Key Points
- At least five state-owned entities could be privatised in FY2026-27.
- US talks continue on a proposed $10 billion exchange stabilisation facility.
- IMF agreement could unlock $1.21 billion in fresh financing.
ISLAMABAD: Pakistan expects economic growth to exceed 4 per cent in the current fiscal year despite elevated oil prices, as the government eyes more than $1 billion from the privatisation of at leastfive state-owned entities, Finance Minister Muhammad Aurangzeb has said.
Aurangzeb told Reuters in an interview on Monday that Pakistan had secured adequate fuel supplies without shortages and that key sectors, including agriculture, were holding up despite economic pressures from the Middle East conflict.
The government is closely monitoring inflation, which could rise further over higher commodity prices, as Pakistan remains vulnerable to disruptions in Gulf energy supplies, remittances and financial support from the region.
The country also depends on external financing to strengthen its foreign exchange reserves and meet debt repayment obligations.
Pakistan’s economic recovery has been supported by a $7 billion, 37-month loan programme agreed with the International Monetary Fund (IMF) in 2024. The programme requires reforms, including measures to increase tax revenue from agricultural income.
IMF financing and US talks
Pakistan reached a staff-level agreement with the IMF last week that could unlock about $1.21 billion in financing under its Extended Fund Facility (EFF) and climate-related programme support, the Resilience and Sustainability Facility (RSF), subject to the required IMF Board approvals.
Aurangzeb said negotiations were also continuing with the United States over a proposed $10 billion exchange stabilisation facility, although he declined to give a timeline for concluding the discussions.
“If it comes through, this will be a great help for us,” he told Reuters, adding that the proposal was separate from ongoing engagement with the US Export-Import Bank and the US International Development Finance Corporation.
However, he said Pakistan’s access to financial markets would not be affected if the proposed facility did not materialise.
The financing discussions are part of Pakistan’s endeavour to consolidate its economic recovery, maintain external stability and reduce pressure on public finances by diversifying its foreign exchange resources.
Pakistan’s privatisation drive
The government has around a dozen entities in its privatisation pipeline, including state-owned electricity distribution companies and plans to outsource airport operations, Aurangzeb said.
He expects five or six transactions to close during the current fiscal year, potentially generating more than $1 billion.
The planned sales follow the privatisation of Pakistan International Airlines late last year that generated over half a billion dollars for the government. The divestitures in the pipeline are part of efforts to reduce the financial burden from loss-making state enterprises.
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Privatisation is a key test of Pakistan’s commitment to economic reforms under its IMF programme, as loss-making public-sector companies can add to fiscal pressures and drain government resources.
Aurangzeb said the government wanted the private sector to play a leading role in the economy, with the state supporting investment and creating an environment conducive to business activity.
The proposed transactions are expected to cover a range of public-sector assets and operations as the government seeks to improve efficiency, attract investment and limit the cost of maintaining loss-making enterprises.
Economic growth above 4 per cent would mark a further step in Pakistan’s recovery, but persistently high energy prices and regional instability would be the major risks to the outlook.
Pakistan’s performance will also depend on containing inflation, maintaining external financing and implementing the structural reforms required under its IMF programme.
Pakistan has gradually emerged from a severe balance-of-payments crisis through fiscal tightening, monetary discipline and external financing support.
Lower inflation and improved foreign exchange reserves have helped restore stability, allowing the economy to stabilise from crisis management towards a gradual recovery in growth.
