Pakistan’s economy is currently navigating turbulent waters, but recent updates from the government hint at a potential turnaround. With its total debt soaring to PRs 76,000 billion, the Finance Minister, Muhammad Aurangzeb, maintains that the nation is on a path to recovery, indicating a growing optimism about the country’s economic future.
Current Economic Overview
The latest economic survey revealed that Pakistan’s total debt has increased significantly during the first nine months of the fiscal year, which runs from July 1 to June 30. The debt is divided into PRs 51,500 billion from domestic banks and PRs 24,500 billion from external borrowing. Nonetheless, the government projects a GDP growth of 2.7% for fiscal year 2024-25, demonstrating a gradual recovery from the previous year’s contraction of -0.2%.
Finance Minister Aurangzeb highlighted this positive shift during a press briefing, reinforcing that the country’s economic conditions have been improving over the past two years. According to him, the growth rate of GDP is an encouraging sign that sets the stage for the overall economic outlook. As the minister noted, the global GDP growth is around 2.8%, placing Pakistan’s recovery within a comparable context.
Signs of Improvement
The economic indicators presented from the survey show that the Pakistani economy is slowly stabilizing. In the recovery narrative, one of the most promising developments is the current account surplus of $1.9 billion recorded between July and April of the fiscal year. This surplus has been bolstered by information technology exports, which are estimated to have contributed approximately $3.5 billion.
Another significant factor influencing the economic landscape is remittances. Aurangzeb anticipates that remittances will reach between $37 billion to $38 billion by the end of the fiscal year, a remarkable increase from $27 billion two years ago. This influx of foreign currency can be a crucial lifeline for the economy, enhancing the resilience against external shocks.
Debt Management and Future Projections
While the rising debt levels pose challenges, the government is reassured by the improving debt-to-GDP ratio, which has seen a decline from 68% to 65%. This drop signifies an effort to manage the debt more effectively, framing the narrative around stabilization. The government aims to adhere to conditions set by the International Monetary Fund (IMF), which may play a critical role in enhancing fiscal sustainability.
Aurangzeb indicated that the upcoming fiscal year has the potential to be a "turnaround story," a phrase that sparks hope. Focused on achieving sustainable growth, the government seems intent on making the necessary reforms and budgetary adjustments to facilitate this shift. However, realizing this potential will depend significantly on various internal and external economic conditions moving forward.
Foreign Exchange Reserves and Fiscal Health
One of the most pressing concerns for any economy is its foreign exchange reserves, and Pakistan’s situation has shown marked improvements. The forex reserves reached $9.4 billion at the end of June 2024, a notable rise from just two weeks of import coverage the previous year. Furthermore, total foreign exchange reserves soared to $16.64 billion in 2025, spread across the State Bank of Pakistan ($11.5 billion) and commercial banks ($5.14 billion). This substantial growth in reserves aims to protect the country against currency fluctuations and enhance investor confidence.
Conclusion: A Hopeful Future
Pakistan’s economy, while still facing significant challenges, shows signs of recovery and stabilization as per the latest data and analyses. The Finance Minister’s assurance of a turnaround story resonates with those hopeful for an economically rejuvenated future. While maintaining vigilance over rising debt levels, the focus on sustainable growth, remittances, and improved fiscal health may pave the way for a brighter economic landscape.
For Pakistan to successfully navigate these changes, it will require a concerted effort—both from the government in implementing prudent fiscal and economic policies and from the public in supporting these initiatives. The future is uncertain, but with steadfast policies and optimistic projections, there is a sense of hope that the coming years will bring about the positive transformation that the nation envisions.
