Islamabad, May 22, 2025: Pakistan’s investment-to-GDP ratio in FY 2024-25 rose modestly but still fell short of the government’s 14.2% target, highlighting continued stagnation in private sector contributions. While this marks a slight improvement from last year’s 13.1%, key structural barriers and policy delays continue to restrain investment growth across the economy.
According to fresh data released by the National Accounts Committee, Pakistan’s investment-to-GDP ratio in 2024-25 reached 13.8%—a step up from last year’s performance but below the government’s official goal. This shortfall is primarily attributed to stagnant private sector participation, which remained subdued at 9.1% versus the 9.7% target.
Public investment stood at 2.9%, while total fixed investment improved marginally to 12% of GDP, still missing the 12.5% mark. The situation reflects persistent structural challenges and slow progress on long-promised reforms.
One of the critical setbacks is the underperformance of the Pakistan Sovereign Wealth Fund (PSWF), which has remained inactive due to unresolved legal and structural concerns—particularly in negotiations with the International Monetary Fund (IMF).
Other flagship programs have shifted focus toward short-term economic stability rather than long-term capital formation.
Interestingly, the savings-to-GDP ratio performed better than expected, rising to 14.1%—surpassing the 13.3% target—thanks largely to an anticipated current account surplus. This uptick provides a rare bright spot in an otherwise sluggish investment climate.
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The IMF, in its latest staff review, projected foreign direct investment (FDI) at just 0.5% of GDP (around $2.1 billion), slightly below the prior year. It warned that unless Pakistan eliminates anti-export distortions—like rigid trade restrictions and ineffective tariffs—it risks losing further investment traction.
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In response, the government has pledged to amend the PSWF Act by March 2026. Proposed reforms aim to classify the fund as a state-owned enterprise (SOE), bring its governance in line with global standards, and restrict its role to co-investing in commercially viable ventures. Notably, the restructured fund will not take on primary investment or first-loss risks.
Transparency will be a key pillar of the revamped law. The government has promised a more competitive and accountable approach to procurement and privatisation, including mandatory disclosures on beneficial ownership and bid details at every stage.
