President summons budget session of National Assembly for June 10 at 5 pm

June 03, 2025 (MLN): The President has summoned the budget session of the National Assembly for June 10 at 5 pm.

An allocation of Rs921 billion has been set for the Public Sector Development Program (PSDP), a 16% reduction from the revised Rs1.1 trillion for the ongoing fiscal year.

Although the Planning Commission had initially sought Rs2.9tr based on ministry demands, the Ministry of Finance approved an Indicative Budget Ceiling (IBC) of only Rs921bn.

The Planning Minister stated he would advocate for increasing the allocation to at least Rs1.6tr to ensure Rs700bn in rupee cover for foreign-funded initiatives, as per the press release.

To date, Rs900bn has been authorized for release under the current PSDP, with further authorizations expected in May and June.

Additionally, Pakistan has projected a GDP growth target of 4.2% for fiscal year 2025-26, signaling a broad-based recovery, as per copy of the proposed annual plan available to Mettis Global.

The commodity-producing sectors are forecasted to expand by 4.4%, driven by a 4.5% rebound in agriculture and 3.5% positive growth in Large Scale Manufacturing.

Agriculture growth will be supported by a recovery in important crops (6.7%) and cotton ginning (7%), as well as robust performance in livestock.

The industrial sector is expected to benefit from a significant revival in Large-Scale manufacturing (3.5%), positive growth in mining and quarrying (3%), alongside sustained growth momentum in Construction and Energy, Gas and water supply.

The services sector, which forms the largest share of GDP, is set to grow by 4%, underpinned by stronger performance in wholesale and retail trade, transport, storage & communications, financial services and real estate.

These projections suggest cautious optimism, contingent on effective macroeconomic management and stable external conditions.

National savings are expected to remain at 14.3% of GDP in FY 2025-26, financing a total investment of 14.7% of GDP, up from 13.8% in FY 2024-25.

This reflects a narrowing saving-investment gap to be financed through modest external inflows.

According to the document, public investment is projected to increase from 2.9% to 3.2% of GDP, while private investment is expected to rise from 9.1% to 9.8%.

Fiscal and monetary policies will focus on consolidation and stability, with inflation projected at 7.5% due to the low base effect and risks from ongoing trade tensions and domestic tariff rationalization measures.

The external sector may face pressure, as easing import controls and debt repayments are likely to widen the current account deficit.

Yet, strong remittances, export recovery, and anticipated external financing are expected to cushion these pressures and support external sustainability.

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