Khurram Schehzad details growth push amid fiscal discipline

July 28, 2026 (MLN): The Government of Pakistan is building its long-term economic agenda around sustained macroeconomic stability, structural reforms, and private-sector-led growth, with recovery over the past two to three years already showing improvement across key indicators.

Adviser to the Finance Minister Khurram Schehzad, stated this while delivering the keynote address at a seminar titled "Pakistan Economic Outlook: FY2027 and Beyond," held at a local hotel in Lahore, said a press release issued.

The session was attended by prominent economists, corporate leaders, and financial sector experts, including Dr. Ali Hasanain, Ali Khizer, and Khurram Husain.

Reviewing the macro-fiscal landscape, the Adviser said the economy has moved from severe contraction and external vulnerability toward structural stabilization.

Real GDP growth recovered from negative territory to 3.7%, driven by broad-based gains in the real sector: agricultural growth rose to 2.89%, above its 25-year historical average, Large-Scale Manufacturing (LSM) posted a four-year-high growth rate of 6.1%, and the services sector expanded 4.4%.

On the fiscal side, the deficit has been contained to under 1% of GDP over a nine-month period, with the full-year figure projected to stabilize near 3%, down sharply from 8% in 2022.

 The primary balance posted a record surplus, while the total debt-to-GDP ratio fell from 75% to 68%, which Mr. Khurram Schehzad attributed to disciplined fiscal management in line with statutory debt limits.

On the external front, the current account deficit has narrowed to under $150mn, compared with $17.5bn in 2022, while headline inflation eased to 7.5%.

State Bank of Pakistan-held foreign exchange reserves climbed from a critical low of $3bn in early 2023 to $18bn, covering over three months of imports.

Mr. Khurram Schehzad noted this reserve build-up came mainly through organic inflows rather than fresh external borrowing, with overall public external debt holding steady near $100bn.

Key contributors to the improved balance of payments included record inflows via Roshan Digital Accounts, which have crossed $13bn with average monthly inflows rising to $300mn, alongside IT exports of $4.6bn and freelance earnings of $1.76bn.

The improved external profile was recognised by international rating agencies, with S&P upgrading Pakistan's rating to 'B' with a stable outlook.

On the institutional front, Mr. Khurram Schehzad detailed progress across eleven core reform areas aimed at reducing the state's footprint in commercial activity and encouraging free-market competition.

On SOE restructuring, he cited 28 privatization transactions now underway, including the completed bidding process for Pakistan International Airlines (PIA) and ongoing transactions for First Women Bank, House Building Finance Corporation (HBFC), and power distribution companies (DISCOs).

A Competitive Trading Bilateral Contract Market (CTBCM) framework is also being introduced to end monopoly purchasing structures in the energy sector.

In tax administration, the Federal Board of Revenue is moving to a fully faceless, multi-tiered digital operating model designed to remove discretionary assessment powers.

Other structural steps include rightsizing federal ministries, winding down loss-making entities such as PASCO and PWD, shifting civil service pensions to a defined-contribution model, and deregulating tariffs to remove protectionist barriers and lower input costs for exporters.

Mr. Khurram Schehzad said fiscal measures are being calibrated to encourage private capital formation and industrial expansion. Private sector credit grew by Rs1.46tr, up 15% year-on-year, supported by agricultural credit flows of Rs2.7tr.

The domestic equity market saw 11 IPOs over the past year, a 20-year high, while corporate registrations crossed 43,000 for the year.

To support export competitiveness, the budget introduced tax relief measures including removal of the super tax for corporates with profits under Rs500mn, a cut in turnover tax to 1.25%, and reduced energy tariffs for off-peak industrial use. The Economic Coordination Committee (ECC) also approved an export refinancing facility offering concessional credit at 4.5% for small and medium-sized exporters.

Looking ahead, Mr. Khurram Schehzad said the government is finalizing two flagship frameworks: a Comprehensive Industrial Policy to boost manufacturing competitiveness, and a Medium-Term Tax Policy intended to give domestic and international investors multi-year policy predictability.

Responding to questions on social safety nets, poverty, and employment during the interactive session, the Adviser said short-term fiscal measures are being paired with an expanded social safety net, including higher allocations to the Benazir Income Support Programme (BISP) to protect vulnerable segments during the transition.

He concluded that sustainable job creation and structural poverty reduction remain tied to facilitating private enterprise, scaling industrial efficiency, and maintaining consistent macroeconomic policy execution.

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