Low Growth Ambition Signals Challenges
Heavy Reliance on Imports and Debt
The federal government has set a modest 4% economic growth target for fiscal year 2026-27, acknowledging limited progress in fixing structural issues. The Annual Plan Coordination Committee (APCC), chaired by Planning Minister Ahsan Iqbal, approved the macroeconomic framework for the next fiscal year.
This 4% target is even lower than the previous year’s 4.2% goal, which the government failed to achieve. Ahsan Iqbal admitted higher growth is possible but warned against relying on increased imports and consumption.
He highlighted the government’s inability over four years to boost investment, savings, and exports meaningfully. Prime Minister Shehbaz Sharif has led since April 2022, presenting four budgets with limited structural reforms.
The Planning Minister criticised the celebration of private debt through Eurobonds and Panda Bonds. “Borrowing loans by issuing bonds and then celebrating it is shameful,” Iqbal stated during the APCC meeting.
He stressed that seeking debt rollovers from friendly countries is not an honourable way to run the economy. Pakistan continues to seek over $12 billion in annual rollovers from Gulf nations and China.
Sectoral Targets and Job Creation
External Sector Under Pressure
The APCC set agriculture growth at 3.8%, large-scale manufacturing at 4.5%, and overall industrial growth at 4%. Services sector is targeted to grow by 4.2%, driven by trade, transport, and financial services.
National savings target is fixed at 14.3% of GDP while investment goal stands at 15% of GDP.The government projects creation of two million new jobs, with services adding 1.1 million.
Inflation target has been set at 8.2%, higher than this year’s estimated 7.1%. Imports are projected to surge past $70 billion, up 5.6% from the current year.Exports target is a modest $32.8 billion, only 8.4% higher than this year’s estimate.
Remittances are expected to reach $42.3 billion, growing just 2.7% amid Middle East tensions. The current account deficit is targeted at $3.6 billion or 0.7% of GDP. Ahsan Iqbal noted that Pakistan cannot escape the IMF without reducing dependence on foreign rollovers.