ISLAMABAD: Pakistan’s Finance Minister Muhammad Aurangzeb has expressed optimism about the country’s 2027 economic outlook following the end of the Iran war. However, he said it is too early to make any changes to the federal budget that was recently presented.
In an interview, Aurangzeb explained that the conflict had disrupted energy infrastructure and global supply chains. These disruptions contributed to inflationary pressures and economic uncertainty. He noted that the government had been closely monitoring the situation and assessing the possible effects if the conflict continued.
According to the finance minister, damaged energy facilities have created challenges for supply chains. He said it will take time for economic activity and trade flows to fully return to normal levels. Despite these concerns, he believes there is room for improvement in Pakistan’s 2027 economic projections.
Aurangzeb stressed that revising the budget at this stage would be premature. He said the government would continue to evaluate economic conditions before making any adjustments. Pakistan’s budget for fiscal year 2026-27 targets economic growth of 4 percent and inflation of 8.2 percent.
The budget also includes an 18 percent increase in defence spending, raising allocations to Rs. 3 trillion. At the same time, the government plans to increase tax revenues to remain on track with its $7 billion agreement with the International Monetary Fund.
The finance minister also discussed plans to improve Pakistan’s debt structure. He said the government may consider commercial borrowing during fiscal year 2027. The goal is to replace some bilateral borrowing with commercial financing without increasing total external debt.
Pakistan recently repaid $3.4 billion in deposits to the United Arab Emirates. At the same time, the country has obtained financing from commercial banks in the UAE. This reflects the government’s strategy to diversify its creditor base.
Aurangzeb added that Pakistan is exploring future financial instruments, including Panda Bonds, Eurobonds, U.S. dollar bonds, and its first rupee-linked, dollar-settled bond issuance. Final decisions on the size of these offerings have not yet been made.
The minister also highlighted developments in the digital asset sector. Pakistan has taken steps to regulate cryptocurrencies, tokenization, and digital asset exchanges. He said taxation measures could follow once the sector is fully formalized and regulated.
While interest in Pakistan’s defence industry has increased after last year’s conflict with India, Aurangzeb said it is still too early to estimate any export gains. However, he remains hopeful that stronger economic conditions could support the country’s broader 2027 economic performance in the coming years.
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The government will continue monitoring regional developments and global markets as it works toward achieving its growth and inflation targets for the next fiscal year.
