Strategic debt, exports central to Pakistan’s economic vision

January 22, 2026 (MLN): Pakistan is prioritizing fiscal discipline, strategic use of debt, and export-driven growth as key pillars of its economic strategy, positioning itself for sustainable development in a challenging global environment.

Speaking at the World Economic Forum’s high-level panel discussion in Davos, “How Can We Unlock New Sources of Growth? – Weight of Global Debt,” Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, emphasized that debt, if deployed productively, can drive growth.

The panel featured prominent global financial leaders, including Anne Walsh, Managing Partner and Chief Investment Officer of Guggenheim Partners; Ronald P. O’Hanley, Chairman and CEO of State Street; and Jennifer Johnson, CEO of Franklin Templeton, and was moderated by Joumanna Bercetche, Anchor at Bloomberg News, according to a press release issued.

Senator Aurangzeb explained that for Pakistan, borrowing is focused on investments that generate exportable goods and services rather than financing consumption, ensuring sustainable repayment and long-term growth.

 He highlighted the constraints faced by emerging economies without reserve currencies, stressing the need for market efficiency, prudent borrowing, and careful management of foreign exchange risks.

The Minister pointed to Pakistan’s fiscal achievements, including a reduction in the debt-to-GDP ratio from 75% to 70%, attainment of a primary surplus, and a sharp decline in inflation from 38% to single digits.

The policy rate has been lowered from over 22% to 10.5%, placing the country on the favorable side of the interest rate cycle.

He also outlined ongoing debt management reforms, including liability operations, debt buybacks, and plans to enter the Chinese capital market with Pakistan’s inaugural Panda bond, structured as a green bond to support sustainable financing.

On climate resilience, he noted that strengthened fiscal buffers allowed Pakistan to fund relief for recent floods domestically, avoiding reliance on international aid.

Senator Aurangzeb highlighted the role of public-private partnerships and capital markets in financing development, citing Pakistan’s largest-ever syndicated financing of $3.6 billion for a major copper mining project, projected to generate $2.8 billion in annual exports from 2028.

He also emphasized Pakistan’s growing potential in IT, freelancing, and digital services, noting that capacity building and effective execution are essential to convert opportunities into sustainable growth.

Concluding his remarks, the Minister stated, “It is not about the availability of debt or funding, but how wisely and effectively it is deployed to generate long-term economic value.”

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