BANGKOK: Pakistan has so far managed to withstand the impact of soaring global energy prices triggered by the Iran war, with sufficient energy supplies secured through November, Finance Minister Muhammad Aurangzeb has told Agence France-Presse (AFP). However, he warned that attacks on energy infrastructure in Saudi Arabia and other Gulf countries could prolong the return to economic normalcy.
Speaking on the sidelines of the International Monetary Fund (IMF) and World Bank annual meetings in Bangkok, Aurangzeb said the government was now planning for the winter season, when household energy demand typically increases.
“The first-order impact has been negotiated well by Pakistan,” he said, adding that the country had experienced no fuel shortages, queues at petrol stations or law-and-order problems of the kind reported in some other countries.
The finance minister said Pakistan would avoid purchasing spot liquefied natural gas (LNG) cargoes unless absolutely necessary, as such shipments were generally more expensive than supplies secured under existing contracts.
Global energy prices have surged since the United States and Israel launched military action against Iran in February, with retaliatory attacks affecting Gulf countries and disrupting oil and gas supplies. Renewed Houthi attacks on Saudi infrastructure, including energy facilities and airports, have added to concerns over regional stability.
Aurangzeb warned that continued attacks on energy infrastructure could significantly delay the recovery of global energy markets, even if hostilities subside.
Pakistan is currently implementing its 25th IMF programme since independence, including a three-year, $7 billion arrangement. The IMF agreed this month to release a further $1.2 billion tranche, according to the report.
Amid rising global debt and economic uncertainty, the IMF has urged countries to strengthen fiscal discipline. Aurangzeb said Pakistan had already been pursuing fiscal consolidation and was working to improve revenue collection.
He highlighted efforts to tackle tax evasion by businesses that collect sales tax from consumers but fail to deposit the proceeds into government accounts. The practice accounts for billions of dollars in lost revenue, he said, adding that income tax collection also offered considerable scope for improvement.
The minister acknowledged resistance from industry groups, lobbyists and vested interests to the government’s reform agenda, noting that efforts to change established practices often encounter opposition.
Addressing the privatisation of state-owned enterprises, another key element of the IMF programme, Aurangzeb said commercially operated businesses run by the military were functioning independently and profitably. He maintained that the government was not providing them with funding from the national exchequer.
Separately, the finance minister held meetings with international development partners, financial institutions and IMF officials to discuss development financing, sovereign debt management, investment opportunities and Pakistan’s economic resilience.
In a meeting with United Nations Development Programme (UNDP) Administrator Alexander De Croo, discussions focused on development financing, climate resilience and employment generation. Both sides explored investment-ready projects, blended finance, public-private partnerships and closer cooperation between the UNDP and World Bank. Potential debt-for-nature and debt-for-climate swaps were also discussed.
Aurangzeb also met representatives of Sharjah Islamic Bank, Abu Dhabi Commercial Bank, Ajman Bank and JPMorgan to discuss Pakistan’s economic progress, foreign exchange reserves, sovereign credit ratings and access to international capital markets.
Potential financing options included Sukuk issuances, rupee-denominated dollar-settled instruments, additional Panda Bonds and possible Eurobond tokenisation. The discussions emphasised replacing expensive short-term borrowing with longer-maturity financing without increasing overall external debt.
In a separate meeting with Jihad Azour, Director of the IMF’s Middle East and Central Asia Department, the minister reviewed Pakistan’s revenue mobilisation, inflation, economic growth and current account position.
He also outlined the government’s energy procurement and winter preparedness plans, along with measures to maintain adequate fertiliser supplies and safeguard food security. Both sides discussed privatisation, greater private-sector participation and export-led growth, stressing the importance of sustained reforms, political commitment and effective communication.
