Finance Minister Nirmala Sitharaman on Monday cited India’s strong growth and sovereign rating upgrades to counter claims that the country was a “dead economy”, telling the Lok Sabha that such upgrades would not have been possible if the economy were weak, PTI reported.Responding to Opposition members who sought the government’s reaction to US President Donald Trump’s description of India as a “dead economy”, Sitharaman said India remains the fastest-growing major economy, recording 8.2% growth in the September quarter.“The economy in the last 10 years has transitioned from external vulnerability to external resilience,” the minister said while replying to the Supplementary Demands for Grants for 2025-26 in the House.“Every institution is raising our growth outlook for this year and the forthcoming year. There are clear expressions (from the IMF) recognising India’s growth and no dead economy gets a credit rating upgrade by DBRS, S&P and R&I,” Sitharaman said.Trump had made the “dead economy” remark in July while expressing disappointment with India’s decision to continue buying oil from Russia. Sitharaman said data and assessments by global institutions contradicted that characterisation.“The economy today has moved from fragility to fortitude,” she said.“So somebody said something somewhere, however important that somebody is, we should not depend on that but rely on data available within the country and also data coming from elsewhere. Rely on data,” she told Opposition members.“Can a dead economy grow at 8.2%? Can a dead economy get credit rating upgrades?” Sitharaman asked.The Reserve Bank of India last week raised its GDP growth projection for FY26 to 7.3% from 6.8% earlier. India grew 8.2% in the September quarter and 7.8% in the June quarter.On concerns raised over the International Monetary Fund’s assessment of India’s national accounts — including Gross Domestic Product (GDP) and Gross Value Added (GVA) — Sitharaman said India’s overall grading remains unchanged at the median rating of ‘B’.She said the IMF had flagged the outdated base year for national accounts and suggested rebasing. “So to say that there has been a downgrade by IMF is misleading the House. For this year, IMF gave B for overall statistics,” she said, adding that India has remained the fastest-growing major economy for the fourth consecutive year despite the pandemic.Sitharaman also addressed concerns over public debt, saying India’s debt-to-GDP ratio rose to 61.4% after Covid but was brought down to 57.1% by 2023-24 due to policy measures taken by the central government.“By this year-end, I expect it to come down to 56.1%,” the finance minister said.

Finance Minister Muhammad Aurangzeb underscored Pakistan’s strategic shift from seeking aid-based support towards trade- and investment-led engagement to ensure long-term economic sustainability and mutually beneficial partnerships, particularly with the Gulf Cooperation Council (GCC) countries.

In an interview with CNN Business Arabia, Aurangzeb highlighted the vision of Prime Minister Shehbaz Sharif, which reflected Pakistan’s renewed economic confidence and reform momentum.

He said that Pakistan has followed a comprehensive macroeconomic stabilisation program for the past 18 months, which has delivered tangible and measurable results, while inflation has declined to single-digit levels from an unprecedented 38%.

On the fiscal front, Pakistan has achieved primary surpluses, while the current account deficit remains well within targeted limits. According to the finance czar, the exchange rate has also stabilised, and foreign exchange reserves have improved to approximately 2.5 months of import cover, reflecting strengthening external buffers.

He maintained that the country has two major external validations, which indicate Pakistan’s improving economic outlook.

Firstly, he said, all three international credit rating agencies have aligned their assessments this year by upgrading Pakistan’s ratings and outlook. On the other hand, the country has completed the second review under the IMF Extended Fund Facility, with the IMF Executive Board granting its approval earlier this week.

He stated that such developments demonstrate growing international confidence in Pakistan’s economic management and reform trajectory.

The finance minister further emphasised that macroeconomic stabilisation has been achieved through a coordinated approach combining disciplined monetary and fiscal policies with an ambitious structural reform agenda.

“Reforms are being implemented across key areas, including taxation, energy, state-owned enterprises, public financial management, and privatisation, aimed at consolidating stability and laying the foundation for sustainable growth,” Aurangzeb said.

The finance minister also highlighted the significant progress in Pakistan’s improvement of the tax-to-GDP ratio.

“During the last fiscal year, it increased to 10.3 per cent, with a clear path towards 11 per cent,” the finance minister said.

He further explained the government’s objective to reach a level of tax collection that ensures fiscal sustainability over the medium to long term.

“This is being pursued through widening the tax base by bringing previously undertaxed but economically significant sectors such as real estate, agriculture, and wholesale and retail trade into the formal net, alongside deepening compliance by reducing leakages through production monitoring systems and AI-enabled technologies. Simultaneously, the tax administration is being transformed through reforms in people, processes, and technology,” he said.

The minister further highlighted efforts to improve governance in [power] distribution companies, involve private sector expertise, advance privatisation, and reduce circular debt, which has long constrained the power sector.

“Rationalising the tariff regime is essential to making energy more competitive for industry, thereby enabling industrial revival and economic growth,” he stressed.

Senator Aurangzeb acknowledged the longstanding support of GCC countries, including Saudi Arabia, the United Arab Emirates, and Qatar, for their critical role in critical role supporting Pakistan through financing, funding, and cooperation at international financial institutions such as the International Monetary Fund.

“This relationship is now evolving towards a new phase centred on trade expansion and investment flows. Remittances continue to play a vital role in supporting the current account, with inflows reaching approximately $38 billion last year and projected to rise to $41-42 billion this year, over half of which originates from GCC countries,” he added.

He further said, “Pakistan is actively engaging with GCC partners to attract investment in priority sectors including energy, oil and gas, minerals and mining, artificial intelligence, digital infrastructure, pharmaceuticals, and agriculture.”

Expressing optimism regarding progress on a Free Trade Agreement (FTA) with the GCC, he termed the discussions at an “advanced stage”.

Senator Aurangzeb reiterated the government’s strategic direction in shifting the collective focus on trade rather than relying on aid.

“Pakistan’s future lies in fostering trade and investment partnerships rather than reliance on aid,” said the finance minister.

He also emphasised the role of foreign direct investment in supporting the higher GDP growth, generating employment opportunities, and delivering shared economic benefits for Pakistan and its partners.

“The government is fully mobilised to translate this vision into reality.” He concluded.

The State Bank of Pakistan (SBP) has announced a 50-basis-point cut in the policy rate in its final monetary policy decision of the current year, signaling a cautious shift as inflation shows signs of control.

The State Bank has issued its last monetary policy of the current year, reducing the policy rate by 50 basis points. As a result, the base interest rate has been lowered from 11% to 10.5%, according to the central bank.

This marks the first rate cut after a prolonged period of policy stability. The interest rate has been cut by half a percentage point after seven months.

The decision was taken during a monetary policy meeting after a detailed review of key economic indicators, the State Bank said. Officials cited improved inflation trends as a key reason for adjusting the policy stance.

The move reflects a shift away from continuously maintaining high interest rates.

Policy rate timeline

December 2024: Policy rate set at 13%

January 2025: Reduced to 12%

March 2025: Maintained at 12%

May 2025: Further reduced to 11%

June 2025: Maintained at 11%

July 2025: Maintained at 11%

September 2025: Maintained at 11%

October 2025: Maintained at 11%

December 2025: Reduced to 10.5%

The State Bank of Pakistan has cut the policy rate by 0.5 percentage points after maintaining it at 11% for seven months, reflecting a cautious shift toward monetary easing.

Inflation under control, policy stance adjusted

The State Bank acknowledged that inflation has come under control, prompting a change in its long-standing tight monetary policy. Previously, the central bank had kept the interest rate unchanged at 11% for four consecutive policy decisions.

This easing suggests growing confidence in macroeconomic stability.

With the reduction in the policy rate, bank loans for businesses and industries have become cheaper. Analysts say the cut may provide some relief to the private sector by lowering borrowing costs and supporting economic activity.

However, the reduction remains modest compared to market expectations.

Experts point to IMF influence

Economic experts say the State Bank’s tight monetary policy remains influenced by the IMF program, limiting the pace of rate cuts. Despite the reduction, the policy rate is still around five percentage points higher than the current inflation rate of 5.5%, analysts noted.

This gap indicates continued caution by the central bank.

The business community has repeatedly demanded a cut to single-digit interest rates as inflation declines. However, experts say the State Bank has once again ignored these demands, opting for a gradual approach.

Despite the government’s desire, analysts believe interest rates could not be brought to single digits in 2025, reflecting fiscal and external constraints.