Pakistan may revise 2027 outlook after US-Iran conflict ends, says finance minister
Why this matters: local context for readers following news across Pakistan and the region.
ISLAMABAD – Finance Minister Muhammad Aurangzeb has said Pakistan could improve its economic projections for 2027 following the end of the US-Iran conflict, but cautioned that it is still too early to revise the federal budget, an international news agency reported on Tuesday. Speaking shortly after Washington and Tehran reached an agreement to end hostilities, the finance minister said the regional conflict had already disrupted economic stability, particularly by pushing inflation into double digits and straining supply chains. He said damage to energy infrastructure during the conflict would take time to repair, delaying a full return to normal economic activity. “We were looking at how to manage second and third-order impacts in case the conflict continued,” Aurangzeb said, adding that disruptions to the energy sector had slowed recovery. “It will take time before we return to normalcy in terms of supply chains.” The finance minister said there could be positive “upside” in Pakistan’s growth outlook for the coming year, but stressed that any revision of official estimates would be premature at this stage. Pakistan’s federal budget for FY2026-27, presented in parliament on Friday, targets 4% economic growth and inflation of 8.2%. The budget also increases defence spending by 18% to Rs3 trillion ($10.8 billion), while aiming to strengthen tax revenues to support a $7 billion IMF programme. Aurangzeb said the government was also considering adjustments in its external financing strategy, including the possible use of commercial borrowing in FY2027 to reshape the country’s creditor profile without increasing overall external debt. “Ideally, we want to replace some bilateral debt with commercial borrowing,” he said, adding that Pakistan did not intend to expand its total external liabilities. He noted that Pakistan had recently repaid $3.4 billion in deposits to the United Arab Emirates, while also securing financing from UAE commercial banks as part of its evo