KARACHI: Pakistan’s Finance Minister Muhammad Aurangzeb said on Wednesday disciplined borrowing, export-led growth and careful debt management were central to stabilizing the country’s economy, as Islamabad looks to unlock new sources of growth amid rising global debt levels.

Speaking at a panel discussion on the sidelines of the World Economic Forum (WEF) in Davos, he said debt was not inherently harmful if used productively, but warned that emerging economies such as Pakistan could not afford to deploy borrowed funds for consumption.

“For countries like Pakistan, debt must be channeled into investments that generate exportable surplus,” Aurangzeb said, according to a statement circulated by the Finance Division. “It is not about the availability of debt or funding, but how wisely and effectively it is steered to create long-term economic value.”

Pakistan has been pursuing fiscal reforms as part of an International Monetary Fund-backed stabilization program, including cutting subsidies, broadening the tax base and restructuring state-owned enterprises, as the government seeks to restore macroeconomic stability and revive growth.

Aurangzeb said Pakistan had reduced its debt-to-GDP ratio to 70 percent from 75 percent, achieved a primary fiscal surplus and brought inflation down from a peak of 38 percent to single digits, allowing the central bank to cut its policy rate to 10.5 percent.

He also flagged ongoing debt-management reforms, including liability management operations and buybacks, and said Pakistan plans to enter China’s capital markets with its first Panda bond, structured as a green bond.

Addressing climate risks, Aurangzeb said building fiscal buffers had allowed Pakistan to respond to recent floods using domestic resources rather than international emergency appeals, underscoring the need for resilience in climate-vulnerable economies.

He added that public-private partnerships and capital markets were playing a growing role in financing development, citing a $3.6 billion syndicated financing for a major copper mining project expected to generate $2.8 billion in annual exports from 2028.

The finance minister is part of Pakistan’s delegation visiting Davos for the annual gathering of global leaders and investors.

The delegation is led by Prime Minister Shehbaz Sharif, who highlighted the country’s shift toward an export-driven growth model, with a focus on minerals, information technology, artificial intelligence and digital services, while speaking at a breakfast event on the sidelines of the forum.