Pakistan achieved a more advantageous financial agreement: Report by Finance Advisor
Pakistan has achieved a major victory in its trade negotiations with the United States, securing a deal that offers unprecedented low tariffs and investment prospects in the region. The deal, outlined in an executive order, will take effect on August 1, with Pakistan facing a 19% tariff rate - a significant reduction from the previous 29%.
Speaking at a ceremony, Khurram Schehzad, Advisor to the Finance Minister, hailed the deal as a "major victory" and a step towards transitioning Pakistan towards a more open and competitive economic model. He also emphasized that the government's role is to facilitate, not control, economic activity.
The economic situation in Pakistan has shown signs of improvement in recent months, according to Schehzad. The direction of economic policy is expected to benefit the middle- and lower-income classes. The government's recent tariff reforms aim to reduce import duties to support local manufacturers and boost exports. Notable improvements in compliance and enforcement have been made in the taxation sector over the past year.
The US has committed to investing in Pakistan's oil and gas sector, a critical area as energy currently constitutes nearly 90% of the country's import bill. This investment could significantly reduce Pakistan's energy burden over the next 20 to 25 years.
The deal is expected to boost Pakistan’s export revenues by lowering tariffs, providing important relief to sectors such as textiles and agriculture, which are crucial for the country’s economy. The reduced tariffs will help sustain and possibly increase exports of garments, home textiles, and Basmati rice by improving competitiveness in the US market.
Strategically, the partnership on oil development signals a deepening of bilateral ties, with the US choosing to invest in Pakistan's resource sector. This move also suggests potential regional energy trade dynamics, such as the possibility of selling oil to India via this partnership.
Efforts are underway to address the concerns of the salaried class in future policies, as they have not yet received adequate relief. Agreements have been signed with banks to provide loans to small businesses, and the Budget 2025-26 Compendium was unveiled at the event, including expert commentary, industry perspectives, and findings from the ICMA-Gallup Post-Budget Survey.
ICMAP Executive Director Aamir Ijaz Khan and other senior officials spoke during the ceremony. Schehzad urged ICMAP to establish an incubation center and encourage innovation. He also emphasized that it is now the private sector's responsibility to seize these opportunities and forge meaningful deals.
This investment could mark a significant milestone in Pakistan-US relations amid evolving regional trade and geopolitical contexts. The deal represents both immediate economic gains in terms of market access and tariffs and longer-term transformative potential through energy sector cooperation.
- Khurram Schehzad, Advisor to the Finance Minister, highlighted that the government's role is to facilitate, not control, economic activity as part of transitioning Pakistan towards a more open and competitive economic model.
- The reduced tariffs resulting from the trade deal with the United States are expected to boost Pakistan’s export revenues, offering important relief to sectors such as textiles and agriculture, which are crucial for the country’s economy.
- In the light of the US investment in Pakistan's oil and gas sector, strategically, the partnership on oil development signals a deepening of bilateral ties and potential regional energy trade dynamics, such as the possibility of selling oil to India via this partnership.
- Speaking at the event, ICMAP Executive Director Aamir Ijaz Khan and other senior officials were urged to establish an incubation center and encourage innovation to seize the opportunities arising from the improved economic situation and trading partnerships, with the private sector taking responsibility for forging meaningful deals.
