The State Bank of Pakistan (SBP) said on Thursday that it had received $1.2 billion from the International Monetary Fund (IMF) after the global money lending agency approved the second reivew of Pakistan’s loan programmes.

“The amount would be reflected in SBP’s foreign exchange reserves for the week ending on Dec 12,” central bank says.

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ISLAMABAD: The Asian Development Bank (ADB) on Wednesday upgraded Pakistan’s economic growth forecast for the current fiscal year due to a less severe-than-anticipated impact of flooding, increased public investment, and anticipated stabilising inflation.

In its Asian Development Outlook December 2025, the Manila-based lending agency also revised the growth outlook for the South Asian Region upward for the current year.

“In the case of South Asia, growth forecasts for 2026 have been revised upward for Sri Lanka and Pakistan, respectively, due to increased public investment and a less-severe-than-anticipated impact of flooding,” it said in its latest report without actually saying where it expected Pakistan’s growth to settle for the year. In July, the ADB had set a 2026 growth forecast for Pakistan at 3pc and had kept it unchanged in its September update in the middle of flooding across Punjab’s agricultural heartland.

“The growth outlooks for Pakistan and Sri Lanka have improved for both 2025 and 2026”, it said, adding that the Government of Pakistan updated its estimate of GDP growth for FY25 to 3pc from a previously reported 2.7pc. “Despite disruptions that resulted from floods in June 2025, the economy grew 5.7pc in Q4FY25, and the country’s large-scale manufacturing expanded robustly in recent months in FY26”, it said.

Sees robust growth for South Asia for 2025 and 2026 despite challenges

Pakistan’s inflation for the first four months (July-October) of FY26 was 4.7pc, down from 8.7pc in the same period a year ago, the bank said, adding “after a sharp increase in the months immediately after the floods, prices of key food items have begun to stabilise”.

It forecast the growth in South Asia to remain robust, with the 2025 forecast revised upward to 6.5pc from 5.9pc, and the 2026 forecast maintained at 6pc. This is driven by upgrades to India’s outlook, based on robust domestic consumption growth. Sri Lanka’s forecasts for 2025 and 2026 are revised upward due to robust credit expansion, buoyant consumption, and improved investor confidence following rating upgrades.

In contrast, Bangladesh’s fiscal year ending June 30, 2026 projection was lowered due to weaker exports amid subdued global demand and supply disruptions, while the forecast for FY2025 remains unchanged. Pakistan’s FY2025 growth outlook was upgraded following a stronger-than-expected Q4, it said.

Growth forecasts for the remaining South Asian economies are retained, although Nepal faces lingering uncertainty in the aftermath of September’s civil unrest and the ongoing political transition.

India’s growth forecast for FY2025 (fiscal year ending March 2026) was revised to 7.2pc from 6.5pc in the September ADO, reflecting stronger third-quarter expansion as tax cuts supported consumption. Indian GDP grew faster than expected at 8.2pc in the second quarter of FY25. The 2026 forecast was kept unchanged at 6.5pc. The bank also raised its growth forecasts for economies in developing Asia and the Pacific for this year and next, amid stronger-than-expected exports and reduced trade uncertainty following the conclusion of several trade agreements with the United States.

Risks to the regional outlook include renewed trade tensions and financial market volatility, as well as geopolitical pressures and a worse-than-expected deterioration in the People’s Republic of China’s (PRC) property market. China’s growth forecast for this year has been raised slightly to 4.8pc from 4.7pc, amid resilient exports and continued fiscal stimulus. The outlook for 2026 was kept unchanged at 4.3pc.Southeast Asia’s growth projection for this year was also upgraded by 0.2 percentage points to 4.5pc, reflecting a strong third quarter in Indonesia, Malaysia, Singapore, and Vietnam.

Published in Dawn, December 11th, 2025

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KARACHI: Instead of improving, the foreign investment climate has become more difficult for Pakistan, as seen in treasury bills where outflows surged by 54 per cent in November — a trend similar to that of foreign direct investment (FDI).

November proved to be the worst month for T-bill inflows and outflows so far in FY26. According to the State Bank’s latest data, foreign inflows in T-bills amounted to $77 million against outflows of $119m during the month.

Most of the outflows went back to Arab countries despite their assurances of investing in Pakistan. The trend is disappointing for a government striving to attract foreign investors across sectors and offering incentives through the Special Investment Facilitation Council (SIFC). Despite its creation to draw investment, the SIFC has yet to achieve meaningful results, and the Board of Investment has also been unable to secure major successes.

During November, the highest inflows came from the UK at $37m, followed by $20m from the UAE and $19m from Bahrain. However, the largest outflows — $51m and $41m — also went to the UAE and Bahrain, respectively, while the UK saw an outflow of $27m.

Govt raises Rs1.2tr amid over-liquid market

The inflow-outflow pattern shows that only a few countries are investing small amounts in high-yielding (around 11pc) T-bills. Despite attractive returns, the broader investment environment appears unappealing. Ongoing terrorism in two provinces and tensions with India and Afghanistan have further undermined investor confidence.

This is reflected in the shrinking FDI, which fell by 26pc in the first four months of the current fiscal year — already the lowest level in the region.

In the first five months of FY26, T-bill inflows were still higher than outflows at $410m compared to $333m during the same period.

Analysts and currency watchers remain pessimistic about any substantial improvement in foreign investment in the second half of the fiscal year.

The government, however, hopes to generate dollars through the sale of PIA and other assets, although major bidders are expected to be Pakistani investors with strong industrial presence. Despite the government signing MoUs with countries, including Saudi Arabia and the UAE, observers do not see significant foreign investment materialising anytime soon.

Treasury bills, bonds

The government raised a total of Rs1.2 trillion through the auction of Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) on Wednesday.

According to the State Bank, the government raised Rs884.7bn through direct auction of T-bills and Rs97bn through non-competitive bids, bringing the total to Rs981.7bn. An additional Rs190.7bn was raised via 10-year PIBs, taking the day’s total mobilisation to Rs1.2tr.

The market appears over-liquid, with T-bill bids reaching Rs1,925bn and PIB bids Rs523bn — a combined Rs2.448tr. This also indicates low private-sector borrowing and sluggish economic activity, mirroring the past three years.

Published in Dawn, December 11th, 2025

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