The government failed to achieve its key targets for investment and savings during the current fiscal year, with the investment-to-GDP ratio remaining unchanged at 14.4% while the savings ratio declined further to 14%.
According to provisional estimates prepared by the Planning Ministry using National Accounts data, the investment ratio remained at the same level as last year and fell short of the official target of 14.7%.
Despite various government initiatives aimed at attracting foreign investment and reducing reliance on debt, overall investment growth remained weak. At the same time, exports declined by more than 6% during the first ten months of the fiscal year, increasing dependence on borrowing to meet financing requirements.
Discussions are reportedly underway within the government regarding the implementation of the second phase of trade liberalisation, as earlier measures resulted in rising imports without significantly improving exports.
The Sovereign Wealth Fund, introduced three years ago to encourage foreign investment, remained inactive during the fiscal year due to concerns raised by the International Monetary Fund over its legal framework. The government has now submitted amendments to the law in the National Assembly, although the Senate Standing Committee on Finance has delayed approval until a future meeting.
The Special Investment Facilitation Council also struggled to attract major foreign investment inflows, although it continued efforts to resolve procedural issues affecting investors.
The fixed investment-to-GDP ratio remained at 12.7%, below the official target of 13%, while private sector investment increased slightly to 9.6% of GDP, missing the targeted 9.8%.
Meanwhile, the public sector investment ratio dropped to 3.1% following a reduction of nearly Rs200 billion in the federal development budget. For the upcoming fiscal year, the government has proposed a development budget of Rs1.126 trillion, though actual spending will depend on revenue performance.
Officials noted that missing investment targets limits the government’s ability to improve infrastructure and social sectors using domestic resources, forcing greater reliance on loans for development projects.
Finance Minister Muhammad Aurangzeb is currently seeking to raise $250 million through Chinese debt markets with support from guarantees provided by the Asian Infrastructure Investment Bank and the Asian Development Bank, as Pakistan’s own credit rating remains insufficient for independent borrowing in those markets.
The savings-to-GDP ratio also missed the official target of 14.3%, falling to 14%, which was lower than the previous fiscal year due to expectations of a current account deficit.
These figures remain provisional and may be revised after final external account data becomes available later this year.
The government also fell short of its broader economic growth target, with the economy expanding by 3.7% during the fiscal year. Analysts believe this level of growth remains insufficient to generate enough employment opportunities for the growing working-age population.
Sector-wise data showed mixed trends in investment activity. Private investment in agriculture increased by 8.7% due to imported machinery and livestock-related activities, while small-scale industries recorded growth of 25%.
Investment in electricity, gas and water supply rose by 7.6%, while the construction sector surprisingly posted growth of more than 60% despite broader market challenges.
Hotels and restaurants recorded investment growth of 12.8%, transportation and storage increased by 6.2%, while the information and communication sector saw a sharp increase of 110%.
In the public sector, manufacturing investment grew by 97%, mining investment rose by 25.9%, and electricity, gas and water supply investment increased by 5.1%.
Public investment in transport and storage climbed 51.2%, while construction sector investment rose 7.4% due to development projects undertaken by various authorities. Public investment in the communication sector also increased by 31%, supported by Ufone purchases and preparations related to the 5G spectrum auction.