Pakistan’s Economic Survey for FY2024–25: Surplus, Reforms, and Fiscal Discipline Lead the Way

ISLAMABAD – June 9, 2025: Finance Minister Muhammad Aurangzeb announced in a detailed presentation of Pakistan’s Economic Survey for FY2024–25 that thanks to extensive structural reforms and careful fiscal management, the nation is on the road to economic stability. Labelling FY2025–26 as a potential “turnaround year,” Aurangzeb said the government has succeeded in stabilizing macroeconomic fundamentals while laying the groundwork for long-term growth.

Fiscal Discipline and Surplus in Pakistan’s Economic Survey for FY2024–25

Aurangzeb reported a major improvement in key fiscal indicators. The fiscal deficit narrowed to 2.6% of GDP, down from 3.7% the previous year. Most notably, the primary surplus—revenue minus non-interest expenditures—doubled to 3.0%, indicating effective cost controls and revenue generation.

“This surplus reflects reduced government spending and a significant boost in tax revenues, which increased by 26.3% to reach Rs9.3 trillion between July and April,” he said.

Aurangzeb added that debt servicing costs were cut in half during the fiscal year, saving nearly Rs1 trillion. This, he said, created the space for interest rate cuts, with the Karachi Interbank Offered Rate (KIBOR) already dropping to around 11%.

Investor confidence and external accounts

A dramatic flip from past deficits, Pakistan’s foreign account showed a \$1.9 billion surplus in July–April FY25. Projected to reach \$37–38 billion by year-end, record-breaking IT exports and a consistent increase in remittances were mostly responsible for this.

As of May 27, the country’s foreign exchange reserves rose to \$16.64 billion, with State Bank holdings of \$11.5 billion. International confidence followed: Fitch Ratings gave Pakistan’s sovereign rating a stable outlook by raising it from CCC+ to B–.

The finance minister emphasized that Pakistan is no longer a “desperate borrower” thanks to macroeconomic discipline and improved fiscal buffers.

Energy Reforms and Privatization

Aurangzeb revealed intentions to privatize 24 of the courageous moves forward in overhauling loss-making state-owned companies (SOEs). He pointed out that private sector experts now running power distribution corporations already show performance improvements.

“The days of circular debt are numbered. We’re putting an end to wasteful practices,” he asserted.

He also noted improved revenue recoveries and operational efficiency in power companies, even as Pakistan’s total power generation capacity rose to 46,605 MW.

Capital Market and Domestic Debt

The capital markets mirrored the overall economic optimism. Gaining 78,000 points throughout the fiscal year, the KSE-100 index saw a 50% increase as investors responded favourably to government changes.

The government cancelled Treasury bills worth Rs2.4 trillion and modified the average length of domestic debt from 2.9 to 3.5 years. Valued at Rs30 billion, it also launched Pakistan’s first Sovereign Domestic Green Sukuk to assist renewable energy projects and climate-resilient efforts.

A fresh two-year zero-coupon bond helped generate Rs610 billion, therefore relieving short-term funding demand and indicating the government’s intention to use long-term fiscal instruments.

Sectoral Performance and Future Development Prospect

Sectoral performance stayed dubious. With so many people working in it, agriculture only rose 0.56% because of low crop yields. Still, rice exports helped somewhat. The government realized it had to cut middlemen, provide better farmer finance choices, and build more storage facilities.

On the other hand, construction expanded by 6.6%, large-scale manufacturing stabilized, and the auto sector surged by 40%. The textile industry recorded a modest 2% rise, aided by increased machinery imports, suggesting future productivity improvements.

The Planning Ministry has now revised GDP growth projections upward from 2.7% to 4.2% for the coming year.

Digital Economy and Freelancers

Aurangzeb highlighted the government’s strategy to boost the digital economy, particularly freelance professionals, who are becoming an increasingly vital part of Pakistan’s export landscape.

“Our job isn’t to create employment directly—it’s to build ecosystems that allow people to create opportunities for themselves,” he said, adding that freelancers need better digital infrastructure and simplified payment gateways.

The government’s support of IT exports and freelancer-friendly policies is expected to increase foreign exchange earnings further and reduce unemployment.

Climate Finance and Sustainability

Aurangzeb emphasized Pakistan’s commitment to sustainability, referencing climate initiatives like the \$77 million Recharge Pakistan Project and the launch of a national Carbon Market Policy during COP29.

Pakistan has also implemented a Climate Budget Tagging system covering more than 5,000 federal cost centres to ensure environmentally sustainable spending.

He confirmed the IMF’s approval of an additional \$1.4 billion under the Resilience and Sustainability Facility (RSF), complementing progress made under the Extended Fund Facility (EFF). One-third of the government’s new \$20 million external financing framework is earmarked for climate resilience.

Population and Development Challenges

One of the most urgent warnings in Aurangzeb’s address was on Pakistan’s unchecked population growth, which is increasing at 2.5% annually. “If our population reaches 300 to 400 million, we’ll face an existential crisis,” he warned.

To address this, the government is preparing for a National Finance Commission (NFC) Award meeting to discuss de-linking development funding from population size, encouraging provinces to manage demographic challenges more effectively.

Social Spending and Development Budget

The government disbursed Rs 593 billion through the Benazir Income Support Programme (BISP) to aid vulnerable populations. Aurangzeb reaffirmed that social safety nets remain a priority, even as the government aims to eliminate inefficiencies.

Pakistan’s total development budget for FY2025–26 is projected at Rs4.2 trillion, focused on critical infrastructure projects like dams, roads, and transmission lines. Provincial governments will administer social sector programs to improve localization and delivery.

Conclusion: A New Economic Chapter

Wrapping up his presentation, Finance Minister Aurangzeb declared that Pakistan has turned a corner economically. From reducing deficits and increasing tax revenues to stabilizing the rupee and improving energy governance, the indicators show steady progress.

“This is just the beginning,” he said. “Macroeconomic stability is the foundation. Now we move toward sustainable, inclusive growth.”

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