- Premier Shehbaz says era of economic firefighting ends after tough reforms
- Says inflation crashed from 29.2pc to 4.5pc in two years with forex reserves surge beyond $21b
- Claims tax-to-GDP ratio hits 25-year high at 10.2pc as over one million new taxpayers added to formal economy
- Says PIA, First Women Bank privatised after decades of delays besides 142 reform actions launched across 58 institutions
ISLAMABAD: Prime Minister Muhammad Shehbaz Sharif on Wednesday launched the government’s Economic Governance Reforms, declaring that Pakistan has exited a prolonged phase of economic firefighting after two years of politically difficult but structurally unavoidable decisions that restored macroeconomic stability, revived investor confidence and reconnected the country with the global economy.
Addressing the launching ceremony, the prime minister said the turnaround was reflected in a record decline in inflation to 4.5 percent and a substantial rise in foreign exchange reserves to up to $21 billion, underscoring the credibility regained through hard reforms.
“When we took charge of the government, we inherited an economy facing severe challenges. Despite these obstacles, we have set the country back on the right path. The challenges before us were significant and not easy to overcome, and economically, we were in a very difficult… pic.twitter.com/g3hY7HlC5j
— Government of Pakistan (@GovtofPakistan) December 31, 2025
He said the government inherited an economy in early 2024 grappling with nearly 30 per cent inflation, critically low foreign exchange reserves, weakened state institutions and Pakistan’s growing marginalisation from international economic engagement. The scale of the crisis, he added, left no room for shortcuts, populism or cosmetic measures.
“Restoring the economy required hard choices that spared no political constituency,” the prime minister said, adding that unsustainable subsidies were withdrawn, fiscal discipline restored, public financial management strengthened, and long-delayed privatization reforms initiated. “These were not cosmetic fixes but unavoidable structural reforms,” he remarked.
Prime Minister Shehbaz Sharif said inflation had fallen sharply from 29.2 percent to 4.5 percent, while foreign exchange reserves more than doubled from $9.2 billion to over $21 billion. He said the current account position improved from a $3.3 billion deficit to a $1.9 billion surplus, with Pakistan also moving from a primary deficit to a primary surplus and significantly narrowing its overall fiscal deficit.
He said revenue reforms had begun correcting long-standing distortions in the economy, with the tax-to-GDP ratio rising from around 8 percent to over 10 percent, while more than one million new taxpayers were brought into the formal system. Tax collection, he noted, grew by 26 percent in 2025, supported by large-scale digitization of government processes.
Highlighting governance reforms, the prime minister said the federal government’s e-procurement platform (ePADS) now covered over 1,000 federal agencies and more than half a million contracts, integrated in real time with FBR, NADRA and SECP, ensuring transparency and efficiency.
He said the successful privatisation of Pakistan International Airlines and First Women Bank marked a decisive break from decades of inaction, with further state-owned enterprise reforms already underway. Pakistan’s stabilisation and reform momentum, he added, had been acknowledged by international credit rating agencies and development partners.
“With macroeconomic indicators stabilised, our focus now shifts to accelerating growth, expanding exports and making Pakistan a far easier place to do business,” the prime minister said, describing the reform drive as a transition from crisis management to institution building.
“Despite the challenges, we have successfully put the country back on the right path. Pakistan’s achievements are being recognized internationally, and global credit rating agencies have praised the government’s efforts in economic improvement and reforms.
Implementing economic… pic.twitter.com/g95moFxOna
— Government of Pakistan (@GovtofPakistan) December 31, 2025
He said the Economic Governance Reforms comprised 142 actions, including 59 priority reforms and 83 complementary measures, to be implemented by 58 institutions within defined timelines. Key areas include taxation, energy, privatization, state-owned enterprises, pensions, tariff rationalization, regulatory simplification, rightsizing of the federal government, and digital governance.
Prime Minister Shehbaz Sharif emphasized that the reform agenda was homegrown and irreversible, aimed at embedding stability into institutions and enabling sustainable, private-sector-led growth. “The people of Pakistan have paid a heavy price,” he said. “We cannot return to business as usual, and we will not look back.”
Earlier, Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb presented a detailed overview of the reform framework and economic performance indicators. He said GDP growth reached 3.1 per cent in FY25 and accelerated to 3.71 per cent in the first quarter of FY26, while inflation remained contained at around 5 per cent during the first five months of FY26 despite climate-related shocks.
“Over the past two years, Pakistan has achieved clear economic progress. Inflation has fallen from 29.2 percent to 4.5 percent, foreign exchange reserves have increased from 9.2 billion dollars to 21.2 billion dollars, and the current account has moved from a 3.3 billion dollars… pic.twitter.com/7zhvXuA1RA
— Government of Pakistan (@GovtofPakistan) December 31, 2025
The finance minister said fiscal discipline had been reinforced through consecutive primary surpluses, including a 2.7 percent surplus of GDP, while the tax-to-GDP ratio rose to 10.2 percent in FY25, the highest in 25 years. Public debt declined to about 70 percent of GDP from 75 percent in FY23, while early debt repayments generated interest savings of Rs3.5 trillion. He added that the policy rate had been reduced to 10.5 percent from 22 percent in June 2024.
On the external front, Senator Aurangzeb said State Bank reserves reached $15.9 billion, a four-year high, with import cover improving to 2.6 months. The current account deficit stood at $812 million in the first five months of FY26, well within targets, while remittances reached $38 billion in FY25 and Roshan Digital Account inflows rose to $11.5 billion.
He said renewed investor confidence was reflected in a stable exchange rate, expanding private sector credit, a 52 percent rise in the Pakistan Stock Exchange in dollar terms during 2025, a surge in IPOs and near-complete digitalisation of company registrations.
