Pakistan targets 3.5% growth as Aurangzeb touts stability, IMF support

Finance Minister Muhammad Aurangzeb said Pakistan’s economy is stabilising and could expand by 3.5% this fiscal year despite flood-related setbacks, citing easing inflation, a more accommodative monetary stance and stronger foreign exchange buffers. In an interview, he said reserves now cover about two and a half months of imports and that international confidence is improving, with all three major rating agencies upgrading Pakistan’s outlook.

Aurangzeb noted that GDP grew around 3% last year and that while the government had targeted growth above 4% for the current year, recent floods might temper the outcome. He pointed to momentum in the second phase of the China-Pakistan Economic Corridor, highlighting 24 joint projects recently signed in Beijing and further investment opportunities under consideration.

The minister underscored progress with the International Monetary Fund, saying a staff-level agreement would unlock $1.2 billion once approved by the IMF’s Executive Board. The package combines $1 billion under the Extended Fund Facility and $200 million through the Resilience and Sustainability Facility, lifting total disbursements under the arrangements to roughly $3.3 billion, subject to regular programme reviews.

Looking ahead, Aurangzeb said Pakistan plans to re-enter international markets, starting with a yuan-denominated green bond and followed by at least a $1 billion global bond. The IMF support since late 2024, he added, has helped steady the $370 billion economy by containing inflation, strengthening external buffers and lowering sovereign spreads as market confidence improves.