During a high-level panel at the World Economic Forum in Davos, Pakistan’s Finance Minister Senator Muhammad Aurangzeb outlined key strategies for economic growth, focusing on the productive use of debt and export-driven development.
Debt as a Tool for Growth
Senator Aurangzeb presented an emerging markets viewpoint, asserting that debt itself is not detrimental if utilized effectively. He emphasized that for countries like Pakistan, borrowing should be directed towards investments that create exportable goods and services rather than consumption, ensuring sustainable repayment and fostering long-term growth.
Fiscal Discipline and Debt Management
The minister pointed out that unsustainable debt levels often stem from weak fiscal discipline. He shared Pakistan’s achievements in reducing its debt-to-GDP ratio from 75% to 70%, attaining a primary surplus, and restoring fiscal balance through prudent economic policies.
Inflation has been brought down significantly from a peak of 38% to single digits, while the policy interest rate was lowered from over 22% to 10.5%, positioning the country favorably in the interest rate cycle.
Ongoing reforms include liability management operations, debt buybacks, and initiatives to enhance domestic market value. Pakistan is also preparing to issue its first Panda bond in the Chinese capital market, structured as a green bond, underscoring its commitment to sustainable finance.
Addressing Climate Risks and Financing Development
Senator Aurangzeb highlighted the real and recurring economic disruptions caused by climate change, particularly for vulnerable emerging economies like Pakistan. He noted that building fiscal buffers has allowed Pakistan to respond to recent floods using domestic resources rather than relying on international aid.
The minister underscored the importance of public-private partnerships and capital markets in funding adaptation and development projects. He cited the successful closure of Pakistan’s largest syndicated financing of approximately USD 3.6 billion for a major copper mining project, expected to generate around USD 2.8 billion in annual exports from 2028, thereby strengthening Pakistan’s export base and supporting global energy transition goals.
Technology and the New Economy
In response to questions on technology funding, Senator Aurangzeb emphasized Pakistan’s strong potential in IT, freelancing, and digital services. He highlighted recent growth in IT exports and ongoing investments in skills development, blockchain, and emerging technologies.
He noted that the main challenges lie not in access to funding but in capacity building, prioritization, and effective execution to convert opportunities into sustainable growth.
Conclusion
Concluding his remarks, the Finance Minister stressed that responsible fiscal management, strategic debt use, investment in emerging sectors, and climate resilience form the cornerstone of Pakistan’s growth strategy. He stated, “It is not about the availability of debt or funding, but how wisely and effectively it is steered to create long-term economic value.”
The panel was moderated by Bloomberg News anchor Joumanna Bercetche and included prominent global financial leaders from Guggenheim Partners, State Street, and Franklin Templeton.
