The government of Pakistan has established a gross domestic product growth target of 4% for the upcoming fiscal year 2026-27. Along with this growth projection, the nominal size of the national economy is expected to reach Rs143.6 trillion. These key macroeconomic objectives were presented during a session of the National Economic Council, which convened under the leadership of the Prime Minister. The primary objective of the meeting was to evaluate the annual plan for the outgoing fiscal year 2025-26 and to deliberate on future public sector investments, regional development strategies, and projects overseen by the Central Development Working Party and the Executive Committee of the National Economic Council.
To anchor these growth targets, the government has proposed a comprehensive National Development Outlay amounting to Rs3.7 trillion for the new fiscal year. This financial framework is supported by a Federal Public Sector Development Programme allocation of Rs1 trillion and various provincial Annual Development Programmes valued at Rs2.2 trillion. When looking at the specific macroeconomic indicators planned for the upcoming fiscal period, the 4% growth target marks an increase from the 3.7% growth achieved in the previous fiscal year. Meanwhile, the nominal gross domestic product is set to scale up from Rs126.9 trillion to the projected Rs143.6 trillion. Consumer price index inflation is anticipated to rise to 8.2%, up from the prior actual rate of 6.7%. Total investment as a percentage of the gross domestic product is projected to dip slightly to 14.3% compared to the previous 15.0%, while national savings are expected to experience a minor increase to 14.3% of the gross domestic product.
Sectoral growth expectations have also been adjusted upward to stimulate the broader economy. The agricultural sector is expected to expand by 3.6%, shifting from its previous growth rate of 2.9%. Industrial output targets have been set at 4.5%, an increase from the 3.5% recorded in the outgoing year. The services sector is also projected to grow by 4.2%, showing a slight improvement over the 4.1% performance previously observed. In terms of funding sources for the proposed development initiatives, the federal program will utilize Rs745 billion in local funding alongside Rs255 billion in foreign assistance. The provincial development plans will combine Rs1.635 trillion of local capital with Rs583 billion in foreign aid. Federal state owned enterprises are allocated Rs451 billion in purely local funding, bringing the entire development framework to a total of Rs2.831 trillion in local financing and Rs883 billion in foreign assistance.
An analysis of the federal development portfolio reveals how resources will be distributed across various sectors. Infrastructure receives the largest portion, with a proposed budget of Rs602.5 billion, rising from the previous revised allocation of Rs501.4 billion. Within infrastructure, energy projects are assigned Rs116.2 billion, water resource initiatives get Rs75.8 billion, and transport and communications receive Rs355.9 billion. Physical planning and housing projects are slated for Rs54.6 billion. The social sector has been allocated Rs180.6 billion, which is an increase from the previous Rs146.6 billion. This includes Rs74.5 billion dedicated to education and the Higher Education Commission, Rs22.1 billion for healthcare, and a consistent Rs63.0 billion for the Sustainable Development Goals Achievement Programme. Other social welfare initiatives will receive Rs21.0 billion. Governance initiatives are set to receive Rs13.0 billion, while science and information technology projects will see an allocation of Rs41.4 billion. Special regions, specifically Azad Jammu and Kashmir and Gilgit Baltistan, are designated to receive Rs88.8 billion, and merged districts are allocated Rs56.1 billion. Production sectors will see an increase to Rs12.6 billion, split between Rs4.6 billion for food and agriculture and Rs8.0 billion for manufacturing industries. An additional Rs5.0 billion has been set aside for multi sectoral initiatives.
The provincial distribution under the new development strategy includes specific proposals for regional administrations. The National Economic Council has recommended Rs749 billion for Punjab, Rs706 billion for Sindh, Rs455 billion for Khyber Pakhtunkhwa, which encompasses the Accelerated Implementation Programme and development plans for newly merged districts, and Rs308 billion for Balochistan. This regional distribution comes on the heels of the resource utilization analysis from the outgoing fiscal year. As of early June, federal project spending stood at Rs590 billion, representing 72% of the revised Rs820 billion budget. This expenditure comprised Rs489 billion from the local rupee component and Rs101 billion from external loan sources.
Regarding external economic balances, the state projects that the current account deficit will expand to 3.599 billion dollars, equivalent to 0.7% of the gross domestic product, up from the baseline deficit of 1.082 billion dollars. This expansion is driven by an expected surge in import demand as internal industrial activity builds momentum. Total goods exports are targeted to reach 32.851 billion dollars, up from 30.307 billion dollars, while services exports are projected at 11.279 billion dollars. Conversely, goods imports are expected to climb to 70.021 billion dollars, and services imports are forecasted at 13.761 billion dollars. Inward worker remittances are anticipated to grow moderately, moving from a baseline of 41.275 billion dollars to a target of 42.387 billion dollars.
Reviewing the baseline performance of the outgoing fiscal period provides context for these new benchmarks. The national economy expanded by 3.7% during the prior fiscal year, accelerating from the 3.2% growth recorded in the preceding period. This expansion brought the nominal gross domestic product to Rs126.9 trillion, which converts to 452.1 billion dollars, and pushed individual per capita income up to 1,901 dollars. Throughout the initial eleven months of the fiscal period, consumer price inflation averaged 6.7%. Revenue collection by the Federal Board of Revenue demonstrated a growth of 9.7%, accumulating Rs11,229 billion during the first ten months of the cycle. Concurrently, the total fiscal deficit successfully dropped to 1.1% of the gross domestic product. Financial institutional credit extended to the private sector experienced a substantial expansion, increasing by 42.2% to reach Rs986.7bn during the primary eleven months of the year.
On the international trade and balance front, incoming worker remittances registered an 8.5% increase, totaling 33.9 billion dollars over a ten month tracking period. Outbound shipments of commercial goods grew by 17.7%, yielding 25.8 billion dollars in revenue, which allowed the overall current account to maintain a small deficit of just 0.2 billion dollars. The foreign currency reserves managed by the State Bank of Pakistan were recorded at 17.2 billion dollars as the month of May concluded. Finally, institutional project processing data shows significant legislative activity over the preceding twelve month window. The Executive Committee of the National Economic Council held eight official sessions, granting formal approval to 72 major public development schemes carrying an aggregate estimated valuation of over Rs5.117 trillion. Simultaneously, the Central Development Working Party convened for 24 separate meetings, authorizing 212 smaller scale initiatives valued at Rs316.76 billion. Out of 709 total schemes submitted to the working party for technical review during this period, 226 public investment proposals remained under active administrative appraisal as the first quarter concluded.
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