ISLAMABAD: Finance Minister Muhammad Aurangzeb announced on Saturday that Pakistan will send a high-powered delegation to Washington to engage with the Trump administration following the United States’ imposition of reciprocal tariffs on Pakistani goods.
Speaking at a press conference here, Aurangzeb said the delegation’s engagement strategy would be finalised after approval from Prime Minister Shehbaz Sharif. “A steering committee and joint working group will develop recommendations to address this challenge,” he stated, adding that Pakistan seeks to create a mutually beneficial situation with the US.
“We want to make sure that we, in terms of our representations, put forward how we see it in the medium to long term as a win-win situation for both Pakistan and the US,” Aurangzeb said.
A veteran banker, the finance minister emphasized that Islamabad views the issue not only as a challenge but also as a chance to deepen economic cooperation with its largest export market.
He highlighted that the United States is an important strategic and trade partner for Pakistan, adding that the government is approaching the matter with a comprehensive response plan.
The minister confirmed that Pakistan’s financial arrangements with China, including rollovers, EXIM Bank refinancing and trade facility enhancements, remain on track. However, he declined to provide specific details about these arrangements. When pressed by reporters after the conference, Aurangzeb maintained that Pakistan’s external financing needs are being met under the current IMF programme, which recently reached a staff level agreement.
“The government will not provide subsidies to any sectors to counter the US tariffs,” Aurangzeb emphasized. He noted that the US has implemented a 10 percent universal tariff for all countries, with an additional 29 percent reciprocal tariff set to take effect on April 9, 2025.
Discussing Pakistan’s economic situation, the minister avoided terms like “boom and bust cycles” but acknowledged the country’s history of achieving macroeconomic stability only to later pursue unsustainable policies that depleted foreign exchange reserves and created balance of payment crises. He stressed the government’s commitment to maintaining stability through export-led growth and private sector development, saying they aim to fundamentally transform the economy.
Aurangzeb reported significant progress with the IMF, including meeting all quantitative and structural benchmarks. This has paved the way for a $1 billion tranche under the Extended Fund Facility and a new agreement under the Resilience Sustainability Facility (RSF), which will disburse funds over 28 months. “We have committed to 13 reforms under RSF,” he added.
In a historic development, the minister noted that all the provinces have approved the Agriculture Income Tax, with implementation now moving forward. He also mentioned that an IMF mission is currently in Pakistan conducting Governance and Anti-Corruption Diagnostics assessments, though he clarified this visit is not related to budget discussions.
He said that an IMF mission might visit Pakistan next month to deliberate upon the next budget for 2025-26 and termed it as a routine exercise of engagements with the Fund. He said that Pakistan sought Technical Assistance (TA) on different areas from the Washington-based lender.
The minister spoke at length about Pakistan’s economic achievements, including increased foreign exchange reserves supported by a 32 percent rise in remittances, which are projected to reach $36 billion by June 2025. The State Bank s reserves are expected to hit $13 billion, aided by a 7 percent growth in export earnings. Inflation has dropped sharply to 0.7 percent month-on-month, allowing the policy rate to be reduced from over 22 percent to 12 percent, with potential for further decreases.
He said dividends of macroeconomic stability would be passed on to the masses while sticking to path of export and private sector led growth, jacking up tax to GDP ratio, reducing expenditures through undertaking right-sizing of ministries and 400 attached departments, and implementing pension reforms.
Aurangzeb cited recent Pakistan Bureau of Statistics data showing Eid spending rose to Rs870 billion this year from Rs720 billion last year. He pointed to increased cement dispatches and automobile sales as indicators that Pakistan would achieve approximately three percent GDP growth this fiscal year.
He said that the Economic Coordination Committee (ECC) of the cabinet was taking measures to reduce inflation. The ECC is closely monitoring inflation and has implemented new measures to track it. An institutional system is being established to monitor the prices of essential commodities, he added.
The finance minister stated that the PWC and Overseas Chamber have reported an increase in the Business Confidence Index, indicating that investor confidence has been restored. Local investors are also investing, and there has been a rise in investment in the stock market.
Looking ahead, the minister outlined key government priorities including tax reforms, energy sector improvements, state-owned enterprise restructuring and privatisation of PIA, financial institutions and three Discos.
He said that the reduction in electricity prices was a major achievement, and the process of reforms in the energy sector is ongoing. The privatisation drive was being accelerated, with 24 entities referred to the Privatisation Commission. He added that further improvements in the power sector would soon be seen.
When asked about PIA’s privatisation, the finance minister stated that the second round of PIA’s privatisation will begin this month.
On taxation, Aurangzeb said reducing the burden on salaried individuals would require greater contributions from the real estate and retail sectors. He pledged to simplify income tax returns for those whose sole income comes from salaries, adding that in the next fiscal year, the salaried class would be subject to a self-assessment tax payment system.
Regarding cryptocurrency, the minister said Pakistan will proceed cautiously following its exit from FATF monitoring, while noting that Pakistan ranks seventh globally in cryptocurrency usage with rapidly growing adoption.