Singapore June 18 2025: Pakistan’s fiscal year 2026 budget guides for faster pace of consolidation on optimistic GDP/ revenue assumptions, declining interest payments, and modest spending increases, except for defense, states JP Morgan report.
“In our view, the government is capable of meeting these fiscal targets, based on their track record in the last two years, where revenue shortfalls were decisively addressed via necessary spending cuts. Oil price shock and global recession are key risks” JP Morgan report added.
“If implemented successfully, this budget will likely further bolster external stability via contained CAD and foreign financing inflows” it added.
JP Morgan estimate another US$2bn increase (from US$13bn to US$15bn) to the foreign reserves position in FY26.
JP Morgan stay Market Weight Pakistan in the model portfolio given tight valuations and near term liquidity needs. The budget targets should bode well for bonds but most of it seems to be priced into valuations
