Pakistan’s investment ratio has improved slightly to 13.8% of GDP for FY2025, still falling short of the official target of 14.2%, as private investment remains stagnant despite government efforts to attract non-debt-creating foreign inflows, according to figures approved by the National Accounts Committee.
The country’s investment-to-GDP ratio increased from 13.1% last year but still misses the target. The government had aimed for a higher investment rate, but its efforts have failed to yield the desired results, particularly from private sector investment.
Private sector investment saw a slight uptick to 9.1% of GDP, but this remains below the targeted 9.7%. Public sector investment, on the other hand, rose to 2.9%, contributing to the overall improvement.
However, these figures still fall short of expectations, indicating the government’s ongoing struggle to address infrastructure needs and social sector challenges without increasing reliance on loans for development.
According to a news report, the government has also faced setbacks with its flagship initiatives. The Special Investment Facilitation Council (SIFC), established to streamline investment processes and remove growth barriers, has yet to produce noticeable outcomes. Despite its efforts over the past two years, the SIFC has struggled to generate the expected investment inflows.
Similarly, the Pakistan Sovereign Wealth Fund (PSWF), which was intended to attract investment from the Middle East, remains dormant due to disagreements over its legal framework with the International Monetary Fund (IMF). The government has committed to revising the SWF’s legal framework and governance structures to ensure transparency and accountability.
In its most recent report, the IMF projected Pakistan’s foreign direct investment (FDI) for FY2025 to be 0.5% of GDP, slightly lower than the previous year. The IMF emphasised that resolving trade policy issues and improving the tariff structure were essential to unlocking Pakistan’s competitiveness and attracting more private investment.
The government has reiterated its commitment to amending the SWF law by March 2026 to ensure its legal clarity and alignment with international best practices. The amended law will focus on attracting FDI, facilitating co-investment in strategic commercial ventures, and ensuring financial returns in line with the SWF’s investment mandate.
