ISLAMABAD: Pakistan’s State Minister for Finance Bilal Azhar Kayani met his UAE counterpart Mohamed Bin Hadi Al Hussaini on Wednesday, stressing the importance of learning from the Gulf country’s digitalization model to promote e-commerce and macroeconomic stability, the Pakistan embassy in Abu Dhabi said. 

Kayani is leading a senior delegation of Pakistani officials who arrived in the UAE this week to participate in a two-day experience exchange program aimed at learning from the UAE’s governance and public sector innovation models.

The program, running from July 8–9, includes sessions with various UAE ministries and authorities and focuses on innovative approaches to public service delivery, competitiveness, and institutional reform. The initiative is in line with Islamabad’s desire to modernize its public sector and strengthen economic cooperation with the Gulf nation.

“Minister Kayani also outlined Pakistan’s reform agenda to modernize public sector finance and emphasized the importance of learning from the UAE’s digitalization model,” the Pakistani embassy said about Kayani’s meeting with Al Hussaini. 

Kayani expressed Pakistan’s appreciation for the UAE’s continued financial support, the statement said, recognizing it played a vital role in maintaining the country’s economic stability.
 
The two sides held discussions on key aspects of fiscal management, including budgeting practices, public finance oversight and tax policy reforms, the Pakistan embassy in Abu Dhabi said.

“Both ministers shared insights from their respective national experiences, identifying common challenges and opportunities to strengthen institutional capacity and improve governance frameworks,” it said. 
 
Kayani said Pakistan’s reform agenda, spearheaded by Prime Minister Shehbaz Sharif, was focused on e-commerce, digitization and sustained macroeconomic stability.

“He emphasized that Pakistan remains committed to deepening structural reforms, ensuring fiscal responsibility, and promoting transparency and good governance as key pillars of long-term economic resilience,” the statement said. 
 
The two sides also reflected on the memorandum of understanding (MoU) signed between Pakistan’s Planning Ministry and the UAE’s Cabinet Affairs ministry on June 16, 2025.

The MoU reinforces the shared commitment of both governments to modernize governance, build institutional capacity, and develop future-ready public administration systems.

Islamabad considers UAE a vital economic ally as it is Pakistan’s third-largest trading partner after China and the United States. 

The Gulf country is also home to over 1.8 million Pakistani expatriates and is the highest source of foreign remittances for Pakistan after Saudi Arabia. 

KARACHI/SINGAPORE: Pakistan’s central bank is preparing to launch a pilot for a digital currency and is finalizing legislation to regulate virtual assets, Governor Jameel Ahmad said on Wednesday, as the country ramps up efforts to modernize its financial system.

Central banks globally are exploring the use of digital currencies as interest in blockchain-based payments grows. Pakistan’s move follows similar steps by regulators in China, India, Nigeria and several Gulf states to test or issue digital currencies through controlled pilot programs.

Speaking at the Reuters NEXT Asia summit in Singapore, Ahmad said Pakistan was “building up our capacity on the central bank digital currency” and hoped to roll out a pilot soon.

He was speaking on a panel alongside Sri Lanka’s central bank governor, P. Nandalal Weerasinghe, with both discussing monetary policy challenges in South Asia.

Ahmad added that a new law would “lay down the foundations for the licensing and regulation” of the virtual assets sector and that the central bank was already in touch with some tech partners.

The move builds on efforts by the government-backed Pakistan Crypto Council, set up in March to drive virtual asset adoption. The PCC is exploring bitcoin mining using surplus energy, has appointed Binance founder Changpeng Zhao as a strategic adviser and plans to establish a state-run bitcoin reserve.

It has also held talks with US-based crypto firms, including the Trump-linked World Liberty Financial.

In May, the State Bank of Pakistan clarified that virtual assets were not illegal. However, it advised financial institutions not to engage with them until a formal licensing framework was in place.

“There are risks associated, and at the same time, there are opportunities in this new emerging field. So we have to evaluate and manage the risk very carefully, and at the same time not allow to let go the opportunity,” he said on the panel.

TIGHT GRIP, FALLING RATES

On the monetary policy front, Ahmad said the central bank would continue to maintain a tight policy stance to stabilize inflation within its 5–7 percent medium-term target.

Pakistan has cut its benchmark rate from a peak of 22 percent to 11 percent over the past year, as inflation fell sharply from 38 percent in May 2023 to 3.2 percent in June, averaging 4.5 percent in the 2025 fiscal year just ended, a nine-year low.

“We are now seeing the results of this tight monetary policy transfer, both on our inflation as well as on the external account,” he said.

Ahmad also said Pakistan was not overly exposed to dollar weakness, noting that the country’s foreign debt was mostly dollar-denominated and only 13 percent comprised Eurobonds or commercial loans.

“We don’t see any major impact,” he said, adding that reserves had risen to $14.5 billion from under $3 billion two years ago.

Ahmad said Pakistan’s current three-year $7 billion IMF program, which runs through September 2027, was on track and had already resulted in reforms in fiscal policy, energy pricing and the foreign exchange market.

“We are confident that after that (IMF program), maybe we will not require an immediate (follow-up).”

Pakistan’s central bank governor was asked during the panel whether Pakistan had financing plans lined up for upcoming military equipment purchases, particularly imports from China.

He responded that he was not aware of such plans, and said the central bank’s mandate remained ensuring smooth interbank market functioning and maintaining ample foreign exchange “so that there is no problem as far as trade financing is concerned.”