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Aurangzeb sees budget upside from US-Iran deal, but says 'way too premature' to revise projections
🇵🇰 Pakistan /Economy & Trade

Aurangzeb sees budget upside from US-Iran deal, but says 'way too premature' to revise projections

From Dawn · () English

Summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Pakistan's Finance Minister Muhammad Aurangzeb sees potential economic benefits from a US-Iran deal ending their conflict, but deems it too early to revise budget projections.
  • He noted that damaged energy infrastructure will delay supply chain normalization and that inflation has returned to double digits.
  • Aurangzeb also discussed plans to use commercial borrowing to alter Pakistan's creditor profile without increasing overall debt.

Pakistan's Finance Minister Muhammad Aurangzeb believes the nation could see improved economic projections for 2027 following a US-Iran deal to end their conflict. However, he cautioned that it remains "way too premature" to revise the current budget. Aurangzeb highlighted that damaged energy infrastructure will necessitate time for supply chains to return to normal, especially after the conflict pushed inflation back into double digits.

We were looking at how we manage the second, third-order impact in case this conflict continues

— Muhammad AurangzebFinance Minister, discussing the government's assessment of the conflict's economic repercussions.

"I do see upsides in what we have projected for next year," Aurangzeb told Reuters, referring to potential economic gains. He added that the government had been assessing the "second, third-order impact in case this conflict continues." The minister emphasized that the energy infrastructure has been significantly impacted, indicating a prolonged period before normalcy in supply chains can be expected.

The energy infrastructure has been hit. And therefore, it will take time before we return to normalcy in terms of supply chains.

— Muhammad AurangzebFinance Minister, explaining the impact of the conflict on infrastructure and supply chains.

Aurangzeb also outlined Pakistan's strategy to manage its debt profile. The country may utilize commercial borrowing in the fiscal year 2027 to shift its creditor base without increasing the total external debt. "Ideally, what we want to do is to see if we can replace some of the bilateral through commercial," he said, clarifying, "We do not intend to increase the size of our external debt."

I do see upsides in what we have projected for next year

— Muhammad AurangzebFinance Minister, expressing optimism about potential economic improvements.

This strategy aligns with Pakistan's recent repayment of $3.4 billion in bilateral deposits from the United Arab Emirates, while simultaneously tapping into the UAE's commercial banks for financing. The government plans further issuances, including Panda Bonds and Eurobonds, though specific sizes are yet to be determined. The FY27 budget targets 4% growth and 8.2% inflation, with an 18% increase in defense spending.

it would be “way too premature” to revise the budget

— Muhammad AurangzebFinance Minister, cautioning against immediate budget revisions despite potential upsides.
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Originally published by Dawn. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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