international capital markets after a four-year gap raising $3 billion as the government reports improvements in public finances tax collection and debt management Finance Minister Senator Muhammad Aurangzeb told international investors.

ISLAMABAD: Pakistan has returned to international capital markets after a four-year gap raising $3 billion as the government reports improvements in public finances tax collection and debt management Finance Minister Senator Muhammad Aurangzeb told international investors.

Speaking during meetings on the sidelines of the 2026 World Bank Group and International Monetary Fund (IMF) Annual Meetings in Bangkok, Thailand on October 14, Aurangzeb said the country’s fiscal deficit had declined to 2.6 percent of gross domestic product (GDP) its lowest level in 22 years.

He added that tax revenues had increased by 40 percent over two years while public debt had fallen from 75 percent to 68 percent of GDP. Pakistan had also recorded three consecutive annual primary budget surpluses. The minister expressed hope that economic growth could reach or exceed 4 percent in the current fiscal year, although he separately cited a growth rate of 3.7 percent during a regional meeting with the IMF.

During meetings with international banks, investors and credit rating agencies, Aurangzeb discussed economic reforms borrowing plans and measures to attract private investment.

The government is considering additional Panda bonds, Sukuk and a proposed Pakistani rupee-denominated international bond settled in US dollars. According to the minister, diversifying financing sources could help reduce borrowing costs extend repayment periods and limit the risks associated with refinancing large debts.

In discussions with S&P Global Ratings, he highlighted improved tax collection stronger foreign exchange reserves and Pakistan’s September bond issuance. He said the country aimed to achieve a double-B credit rating through sustained economic progress. Policy continuity fiscal reforms and stronger external reserves also featured in the discussions.

Aurangzeb met US officials to discuss a proposed trade framework energy imports support for vulnerable consumers and potential financing from American development institutions. Other subjects included the Reko Diq mining project critical minerals aviation cooperation and digital asset regulation.

Separate meetings with the Multilateral Investment Guarantee Agency and the Asian Infrastructure Investment Bank focused on financing conditions, electricity transmission, railway modernisation and infrastructure development. The discussions also covered potential support for capital market transactions and climate-related projects.

During meetings with IMF officials, Aurangzeb highlighted foreign exchange reserves sufficient to cover three months of imports and referred to the October 7 staff-level agreement.

He emphasized targeted, time-limited subsidies for low-income households while maintaining budget discipline. Discussions also addressed disaster preparedness, climate resilience and protecting expenditure on health and education.

The finance minister said Pakistan’s next challenge was to convert economic stability into sustainable growth by increasing exports, attracting private investment and creating employment. He also stressed the importance of stronger regional trade improved logistics and diversified energy supplies.