Govt Misses Investment Target Again

Pakistan fell short of its 2024-25 investment-to-GDP target of 14.2 percent, as private sector investment remained largely stagnant. It still improved to 13.8 percent from last fiscal year’s 13.1 percent. According to data approved by the National Accounts Committee, key investment initiatives have so far failed to yield results. The PSWF remains dormant due to unresolved legal issues with the International Monetary Fund (IMF), while others have redirected their focus toward economic policy support. Fixed investment rose to 12 percent of GDP, missing the 12.5 percent target. Private investment stood at 9.1 percent against a target of 9.7 percent. Public sector investment reached 2.9 percent. Meanwhile, the savings-to-GDP ratio rose to 14.1 percent, above the 13.3 percent target and driven by an expected current account surplus. The IMF’s recent staff report projects foreign direct investment (FDI) at 0.5 percent of GDP, equivalent to $2.1 billion, slightly below the previous year. The report stressed that removing anti-export distortions caused by restrictive trade policies and ineffective tariffs is crucial to enhancing investments. The government has committed to amending the PSWF Act by March 2026. Planned reforms include classifying the fund as a state-owned enterprise, aligning governance with global standards, and narrowing its role to co-investing in commercially viable projects. The fund will neither act as a sole investor nor absorb first-loss risks. The amended law will enforce transparent and competitive processes for privatisation and procurement, with minimum disclosure requirements at every stage, including beneficial ownership.