Pakistan Targets Growth Above 4% as Privatisation Drive Seeks $1 Billion

Pakistan expects its economy to grow by more than 4% in the current fiscal year and plans to raise over $1 billion through the privatisation of five to six state-owned entities, as the government seeks to strengthen economic stability and attract greater private-sector investment.

Finance Minister Muhammad Aurangzeb outlined the targets in an interview with Reuters on October 12, 2026, on the sidelines of the International Monetary Fund (IMF) and World Bank Group annual meetings in Bangkok. He said the government remained confident about the growth outlook despite elevated global oil prices and economic uncertainty linked to conflict in the Middle East.

The plans reflect Pakistan's broader effort to move from economic stabilisation towards sustained growth while reducing pressure on public finances. However, the targets remain dependent on economic conditions, investor interest and the government's ability to complete planned transactions.

Privatisation Becomes a Key Economic Priority

Pakistan plans to pursue the sale or transfer of five to six state-owned entities, with the transactions expected to generate more than $1 billion.

The government has been advancing privatisation across several sectors, including electricity distribution, aviation and financial services. The programme is intended to attract private capital, improve operational efficiency and reduce the financial burden associated with state-owned businesses.

In October, Pakistan's Privatisation Commission Board approved the prequalification of nine interested parties for the privatisation of Gujranwala Electric Power Company. The board also reviewed plans concerning the outsourcing or concession of operations at major airports, including those in Lahore, Karachi and Islamabad. Financial-sector transactions involving House Building Finance Company and Zarai Taraqiati Bank were also under review.

These initiatives could create opportunities for domestic and international investors. However, the amount ultimately raised will depend on the structure of individual transactions, the valuation of the assets, regulatory requirements and the willingness of investors to commit capital.

Privatisation proceeds may also provide fiscal relief, but asset sales are generally one-off sources of revenue. Lasting improvements in public finances will require stronger recurring revenues, effective expenditure management and sustainable performance from the remaining state-owned enterprises. Growth Outlook Faces External Risks

The government's growth target comes amid continued exposure to international energy prices and financing conditions.

Pakistan relies significantly on imported energy and remains vulnerable to prolonged disruption in the Middle East. Higher oil prices can increase import costs, put pressure on foreign exchange reserves and raise domestic transport and production expenses.

The effects can extend across the economy. Businesses may face higher operating costs, households can experience pressure on purchasing power, and the government may face difficult decisions over fuel support and public spending.

Aurangzeb said Pakistan had secured adequate fuel supplies and that key sectors, including agriculture, were holding up despite the challenging environment. The government believes these factors can help support economic activity during the current fiscal year.

Nevertheless, the growth projection remains an expectation rather than a confirmed outcome. Sustained expansion will depend on domestic demand, agricultural performance, industrial activity, investment and the country's ability to manage external shocks.

IMF Programme Shapes Reform Efforts

Pakistan's economic policy remains closely linked to its $7 billion IMF lending programme, agreed in 2024. The programme supports economic stabilisation and structural reforms, including measures to strengthen government revenues and improve the management of public finances.

The government is seeking to increase the role of private investment and reduce reliance on external assistance. Privatisation forms part of this broader approach, alongside efforts to improve the business environment and strengthen the economy's capacity to generate foreign exchange.

On October 7, the IMF announced a staff-level agreement with Pakistan that could unlock approximately $1.21 billion in financing, subject to approval by the fund's Executive Board. The potential funding provides additional context for the country's continuing engagement with international financial institutions.

However, external financing does not eliminate the need for structural improvements. Pakistan must continue managing debt repayments, rebuilding financial buffers and improving the ability of its economy to generate sustainable export earnings and investment. The pace of reform will therefore matter as much as the amount of funding secured.

Private Investment and State-Owned Enterprises

The proposed asset sales could reshape how some public services and businesses are financed and operated. Private-sector participation can bring new capital, management expertise and incentives to improve productivity. In electricity distribution, for example, investors may seek to reduce operational inefficiencies and improve service delivery. In aviation, private operators could bring additional investment and operational capabilities, depending on the terms of the arrangements.

The results are not automatic. Transaction design, competition, regulatory oversight and protections for consumers will influence whether changes produce lasting improvements. For investors, Pakistan's privatisation programme offers potential opportunities but also requires careful assessment of financial risks, operating conditions and policy continuity. Successful transactions could help demonstrate that the country can attract capital for longer-term business operations rather than relying primarily on emergency financing.

For the government, the challenge is to secure credible bids while ensuring that sales and concessions serve clearly defined economic objectives.

What Happens Next?

Pakistan's immediate priorities include advancing transactions involving state-owned enterprises, maintaining adequate energy supplies and continuing reforms under its international financing arrangements. The government is also holding discussions with the United States over a proposed $10 billion exchange stabilisation facility, according to Reuters. The proposal remains a matter of ongoing discussions and should not be treated as secured financing.

Investors and economic observers will be watching for progress on privatisation deals, the availability of external financing and evidence that economic growth is broadening beyond individual sectors. The central test will be whether Pakistan can turn short-term stabilisation into more durable growth. Raising more than $1 billion from asset sales could support that effort, but lasting progress will depend on productivity, investment, export performance and the government's ability to maintain financial stability while implementing reforms.