logo
Finance minister touts recovery, reforms in Economic Survey 2024–25

Finance minister touts recovery, reforms in Economic Survey 2024–25

Pakistan's economy is on the mend following key structural reforms, Finance Minister Muhammad Aurangzeb said Monday while presenting the Economic Survey for FY2024–25.
'We were not moving in the right direction,' Aurangzeb admitted, but said the government had since implemented reforms to consolidate the economy—particularly in taxation, debt control, and energy.
He noted significant improvements in the power sector, with better governance in distribution companies after the inclusion of private sector professionals on their boards. 'Recoveries have been remarkable,' he said, while acknowledging the need to tackle system leakages.
Public finances also benefited from a sharp cut in the policy rate, which helped reduce debt servicing costs by around Rs800 billion. 'Debt servicing remains the single largest expense item, but we've saved nearly a trillion rupees,' he added.
The minister announced plans to privatise 24 state-owned enterprises (SOEs) in the coming year, after curbing annual losses of Rs800 billion. 'We've stopped the bleeding,' he said.
Highlighting macroeconomic indicators, Aurangzeb said the current account recorded a surplus of $1.9 billion during July–April FY25, driven by strong IT exports. Remittances are projected to reach $37–38 billion by year-end, up from $27 billion two years ago.
He also placed Pakistan's recovery within the broader global context, noting that world GDP growth has reached 2.8%.
'We need to first stop the bleeding and then address legacy issues,' Aurangzeb further said.
'The government is no longer a desperate borrower,' Aurangzeb said, crediting a significant reduction in the policy rate for saving nearly Rs1 trillion in debt servicing costs, including Rs800 billion in the current fiscal year.
The number of individual tax filers has doubled as Pakistan expanded and deepened its tax base, the minister said. During FY25, the government also retired Rs2.4 trillion in treasury bills and raised Rs610 billion through a newly introduced two-year zero-coupon bond, extending the average maturity of domestic debt from 2.9 to 3.5 years.
The government now projects FY26 as a 'turnaround year,' with plans to privatise 24 loss-making state-owned enterprises. Aurangzeb said banks will also be expected to step up lending to the private sector.
The economy posted mixed results across sectors. Agriculture grew 2.6% despite falling production of key crops including cotton, wheat and maize. Rice exports, however, improved significantly. Construction posted a 6.6% growth rate, while services expanded by 2.9%.
Large-scale manufacturing (LSM) remained in contraction but showed signs of stabilisation. In March 2025, LSM grew 1.8% year-on-year, compared with 1.7% in the same month last year. However, a month-on-month decline of 4.6% was recorded, slightly better than February's 5.6% fall.
Electricity generation capacity reached 46,605 MW, with 55.7% from thermal sources and 24.4% from hydropower. Consumption stood at 80,111 GWh, with nearly half used by households. Petroleum product demand rose 7% in the July–March period, with transport accounting for 80% of use.
Aurangzeb said governance in the power sector has improved, with private sector experts brought onto boards of power distribution companies. Recoveries were described as 'remarkable,' though energy sector leakages remain a challenge.
The external sector saw improvement, with a $1.9 billion current account surplus in July–April FY25, driven by IT exports. Remittances are projected to hit $37–38 billion this fiscal year, up from $27 billion two years ago. Imports rose 12%.
On the climate front, Pakistan launched its Recharge Pakistan Project with $77 million in funding and introduced its first Carbon Market Policy at COP29.
"The next fiscal year will be a turnaround story,' Aurangzeb said, setting the tone for a budget expected to aim for IMF compliance, increased revenue, and growth-focused reforms.
Pakistan's foreign exchange reserves rose to $16.64 billion Aurangzeb said addinf that it, boosted by improved economic indicators and renewed investor confidence, even as the agriculture sector posted weak growth due to poor crop yields.
Of the total reserves, the State Bank of Pakistan held $11.5 billion while commercial banks retained $5.14 billion. The increase follows improved credit ratings, with Fitch upgrading Pakistan's sovereign rating from CCC+ to B- with a stable outlook.
The International Monetary Fund (IMF) acknowledged Pakistan's progress under the Extended Fund Facility (EFF) and approved an additional $1.4 billion under the Resilience and Sustainability Facility (RSF) to support the country's climate adaptation and disaster resilience efforts.
Pakistan's stock market also performed strongly, with the benchmark index delivering a 50% return and gaining 78,000 points over the fiscal year, reflecting growing investor confidence.
Agriculture, however, remained under pressure. The sector recorded a modest 0.56% growth in FY25 due to a decline in major crop production. Officials acknowledged challenges including inadequate crop storage and limited farmer financing. Reforms are being explored to reduce middlemen's role and improve farm-to-market access.
Meanwhile, more than 5,000 federal cost centres have been tagged under the government's new Climate Budget Tagging initiative aimed at tracking climate-related spending.
In the social sector, the Benazir Income Support Programme (BISP) disbursed Rs593 billion during the fiscal year to support vulnerable households.

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Defence budget hiked by 20.2% to Rs2,550b
Defence budget hiked by 20.2% to Rs2,550b

Express Tribune

timean hour ago

  • Express Tribune

Defence budget hiked by 20.2% to Rs2,550b

Listen to article The government has announced major allocations for defence, civil administration, pensions, subsidies, and grants in its budget for the financial year 2025-26. The defence budget has been hiked by over 20% as Rs2,550 billion has been set aside in the budget 2025-26, which will be spent on the operations, equipment, and other needs of the Pakistan Army, Pakistan Air Force, Pakistan Navy, and related defence institutions. For civil administration expenses, Rs971 billion has been earmarked, which includes operational expenses of federal ministries, departments, and the civil bureaucracy. Read more: Finance minister unveils anti-digital, pro-realty sector budget An amount of Rs1,055 billion has been allocated for pension payments, which will be made to retired government employees. As per the budget document, this amount is increasing every year, adding to the government's financial woes. As for subsidies, the government has earmarked Rs1,186 billion for various sectors, particularly the power sector. These subsidies will be provided to low-income consumers, agricultural tube-wells, and the industrial sector to facilitate them. For grants, Rs1,928 billion has been allocated, which will be distributed among the Benazir Income Support Program (BISP), Azad Jammu and Kashmir, Gilgit-Baltistan, and the merged districts of Khyber-Pakhtunkhwa. The aim is to promote development, welfare projects, and financial stability in these regions.

Budget 2025-26: Pakistan govt proposes 18% tax on imported solar panels
Budget 2025-26: Pakistan govt proposes 18% tax on imported solar panels

Business Recorder

timean hour ago

  • Business Recorder

Budget 2025-26: Pakistan govt proposes 18% tax on imported solar panels

Pakistan government on Tuesday proposed the budget for the financial year 2025-26, revealing its intention to impose 18% sales tax on imported solar panels. The proposed tax would help the local industry grow, Finance Minister Muhammad Aurangzeb said in his budget speech in the National Assembly. The development comes amid a solar boom in the country, with net-metering capacity in Pakistan jumping to 2,813 megawatts (MW) as of March 31, 2025, according to the Pakistan Economic Survey 2024-25 released on Monday. Key highlights of Pakistan Economic Survey 2024-25 The net-metering capacity rose by over 300MW from the previous fiscal year, when the capacity stood at around 2,500MW, as per NEPRA's State of the Industry Report 2024. The 300MW jump in net-metering capacity was largely attributed to a sharp fall in solar panel prices and the financial incentives net-metering offers to consumers. However, with 18% tax proposed in the budget for FY26, the prices for solar panels may increase. Despite being a low-income country plagued by economic and social issues, a green revolution is taking place in Pakistan and the South Asian country has quietly emerged as one of the world's largest markets for the growing solar industry. According to the Global Electricity Review 2025 by Ember, an energy think tank in the UK, Pakistan imported 17 giga-watts (GW) of solar panels in 2024, joining the ranks of leading solar nations. 'Solar is now so cheap that large markets can emerge in the space of a single year - as evidenced in Pakistan in 2024,' read the report published earlier this year. 'Amid high electricity prices linked to expensive contracts with privately-owned thermal power stations, rooftop solar installations in Pakistan's homes and businesses soared as a means of accessing lower-cost power.' A recent research report stated that China exported more solar panels to Pakistan than to many G20 nations, with over 16 gigawatts (GW) imported in 2024 alone. The report titled 'Leader of One or Leader of None - China's Choice for Clean over Coal in Pakistan' published by think tank Renewables First said more than 39GW of solar panels, nearly all from China, entered Pakistan in the last five years. Solar panels: Pakistan govt mulling withdrawing ST exemption These solar panels are 'enough to exceed three-quarters of Pakistan's installed national generation capacity', the report said. 'Pakistan may be the first to experience this clash between legacy coal and democratised solar at this scale, but it will not be the last. If China gets this right, it will not just lead to Pakistan's energy transition. It will prove itself as the architect of a new Global South energy paradigm, one that is fast, fair, and truly transformative,' the report envisaged.

Pakistan increases defence spending by over 20% after recent clashes with India
Pakistan increases defence spending by over 20% after recent clashes with India

Business Recorder

timean hour ago

  • Business Recorder

Pakistan increases defence spending by over 20% after recent clashes with India

Pakistan has announced to raise its defence budget significantly by over 20% as the government allocated Rs2.55 trillion for the incoming fiscal year (FY26). The increase in budget spending comes at a time when tensions between neighbouring Pakistan and India remain high. Finance Minister Muhammad Aurangzeb announced Pakistan's federal budget 2025-26 'for a competitive economy' on Tuesday, targeting a modest 4.2% growth for the coming fiscal year, compared to 2.7% expected in the outgoing FY25. 'The country's defence is our top priority,' said Aurangzeb during his address, as he lauded the role of the country's leadership, especially the armed forces, for their role against recent clashes with India. Pakistan had allocated Rs2.12 trillion for defence in the FY 2024-25. Its defence budget was raised by 16.4% last year. Addressing the federal cabinet meeting, Prime Minister Shehbaz Sharif said that Pakistan is now in a take-off position, and all economic indicators are satisfactory. 'After defeating India in a conventional war, now it has to surpass it in the economic field as well,' the PM said. 'If there is passion and desire, nothing is impossible; everyone will have to work together day and night to move forward,' he added. Earlier, Tola Associates, a tax advisory and consultancy firm, has proposed to raise the defence budget to Rs2.8 trillion, reflecting a 32% increase as compared to the last fiscal, 'due to the war situation with the neighbouring country and the new recruitment of army personnel'. Ties between Pakistan and India nosedived after a deadly attack in Indian Illegally Occupied Jammu and Kashmir (IIOJK) last month that New Delhi said was backed by Islamabad. Pakistan denied involvement, but intense fighting broke out when India struck what it said were 'terrorist camps' in Pakistan. They agreed on a ceasefire, which has largely held.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store