ISLAMABAD: Despite higher allocations under the International Monetary Fund (IMF) compulsions, the government on Tuesday reported an actual 7.5 per cent decline in social protection spending but projected moderate inflation and economic momentum this year.
“During July-November FY26, Rs144.9 billion was spent under Benazir Income Support Programme (BISP) against Rs156.7bn last year,” the Ministry of Finance said in its economic update and outlook for January.
This is despite the fact that the government has committed to increasing unconditional cash transfers, the Kafaalat benefit from Rs13,500 to Rs14,500 to adjust for inflation, and to entail a structural benchmark for end-January 2026 under the IMF programme. The coverage for this programme has also to be expanded by 200,000 to 10.2m families by end of FY26.
The ministry said the economy was well-positioned to sustain its growth momentum in FY26, supported by the encouraging performance of large-scale manufacturing (LSM) and other high-frequency indicators. The MoF claimed that this reflected the impact of prudent policies, ongoing structural reforms, and easing of monetary conditions due to subsiding inflationary pressures. “Inflation is expected to remain within the range of 5-6pc in January,” it said.
On the external front, the current account would remain a deficit, the ministry said, hoping that robust remittance inflows and steady performance in IT and services exports would likely “cushion external pressures”.
The improved fiscal management is also expected to continue supporting the macroeconomic stability, it added.
It said the economy completed the first half of the current fiscal year with continued macroeconomic stability, as reflected in contained inflation, rebounding LSM growth, and strengthened foreign exchange reserves, with a stable exchange rate. The sustained growth momentum has been complemented by fiscal discipline, resulting in fiscal and primary surpluses. LSM has gained momentum, signalling improved growth prospects for the remaining period of the fiscal year.
Remittances remained robust, supporting the external account. In parallel, the Pakistan Stock Market has maintained a strong rally, ranking among the world’s top-performing markets and reflecting improved investor sentiment.
Building on these gains, the government has launched economic governance reforms to embed stability in institutions and enable sustainable, private-sector-led growth.
Published in Dawn, January 28th, 2026
