Pakistan growth over 4pc, $1bn privatisation push plannedBusiness

Pakistan’s economy is considered highly vulnerable to a prolonged Middle East conflict given its dependence on Gulf energy imports, remittances and financing support from the region, even as the country remains reliant on external financing to bolster its foreign exchange reserves and meet debt repayments.

Aurangzeb said the country had been able to procure adequate quantities of fuel, avoiding any shortages, and that critical sectors such as agriculture were holding up. “So I’m still quite clear that we should clock north of 4%,” he said, adding that the government was keeping inflation under close watch. “On the inflation side, obviously, we are keeping a very close eye because it does have a knock-on impact in terms of the commodity prices.”

The finance minister’s assessment reflects an economy that has recovered some of its footing after severe turmoil exacerbated by the Covid-19 pandemic, supported by a $7 billion, 37-month IMF loan programme known as the Extended Fund Facility signed in 2024, which includes tough measures such as raising tax revenue on farm income.

<h2>Privatisation pipeline</h2> Following the privatisation of flag carrier Pakistan International Airlines last year, Aurangzeb said the government had around another dozen entities in the privatisation pipeline, including state-owned power distribution companies and the outsourcing of airport operations.

&#8220;I expect about five or six of these to go through during this fiscal year,&#8221; he said, adding that they could raise more than $1 billion. Privatisation has been seen as a key test of Pakistan&#8217;s reform credibility with the IMF, with officials previously underlining that failure to offload loss-making state firms risked renewed pressure on public finances.

&#8220;We are quite clear that we want the private sector to lead the country,&#8221; Aurangzeb said. &#8220;So our role is to help support, assist any way we can in terms of the ecosystem.&#8221;

<h2>Exchange stabilisation facility</h2> Pakistan, which reached a staff-level agreement with the IMF last week that could unlock about $1.21 billion in financing under the Extended Fund Facility and a climate programme, is continuing discussions with the United States for a proposed $10 billion exchange stabilisation facility, Aurangzeb said.

He declined to provide a time frame for the conclusion of the negotiations. &#8220;If it comes through, this will be a great help for us,&#8221; he said of the facility, which is in addition to ongoing talks with the Export-Import Bank of the United States and the US International Development Finance Corporation. &#8220;If it doesn&#8217;t come through, this does not, you know, create any problem for us in terms of access to market.&#8221;

The US-Israeli-led war with Iran, now in its eighth month, and the inflation and hardship it has caused, will dominate the agenda and sidelining conversations during the meetings, which are being held outside Washington for the first time in three years.