Prime Minister Shehbaz Sharif declared that Pakistan has moved out of “economic firefighting,” saying tough decisions taken over the past two years have stabilized the economy.
He noted that the government has successfully cut inflation to 4.5 percent and lifted foreign exchange reserves to over $21 billion.
Speaking at the launch of the government’s Economic Governance Reforms, the prime minister said the country inherited a severe economic crisis in early 2024, marked by nearly 30 percent inflation, critically low reserves, weak state institutions and isolation from global markets. He said the situation left no option but to take politically difficult decisions.
PM Shehbaz said the government withdrew unsustainable subsidies, enforced fiscal discipline, improved public financial management and initiated long-delayed privatisation reforms. “These were not cosmetic fixes but unavoidable structural reforms,” he said.
He told the audience that inflation had dropped from 29.2 percent to 4.5 percent, while foreign exchange reserves increased from $9.2 billion to over $21 billion.
The current account position improved from a $3.3 billion deficit to a $1.9 billion surplus, and the country moved from a primary deficit to a primary surplus, he added.
The prime minister said revenue reforms were beginning to fix long-standing problems, with the tax-to-GDP ratio rising from around 8 percent to over 10 percent and more than one million new taxpayers added to the system. Tax collection grew by 26 percent in 2025, supported by large-scale digitisation.
He said the government’s e-procurement platform now covers over 1,000 federal agencies and more than half a million contracts, and is integrated with the Federal Board of Revenue, Nadra and the Securities and Exchange Commission of Pakistan.
Highlighting privatisation, the prime minister said the sale of Pakistan International Airlines and First Women Bank marked a clear break from decades of delay, with more state-owned enterprise reforms underway.
He said Pakistan’s stabilization efforts have been acknowledged by international credit rating agencies and development partners.
“With macroeconomic indicators stabilised, our focus now shifts to growth, exports and making Pakistan a far easier place to do business,” he said, calling it a move from crisis management to institution-building.
The reform programme includes 142 actions, with 59 priority reforms and 83 supporting measures to be implemented by 58 institutions.
Key areas include taxation, energy, privatisation, pensions, tariffs, regulatory simplification, rightsizing of the federal government and digital governance.
Earlier, Finance Minister Muhammad Aurangzeb said GDP growth reached 3.1 percent in FY25 and accelerated to 3.71 percent in the first quarter of FY26. He said inflation stayed around 5 percent in the first five months of FY26 despite climate-related shocks.
He added that public debt declined to about 70 percent of GDP from 75 percent in FY23, and early debt repayments saved Rs. 3.5 trillion in interest, and the policy rate was reduced to 10.5 percent from 22 percent in June 2024.
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