ISLAMABAD – Finance Minister Muhammad Aurangzeb has said Pakistan could improve its economic projections for 2027 following the end of the US-Iran conflict, but cautioned that it is still too early to revise the federal budget, an international news agency reported on Tuesday.
Speaking shortly after Washington and Tehran reached an agreement to end hostilities, the finance minister said the regional conflict had already disrupted economic stability, particularly by pushing inflation into double digits and straining supply chains.
He said damage to energy infrastructure during the conflict would take time to repair, delaying a full return to normal economic activity.
“We were looking at how to manage second and third-order impacts in case the conflict continued,” Aurangzeb said, adding that disruptions to the energy sector had slowed recovery. “It will take time before we return to normalcy in terms of supply chains.”
The finance minister said there could be positive “upside” in Pakistan’s growth outlook for the coming year, but stressed that any revision of official estimates would be premature at this stage.
Pakistan’s federal budget for FY2026-27, presented in parliament on Friday, targets 4% economic growth and inflation of 8.2%. The budget also increases defence spending by 18% to Rs3 trillion ($10.8 billion), while aiming to strengthen tax revenues to support a $7 billion IMF programme.
Aurangzeb said the government was also considering adjustments in its external financing strategy, including the possible use of commercial borrowing in FY2027 to reshape the country’s creditor profile without increasing overall external debt.
“Ideally, we want to replace some bilateral debt with commercial borrowing,” he said, adding that Pakistan did not intend to expand its total external liabilities.
He noted that Pakistan had recently repaid $3.4 billion in deposits to the United Arab Emirates, while also securing financing from UAE commercial banks as part of its evolving debt strategy.
The minister also outlined plans for future international market borrowing, including Panda bonds, Eurobonds, US dollar bonds, and a potential rupee-linked, dollar-settled instrument. However, he said the size and timing of these issuances had not yet been finalised.
Under the FY2026-27 budget framework, Pakistan plans to raise $2.82 billion through commercial and Eurobond instruments, while also holding approval for up to $1 billion in Panda bonds following a $250 million debut supported largely by multilateral lenders.
Aurangzeb, a former banker, has now presented three consecutive federal budgets, reflecting unusual continuity in Pakistan’s frequently unstable political and fiscal environment.
On defence-related exports, the minister said it was too early to assess any potential gains despite growing international interest in Pakistan’s defence industry following last year’s conflict with India.
He added that fiscal priorities remain focused on security and allocations, particularly given Pakistan’s “two active borders” with Afghanistan and India.
Separately, Aurangzeb said Pakistan is moving ahead with efforts to regulate its digital assets sector, including engagement with global platforms as part of broader financial modernisation.
He said taxation of cryptocurrencies and digital assets would follow once the sector is formally regulated. “At some point, we will bring it into the tax framework,” he said, adding that immediate taxation was not the government’s priority.
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