ISLAMABAD, Jun 9 (APP) : Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, said here on Monday that Pakistan’s economic recovery, which began after Fiscal Year 2023, gained momentum in FY 2024 and showed signs of consolidation in FY 2025, indicating a shift towards sustained stability and GDP growth.
Addressing a press conference at the launching ceremony of Economic Survey of Pakistan 2024-25, the minister said that during the last two years, the economy navigated a complex and challenging environment characterized by multiple global crises and a broader domestic economic slowdown.
Elaborating the details, the minister said, in FY2023, the economy was struggling to stabilize amid a confluence of domestic and global economic shocks and when the incumbent government assumed office in March 2024, the economy was grappling with multiple challenges.
The challenges included decline in GDP growth (-0.2% in FY2023); contraction in industrial activity (-3.9%); high inflation 29.2%, massive PKR depreciation (28.5%); and policy rate increase up to 22%.
In addition, the challenges also included squeezing fiscal space – higher fiscal deficit (7.8% of GDP); high public debt at (75% of GDP); depletion of Forex reserves ($6.3 bn in FY2023), and rising financing needs of around $25 billion in FY2024, putting the external sector under pressure.
“To cope with these challenges, the government embarked on a journey towards stability and sustainable, inclusive growth through various structural and policy adjustments,” the minister remarked.
The successful IMF programme helped in building the confidence of the friendly countries, resulting in the disbursement of $ 3 billion of bilateral assistance (KSA $ 2 billion, UAE $ 1 billion).
He said, the government’s effective policy measures led to a moderate economic recovery in FY2024, marked by a $5 billion increase in foreign exchange reserves, reversing the $5.4 billion depletion witnessed the previous year. Fiscal consolidation efforts resulted in a primary surplus for the first time in two decades, contributing to a decline in the debt-to-GDP ratio.
Administrative actions and central bank interventions helped narrow the gap between interbank and open market exchange rates, while incentives under the Pakistan Remittance Initiative (PRI) boosted formal remittance inflows.
To combat inflation, the government implemented a multi-pronged approach involving monetary tightening, fiscal prudence, and targeted price monitoring of essential items.
In the agriculture sector, access to credit, fertilizer, machinery, and certified seeds was improved to enhance productivity. Investment inflows were encouraged through the Special Investment Facilitation Council (SIFC), particularly in sectors like energy, IT, agriculture, and mining, as part of a broader growth strategy.
Social protection received a boost with a 27% increase in the Benazir Income Support Programme’s allocation, reaching Rs 593 billion. Financial inclusion efforts were strengthened through the launch of Buna-Raast connectivity while under the Prime Minister Youth Skill Development Program, thousands of young individuals were being trained and certified in IT and hospitality by globally recognized institutions.
These reforms collectively contributed to reducing the twin deficits, stabilizing the exchange rate, easing inflationary pressures, and setting the stage for continued recovery in FY2025.
Giving details about the performance of Fiscal Year 2024-25, the minister said, economy witnessed a broad-based recovery in FY2025, with real GDP growing by 2.7%, driven by a robust 4.8% rebound in industrial activity.
The size of the economy crossed the $400 billion mark for the first time, while per capita income rose to $1,824. Inflation declined to a multi-decade low of 0.3% in April 2025, supported by exchange rate stability, tight monetary policy, and improved food supply.
The external sector strengthened, with a current account surplus of $1.9 billion, increased exports and remittances, and a $2.3 billion rise in foreign exchange reserves.
Total foreign investment rose by 16.5%, and overseas Pakistanis’ confidence returned, reflected in record Roshan Digital Account inflows. Fiscal consolidation led to a lower fiscal deficit (2.6% of GDP) and a higher primary surplus (3.0% of GDP), alongside 25.9% growth in FBR tax collections.
The policy rate was reduced from 22% to 11% as inflation eased. The KSE-100 index surged by over 52%, investor sentiment improved, and Pakistan’s credit ratings were upgraded by both Fitch and Moody’s.
The IMF approved a new $7 billion EFF programme, disbursing $2.1 billion to date and providing additional support under the RSF. Banking sector assets and deposits posted healthy growth, with improved capital adequacy.
Energy diversification efforts continued, with the total installed power capacity reaching 46,604 MW. Overall, macroeconomic stability, enhanced investor confidence, and improved fiscal and external fundamentals signal a positive trajectory for the economy in FY2025.
Talking about fiscal sustainability and economic recovery, he said, the government has intensified reforms focused on revenue enhancement, expenditure rationalization, and deficit reduction. These efforts led to a historic fiscal surplus of Rs 1,896 billion (1.7% of GDP) in Quarter FY2025, the first in 24 years. Key reforms include provincial tax mobilization—particularly in agriculture—an updated National Fiscal Pact, and GST rationalization.
Investments in education are ongoing, with Rs 61.12 billion allocated to HEC in FY2025 and literacy initiatives underway. Pakistan’s literacy rate stands at 60.65%, with urban literacy at 74.09% and rural at 51.56%.
Youth empowerment remains a priority through PMYSDP, training over 56,000 individuals, and overseas employment facilitation, with 727,381 workers registered abroad in 2024. BISP received Rs 592.48 billion to support 9.9 million beneficiaries.
On climate action, Pakistan launched its first carbon market policy and issued a Rs 30 billion Green Sukuk. It also secured $1.4 billion under the IMF’s RSF and initiated projects like Recharge Pakistan to enhance resilience. Despite minimal contribution to global emissions, Pakistan continues to push for sustainable energy and climate adaptation, reaffirming its environmental commitment through the Economic Survey FY2025, he added.
The minister termed IT and telecom sectors are key drivers of digital growth and economic resilience. In July–March FY2025, ICT exports rose by 23.7% to $2.8 billion, with a trade surplus of $2.43 billion and $400 million contributed by freelancers.
Over 50 Software Technology Parks and e-Rozgar centers support digital expansion, while National Incubation Centers have helped over 1,900 startups, generating 185,000 jobs and Rs 30.8 billion in investments.
These developments, alongside structural reforms and investments in human capital, support inclusive growth, digital transformation, and macroeconomic stability under Pakistan’s home-grown reform agenda.
Meanwhile, talking about global economic performance, the minister said after a period of global shocks, the world economy has stabilized with modest growth, though recent tariff tensions have reignited uncertainty.
He said, Global GDP growth was projected to slow to 2.8% in 2025 before improving to 3.0% in 2026, while inflation is expected to decline from 5.7% in 2024 to 4.3% in 2025 and 3.6% in 2026—offering relief for domestic price pressures.
The economic outlook for Pakistan’s key trading and remittance partners, including Saudi Arabia, UAE, China, and the US, remains positive. Additionally, global trade volume is set to expand, supporting Pakistan’s export and remittance growth.
