ISLAMABAD: Prime Minister Muhammad Shehbaz Sharif on Wednesday launched the government’s Economic Governance Reforms, declaring that Pakistan has exited the phase of economic firefighting after two years of politically difficult but structurally necessary decisions that restored macroeconomic stability and credibility with a record drop in inflation to 4.5 per cent and a substantial surge in the foreign exchange reserves of up $21 billion.
Addressing the launching ceremony of the Prime Minister’s Economic Governance Reforms, the prime minister said the government inherited an economy in early 2024 marked by nearly 30 per cent inflation, critically low foreign exchange reserves, weakened state institutions, and Pakistan’s marginalisation from global economic engagement. He said the scale of the crisis left no room for shortcuts or populism.
“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hard choices that spared no political constituency,” the prime minister said, adding that unsustainable subsidies were withdrawn, fiscal discipline restored, public financial management strengthened, and long-delayed privatisation reforms initiated. “These were not cosmetic fixes but unavoidable structural reforms,” he added.
Prime Minister Shehbaz Sharif said inflation had fallen sharply from 29.2 per cent to 4.5 per cent, 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 narrowing its overall fiscal deficit.
The prime minister said revenue reforms had begun to correct long-standing distortions, with the tax-to-GDP ratio rising from around 8 per cent to over 10 per cent and more than one million new taxpayers brought into the formal economy. Tax collection grew by 26 per cent in 2025, supported by large-scale digitisation of government systems. He highlighted that the e-procurement platform, ePADS, now covers over 1,000 federal agencies and more than half a million contracts, integrated in real time with FBR, NADRA, and SECP.
PM Shehbaz said the successful privatisation of Pakistan International Airlines and First Women Bank marked a break from decades of inaction, with further state-owned enterprise reforms underway. He said Pakistan’s stabilisation and reform momentum 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,” he said, adding that the reform agenda represented a shift from crisis management to institution building.
The prime minister underscored that 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 focus areas include taxation, energy, privatisation, SOEs, pensions, tariff rationalisation, regulatory simplification, rightsizing of the federal government and digital governance.
Prime Minister Shehbaz Sharif said the reforms were a home-grown, irreversible agenda 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 in the first five months of FY26 despite climate-related shocks.
The finance minister said fiscal discipline had been reinforced through consecutive primary surpluses, including a 2.7 per cent surplus of GDP, while the tax-to-GDP ratio rose to 10.2 per cent in FY25, the highest in 25 years. Public debt declined to about 70 per cent of GDP from 75 per cent in FY23, while early debt repayments generated interest savings of Rs3.5 trillion. He noted that the policy rate had been reduced to 10.5 per cent from 22 per cent in June 2024.
On the external front, Senator Aurangzeb said State Bank reserves had 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 per cent rise in the Pakistan Stock Exchange in dollar terms during 2025, a surge in IPOs and near-complete digitalisation of company registrations.