LAHORE:
Pakistan’s financial system has proven cautious indicators of stabilisation through the October-December quarter of fiscal yr 2025-26, though persistent fiscal and exterior pressures proceed to weigh on the general development outlook.
In line with the newest “Financial Infographics: A Snapshot of Pakistan’s Financial system”, launched by the Analysis and Publications Division of the Institute of Value and Administration Accountants of Pakistan, key macroeconomic indicators mirrored a combined however progressively bettering development through the secoand quarter of FY26.
On the fiscal entrance, income assortment remained beneath pressure. The Federal Board of Income collected Rs3,274 billion through the quarter towards the goal of Rs3,467 billion, leading to a shortfall of Rs193 billion. Notably, income deficits had been recorded in all three months of the quarter, underlining the structural challenges in broadening the tax base and assembly bold fiscal targets. Exterior sector indicators additionally highlighted persevering with vulnerabilities. Items exports through the quarter stood at $7.66 billion, whereas imports reached $15.84 billion, resulting in a large commerce deficit of $8.98 billion. In consequence, the present account posted a deficit of $458 million for the October-December interval.
Though November recorded a short C/A surplus of $98 million, it was not enough to offset deficits of $291 million in October and $265 million in December. The information displays ongoing stress on the stability of funds regardless of efforts to handle import flows and stabilise the foreign money market. Nonetheless, remittances as soon as once more emerged as a powerful help pillar for the financial system. Employees’ remittances totalled $10.2 billion through the quarter, offering much-needed overseas change inflows. Saudi Arabia remained the biggest contributor with $2.4 billion, adopted by the UAE with $2.1 billion and the UK with $1.54 billion. These inflows performed a important function in supporting exterior accounts and stabilising reserves.
Overseas change reserves confirmed enchancment through the second quarter. Web reserves held by the State Financial institution elevated from $14.5 billion in October to $16.1 billion in December, whereas industrial banks’ reserves edged up from $4.67 billion to $4.69 billion.
The Pakistani rupee remained largely steady, shifting barely from Rs282.8 per greenback on the finish of October to Rs283 by the tip of December, indicating relative calm within the foreign money market. Inflation supplied seen reduction to households. The Client Value Index on a month-on-month foundation declined from 1.7% in October to unfavorable 0.4% in December. Equally, the Delicate Value Indicator improved from 0.9% to unfavorable 0.8% throughout the identical interval. The easing of value pressures offered some respiration area to shoppers, who’ve endured extended inflationary stress in recent times.
The banking sector mirrored strengthening credit score exercise. Credit score to the personal sector expanded from Rs9,945.8 billion in October to Rs10,930.9 billion in December, signalling improved industrial exercise and enterprise confidence. In the meantime, internet credit score to the federal government declined from Rs2,796.8 billion to Rs2,310.6 billion, easing crowding-out stress and permitting higher room for personal sector borrowing.
Monetary markets responded positively to bettering indicators. The KSE-100 index rose sharply from 161,631 factors in October to 174,054 factors in December, whereas market capitalisation elevated from Rs18,561 billion to Rs19,689 billion through the quarter.
Rising gold costs, which moved from Rs363,529 to Rs394,376 per 10 grams, mirrored international developments and investor choice for safe-haven belongings. Petroleum costs remained largely steady through the quarter, hovering round Rs263 per litre earlier than easing to Rs258.17 by mid-February 2026.
Company exercise remained encouraging. A complete of 10,421 new corporations had been registered through the quarter, bringing the general variety of registered corporations to 279,724 by December 2025.
Within the industrial sector, cement dispatches reached 13.24 million tons, together with 2.04 million tons of exports, indicating regular construction-related exercise. The automotive sector produced 38,805 passenger automobiles throughout Q2, though month-to-month manufacturing declined from 15,112 items in October to 10,735 items in December, reflecting moderation in demand. Funds in Roshan Digital Accounts continued to rise, growing from $11.31 billion in October to $11.71 billion in December, demonstrating sustained confidence from abroad Pakistanis.
On the debt entrance, the image remained combined. Home debt elevated from Rs53.96 trillion in October to Rs55.36 trillion in December, whereas exterior debt edged up from Rs23 trillion to Rs23.17 trillion. In the course of the quarter, overseas grants and loans offered extra help, with Saudi Arabia contributing $302.31 million by the Saudi Fund for Improvement oil facility, adopted by China with $198.35 million in bilateral help.
Wanting forward, development projections stay reasonable. The IMF, World Financial institution, United Nations, Asian Improvement Financial institution, ICMA Worldwide and Moody’s have projected GDP development within the vary of round 3% to three.5% for FY26, whereas the State Financial institution of Pakistan expects a barely increased development band of three.75% to 4.75%.
Total, the quarter presents an image of gradual stabilisation supported by remittances, improved reserves, easing inflation and strengthening markets. But fiscal gaps, commerce imbalances and rising debt underscore the necessity for sustained tax reforms, export development and disciplined macroeconomic administration to make sure inclusive financial restoration.
