Pakistan’s Finance Minister, Muhammad Aurangzeb, addressed the nation on Saturday regarding the recently imposed 29% additional tariffs on Pakistan’s exports to the United States, clarifying that the government is not overly concerned.
However, he noted that a high-level delegation will soon visit Washington to engage in trade negotiations. The Finance Minister mentioned that while there could be some short-term impact on Pakistan’s $5.5 billion annual exports to the U.S., the government remains focused on addressing the issue.
The remarks follow Prime Minister Shehbaz Sharif’s decision to establish a Policy Steering Committee and a Technical Working Group to respond to the U.S. action and position Pakistan as an “early mover” nation.
The Finance Minister emphasized the importance of the U.S. as Pakistan’s largest trading partner and a critical strategic ally, confirming that the government is preparing recommendations to propose lowering duties on U.S. goods and offering more opportunities for U.S. sellers to address the current $3 billion trade surplus. This move comes after President Trump imposed unilateral tariffs on 60 countries with trade surpluses, including Pakistan, which ranks 33rd due to its higher textile exports.
Regarding discussions with China, the Finance Minister shared that talks are focused on refinancing the $1 billion commercial loan that Pakistan repaid last month and the issuance of Panda bonds. While he confirmed the commercial loan discussions are progressing, he acknowledged the ongoing pending issues regarding a $1.3 billion new loan and the rescheduling of $3.4 billion in guaranteed debt.
He also mentioned that Pakistan’s foreign exchange reserves, currently at $10.7 billion after repaying Chinese debt, are expected to reach $13 billion by the end of June.
The Finance Minister further revealed that Pakistan has active engagements with the International Monetary Fund (IMF), with upcoming missions to discuss governance improvements. He confirmed the IMF’s Corruption and Governance Diagnostic Mission has already begun engagements with over 30 institutions, including the Supreme Court and the accountability court.
Additionally, a mission will visit Pakistan in May to discuss the next fiscal year’s budget. The Finance Minister expressed hope that the IMF’s Executive Board would approve the second tranche of $1 billion soon.
In terms of the economy, the Finance Minister highlighted that Pakistan’s industries will need to become more competitive, with the government planning to lower the trade-weighted average tariffs by 43% to 6% over the next five years. He stressed the necessity for all industries, including the auto sector, to focus on exports.
Notably, he indicated that foreign exchange reserves are growing strongly, bolstered by remittances, which are expected to reach a record $36 billion this fiscal year. Exports also continue to show resilience with a 7% growth.
The Finance Minister also discussed Pakistan’s tax collection efforts, stating that the Federal Board of Revenue (FBR) expects to achieve a 32.5% increase in revenue this year, down from an initial target of 40%. The revised FBR target is now set at Rs12.3 trillion, a reduction of Rs640 billion based on IMF recommendations.
He also mentioned that interest rates have significantly reduced, leaving room for further cuts. The government is also addressing inflation, which has decreased substantially, and the benefits of this reduction should be passed on to the public.
Additionally, the Finance Minister reported a 21% increase in purchases during Eidul Fitr, with Rs870 billion worth of transactions, up from Rs720 billion last year. This uptick in spending signals an improvement in consumer purchasing power.
