Pakistan introduces NFC deliberations, boosts export, private sector

December 01, 2025 (MLN): The 11th National Finance Commission (NFC) Award process is set to begin next week, marking a new phase of federal provincial engagement on revenue, expenditure, and governance reforms.

Chief Ministers and provincial finance teams will join in the deliberations, which the Minister said will follow a “Pakistan First” consensus approach, building on the framework established under the National Fiscal Pact.

Speaking at a wide-ranging press conference in Islamabad, Senator Aurangzeb highlighted the Government’s decisive shift toward an export-led, private-sector-driven, and inclusive growth model.

He pointed to the recent abolition of the decades-old Export Development Surcharge (EDS) as a key step in empowering exporters and boosting competitiveness.

The 0.25% levy, introduced in 1991, has been removed, and reforms are underway to strengthen the governance of the Export Development Fund (EDF).

Cabinet approval for the abolition is underway, with implementation set to begin immediately.

The Finance Minister also addressed the Global Diagnostic and Corruption Report, emphasizing Pakistan’s proactive role in facilitating the assessment.

He noted meaningful progress in taxation, governance, public financial management, and procurement, while stressing that institutional reforms are essential to sustaining the country’s economic turnaround.

“Structural reforms without institutional strengthening would remain incomplete,” he said, framing the report as a catalyst for accelerated reforms rather than a critique.

Highlighting recent economic performance, the Minister reported growth in key industrial sectors between July and October: cement production up 16%, fertiliser 9%, petroleum 4%, automobiles 31%, and mobile phone manufacturing 26%.

Large-scale manufacturing grew 4.1% year-on-year in the first quarter, reversing last year’s contraction.

Exports and IT services showed strong momentum, with overall exports rising 5% and IT exports increasing over 20% year-on-year. The $3.5bn Reko Diq syndication, led by IFC, is expected to generate $2.8–$2.9bn in annual exports once production begins.

Remittances reached $38bn last year and are projected to exceed $41bn in 2025, providing a robust buffer to the current account.

The Government is managing imports carefully under a reformed tariff regime that prioritizes raw materials and intermediate goods while gradually phasing out long-standing protectionism over the next four to five years.

Structural reforms continue across taxation, energy, SOE reform, pensions, debt management, and rightsizing.

The new Tax Policy Office, now operational under the Finance Division, will prepare tax policy and the national budget, allowing the FBR to focus on enforcement, compliance, and technology-driven administration.

On public finance, Senator Aurangzeb reported that Pakistan’s domestic debt stock has stabilized for the first time in nine years, with debt servicing costs declining following the policy rate reduction.

Pakistan’s inaugural Panda Bond, supported by ADB and AIIB and approved by China’s central bank, is expected before December or by the Chinese New Year, diversifying funding sources and reducing borrowing costs.

The Minister also emphasized that revenue, expenditure, and governance reforms require constructive federal provincial engagement, which will underpin the upcoming NFC Award discussions.

He expressed confidence that the process will be conducted in a spirit of “Pakistan First,” following the consensus approach demonstrated in the National Fiscal Pact.

Addressing competitiveness, taxation, and energy pricing, the Minister reaffirmed the Government’s commitment to expanding the tax base, enhancing enforcement, reducing leakages, and ensuring fairness between formal and informal sectors.

Tax refunds have increased from Rs200bn to Rs250bn over a five-month period, showing responsiveness to industry needs.

Efforts to reduce circular debt and improve energy pricing are already showing tangible progress.

Strong interest from international firms has been observed across sectors including energy, mining, IT, telecom, construction, logistics, and electric vehicles.

Recent commitments have come from global companies such as Aramco, Wafi, Gunvor, Turkish Petroleum, Barrick Gold, Citizen Metals, Nova Minerals, BYD, Chery, NWTN Motors, Abu Dhabi Ports, and Google, highlighting the country’s potential as a strategic hub for business and exports.

In concluding remarks, the Finance Minister reiterated that Pakistan has moved past the economic crisis of two years ago and is now pursuing a stable, export-driven, investment-focused growth model grounded in structural and institutional reforms.

Agriculture, large-scale manufacturing, the new economy, remittances, and private investment are expected to drive a resilient and inclusive economic future for Pakistan.

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