Growth rate for the outgoing fiscal year has been estimated at 3.7 percent, a rate lower than the budgeted 4.2 percent and lower than India’s by around 3 percent, but higher than the 3.2 percent in 2024-25, and 2.6 percent in 2022-23 – a rate rise critical if success was to be claimed in transitioning from pro-stablisation policies — the primary objective of the ongoing International Monetary Fund (IMF) programme — to growth promotion policies.
Stabilisation was achieved through higher foreign exchange reserves of 17.19 billion dollars as of 29 May 2026, a figure cited by the Finance Minister, while the Survey noted reserves of 15.8 billion dollars on 8 May against end April reserves of 14.8 billion dollars. These reserves held by the State Bank of Pakistan are largely debt based, with over 10 billion dollar roll-overs parked with the SBP by two friendly countries. Gross debt was 83 trillion rupees as of March 2026 posting a growth of 3.4 percent over the same period of the year before.
Stabilisation requiring severely contractionary monetary and fiscal policies (considered to be anti-growth) continued in 2025-26 (IMF condition in all the three programme loans since 2019 on pain of programme suspension) and reports suggest they are likely to continue next fiscal year with over-ambitious tax targets as well as a policy rate likely to be upped as early as this coming Monday given the 15 June scheduled meeting of the Monetary Policy Committee as headline inflation rose by 0.8 percent in May and core inflation by one percentage point when compared to April 2026.
The rise in average inflation July-April 2026 to 6.2 percent from 4.7 percent in the comparable period the year before was attributed to the Gulf crisis, a statistic that householders assess individually each time they go to the market or access a service; while 1.8 million new employment opportunities were linked to higher GDP growth. The unemployment rate was cited at 7 percent though independent economists argue that the rate is much higher – at almost 22 percent if the labour Force Survey is used as a yardstick. These two statistics with serious political overtones are being cited as the reason behind the poor electoral performance of PML-N in recent Gilgit-Baltistan elections.
The Finance Minister cited the rise in the number of businesses, IPOs, and the rise in the earnings of freelancers to 900 million dollars as. Indeed, though the actual impact on the general public is not yet apparent. In addition, he referred to the issuance of Pakistan’s first-ever sovereign Panda Bond in China’s onshore capital as another major achievement; however, the total amount is RMB 1.75 billion which is equivalent to 250 million dollars only though it carries only 2.5 percent interest.
The 3.7 percent growth rate will no doubt be challenged by economists on two counts. First, an IMF team expressed dissatisfaction at Pakistan Bureau of Statistics (PBS) development of a new Producer Price Index (PPI) under its Technical Assistance leading to a deferral of its 30 June scheduled completion to October – PPI defined as the average change over time in the selling prices received by domestic producers and their output – a key statistic for economic and business decision-making and inflation monitoring. And second, it is as yet unclear whether this growth rate is being attributed to a rise in output or a draw-down in inventories. It is relevant to note that in 2021-22 the then Khan administration was pleasantly surprised when the growth rate was estimated at 6.1 percent; however, the rise was due to a draw-down on inventories subsequent to the lifting of lockdown associated with the COVID-19 months.
It is therefore relevant to note that consumption households rose to 82.6 percent of Gross Domestic Product in 2026, exhibiting a growth of 11.4 percent against 6.68 percent in the previous year, while government consumption as a percentage of GDP increased to 9.94 percent. Total consumption rose to 93.57 percent of GDP in 2026 against 92.95 percent last year was no doubt reflective of a rise in inflation. The rise in consumption ties in well with the 4.1 percent growth in the services sector with the largest component being wholesale and retail trade where middlemen, especially in agriculture, dictate the prices.
The Finance Minister during the traditional unveiling of the Economic Survey claimed that comparison must be made between the growth rate for the outgoing year and past years and began with 2023, perhaps overlooking the fact that the Khan administration was replaced by the incumbent government on 11 April 2022.
Outstanding stock of contingent liabilities was cited at 4322 billion rupees July-March 2026 against 3632 billion rupees in the same period last year – a rise of a disturbing 19 percent
To conclude, the Finance Minister’s narrative that the country had achieved much but three exogenous factors notably the Middle East conflict, the floods in September and the tariffs imposed by President Trump impeded the full attainment of the administration’s objectives falls by the wayside given the continuation of policies that are anti-growth.
Copyright Business Recorder, 2026
Comments