LAHORE: Pakistan must move beyond economic stabilisation and build growth on exports, productivity and private-sector investment if it is to avoid another cycle of crises, Finance Minister Senator Muhammad Aurangzeb said on Saturday.
He warned that a return to consumption-led growth could set the recovery back by four to five years.
Speaking at a policy dialogue titled “From Stabilisation to Growth: Pakistan’s Long-Term Reform Agenda,” hosted by the Lahore University of Management Sciences (LUMS) and the American Business Forum (ABF), Aurangzeb said the country had made real progress on macroeconomic stability. The twin deficits, he said, had fallen from 12.5 per cent of GDP at the start of the reform process to 2.6 per cent by the end of the last fiscal year. The fiscal deficit hit a 22-year low, and the current account deficit stood at about 0.1 per cent of GDP. Foreign exchange reserves have climbed to more than three months of import cover, up from barely two weeks at the height of the crisis, and Pakistan has received three credit-rating upgrades since April last year, the minister added.
READ ALSO: Aurangzeb outlines five key economic priorities
But stability alone, he stressed, would not deliver sustainable growth. Reforms in taxation, privatisation, debt management and tariffs are meant to make businesses more competitive and encourage them to invest, expand and create jobs. The government, he said, is moving towards a model in which the private sector leads and the state provides an enabling environment. As part of this, control of the roughly Rs40 billion Export Development Fund has been moved from bureaucrats to the private sector, so exporters can set their own priorities.
Aurangzeb also pointed to reforms in livestock, dairy and energy, noting that livestock and dairy make up about 63 per cent of agricultural GDP. The government is pursuing the privatisation of state-owned enterprises and is receiving bids for three power distribution companies. Tariff cuts, he said, are designed to lower the cost of imported raw materials and intermediate goods, as Pakistan must move away from prolonged protection and learn to compete internationally.
IT services exports have grown from under USD1 billion to USD4.6 billion and are expected to reach USD5.5 billion this fiscal year, he said. Exporters are being supported with financing at 4.5 per cent and surplus electricity at Rs23 per unit.
However, former State Bank of Pakistan governor, Dr Reza Baqir, said exchange-rate adjustments alone cannot sustain export growth without investment in productive capacity. Goods exports have recovered to roughly USD33 billion to USD34 billion over a rolling 12-month period, while services exports have doubled in five years. He also suggested the government explore ways to share in the gains of businesses backed by public resources, without interfering in their operations or shielding them from competition.
Salman Burney, vice-chair of Habib Group and former managing director of GSK Pakistan, said economic pressure has pushed companies to improve energy efficiency and productivity. Pakistani firms, he said, should identify sectors where they have a genuine edge and invest more seriously in international markets.
Halima Iqbal, founder and CEO of Oraan, joined the discussion on women’s participation in the economy.
However, Senator Aurangzeb said expanding women’s education and workforce participation is vital for long-term growth, alongside tackling climate change and population growth.
The session, opened by ABF President Osman Khalid Waheed, was moderated by Dr Ali Hasanain, Associate Professor of Economics at LUMS. He said Pakistan should target annual growth of at least seven per cent and undertake deeper structural reforms to address its recurring economic challenges.
Copyright Business Recorder, 2026