The government on Tuesday highlighted significant economic gains achieved during the ongoing fiscal year, citing improved macroeconomic stability, fiscal consolidation, and strengthening external sector indicators.
According to the Monthly Economic Update & Outlook for March 2026, released by the Finance Division, the national economy demonstrated encouraging progress across key sectors during the first eight months of FY2025-26.
One of the major achievements was the strengthening of the external account, where the current account posted a surplus of $427 million in February 2026, the highest during the fiscal year, supported by robust remittance inflows and controlled imports.
Overall, the current account deficit remained contained at $700 million during July-February FY2026, indicating effective external sector management.
Remittances emerged as a key pillar of stability, rising by 10.5 percent to $26.5 billion, driven by higher inflows from key partner countries.
Meanwhile, foreign exchange reserves surged to $21.7 billion by mid-March 2026, marking a four-year high and significantly enhancing the country’s external liquidity position and resilience against global shocks.
The government’s focus on digital transformation also yielded positive results, with IT exports maintaining strong growth momentum and contributing to foreign exchange earnings.
Net foreign direct investment (FDI) inflows stood at $1.2 billion, with major contributions directed towards the power and financial sectors, reflecting improved investor confidence.
On the domestic front, large-scale manufacturing (LSM) recorded a growth of 5.8 percent during July-January FY2026, compared to a contraction in the same period last year.
The expansion was driven by key industries, including automobiles, textiles, food, and petroleum products.
Notably, automobile production witnessed remarkable increases, with trucks and buses up by 78.4 percent and cars by 52.3 percent, indicating a revival in industrial demand and consumer confidence.
The agriculture sector also benefited from proactive government support, particularly during the Rabi season. Agricultural credit disbursement rose by 11.1 percent to Rs1,649 billion, while imports of agricultural machinery increased by 17.1 percent, facilitating modernization and productivity enhancement. Fertilizer offtake, including urea, also recorded growth, supporting improved crop prospects.
Fiscal consolidation remained one of the government’s most notable achievements. The fiscal deficit during July-January FY2026 was significantly reduced to Rs64.7 billion from Rs2,070.9 billion in the corresponding period last year.
This sharp improvement was attributed to prudent fiscal management, enhanced revenue collection, and expenditure rationalization.
Federal revenues increased by 9.3 percent to Rs11,218.8 billion, supported by growth in both tax and non-tax revenues. The Federal Board of Revenue (FBR) collected Rs8,122.2 billion during July-February FY2026, posting a 10.6 percent increase.
At the same time, federal expenditures declined by 10.7 percent due to significant reductions in current spending, particularly markup payments, while development spending increased by 13 percent in line with growth priorities.
The primary surplus improved to 3.2 percent of GDP, further reinforcing fiscal discipline and sustainability.
Inflation, although witnessing a slight uptick to 7.0 percent year-on-year in February 2026, remained moderate overall, averaging 5.5 percent during the first eight months of the fiscal year-lower than the corresponding period last year. The government attributed price stability to effective administrative measures and improved supply conditions.
Monetary indicators also reflected a favourable outlook, with increased credit to the private sector and growth in money supply, indicating improved business activity. The policy rate was maintained at 10.5 percent to balance inflation control with economic growth.
Despite global uncertainties and geopolitical tensions, particularly in the Middle East affecting oil markets, the government maintained adequate petroleum reserves and implemented energy sector reforms to ensure uninterrupted supply and price stability.
Social protection initiatives were further expanded, with significant increases in allocations under safety net programmes. Disbursements under the Benazir Income Support Programme (BISP) rose by 36.9 percent to Rs 329.8 billion during July-January FY2026, while interest-free loan schemes continued to support low-income groups and small businesses.
Ongoing reforms, improved macroeconomic indicators, and strategic policy interventions have positioned the economy on a sustainable growth path despite external risks such as rising global oil prices and geopolitical tensions, it added.