Finance Minister Muhammad Aurangzeb says Pakistan must raise the FBR tax-to-GDP ratio to 11%-12% in the short term while advancing structural reforms and private-sector investment.
ISLAMABAD, September 4, 2026: Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb said on Friday that Pakistan’s Federal Board of Revenue (FBR) tax-to-GDP ratio had improved from 8.8% to 10.3%, with the government targeting 11% to 12% in the short term.
Addressing the “Mobilising Private Capital: National Strategic Dialogue on PPPs and Privatisation”, organised by the Asian Development Bank (ADB), Aurangzeb said the government remained committed to maintaining macroeconomic stability and moving the economy from stabilisation towards sustainable growth.
He stressed the need to maintain the momentum of structural reforms while strengthening the private sector through privatisation and public-private partnerships (PPPs).
Fiscal position improves
Aurangzeb said Pakistan had made significant progress in addressing the structural twin deficit, which had fallen from 12.5% of GDP to 2.6% over the past two and a half to three years.
He attributed the improvement on the fiscal side to higher revenues following the transformation of the FBR in terms of people, processes and technology. FBR revenues, he said, had increased by 40% over the past two years.
At the same time, the government was working to contain expenditure, including the costs of running the civil government and debt servicing, although significant challenges remained.
Aurangzeb reiterated that the FBR tax-to-GDP ratio had risen from 8.8% to 10.3%, with a short-term target of 11% to 12%.
Remittances and IT exports support external sector
On the external sector, the minister said Pakistan’s position had been supported by strong remittance inflows and growth in IT export services.
IT exports reached $4.6 billion last year, including $1.6 billion generated by freelancers.
However, goods exports remained broadly unchanged at around $30 billion, which Aurangzeb described as an area requiring greater attention.
Energy reforms linked to privatisation
Aurangzeb said reforms in the energy sector, state-owned enterprises (SOEs) and privatisation were closely interconnected.
He stressed that structural reforms in the energy sector were essential to making progress on SOEs and the privatisation agenda.
The minister said 27 transactions had been handed over to the Privatisation Commission, while some SOEs considered “beyond repair” had been closed, including Utility Stores Corporation, PASCO and PWD.
He added that debt servicing, public debt reduction and pension reforms were also part of the government’s broader public finance reform agenda.
Pakistan returns to international capital markets
Aurangzeb said Pakistan had received three sovereign credit rating upgrades since April 2025, allowing the country to return to international capital markets after a hiatus of around four years.
He said the order book for the latest $3 billion transaction was twice the amount issued and attracted a diverse investor base from Asia, the Middle East, Europe and the United States.
“This is a great vote of confidence in terms of our direction of travel as far as the economy is concerned,” he said.
Government targets growth above 4%
Looking ahead, Aurangzeb said the government aimed to achieve economic growth of more than 4% during the current fiscal year.
It also plans to increase foreign exchange reserves from $18.4 billion as of June 30 to $21 billion by the end of the fiscal year.
He said the government was closely monitoring the ongoing conflict and its potential impact on economic growth and inflation projections.
Focus on debt market diversification
The finance minister said the government was seeking to reduce its reliance on the banking system to meet borrowing requirements by developing debt capital markets and broadening the investor base.
He said the government wanted greater participation from insurance companies and other non-bank financial institutions.
The Ministry of Finance was also working on a rupee-denominated, dollar-settled bond and exploring the possibility of tokenising some existing Eurobond debt, following Hong Kong’s example.
Greater private-sector role
Aurangzeb said stronger participation by local investors and conglomerates in privatisation transactions would send a positive signal to foreign investors.
He noted that conglomerates were increasingly prepared to collaborate through consortiums to participate in investment opportunities.
On PPPs, the minister welcomed efforts to bring relevant initiatives under one umbrella through the Privatisation Commission.
He said successful provincial models, particularly those developed in Sindh, could be adapted at the federal level.
The government was also seeking to facilitate private equity and venture capital investment, including through improvements in taxation and regulatory frameworks.
Aurangzeb stressed the importance of a whole-of-government approach to mobilising private capital and said the government remained fully committed to both privatisation and public-private partnership initiatives.