Pakistan Aims for Economic Turnaround Despite Debt Increase
Rohan DesaiPakistan projects 2.7% GDP growth in 2025 amid rising debt, aiming for a sustainable economic turnaround.
Pakistan's Economic Survey for 2024-25 reveals a mixed economic landscape, projecting a 2.7% growth rate amidst rising debt.
The survey, released by Finance Minister Muhammad Aurangzeb, highlights the government's efforts to stabilize the economy. While challenges remain, Aurangzeb emphasizes a focus on sustainable growth and compliance with IMF requirements. This economic trajectory is crucial for Pakistan's long-term financial health and regional stability.
Top 5 Key Insights:
GDP Growth Target: Pakistan projects a 2.7% GDP growth for 2025, a modest increase from the 2.5% growth in 2024. This target reflects a gradual recovery strategy aimed at sustainable economic expansion. The government aims to avoid the boom-and-bust cycles that have historically plagued the nation.
Debt Increase: Pakistan's debt has surged to PRs 76,000 billion in the first nine months of the current fiscal year. This includes PRs 51,500 billion borrowed from local banks and PRs 24,500 billion from external sources. Managing this debt remains a critical challenge for the government.
Current Account Surplus: The current account recorded a surplus of $1.9 billion during July-April FY25, driven by strong IT exports. IT exports reached approximately $3.5 billion, showcasing the potential of Pakistan's technology sector. This surplus provides crucial support to the country's foreign exchange reserves.
Remittance Growth: Remittances are projected to reach $37-38 billion by the end of the fiscal year, up from $27 billion two years ago. Increased remittances are expected to boost consumer spending and provide vital support to the economy. The Pakistan Remittances Initiative and Roshan Digital Accounts are credited with facilitating these inflows.
Improved Forex Reserves: Foreign exchange reserves stood at $9.4 billion as of June 30, 2024, a significant recovery from 2023. By 2025, reserves rose to $16.64 billion, with the State Bank of Pakistan holding $11.5 billion and commercial banks $5.14 billion. This improvement provides a buffer against external economic shocks.
Expert Insight:
Muhammad Aurangzeb, Finance Minister of Pakistan: "The next fiscal year will be a turnaround story, with the budget expected to focus on IMF compliance, increased revenue, and growth-oriented reforms."
Asian Development Bank Country Director for Pakistan Emma Fan: “Pakistan's economy has benefitted from improved macroeconomic stability through robust reform implementation in areas such as tax policy and energy sector viability. Growth is projected to persist in 2025 and to increase in 2026.
Sustained implementation of policy reforms is vital to buttress this growth trajectory and fortify fiscal and external buffers.”
Wrap-up:
Pakistan's economic outlook for 2025 presents a cautiously optimistic picture, balancing growth targets with the realities of significant debt.
The government's focus on sustainable strategies and IMF compliance signals a commitment to long-term stability. Success will hinge on effective macroeconomic management and continued reforms to unlock the nation's economic potential.
Author Bio:
Rohan Desai has dedicated 10 years to analyzing business trends, technological innovations, and international trade dynamics. His expertise spans from startup ecosystems to global economic policy.
