First, remittances increased by 38.8 percent in July-September 2025 compared to the same period the previous year. This growth is primarily attributed to the government’s decision to discontinue its problematic foreign exchange market interventions. However, it’s worth noting that remittance growth slowed to 29 percent in September 2025 compared to September 2024, suggesting these inflows may be reaching their peak.
Second, the country achieved a current account surplus, which reports suggest resulted more from delays in opening letters of credit than from increased exports, although raw material imports have been facilitated to support domestic production.
Exports rose by 8.5 percent, but this was outpaced by imports, which climbed 19.4 percent, indicating critical raw material inflows. This contributed to a slight reduction in the decline of the large-scale manufacturing sector (LSM), which recorded a 0.19 percent drop in July-August compared to a negative 2.53 percent in the same period last year. However, concerningly, the LSM figure for August 2025 was negative 2.65 percent, down from a positive 0.21 percent in August 2024.
Third, there was a significant 32.7 percent increase in Federal Board of Revenue collections in September compared to the same month last year, and a 25.5 percent rise for July-August this year over the same months last year. Nevertheless, the target was set unrealistically high at 40 percent above previous levels, as agreed with the International Monetary Fund (IMF). This raises concerns that the government may need to activate contingency plans in the event of revenue shortfalls, which could lead to increased reliance on indirect taxes (currently around 75-80 percent). These taxes disproportionately affect the poor, contributing to a 21 percent drop in electricity consumption and a notable rise in crime.
Despite these challenges, the government appears committed to achieving its budgeted revenue goals by enforcing measures to broaden the tax base. However, significant obstacles remain, including (i) a decline in the discount rate by 5.5 percent, yet private sector credit has continued to shrink, with a negative 240.9 billion rupees recorded from July 11 to October this year, compared to a negative 247.8 billion rupees during the same period last year. This suggests the projected 3.5 percent growth needed for robust tax collections is unlikely to be achieved; and (ii) ongoing resistance from traders and industrialists against measures implemented by the Federal Board of Revenue (FBR).
Finally, inflation has significantly decreased to single digits. However, this drop must be viewed in context, considering the 21 percent decline in electricity demand due to higher rates and a substantial increase in petroleum levy collections, which surged by 19.6 percent. This has further diminished the purchasing power of citizens, amid a poverty level of 41 percent that rivals that of Sub-Saharan Africa.
The report does not disclose three critical indicators. First, while it mentions that the country’s debt has decreased, it also notes that mark-up expenditures fell by 6.3 percent due to a gradual reduction in the policy rate, which lowered the fiscal deficit to 0.7 percent of GDP, down from 0.8 percent last year.
Second, the poorly managed energy sector remains burdened by flawed policies, contributing to an estimated 2.6 trillion rupees in circular debt. These policies include promoting solar panels, which have decreased demand from the national grid and increased tariffs due to rising capacity payments, as well as a focus on privatization without learning from past mistakes, such as with K-Electric, which still requires a 171 billion rupee tariff equalization subsidy.
Lastly, while total current expenditure grew by 3.1 percent from July to August 2025, amounting to 16,635.5 billion rupees compared to 15,585.7 billion rupees in the same period last year, a complete picture remains elusive.
In summary, significant work lies ahead to effectively set the economy on a stable path.