Pakistan could improve economic projections for 2027 after the end of the Iran war, but it is still too early to revise the budget, Finance Minister Muhammad Aurangzeb toldReuters, hours after the US. Iransigned a dealto end the Middle East conflict.
Damaged energy infrastructure meant supply chains would take time to return to normal. after the conflict pushed inflation back into double digits, Aurangzeb said.
“We were looking at how we manage the second, third-order impact in case this conflict continues,” he said. “The energy infrastructure has been hit. And therefore, it will take time before we return to normalcy in terms of supply chains.”
He added, “I do see upsides in what we have projected for next year,”. cautioned it would be “way too premature” to revise the budget.
The budget for the upcoming financial year,presented in Parliamenton Friday, targets growth of 4 per cent and inflation of 8.2pc.
It raiseddefence spendingby 18pc to Rs3 trillion. while relying on higher tax revenue to keep a $7 billion International Monetary Fund (IMF) programme on track.
Islamabad may use commercial borrowing in fiscal year 2027 to change its creditor profile without increasing overall external debt. Aurangzeb added in comments on Monday.
“Ideally. what we want to do is to see if we can replace some of the bilateral through commercial,” he said. “We do not intend to increase the size of our external debt.”
Pakistanrepaid$3.4 billion in bilateral deposits from the United Arab Emirates last month. has also tapped the emirates’ commercial banks for financing, reflecting the creditor-profile shift Aurangzeb wants to formalise.
It plans further Panda Bond, Eurobond, US dollar. first rupee-linked, dollar-settled issues, though the sizes have yet to be decided, he said.
The FY27 budget envisages $2.82bn in commercial. eurobond financing, while Pakistan has approval for $1bn equivalent in Panda bonds after a$250 million debutthat was 95pc backed by the Asian Development Bank and the Asian Infrastructure Investment Bank.
Interest has surged in Pakistan’s burgeoning defence industry afterlast year’s conflict with India,. Aurangzeb said it was too early to project any defence-export upside.
The government’s immediate focus is on allocations, given two “active” borders, he added, as the country is flanked by Afghanistan. India.
Pakistan has also moved to formalise the digital asset sector this year, for example by signing pacts withBinanceandWorld Liberty Financial.
Aurangzeb said Pakistan would regulate crypto, tokenisation. digital-asset exchanges before taxing the sector, saying revenue gains would follow once it was formalised.
“Yes, at some point we have to bring it into the taxation timeframe,” he added. “But this was not the time to do it.”
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