Pakistan has set a GDP growth target of 4.4% for the fiscal budget of 2025-26, an increase from the current year’s target of 3.6%.
The budget, scheduled for presentation on June 2, 2025, aims for growth rates of 4.8% in the agriculture and industrial sectors and 4.3% in services. This marks an improvement over the 2024-25 targets, which stand at 2% for agriculture, 4.4% for industry, and 4.1% for services. The Annual Plan Coordination Committee (APCC) will review these growth targets at its meeting on May 26, and the National Economic Council (NEC) is expected to grant final approval on May 31.
The International Monetary Fund (IMF) has urged Pakistan to phase out federal funding for provincial projects under the Public Sector Development Programme (PSDP), pushing provinces to raise independent resources, including an agricultural income tax on earnings above Rs600,000 starting July 1, 2025. Discussed during virtual talks with provincial governments, these reforms aim to align the Rs17.6 trillion 2025-26 budget with the IMF programme targets.
According to ARY News, the proposed budget allocates Rs8,685 billion for debt servicing and Rs2,414 billion for defence, reflecting fiscal pressures. The IMF projects revenues nearing Rs20 trillion and urges strict spending controls to achieve a 2.1% primary surplus.
The 4.8% agricultural target builds on reforms like the proposed income tax, aiming to boost productivity. The industrial sector’s 4.8% goal aligns with efforts to enhance manufacturing. The services sector’s 4.3% target reflects steady growth in trade and IT, per Finance Ministry reports. However, achieving these requires addressing structural challenges, per the World Bank’s Pakistan Development Update.
The IMF has warned that relations with India could affect these economic goals. As the APCC and NEC work to finalise the budget, aligning with IMF conditions will be crucial for maintaining stability.
