In an insightful address at the SECP’s Insolvency & Debt Management Consultation, Finance Minister Muhammad Aurangzeb highlighted the urgent need to focus on business rehabilitation in Pakistan rather than liquidation.
He explained that many companies facing financial stress still have long-term potential. Therefore, instead of pushing them into insolvency, the system should support their recovery and renewal. According to the Minister, a healthy economy depends on helping viable businesses survive economic downturns.
He outlined a three-tiered approach to managing credit risks:
- Macroeconomic level: Ensuring stable policies and market confidence
- Industry level: Encouraging sector-specific support mechanisms
- Entity level: Tailored strategies for struggling businesses
Minister Aurangzeb stressed the importance of building a strong debt resolution system. He called for a framework that provides fair access to credit while protecting financial institutions. This balance, he noted, will strengthen trust in Pakistan’s financial markets.
One of his key points was the need to separate willingness from ability to pay. He encouraged lenders to focus on the broader financial situation of the borrower before taking legal action. In other words, financial institutions should prioritize helping businesses recover, rather than rushing to court.
Business rehabilitation in Pakistan, he said, is critical for long-term economic resilience. A fair, forward-thinking approach to debt resolution can reduce insolvencies and encourage sustainable growth.
