KEY POINTS
- Pakistan records $2.1 billion current account surplus
- GDP growth for FY 2024–25 reaches 2.7 percent
- Real tax collection increased by 46 percent
ISLAMABAD: In a significant engagement with the diplomatic community, Pakistani ministers have briefed foreign diplomats regarding the country’s recent economic achievements, tax reform agenda, and key developments in the power sector.
The Minister for Power, Sardar Awais Ahmad Khan Leghari, and the Minister of State for Finance, Bilal Azhar Kayani, jointly addressed the gathering of ambassadors, high commissioners, and senior diplomats from the USA, UK, European Union, Italy, Germany, Canada, Australia, Switzerland, Japan, the Netherlands, and Saudi Arabia at the Finance Division on Tuesday.
Minister Bilal Azhar Kayani offered a data-backed assessment of Pakistan’s macroeconomic landscape, highlighting a shift from stabilisation to sustained reform.
GDP growth for FY 2024–25
He noted that GDP growth for FY 2024–25 reached 2.7 percent, with per capita income increasing by 10 percent to $1,824. Fiscal discipline was reflected in a primary surplus of 3.1 percent of GDP—the highest in two decades—while annual inflation fell to a nine-year low of 4.5 percent.
The policy rate was halved from 22 percent to 11 percent, and the debt-to-GDP ratio declined to 69 percent, underscoring improved fiscal and monetary management.
The external sector also showed marked resilience. Pakistan recorded a $2.1 billion current account surplus for the fiscal year, the first in 14 years, and the highest in 22 years, supported by strong remittances, growing exports, rising foreign direct investment, and stable foreign exchange reserves exceeding $14.5 billion (State Bank’s portion, total around $20 billion).
These improvements were achieved without any significant reliance on external borrowing. The country’s improved fiscal standing has earned positive recognition internationally, including sovereign credit rating upgrades and rising investor and business confidence, reflected in the strong performance of the Pakistan Stock Exchange.
Real tax collection increases
The Chairman Federal Board of Revenue (FBR) elaborated on the FBR Transformation Plan, a comprehensive reform framework based on three pillars—people, process, and technology. Real tax collection increased by 46 percent, with enhanced compliance and enforcement measures contributing to sustained revenue growth.
The reform agenda includes digitisation of invoicing, production monitoring systems, AI-based audit tools, national goods tracking, improved taxpayer services, and strengthened integration with financial data sources. These measures aim to broaden the tax base, increase transparency, and simplify compliance.
He shared how the FBR transformation has started yielding results; from the highest growth in taxes, to having the collection increasingly through compliance and enforcement. He also mentioned the FBR Tax-to-GDP has been the highest ever at 10.24% in FY 2025, compared to 8.8% in FY 2024.
Energy sector transformation
Complementing the economic reforms, Federal Minister for Power Sardar Awais Ahmad Khan Leghari highlighted the transformation underway in the energy sector. He emphasised that ensuring affordable and reliable energy is essential for sustaining economic growth.
Recognising that energy demand rises with economic expansion, the government is pursuing strategic reforms to improve efficiency, enhance governance, and realign tariffs to support productivity and competitiveness.
The Minister noted that over the years, certain structural challenges had emerged—such as high electricity tariffs and inefficiencies in pricing mechanisms—which affected affordability for both households and industries.
These challenges also contributed to pressures on public finances. To address them, the government has undertaken a broad-based reform programme centred on tariff rationalisation, fiscal responsibility, and operational improvements. As a result, progress has been made in stabilising the circular debt during FY 2025.
He also pointed out the importance of modernising energy planning, given the seasonal variations in electricity demand, regional supply constraints, and the growing role of distributed generation. The government is adapting long-term planning and market design accordingly.
The need for competitively priced energy for industry was also highlighted, with reforms geared toward reversing the decline in industrial electricity consumption and encouraging reinvestment in productive sectors.
Performance of electricity distribution companies
The audience was also briefed on efforts to improve the performance of electricity distribution companies, where infrastructure upgrades and strengthened governance are helping reduce technical and commercial losses. These measures are being implemented with a focus on regional equity and institutional coordination.
A cornerstone of these reforms is the establishment of the Power Planning & Monitoring Company (PPMC), a professional entity responsible for integrated energy planning, monitoring, and oversight to ensure long-term sectoral stability and transparency.
The Federal Minister for Power also drew the attention of the diplomatic audience to the significant investment potential within Pakistan’s power sector, estimating opportunities worth $2 to $3 billion across various segments of the energy value chain.
He invited global power utility companies, investors, and industry leaders to explore these prospects, particularly in areas such as grid modernisation, renewable energy integration, distribution efficiency, and energy services.
Emphasising the government’s commitment to regulatory reforms and institutional transparency, the Minister assured participants that Pakistan welcomes strategic partnerships that can contribute to a more resilient and forward-looking energy ecosystem.
He also shared the progress on the privatisation of the Electricity Distribution Companies, with the first batch of three being restructured to be privatised by early 2026, where he called for potential global investors across the utility chains to come forward and participate.
As a recurrent theme during their separate presentations, both Ministers reaffirmed Pakistan’s commitment to responsible economic management and modernising key public sectors in line with global standards. They emphasized that these reforms are part of a strategic, forward-looking national agenda designed to enhance competitiveness, transparency, and resilience.
The diplomatic participants welcomed the comprehensive and candid briefing and acknowledged the government’s resolve to deliver meaningful and sustainable reform.
