Economy to Grow by 4.2% Next Fiscal Year: Planning Minister

The Annual Plan Coordination Committee (APCC) met in Islamabad under the chairmanship of Federal Minister for Planning, Development & Special Initiatives, Prof. Ahsan Iqbal, to review the progress of the Public Sector Development Program (PSDP) 2024–25 and finalize recommendations for PSDP 2025–26. He said the economy is expected to grow by 4.2 percent in the coming year, driven by a rebound in agriculture and manufacturing, and supported by stable policies and a stronger external sector. In his address, the Minister emphasized that despite constrained fiscal space and competing demands, the government is fully committed to sustaining development momentum through strategic realignment of resources, performance-based planning, and increased coordination with provinces. He reiterated that the government’s vision is to steer Pakistan towards becoming a $1 trillion economy by 2035 and $3 trillion by 2047. The Minister said, thanks to our disciplined fiscal management and policy reforms, we posted a primary surplus of 3.0 percent of GDP during July-March 2024-25, as compared to 1.5% in the corresponding period last year, while investor confidence strengthened as a result of our agreements with the IMF and an upgraded credit rating. Although GDP growth came in at 2.7 percent, below expectations, however, encouraging signs of recovery were seen, particularly in the industrial sector, which grew by 4.8 percent, which is a clear sign that targeted energy and infrastructure initiatives have begun to pay off. The services sector, which continued its upward trend with 2.9 percent growth, has made notable gains in information and communication, finance, and public administration, reflecting a gradual but consistent revival in economic activity. The government has successfully narrowed the fiscal deficit and recorded a current account surplus, thanks to strong remittance inflows and disciplined fiscal management. Participants were briefed on the implementation status of the current PSDP. The original national development outlay approved by the National Economic Council (NEC) stood at Rs. 3,792.3 billion, including: Due to fiscal adjustments, the federal PSDP was revised to Rs. 1,100 billion. As of May 31, 2025, Rs. 1,036 billion had been authorized and Rs. 596 billion utilized. A total of 1,071 projects were included, with a cumulative approved cost of Rs. 13,427 billion. Forward-looking liabilities stood at Rs. 10,216 billion, prompting a strong push for project rationalization. The Minister informed that following comprehensive performance reviews, over 118 non-performing or redundant projects—mainly approved at the DDWP level—have been recommended for capping or closure, potentially saving Rs. 1,000 billion. Moreover, Rs. 84 billion were re-appropriated to fast-moving projects and Rs. 80 billion reallocated through TSGs for national priorities such as tube well solarization in Balochistan. The Finance Division, in consultation with the IMF, has set an Indicative Budget Ceiling of Rs. 1,000 billion for the federal PSDP 2025–26, including Rs. 270 billion in foreign aid. The proposed portfolio includes 1,120 projects, with a strong focus on high-impact, ongoing, and near-completion schemes. Key highlights: Sectoral Allocations Include: Minister Ahsan Iqbal acknowledged that the recent escalation along the eastern border following the May 7, 2025, events has increased defense expenditures and placed further strain on the development budget. However, he emphasized the government’s commitment to maintaining a careful balance, stating: “A strong nation while needs strong defence—it also requires investment in the health, education, technology and economic empowerment of its people.” In his closing remarks, the Minister urged all stakeholders—federal ministries, provincial departments, SOEs, and development partners—to join hands in implementing the URAAN Pakistan vision, centered on five pillars: “We are not just managing a budget—we are shaping Pakistan’s future. Where the world sees constraints, we see possibilities. URAAN Pakistan is not merely a plan—it is a reflection of our shared national ambition.” The meeting was attended by senior officials from federal ministries, provincial governments, Gilgit-Baltistan, and Azad Jammu & Kashmir. Held at a critical juncture amid fiscal constraints and regional challenges, the session reaffirmed Pakistan’s commitment to its long-term transformation strategy, URAAN Pakistan. Provinces appreciate that under the leadership of the Planning Minister, the planning process became transparent, collaborative and efficient.