KARACHI: Pakistan’s Finance Minister Muhammad Aurangzeb said on Wednesday disciplined borrowing, export-led growth and careful debt management were central to stabilizing the country’s economy, as Islamabad looks to unlock new sources of growth amid rising global debt levels.
Speaking at a panel discussion on the sidelines of the World Economic Forum (WEF) in Davos, he said debt was not inherently harmful if used productively, but warned that emerging economies such as Pakistan could not afford to deploy borrowed funds for consumption.
“For countries like Pakistan, debt must be channeled into investments that generate exportable surplus,” Aurangzeb said, according to a statement circulated by the Finance Division. “It is not about the availability of debt or funding, but how wisely and effectively it is steered to create long-term economic value.”
Pakistan has been pursuing fiscal reforms as part of an International Monetary Fund-backed stabilization program, including cutting subsidies, broadening the tax base and restructuring state-owned enterprises, as the government seeks to restore macroeconomic stability and revive growth.
Aurangzeb said Pakistan had reduced its debt-to-GDP ratio to 70 percent from 75 percent, achieved a primary fiscal surplus and brought inflation down from a peak of 38 percent to single digits, allowing the central bank to cut its policy rate to 10.5 percent.
