Aurangzeb Rules Out Consumption-Led Growth, Says Tariff Reforms Will Continue

Aurangzeb Rules Out Consumption-Led Growth, Says Tariff Reforms Will Continue

Pakistan's Finance Minister Muhammad Aurangzeb has ruled out a return to liquidity-fuelled, consumption-led growth, saying the government will instead stay focused on sustainable, export-driven expansion. Speaking at a Lahore event organised by the American Business Forum, he said tariff reforms will continue into their second year, aimed at lowering the cost of imported raw materials and intermediate goods to boost industrial competitiveness.

Aurangzeb pointed to sharp improvements in the headline numbers: the combined twin deficits fell from 12.5 percent of GDP to 2.6 percent by the close of the last fiscal year, driving the fiscal deficit to a 22-year low, while external debt repayments dropped from $26.5 billion last year to $21.5 billion this year. IT export services grew from under $1 billion to $4.6 billion, with expectations of reaching $5.5 billion in the current fiscal year. Recent budget measures supporting exporters include the removal of super taxes, lower tax slabs and exporter financing at 4.5 percent, while universal energy subsidies have been replaced by targeted relief estimated to reach 40 to 50 million people.

The shift away from import-dependent expansion is meant to break Pakistan's cycle of recurring balance-of-payments crises, the minister said, building resilience against uncertain global conditions, energy risks and climate pressures. He also flagged a 2.55 percent population growth rate as a domestic challenge. American Business Forum President Osman Khalid Waheed, former State Bank governor Raza Baqir and Habib Group Vice Chairman Salman Burni also spoke at the gathering.

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