inance Minister Muhammad Aurangzeb is optimistic about securing the approval of the executive board of the International Monetary Fund for the $7 billion 37-month Extended Fund Facility programme, for which a staff-level agreement was signed on July 12. However, he has indicated no definite date.

Despite positive trends and improving ratings from major credit agencies, the country faces ongoing challenges related to its balance of payments and dependence on multilateral and bilateral financial support. It is important for economic managers to address these issues, reduce reliance on external partners, adopt effective strategies to strengthen country’s foreign exchange reserves and improve its financial stability.

Pakistan faces significant challenges in enhancing its exports, continuing to rely on traditional goods rather than investing in value-added sectors, including the information technology and export of skilled human resources. The current regulatory environment is hindering business and economic growth, which is stifling both domestic investment and foreign direct investment (FDI).

The Special Investment Facilitation Council was established as a one-window platform to promote FDI by facilitating investor engagement, improving interdepartmental collaboration and expediting decision-making and project development. However, there numerous procedural hurdles still need to be removed. A crucial step in this process is the reform of the taxation system, which must be streamlined to create a more conducive environment for investment and growth.

The government should focus on improving fiscal management by implementing structural reforms to enhance revenue collection and manage public expenditures more effectively. Developing a strong domestic financial sector capable of mobilising savings and investment will be decisive in addressing the financial needs.

Minister Aurangzeb announced on September 3 that the government was in “advanced stages” of securing external financing assurances, a prerequisite for the IMF programme. The government is also negotiating a $12 billion rollover of loans from China, Saudi Arabia and the United Arab Emirates. It has requested an additional $1.2 billion from Saudi Arabia to cover a $2 billion financing gap.

The finance minister highlighted recent improvements, including a reduction in inflation from 23.7 percent last year to 9.6 percent in August 2024, which will allow a further reduction in the........

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