Pakistan is in the middle of a storm that it did not create. On one front, it is quietly mediating between Washington and Tehran, persuading the United States and Iran to talk face?to?face after half a century of silence. On the other front, it is juggling debt, inflation, fuel shortages and a reform programme overseen by the International Monetary Fund. The way its leaders navigate these cross?currents will shape the country’s economic trajectory and its sense of place in the world.
Finance Minister Muhammad Aurangzeb spent last week in the US for the World Bank-IMF Spring Meetings while taking part in over 50 interactions and events, including discussions with international finance institutions, policymakers, and global investors.
Critics often dismiss such gatherings as elite talk shops. Yet behind the jargon lie concrete changes.
Away from the formal sessions, he told Daily Times during a briefing held at the embassy in Washington, D.C., that Pakistan’s role in co?chairing the new Borrowers’ Platform was misunderstood. The initiative, co?led with Egypt, is not a lobbying bloc for debt relief; he (bluntly) drew a line. It was a forum for peer learning among countries that borrow, a place to ask the blunt questions governments usually avoid in public: why was the debt taken, where was it used, and how will it be repaid on time. His formulation was almost severe. A borrowing obligation, he argued, does not change its character because the borrower is a state rather than a household or a company. Money taken must be returned, and returned on time.
Aurangzeb’s insistence on discipline extended to the IMF talks. He explained that Pakistan was pressing for early approval of the next IMF tranche and that an IMF team would visit next month. He welcomed the reopening of the Strait of Hormuz, noting that lower oil prices would ease inflation, but he cautioned that hope is not a strategy and that Pakistan had contingency plans. The focus, he said, remained on securing the tranche and sustaining reforms.
He briefed reporters on broader economic trends. He highlighted a current account surplus of more than $1?billion in March, remittances of $3.8?billion the same month and record Roshan Digital Account inflows of $261?million. He credited the Pakistani diaspora with stabilising the external sector. His message underscored that policy continuity-not quick fixes-is what encourages investment. He pointed to the Roshan Digital Account as an example of a programme that remained open even at the height of reserve stress. Consistent rules, he argued, are more important than any single technology, even as citizens adopt rooftop solar to escape high tariffs.
On the domestic front, Aurangzeb outlined a series of reforms. He said the finance ministry was working with the State Bank and law enforcement to strengthen oversight and formalise exchange companies. Budget preparations included consultations with chambers and business councils, with an emphasis on broadening the tax base. He stressed reducing administrative bottlenecks and streamlining regulations to improve the ease of doing business. In energy and climate policy, he noted the need to expand renewable energy and fix structural problems in the power sector, adding that recent climate shocks had highlighted the importance of fiscal buffers and preparedness.
The challenges are real. Pakistan relies on imported energy and has little storage capacity; disruption in Gulf shipping lanes could quickly drive up prices. Inflation has eased but remains elevated, and Fitch Ratings projects it to average about eight per cent in fiscal 2026 with growth just above three per cent. External debt repayments will rise next year, and reform momentum must be maintained. Previously, in an interview held with CNBC, the minister made clear why Islamabad worked so hard to broker a ceasefire between Washington and Tehran. “It’s about 50 years later that there were face?to?face discussions between Iran and the United States. And I think that in itself is a big achievement,” he said. Those talks resumed in Pakistan after frantic shuttle diplomacy by Prime Minister Shehbaz Sharif and the military leadership, and the minister emphasised that the very act of dialogue should be seen as a success because a prolonged war “would have serious financial consequences” for Pakistan and the broader world.
Why the urgency? Pakistan sits on the eastern rim of the Persian Gulf shipping lanes and relies on imported fuel for transport and electricity. Aurangzeb warned that Pakistan’s oil reserves were enough “to take us towards the end of this month and into the next month”. The country lacks strategic stockpiles, so even a modest disruption at the Strait of Hormuz could push energy prices higher and threaten a fragile economic recovery. This vulnerability explains the quiet diplomacy: Islamabad’s push for a ceasefire is not altruism alone–it is about survival.
Pakistan’s reform programme has also been praised publicly by the IMF Managing Director, Kristalina Georgieva. In a statement after meeting Aurangzeb, she noted that “Pakistan’s strong implementation of its reform programme has helped maintain macroeconomic stability and build investor confidence.” She cautioned that “sound economic policies, along with deeper structural reforms, will be critical for sustaining growth.”
Remittances seem to have cushioned the external account. The State Bank of Pakistan reported that overseas workers sent home $3.8 billion in March 2026, a 16.5 per cent month?on?month increase. Cumulative inflows for July-March reached $30.3 billion, up 8.2 per cent from the previous year. Saudi Arabia remained the top source with $918.4 million in March, followed by the United Arab Emirates at $823.7 million and the United Kingdom at $587.3 million. These transfers support household consumption and help finance imports, illustrating how migrant labour underpins Pakistan’s macroeconomic stability.
In another interview, Aurangzeb told Fox Business that macroeconomic indicators showed gradual improvement in external stability, supported by rising remittances, a current account surplus and improving supply-side conditions. He expressed confidence that Pakistan would achieve “around four percent” economic growth. The government has, meanwhile, repaid a $1.4 billion Eurobond and secured additional deposits from Saudi Arabia, which improved foreign reserves. Plans are underway to issue a Panda bond denominated in yuan and to explore Eurobonds and Sukuk to diversify funding.
The government has not limited itself to fiscal measures; it is also trying to rewire the economy. Aurangzeb told a ministerial meeting of the Coalition for Finance Ministers for Climate Action that Pakistan has increased renewable energy capacity to 8,000 megawatts of installed solar power and aims for 90 per cent renewable energy generation within a decade. He emphasised fiscal resilience, noting that Pakistan needed international aid during the devastating 2022 floods but managed to fund its response to a similar climate shock in 2025 from domestic resources. He also outlined initiatives such as the State Bank’s Green Taxonomy guidelines and praised the IMF’s Resilience and Sustainability Facility.
At an Atlantic Council forum in Washington, Aurangzeb highlighted macroeconomic stabilisation achieved through disciplined fiscal management and the IMF?supported programme, but he also showcased reforms: privatisation, rightsizing ministries, digitising public financial management and establishing the Pakistan Virtual Assets Regulatory Authority. He described a shift in relations with Washington from aid to trade and noted growing cooperation in critical minerals and infrastructure.
Critics often dismiss such gatherings as elite talk shops. Yet behind the jargon lie concrete changes. One example is the digitalisation of tax collection. By issuing point?of?sale devices to retail outlets, the Federal Board of Revenue has begun widening the tax net and plugging leakages. Another is the green taxonomy that encourages banks to evaluate the climate impact of loans, a measure that may seem bureaucratic but can change investment patterns.
Pakistan’s role in mediating the US-Iran conflict could mark the beginning of a broader foreign policy realignment. To avoid being pulled into a great?power confrontation, Islamabad must develop strategic autonomy rooted in economic strength. That requires more than issuing bonds. Parliament should also enact a climate adaptation act that sets legally binding targets for flood defences and renewable energy. Domestic prejudice and inequality are another Achilles’ heel. Women’s participation in the labour force remains around 20 per cent, among the lowest in South Asia, and sectarian tensions occasionally erupt into violence. A pro?growth agenda will not succeed if half the population is excluded. Social protection schemes like the Benazir Income Support Programme need expansion and oversight, and digital tools can help curb leakages. Engaging the diaspora beyond remittances – through skills transfer and political representation – can also enrich the conversation.
Finally, the public discourse must resist the temptation of triumphalism. Pakistan deserves credit for helping forestall another war in the Gulf and for honouring its debt obligations on time. Nevertheless, the same leaders who are feted in Washington must still answer to citizens who queue for hours for subsidised flour or endure power cuts when the mercury touches 45 degrees Celsius.
Aurangzeb’s rhetoric is clear: no more excuses, no more blaming creditors for home-grown problems. The test of his sincerity is whether the government can translate that stance into action that reaches beyond Islamabad’s conference rooms. Pakistan may have bought time. Whether it has bought itself a future depends on how well it confronts the structural weaknesses it has long avoided.
The writer is OpEd Editor (Daily Times) and can be reached at durenayab786 @gmail.com. She tweets @DureAkram.