Pakistan has reached staff-level agreement with IMF for second loan review; Finance Minister

Finance Minister Muhammad Aurangzeb on Tuesday addressed The Future Summit 2025 in Karachi, warning that Pakistan’s economic stability faces two major challenges: unchecked population growth and climate change, which he termed “existential threats.” He emphasized the urgent need for sustained policy action to address these issues and ensure long-term economic stability.

Aurangzeb highlighted the government’s focus on transitioning to an investment-driven economy, led by the private sector rather than relying on borrowing. He also discussed his recent visits to Washington, where he met with officials from the World Bank and the International Monetary Fund (IMF), and praised the diplomatic efforts with Saudi Arabia, the United States, and other partners for enhancing bilateral and economic cooperation.

He further announced that Pakistan had reached a staff-level agreement with the IMF for its second loan review, with the next tranche expected to be approved in early December. Aurangzeb noted the evolving global economic landscape and the critical role of the private sector in driving productivity-led growth. He assured that investor confidence is rising and affirmed that “our direction is right.”

Aurangzeb also addressed the government’s fiscal reforms, particularly in expanding the tax base through the use of artificial intelligence to strengthen revenue collection. He reported that the sugar sector is now digitized, and the cigarette sector will follow. The government has registered 900,000 new taxpayers and aims to expand these policies to other sectors.

He confirmed that Google had decided to open an office in Pakistan, with plans to establish the country as an export hub, reflecting growing global confidence in Pakistan’s tech ecosystem. Additionally, a blockchain center has been set up at the Lahore University of Management Sciences (LUMS) with a USD 13 million private investment.

Aurangzeb also shared that Egypt has shown interest in adopting Pakistan’s reform model, and the privatization of Pakistan International Airlines (PIA) is on track to be completed by the end of the year. He also noted a recent UAE investment in a Pakistani bank, calling it “the beginning of a new era.”

In his address, Federal Minister for Climate Change and Environmental Coordination, Senator Musadik Malik, emphasized the need for a “level playing field” in Pakistan’s economy. He warned that elite dominance and protectionist policies, such as subsidies for certain local sectors, were stifling innovation, exports, and foreign investment. Malik stated that Pakistan’s economic challenges, including the “boom-and-bust” cycle, are largely due to imbalances in the economy and protectionist practices.

He also discussed the severe environmental challenges, such as smog in Lahore and flooding in Karachi, which have resulted in a reduction in life expectancy by up to eight years. Malik called for immediate reforms in local governance and the empowerment of local bodies to build stronger, healthier communities.

Sindh Chief Minister Syed Murad Ali Shah underscored the province’s importance in Pakistan’s economy, contributing over 30% to the national GDP, with Karachi accounting for nearly half of the country’s exports. He highlighted reforms in transparency, digital governance, and ease of doing business, emphasizing the province’s public-private partnership model as the strongest in Pakistan. Shah also detailed the allocation of Rs959 billion for current development projects, with a proposed Rs3.45 trillion for the next budget, including Rs523.7 billion for education.

Governor of Khyber Pakhtunkhwa, Faisal Karim Kundi, called on investors to explore opportunities in the province, citing its potential in tourism, minerals, renewable energy, and value-added industries. He emphasized the province’s natural resources and improving infrastructure as key factors making it an attractive destination for investment.

Fauzia Janjua, a finance and management consultant, highlighted the lack of women in leadership roles within Pakistan’s financial sector. She emphasized that real progress in the economy would remain out of reach until women are included in mainstream economic processes. Janjua called for financial inclusion and women’s empowerment to go hand in hand, quoting Napoleon: “Give me good mothers, and I will give you a good nation.”