The National Economic Council’s leap from a modest 2.7 percent growth target to an ambitious 4.2 percent for next year signals renewed government faith in economic rebound
By our correspondent
ISLAMABAD: The National Economic Council (NEC), under the chairmanship of Prime Minister Shehbaz Sharif, has approved a national development budget of Rs4,224 billion for the fiscal year 2025–26, signaling a cautious yet optimistic approach toward Pakistan’s economic future. The decision, taken at a meeting attended by all four provincial chief ministers and senior economic officials, marks a pivotal moment as the government seeks to balance fiscal discipline with developmental needs.
During the session, officials presented revised economic indicators for the current fiscal year 2024–25, revealing that Rs3,483 billion is expected to be spent under the national development program. Of this, Rs1,100 billion will fund federal projects while Rs2,383 billion is earmarked for provincial initiatives, reflecting the continuing emphasis on devolving responsibilities and resources to the provinces.
The NEC set a GDP growth target of 2.7 percent for the ongoing year but raised the bar with an ambitious 4.2 percent target for the next fiscal year, underscoring the government’s confidence in economic recovery. This optimism is supported by several key achievements outlined during the meeting. Notably, remittances surged by 30.9 percent from July 2024 to April 2025, providing a vital boost to foreign exchange reserves.
For the first time in recent memory, the current account balance swung into positive territory, while the fiscal deficit was brought down to a manageable 2.6 percent of GDP. The briefing also highlighted the government’s fiscal discipline, with the primary balance posting a surplus equivalent to 3 percent of GDP. This discipline has facilitated a steady reduction in the policy rate, now standing at 11 percent, and private sector credit expanded significantly, reaching Rs681 billion over the same period—an encouraging sign for business confidence and investment.
Pakistan’s GDP is projected to reach Rs114 trillion, approximately $411 billion, a figure that illustrates the scale of the economy despite ongoing challenges. In line with these projections, the NEC gave final approval to the Annual Development Plan for 2025–26, confirming the Rs4,224 billion budget. The distribution of funds shows a continued focus on provincial development, with Rs2,869 billion allocated for provincial programs and Rs1,000 billion reserved for federal projects.
