🛡️ Defense, 💰 Debt, 🤝 Deals

Another Week, Another Pulse!
From high-profile state visits to cyberattacks on Europe’s busiest airports, the past week had no shortage of events. In Riyadh, Saudi Crown Prince Mohammed bin Salman and Pakistani Prime Minister Shehbaz Sharif signed a joint strategic defense agreement during the latter’s visit. Back home, the State Bank of Pakistan kept the policy rate unchanged at 11%. Petrol prices were also maintained, while diesel saw a slight increase of Rs. 2.78 per litre. On the agriculture front, the Sindh and federal governments agreed to formulate a National Wheat Policy.

On the fiscal side, Pakistan made arrangements for the timely payment of a $500 million Eurobond due on September 30, 2025. FBR Chairman Rashid Mahmood Langrial confirmed that no mini-budget is under consideration as the country prepares for the upcoming IMF mission visit. Meanwhile, net foreign direct investment (FDI) fell 22% year-on-year. The government also operationalized the Pakistan Virtual Assets Regulatory Authority (PVARA), with FBR officials onboard to strengthen market surveillance, risk management, and anti-money laundering measures. Profit rates on National Savings Schemes (NSS) were revised across multiple categories effective September 17, 2025. Finally, Pakistan’s central government debt rose to Rs. 78.238 trillion in July, the first month of FY26—an increase of Rs. 350 billion or 0.4% from June.

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The benchmark KSE-100 Index witnessed a strong rally this week, gaining 2.33% WoW. The upward momentum was largely fuelled by optimism following the landmark Saudi-Pakistan Strategic Mutual Defence Agreement signed in Riyadh, alongside positive sentiment over Pakistan’s timely Eurobond payment arrangements and the government’s assurance of no mini-budget ahead of the IMF mission.

Pakistan Posts Current Account Deficit of $245 Million in August

Pakistan’s current account slipped back into deficit, recording a $245 million gap in August 2025, wider than last year’s $82 million but smaller than July’s $379 million shortfall, according to SBP data. The deficit for the first two months of FY26 has now reached $624 million, compared to $430 million in the same period last year, highlighting pressure after FY25’s rare $2.1 billion surplus. August’s balance was weighed down by a $2.48 billion trade deficit in goods and a $437 million gap in services, partly cushioned by $3.14 billion in remittances, which remain the key support for Pakistan’s external account.

Fitch put Pakistan's debt ratings under review

Fitch Ratings has placed Pakistan’s sovereign debt, along with that of 24 other countries, under review following changes to its global rating methodology. The new framework, announced on September 15, 2025, introduces “loss severity” into sovereign ratings, meaning recovery prospects for creditors in the event of default will now directly influence ratings. While the move does not immediately alter Pakistan’s rating, Fitch will reassess within six months, which could result in ratings being revised up, down, or left unchanged. Analysts say the review is largely technical, aimed at recalibrating recovery expectations, and carries no immediate impact for Pakistan’s credit standing.

Pakistan to Shift All Federal and Provincial Payments to Digital by June 2026

Pakistan will move all federal and provincial government payments to digital platforms by June 2026, the State Bank informed the National Assembly’s finance committee. Officials assured that customers will not be charged for cashless transactions, while lawmakers stressed the need to keep internet and mobile services uninterrupted to support the shift. The central bank also announced that overseas Pakistanis in Gulf countries will soon be able to send remittances directly into local bank accounts through the RAAST system linked with Buna.

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