ISLAMABAD: Pakistan’s finance chief acknowledged on Wednesday some companies have exited the country due to high production and operational costs, though he pointed out that others have adapted their business models and are expanding amid the government’s efforts to move from economic stabilization to sustainable growth.

Several high-profile multinational firms in the consumer goods, energy, telecommunications, pharmaceuticals and manufacturing sectors have exited or scaled back operations in Pakistan over recent years, as the government sought to stabilize a weakening economy through stringent structural reforms, currency controls and fiscal tightening. These included organizations such as Shell, Procter & Gamble, Lotte Chemical and Telenor, while others transferred or shut local manufacturing units amid rising costs, import restrictions and policy uncertainty.

Speaking at the Pakistan Policy Dialogue in Islamabad, Finance Minister Muhammad Aurangzeb said the government was focused on sustaining reforms after repeated boom-and-bust cycles that had left Pakistan reliant on successive International Monetary Fund (IMF) programs.

“Now there are firms who are also leaving, which is true,” he said. “But those firms which have been able to look at their business models and adapt are staying and expanding. It takes two to tango. The government has its role, and the private sector has its role.”

Aurangzeb said investor sentiment had strengthened in recent months, pointing to new foreign entrants, rising private-sector credit and increased activity in capital markets.

He cited growth in large-scale manufacturing, including automobiles, cement and fertilizers and said services exports, particularly information technology, had remained resilient.

DEBT MANAGEMENT
The minister also highlighted efforts to tighten debt management, describing debt servicing as the country’s single largest expenditure. He said Pakistan had reduced its debt-to-GDP ratio to about 70 percent from 75 percent, extended the average maturity of its debt to ease refinancing pressures and saved hundreds of billions of rupees through liability management operations.

Pakistan has also been engaging key Gulf partners on managing external liabilities. Last month, Deputy Prime Minister Ishaq Dar said Islamabad was in talks with the United Arab Emirates to convert $1 billion in deposits into equity investment, potentially involving stakes in companies linked to the Fauji Fertilizer Group, a move that would end Pakistan’s repayment obligation on that portion of the funds.

Aurangzeb reiterated the government was also working to diversify funding sources, including plans to issue Pakistan’s inaugural Panda bond in China’s onshore market, while emphasizing that long-term stability depended on export-led growth, private investment and continued fiscal discipline.

Pakistan has entered more than 20 IMF programs since the 1980s, with successive governments struggling to sustain growth without triggering external financing crises.