By Staff Reporter
ISLAMABAD: Pakistan has rolled out a Rs141 billion funding package for federal development projects in the first quarter of the 2025-26 fiscal year, part of a broader strategy to sustain a burgeoning economic recovery driven by soaring exports, a historic current account surplus, and a sharp drop in inflation, officials said Tuesday.
The allocation, approved in mid-July under the Public Sector Development Programme (PSDP), targets key initiatives across federal ministries and divisions, according to the Ministry of Planning and Development’s Monthly Development Update for August 2025, released by Planning Minister Ahsan Iqbal. The move signals Pakistan’s intent to maintain momentum in infrastructure, technology, and social development as it navigates a phase of newfound economic stability.
The Rs141 billion release accounts for roughly 14 percent of the Rs1 trillion PSDP budget for FY26. Funds for Azad Jammu and Kashmir and Gilgit-Baltistan, however, will be disbursed biannually due to seasonal constraints, the ministry said. “Releases to the Azad Jammu and Kashmir and Gilgit-Baltistan are to be made biannually due to seasonal constraints,” it stated, noting that a formal request has been sent to the Ministry of Finance to accommodate this schedule.
The Finance Ministry’s current strategy allocates 15 percent of the PSDP budget for July-September, 20 percent for October-December, 25 percent for January-March, and 40 percent for April-June. But the Planning Ministry has raised concerns that the low first-quarter allocation hampers project momentum.
To address this, Iqbal has instructed the Finance Ministry to increase first-quarter releases to 20 percent and trim the final quarter to 30 percent, ensuring smoother project execution year-round.
Speaking at the release of the update, Iqbal hailed Pakistan’s economic progress, saying the country had entered a phase of “sustained stability” in 2025. “Pakistan’s economy had entered a phase of sustained stability, with all major macroeconomic indicators showing positive trends during 2025,” he said, pointing to rising GDP, stabilised fiscal and external sectors, and a significant easing of inflationary pressures.
Exports in July alone jumped 17 percent to $2.7 billion from $2.3 billion a year earlier, a sign of Pakistan’s growing trade prowess. “The government’s priority to ensure continuous growth in exports as a driver of economic progress is yielding results,” Iqbal said, underscoring the role of trade in the recovery.
The external sector has seen a dramatic turnaround, with a $2.1 billion current account surplus in FY25, compared to a $2.1 billion deficit the previous year—a $4.2 billion swing that marks the highest surplus in 22 years. Remittances also rose 7.4 percent to $3.2 billion in July, reflecting “strong confidence of overseas Pakistanis in the government’s economic management,” the minister noted.
Fiscal discipline has also paid dividends, with the fiscal deficit shrinking to 5.4 percent of GDP—the lowest in eight years—and the primary balance posting a 2.4 percent GDP surplus, the highest in 24 years. “Improved fiscal discipline has enabled the government to spend over Rs1.068 trillion on development projects in FY2025, achieving a historic 98 percent utilisation rate,” Iqbal said.
This turnaround has not gone unnoticed globally. Barron’s dubbed Pakistan’s recovery a “macroeconomic miracle,” while rating agencies Fitch, Moody’s, and S&P upgraded the country’s ratings and outlook, signaling renewed international confidence. Inflation, a longstanding burden for Pakistanis, has eased dramatically. The Consumer Price Index (CPI) fell to 4.1 percent in July 2025 from 11.1 percent a year earlier, with the annual inflation rate dropping from 38 percent to just 4 percent. “This downward trend in inflation is expected to continue, providing relief to the people,” Iqbal said, citing the development outlook.
The Pakistan Stock Exchange (PSX) mirrored this optimism, surging past the 141,000 mark on August 1, fueled by a landmark trade agreement with the United States that secured the lowest tariff rates in South Asia. “It is now up to our business community to take full advantage of this opportunity,” Iqbal urged, calling for private sector innovation to capitalise on the deal.
In agriculture, a critical pillar of the economy, the completion of the 7th Agriculture Census 2024 marks a significant step toward data-driven policymaking. “For the first time, comprehensive national agricultural data had been collected,” Iqbal said, noting its potential to bolster food security, climate resilience, and rural development.
Development efforts are gaining steam, with the Central Development Working Party (CDWP) approving eight major projects in July and recommending three to the Executive Committee of the National Economic Council (Ecnec), expected to generate over 2,000 jobs. Cost rationalisation measures saved Rs40 billion, reflecting a strategic approach to public spending. Technological advancements are also in focus, with Pakistan launching a Remote Sensing Satellite from China on July 31, 2025, to enhance agriculture monitoring, urban planning, disaster management, and climate change analysis.
Iqbal said in 2026, Pakistan’s first astronaut will conduct scientific experiments in collaboration with China, a milestone in the country’s space ambitions. Youth empowerment remains a priority, with the Prime Minister’s Ba-Ikhtiyar Naujawan Internship Programme drawing global interest. The Uraan Overseas Summer Internship Scholar Programme received over 2,300 applications from 45 countries, with 31 top-performing students selected for placements in the Planning Commission’s key divisions.
The minister reaffirmed the government’s commitment to export-led, technology-driven projects under the PSDP 2025-26, with a focus on empowering youth and women, building climate resilience, and promoting inclusive development. “Pakistan’s macroeconomic stability, coupled with structural reforms and strong international partnerships, is driving private sector growth and innovation,” he said. “The government is determined to sustain this momentum to secure a prosperous and resilient future for the nation.”
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