Pakistan has formally shifted its economic strategy from aid-based support to trade- and investment-led growth, Finance Minister Senator Muhammad Aurangzeb said, highlighting a major change in the country’s approach to long-term economic sustainability.
Speaking in an interview with CNN Business Arabia, the finance minister said the government is now focused on building mutually beneficial trade and investment partnerships, particularly with Gulf Cooperation Council countries, as Pakistan’s economy stabilizes and reforms take hold.
He said the shift reflects renewed confidence in Pakistan’s economic direction, backed by tangible improvements over the past 18 months.
Inflation, which had surged to 38 percent, has fallen to single-digit levels, while the country has posted primary fiscal surpluses and kept the current account deficit within targets. The exchange rate has stabilized, and foreign exchange reserves now cover around 2.5 months of imports.
The finance minister pointed to two key external developments supporting Pakistan’s improved outlook. All three major international credit rating agencies have upgraded Pakistan’s ratings and outlook during the year, while the IMF Executive Board has approved the second review under the Extended Fund Facility earlier this week. He said these steps signal growing global confidence in Pakistan’s economic management.
Senator Aurangzeb said macroeconomic stability has been achieved through disciplined fiscal and monetary policies alongside wide-ranging structural reforms. These reforms cover taxation, energy, state-owned enterprises, public financial management, and privatization, with the aim of turning stability into sustainable growth.
On taxation, he said Pakistan’s tax-to-GDP ratio has risen from 8.8 percent at the start of reforms to 10.3 percent last fiscal year, with a clear path toward 11 percent.
The government is widening the tax base by bringing sectors such as real estate, agriculture, and wholesale and retail trade into the formal system, while also using technology and AI-based monitoring to reduce leakages and improve compliance.
In the energy sector, the minister said reforms are underway to improve governance of distribution companies, involve the private sector, reduce circular debt, and rationalize tariffs. He said competitive energy pricing is essential for reviving industry and supporting economic growth
He acknowledged the longstanding support of GCC countries, including Saudi Arabia, the UAE, and Qatar, noting their role in financing and cooperation at international financial institutions.
He said the relationship is now evolving toward trade and investment. Remittances remain critical for Pakistan’s economy, reaching about USD 38 billion last year and expected to rise to USD 41 to 42 billion this year, with more than half coming from GCC states.
Looking ahead, Senator Aurangzeb said Pakistan is actively engaging GCC partners to attract investment in energy, oil and gas, minerals and mining, artificial intelligence, digital infrastructure, pharmaceuticals, and agriculture. He added that talks on a Free Trade Agreement with the GCC are at an advanced stage.
The finance minister said Pakistan’s future lies in trade and investment rather than aid, stressing that foreign investment in productive sectors will boost growth, create jobs, and deliver shared economic benefits.
