Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal has said Pakistan’s economy has entered a phase of greater stability, while stressing that the government’s next priority is to convert this stability into sustainable economic transformation under URAAN Pakistan. Presenting the Monthly Development Update for August, the minister said the government remains committed to providing a regular and transparent assessment of the country’s economic position, progress and areas requiring continued attention. He noted that Pakistan had gone through a difficult period of economic adjustment and that the stability achieved over recent years had required significant effort. According to the minister, the focus is now shifting towards using improved macroeconomic conditions to generate stronger exports, employment, incomes and opportunities for the country’s young population.
Iqbal said the opening month of FY2026-27 had produced several encouraging economic indicators. Consumer Price Index inflation eased to 9.2% in July 2026 from 11.7% in May 2026, indicating some moderation in price pressures. He noted that the year-on-year increase from 4.1% was influenced by the base effect as well as the pass-through of international food and energy prices. The government, he said, is continuing to monitor prices and market conditions through regular meetings of the National Price Monitoring Committee, with attention directed towards supply chains, the quality and availability of essential commodities and administrative steps required to keep basic items affordable. The minister maintained that controlling inflation and ensuring adequate supplies remain important elements of maintaining economic stability as the government moves towards its broader development objectives.
Workers’ remittances continued to provide significant support to Pakistan’s external sector, reaching $3.6 billion in July 2026, up 13% from $3.2 billion in July 2025. Iqbal highlighted that the strong start to the new fiscal year followed record remittance inflows of $41.6 billion during FY2025-26. He said these inflows strengthen the country’s foreign exchange position while also supporting millions of Pakistani households and reflecting the continued economic contribution of overseas Pakistanis. The performance of remittances has therefore remained an important source of resilience for the external account, particularly as Pakistan continues efforts to strengthen its foreign exchange position and maintain stability in international payments.
Industrial activity also showed a marked improvement during the previous fiscal year. Large-Scale Manufacturing recorded average growth of 5.0% in FY2025-26, compared with a contraction of 0.7% in the preceding year. The improvement points to a recovery in industrial production after a period of weakness and provides a stronger base for economic activity going into FY2026-27. The minister also pointed to developments in the external sector, where goods exports rose 9.4% to $3 billion in July 2026 from $2.8 billion in the same month of 2025. Total exports of goods and services increased 13% to $3.9 billion from $3.5 billion over the same period, indicating stronger export activity at the beginning of the new fiscal year.
Imports of goods and services also increased during July 2026, rising 13% to $7.3 billion compared with $6.5 billion in July 2025. Iqbal said the increase reflected strengthening domestic economic activity and higher demand for productive and capital goods. Despite the rise in imports, Pakistan’s current account deficit remained contained at $328 million in July 2026, improving from $529 million in July 2025. The narrower deficit was cited as evidence of continued resilience in the external sector despite uncertainties in the global economic environment. The combination of stronger exports, higher remittances and a contained current account deficit remains an important part of the government’s efforts to maintain external stability while supporting economic expansion.
Fiscal consolidation was another major area highlighted by the minister. Federal Board of Revenue tax collection increased 8.4% to Rs820.9 billion in July FY2026-27 from Rs757.4 billion in the corresponding month of the previous year. Iqbal also pointed to the broader improvement in Pakistan’s fiscal position, saying the fiscal deficit narrowed to 2.6% of GDP in FY2025-26 from 5.4% in FY2024-25. He described the 2.6% fiscal deficit as the lowest recorded in two decades, highlighting the progress made in reducing the gap between government revenues and expenditure. The improvement in fiscal indicators is being presented as a key component of the broader economic reform programme and the government’s efforts to maintain financial discipline.
Development spending and project execution also remained a central part of the government’s economic agenda. Under the Finance Division’s release strategy, which provides for 15% of allocations to be released in the first quarter, 20% in the second quarter, 25% in the third quarter and 40% in the fourth quarter, the Ministry of Planning authorised Rs211.327 billion during July 2026. This amount represented 21.1% of the relevant allocation. The minister said the Central Development Working Party continued to play an important role in improving the quality and prioritisation of public investment decisions, particularly as the government seeks to ensure that limited development resources are directed towards projects with stronger economic and social impact.
During July FY2026-27, the CDWP considered 27 agenda items, including 22 projects, four position papers and one concept clearance proposal. Of these, nine projects, three position papers and one concept clearance proposal were approved, while nine projects were recommended for consideration by the Executive Committee of the National Economic Council. Iqbal said the projects approved during July are expected to generate approximately 7,851 direct jobs and 14,053 indirect jobs across key sectors. According to the minister, the expected employment impact reinforces the government’s stated objective of promoting development that is employment-oriented, inclusive and sustainable while ensuring that public investment contributes to wider economic activity.
The government also undertook a review of CDWP projects during the month to identify and remove non-essential components. The exercise resulted in savings of Rs1.02 billion during July 2026, according to Iqbal, allowing scarce public resources to be redirected towards development priorities with potentially higher impact. The minister said the review forms part of efforts to improve the efficiency of public investment and ensure that government expenditure remains aligned with priority development objectives. During the same month, five Public Sector Development Programme projects were monitored, while two projects were evaluated to assess their implementation progress, efficiency, impact and sustainability.
Iqbal’s assessment places the latest economic indicators within the government’s wider URAAN Pakistan framework, which seeks to move beyond stabilisation towards sustained economic growth and structural transformation. With inflation showing moderation, remittances remaining strong, industrial production recovering, exports increasing and the fiscal deficit narrowing, the government sees the opening months of FY2026-27 as providing a stronger platform for its next phase of economic policy. The minister has emphasised that the central challenge now is to convert these indicators of stability into lasting improvements in exports, employment, incomes, investment and living standards while maintaining fiscal and external discipline.
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