Aurangzeb projects up to $42bn remittances, says economy ended FY26 on strong footing

Pakistan is expected to receive between $41 billion and $42 billion in workers' remittances during the fiscal year, while foreign exchange reserves are projected to close at around $18.4 billion, Finance Minister Senator Muhammad Aurangzeb said on Tuesday, citing continued strength in the country's external sector.

Addressing the second edition of the Pakistan Banking Summit 2026, Aurangzeb said the current account remained resilient on the back of record remittance inflows, adding that the reserves outlook was stronger than earlier estimates.

Reviewing the economy's performance, the finance minister said FY2025-26 concluded with improvements across key macroeconomic indicators, including a primary surplus, the lowest fiscal deficit on record, a debt-to-GDP ratio below 70% and GDP growth of 3.7%, supported by a strong recovery in large-scale manufacturing (LSM).

On external trade, Aurangzeb acknowledged a decline in exports but said the weakness was largely concentrated in food products, while value-added exports—particularly textiles—continued to post year-on-year growth.

Highlighting the government's financing strategy, he said Pakistan was pursuing access to international capital markets through instruments including the Panda Bond, describing it as a long-overdue initiative given China's position as the world's second-largest and second-deepest capital market. He noted that work on the instrument had been under way for the past seven to eight years.

Discussing the financial sector, the minister said the focus should extend beyond headline gains in the Pakistan Stock Exchange to broader market fundamentals, pointing to rising investor participation, growing interest from Gen Z investors and the return of corporate profitability to double-digit levels.

Aurangzeb said this year's federal budget was the first to be prepared under the leadership of the Tax Policy Office following its transfer to the Finance Division. He said the government's priorities included export-led growth through the removal of advance tax and super tax, provision of low-cost subsidised financing and continuation of tariff reforms. He added that authorities were also preparing a medium-term tax strategy.

The finance minister said Parliament had approved a new tax administration operating model designed to minimise human intervention by relying on artificial intelligence and technology for taxpayer engagement, including the issuance of notices.

Calling access to finance critical for sustaining economic growth, Aurangzeb urged the banking industry to expand lending to small and medium-sized enterprises (SMEs), exporters, agriculture, manufacturing, construction and the information technology sector, describing increased private-sector credit as essential for Pakistan's transition from economic stabilisation to sustainable growth.

On the privatisation programme, he said Pakistan International Airlines (PIA) was now in private ownership, while roadshows had been completed for the planned privatisation of three power distribution companies (DISCOs). He added that 28 institutions had also been transferred to the Privatisation Commission for the next phase of the programme.

Concluding his remarks, Aurangzeb commended the Pakistan Banks Association (PBA) for organising the summit and invited stakeholders to provide recommendations on strengthening the country's financial sector.