The Ministry of Finance has released its Monthly Economic Update and Outlook Report, highlighting that Pakistan’s economy is on a steady path to recovery.
The report notes that economic activities remained positive during the first quarter of the fiscal year 2025–26, supported by strong policy actions, fiscal discipline, and sustainable reforms.
Economy shows resilience, growth
According to the Finance Ministry, economic performance in the first quarter of the ongoing financial year was encouraging. The recent staff-level agreement with the International Monetary Fund (IMF) is described as a reflection of Pakistan’s strong policy performance and reform commitment.
The ministry emphasized that the agreement reaffirms Pakistan’s dedication to maintaining sound economic fundamentals, improving fiscal management, and ensuring long-term sustainability through responsible governance.
Default risk sharply reduced amid policy stability
The report states that Pakistan’s default risk has significantly decreased, indicating renewed investor confidence in the economy. The country’s credit default swap (CDS) has fallen by 2,200 basis points over the past 15 months, marking a substantial improvement in Pakistan’s international financial standing.
Moreover, the Finance Ministry confirmed that Pakistan’s financing framework remains sustainable, reinforcing market confidence in the country’s debt management and repayment capacity.
Inflation expected to remain within 5–6%
While acknowledging that recent floods have created upward pressure on inflation, the report estimates that the inflation rate will remain between 5% and 6% this month.
The ministry reiterated the government’s commitment to maintaining fiscal discipline and keeping inflation within the target range, despite challenges stemming from external shocks and natural disasters.
Goct committed to sustainable reforms, social protection
The Finance Ministry stated that measures are underway to strengthen social protection programs under a robust economic policy framework. These initiatives aim to cushion vulnerable groups from inflationary impacts while supporting inclusive growth and stability.
The report underlined that the recent IMF engagement and other multilateral partnerships reflect Pakistan’s success in aligning its reform agenda with sustainable development goals.
Positive recognition from Fitch
According to the report, Pakistan has achieved an “Excellent” rating from Fitch, confirming that the country’s financing framework meets global standards for green, social, and sustainable bond loans. This recognition positions Pakistan favourably for future international investment in environmentally and socially responsible projects.
Floods caused Rs430bn agri losses, but recovery underway
The report estimated Rs430 billion in losses to the agriculture sector due to the recent floods, which affected key crops such as rice, cotton, sugarcane, maize, fodder, and vegetables.
Despite these setbacks, agricultural recovery is gaining momentum, with increases in agriculture loans and machinery imports signaling renewed growth. Early indicators, the report notes, reflect positive progress in restoring productivity and resilience within the sector.
