Aurangzeb says may use commercial borrowing to change creditor profile without increasing overall external debt
The government could improve economic projections for 2027 after the end of the Iran war, but it is still too early to revise the budget, Finance Minister Muhammad Aurangzeb toldReuters, hours after the US. Iransigned a dealto end the fighting.
Damaged energy infrastructure meant supply chains would take time to return to normal. after the conflict pushed inflation back into double digits, Aurangzeb said.
"We were looking at how we manage the second, third-order impact in case this conflict continues," he said. "The energy infrastructure has been hit. And therefore, it will take time before we return to normalcy in terms of supply chains."
He added, "I do see upsides in what we have projected for next year,". cautioned it would be "way too premature" to revise the budget.
Pakistan'sFY27 budget, presented in parliament on Friday, targets growth of 4% and inflation of 8.2%.
It raised defence spending 18% to Rs3 trillion ($10.8 billion). while relying on higher tax revenue to keep a $7-billion IMF programme on track.
Commercial borrowing to change creditor profile
Islamabad may use commercial borrowing in fiscal year 2027 to change its creditor profile without increasing overall external debt. Aurangzeb added in comments on Monday.
"Ideally what we want to do is to see if we can replace some of the bilateral through commercial," he said. "We do not intend to increase the size of our external debt."
Pakistanrepaid $3.4 billionin bilateral UAE deposits last month. has also tapped the emirates' commercial banks for financing, reflecting the creditor-profile shift Aurangzeb wants to formalise.
Read:SBP holds policy rate at 11.5%
It plans further Panda Bond, Eurobond, US dollar. first rupee-linked, dollar-settled issues, though the sizes have yet to be decided, he said.
The FY27 budget envisages $2.82 billion in commercial. eurobond financing, while Pakistan has approval for $1 billion equivalent inPanda bondsafter a $250 million debut that was 95%backedby the ADB and AIIB.
Former banker has presented three budgets
A former banker, Aurangzeb has presented three consecutive budgets, achieving a rare run in Pakistan, where governments often fail to complete their terms. finance ministers are frequently replaced.
Interest has surged in Pakistan's burgeoning defence industry after last year's conflict with India,. Aurangzeb said it was too early to project any defence-export upside.
The government's immediate focus is on allocations, given two "active" borders, he added, as the South Asian nation is flanked by Afghanistan. India.
Pakistan's defence manufacturing industry is running red-hot since its jets, drones,. missiles earned the coveted 'combat tested' tag in the India conflict, drawing a slew of buyers.
Pakistan has moved to formalise the digital asset sector this year. for example by signing pacts with Binance and World Liberty Financial.
Aurangzeb said Pakistan would regulate crypto, tokenisation. digital-asset exchanges before taxing the sector, saying revenue gains would follow once it was formalised.
"Yes, at some point we have to bring it into the taxation timeframe," he added. "But this was not the time to do it."
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