Rain 🌧️ Reforms 🏛️ Rally 🚀

Another Week, Another Pulse!

As the country braces for yet another spell of rain, the news cycle remains just as intense. On the positive side, the Asian Development Bank (ADB) approved an $800 million loan and guarantee program for Pakistan to strengthen fiscal sustainability and improve public financial management. In a separate development, ADB also sanctioned a $410 million financing package to support the Reko Diq copper and gold mine in Balochistan, one of the world’s largest untapped mineral deposits, to be operated by Barrick Gold.

Progress on the digital front continued as Planning Minister Ahsan Iqbal launched the country’s first “Digital Economic Census,” promising a data-driven approach to economic planning. However, concerns surfaced as Pakistan’s external debt and liabilities surged to approximately $130 billion, with nearly 58% denominated in US dollars, according to the latest Debt Management Strategy (DMS) for 2026 to 2028.

Adding to the challenges, courier companies reported a slowdown in business as e-commerce delivery orders dipped significantly. Meanwhile, Prime Minister Shehbaz Sharif emphasized the government’s commitment to digitalizing the economy and moving toward a cashless financial system.

On the trade front, Pakistan and Iran agreed to boost bilateral agricultural trade to $3 billion within two years, signing a joint communique during the visit of Pakistan’s high-level ministerial delegation to Tehran. Finally, SBP Governor highlighted a concerning trend as Pakistan’s domestic savings have fallen to just 7.4% of GDP, far below the regional average of 27%, fueling chronic reliance on external financing and perpetuating economic boom-bust cycles.

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The Pakistan Stock Exchange (PSX) continued its bullish run this week, with the benchmark KSE-100 Index hitting a historic intra-day high of 151,262 points before closing at 149,493 points. This marks a weekly gain of 3,001 points or 2.05%.

The rally was driven by strong corporate earnings, increased investor participation in T-bill and Sukuk auctions, and improved macroeconomic indicators, including a narrower current account deficit, stable foreign exchange reserves, and a slight appreciation of the Pakistani rupee.

Moody’s Upgrades Ratings of 5 Major Pakistani Banks

Moody’s Investors Service has upgraded the long-term deposit ratings of five major Pakistani banks—Allied Bank, Habib Bank, MCB Bank, National Bank of Pakistan, and United Bank—from Caa2 to Caa1, following the recent upgrade of Pakistan’s sovereign credit rating. The improvement reflects a better operating environment, stronger government capacity to support the banking sector, and the banks’ own resilient financial performance. Moody’s also raised the baseline credit assessments for most of these banks and revised their outlook to stable, while noting that further progress on IMF reforms will be crucial to strengthen foreign exchange reserves and maintain financial stability.

SECP Operationalizes Capital Market Development Fund

The SECP has operationalized the Capital Market Development Fund (CMDF) to boost financial literacy, expand investor outreach, and support capital market growth. Funded by PSX, NCCPL, CDC, and PMEX with Rs. 30 million in seed capital plus 1% of annual revenues, the CMDF will be managed by the IFMP under a Steering Committee for strategic oversight. Launched on August 18, 2025, the initiative aims to empower retail investors and strengthen Pakistan’s capital markets in line with global best practices.

Fauji Foundation, KAPCO Submit Binding Offer to Acquire Majority Stake in Attock Cement

Fauji Foundation and Kot Addu Power Company (KAPCO) have jointly submitted a binding offer to acquire an 84.06 percent majority stake in Attock Cement Pakistan Limited from Pharaon Investment Group. Both parties plan to purchase equal stakes of 42.03 percent each. The move follows KAPCO’s earlier disclosure in June 2025 and the public announcement of intention made through Integrated Equities Limited, signaling a major acquisition in Pakistan’s cement sector.

Pakistan Launches Upgraded Payment and Settlement System

The State Bank of Pakistan has launched its upgraded payment and settlement system, PRISM+, marking a major step in financial digitization. Governor Jameel Ahmad said the system brings Pakistan in line with global standards, offering real-time settlements, advanced automation, and stronger security features. With over 225 million bank and digital wallet account holders and rapidly growing digital payment channels like RAAST, PRISM+ is expected to improve transparency, liquidity management, and efficiency across the financial sector, supporting both innovation and economic stability.

ADB to back Pak rail upgrade as China financing stalls

The Asian Development Bank (ADB) has stepped in to fund upgrades for Pakistan’s outdated railway system after years of delays in getting financing from China. The rail project, part of a $60 billion Chinese investment plan announced in 2015, had been stuck due to prolonged negotiations and Pakistan’s growing debt to China. With ADB taking over, Pakistan can finally move forward with modernizing its railways, which is key for boosting trade, supporting mining projects, and improving the country’s transport infrastructure.

SECP introduces ‘Angel Fund’ for startups in Pakistan

The Securities and Exchange Commission of Pakistan (SECP) has launched a new “Angel Fund” category under its Venture Capital Fund regulations to support early-stage startups. Announced through amendments to the Private Fund Regulations 2015, this fund will allow eligible investors who meet certain income or asset thresholds to invest in unlisted securities and financial assets of young companies. The move aims to make it easier for startups to access funding while giving investors more structured options to back innovation and entrepreneurship in Pakistan.

President Zardari constitutes 11th National Finance Commission

President Asif Ali Zardari has formed the 11th National Finance Commission (NFC) to recommend how revenues, grants, borrowing powers, and costs of national projects should be shared between the federal and provincial governments. The commission will be chaired by Federal Finance Minister Muhammad Aurangzeb and include provincial finance ministers along with Nasir Mahmood Khosa, Dr Asad Sayeed, Dr Musharraf Rasool Cyan, and Farman Ullah as members. It will review tax distribution, grants-in-aid, borrowing powers, and cost-sharing for both provincial and national projects, with the Finance Division providing secretariat support. The previous NFC, constituted in July 2020, has been dissolved.

Audit report exposes unauthorised salary increases at SECP

An audit by the Auditor General of Pakistan has flagged serious irregularities at the Securities and Exchange Commission of Pakistan (SECP), revealing unauthorized salary hikes and allowances worth over Rs377 million. The report found that SECP raised the salaries of its chairman and commissioners without mandatory approval from the Ministry of Finance, with the chairman’s package reaching Rs41.5 million and each commissioner receiving Rs35.8 million for 2023-24. It also uncovered illegal distribution of Rs110 million in entertainment allowances, noting that the SECP Policy Board approved the raises despite lacking the authority to do so.

Pakistan to Launch $1 Billion Panda Bonds in Chinese Market

Pakistan plans to issue $1 billion worth of Panda Bonds in the Chinese market in three phases, starting with $250 million in the current fiscal year and the remaining $750 million by 2028. The decision, aimed at diversifying financing sources and reducing reliance on short-term Treasury Bills, is expected to gain momentum during Prime Minister Shehbaz Sharif’s upcoming visit to China next month. The Finance Ministry also projects Pakistan’s GDP to grow significantly from Rs114 trillion to Rs163 trillion by 2028, marking an increase of Rs48 trillion over three years.

IMF Urges Pakistan to End Special Treatment for Parliamentarians’ Projects

The International Monetary Fund has urged Pakistan to end the special treatment given to parliamentarians’ development projects and bring them under the regular Public Sector Development Programme approval process. In its Governance and Corruption Diagnosis Assessment report, the IMF warned against mid-year budget changes without parliamentary approval and criticized the lack of scrutiny for these schemes, which consumed Rs61 billion last year and have Rs70 billion allocated this year. The lender stressed that bypassing standard procedures leads to inefficiency, wastage, and diversion of funds from high-priority projects.

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