Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, participated in a high-level roundtable on addressing sovereign debt risks, held during the Al-Ula Conference 2026, organized jointly by the Government of Saudi Arabia and the International Monetary Fund (IMF).
According to sources, while addressing the meeting, he stated that global public debt has reached historically high levels, putting emerging and developing economies under pressure from high debt servicing costs, tight financial conditions, and limited fiscal space. Senator Muhammad Aurangzeb noted that the real policy challenge is not merely managing the size of debt but ensuring that temporary liquidity pressures do not escalate into a sovereign default crisis, while promoting growth and safeguarding social spending.
Referring to Saudi Finance Minister Mohammed Al-Jadaan, he said that macroeconomic stability is not the enemy of growth but the foundation for sustainable economic development, and Pakistan’s recent experience confirms this view.
Sources said the Federal Minister highlighted that Pakistan has made initial but meaningful progress toward restoring economic stability through disciplined macroeconomic policies, institutional reforms, and active debt management, though the reform journey is still ongoing. He stated that Pakistan has improved debt management by controlling public debt, extending maturities, reducing borrowing costs, and ensuring timely repayments, which has reduced the debt-to-GDP ratio from around 74 percent to approximately 70 percent over the past three years.
Senator Aurangzeb also emphasized the implementation of a regular and transparent framework for sustainable debt analysis, aligned with IMF and World Bank practices, covering both domestic and external debts as well as government guarantees. He said this framework has improved risk identification, strengthened communication with creditors, and increased market confidence.
He added that Pakistan has raised the tax-to-GDP ratio from single digits to nearly 12 percent through tax reforms and digitalization. Additionally, by issuing green sukuk and establishing a sovereign sustainable financing framework, debt management is being aligned with environmental and development objectives.
In conclusion, the Federal Minister stressed that timely action, strong institutions, transparency, and a credible policy framework are essential to address the risks associated with sovereign debt.
