Debt not inherently negative, says Finance Minister Aurangzeb

Pakistan’s Minister for Finance and Revenue Senator Muhammad Aurangzeb said export expansion and the productive deployment of borrowed funds are essential to unlocking new sources of economic growth while speaking at a high-level panel on global debt at the World Economic Forum Annual Meeting in Davos, Switzerland.

Aurangzeb said debt is not inherently negative if it is directed toward investments that generate exportable surplus rather than financing consumption, enabling sustainable repayment and long-term growth for emerging economies that do not benefit from reserve currencies. He stressed the need for fiscal discipline, market efficiency, prudent borrowing, and careful foreign exchange risk management. “It is not about the availability of debt or funding, but how wisely and effectively it is steered to create long-term economic value," he said.

He reported progress in Pakistan’s macroeconomic indicators, noting a reduction in the debt-to-GDP ratio from 75 percent to 70 percent and a primary fiscal surplus. Aurangzeb said inflation has fallen from a peak of 38 percent to single digits, allowing the central bank to cut the policy rate to 10.5 percent.

The minister outlined ongoing debt management reforms, including liability management operations, debt buybacks, and efforts to add value in domestic markets. He announced Pakistan will issue its inaugural Panda bond in China, structured as a green bond to align with climate-resilient financing objectives.

Aurangzeb also discussed climate risks, saying building fiscal buffers enabled Pakistan to address recent flood impacts using domestic resources rather than emergency external appeals. He highlighted the role of public-private partnerships and capital markets in financing development and adaptation projects, citing closure of a roughly USD 3.6 billion syndicated financing for a major copper mining project expected to generate about USD 2.8 billion in annual exports from 2028.

The panel was hosted by a Bloomberg anchor and included global financial and investment leaders discussing strategies for resilient and inclusive growth amid rising global debt.