Key Takeaways
- • Pakistan's government plans to restrict Pakistan Sovereign Wealth Fund (PSWF) investments to domestic companies, with the finance ministry stating the fund lacks the capacity to invest in foreign firms under the 2023 law.
- • The proposed Pakistan Sovereign Wealth Fund (Amendment) Bill 2026 was reviewed by the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla, on a Wednesday meeting.
- • The amendments would also reduce bureaucratic control and strengthen the role of professionals in fund management, with dividends from fund-held companies transferred to the government.
- • Mandviwalla questioned whether the changes were being driven by the International Monetary Fund and criticised them as contrary to the original 2023 law.
- • Finance Minister Muhammad Aurangzeb reported a budget deficit of 2.5 per cent and a current account deficit of 0.1 per cent of GDP, with $4.5 billion in debt repaid last year.
Summary
Pakistan's government plans to restrict the Pakistan Sovereign Wealth Fund's investments to domestic companies, according to officials from the finance ministry, who told the Senate Standing Committee on Finance that the fund currently lacks the capacity to invest in foreign companies. The proposed changes were discussed at a Wednesday meeting of the committee, chaired by Senator Saleem Mandviwalla, which reviewed the Pakistan Sovereign Wealth Fund (Amendment) Bill 2026. The underlying Pakistan Sovereign Wealth Fund Act was passed in 2023, and the ministry said the existing law gave the fund a much broader scope that the government now intends to narrow.
Under the proposed amendments, the fund would focus exclusively on domestic businesses, and dividends generated by companies under the fund would be transferred to the government. The bill also seeks to reduce bureaucratic control and expand the authority of professionals in the fund's management.
Mandviwalla questioned whether the amendments were being introduced at the direction of the International Monetary Fund and criticised the government for proposing changes that run contrary to the original law passed three years ago.
In the same session, Finance Minister Muhammad Aurangzeb briefed the committee on Pakistan's debt position. He said the government is working to reduce external borrowing and repay short-term, expensive loans, noting that foreign debt had previously been rising by $6 billion to $7 billion annually. Pakistan repaid $4.5 billion in debt last year, with repayments expected to reach around $4 billion this year before declining to $3 billion next year. Extending loan maturities is also a priority, as frequent rollovers had exposed the country to significant risks.
Aurangzeb added that the budget deficit has been reduced to 2.5 per cent and the current account deficit has fallen to 0.1 per cent of GDP, which he expects to remain between zero and one per cent this fiscal year. He also said Pakistan had avoided fuel shortages despite regional tensions, with no queues at petrol stations, and that foreign exchange reserves had reached historically high levels.
Under the proposed amendments, the fund would focus exclusively on domestic businesses, and dividends generated by companies under the fund would be transferred to the government. The bill also seeks to reduce bureaucratic control and expand the authority of professionals in the fund's management.
Mandviwalla questioned whether the amendments were being introduced at the direction of the International Monetary Fund and criticised the government for proposing changes that run contrary to the original law passed three years ago.
In the same session, Finance Minister Muhammad Aurangzeb briefed the committee on Pakistan's debt position. He said the government is working to reduce external borrowing and repay short-term, expensive loans, noting that foreign debt had previously been rising by $6 billion to $7 billion annually. Pakistan repaid $4.5 billion in debt last year, with repayments expected to reach around $4 billion this year before declining to $3 billion next year. Extending loan maturities is also a priority, as frequent rollovers had exposed the country to significant risks.
Aurangzeb added that the budget deficit has been reduced to 2.5 per cent and the current account deficit has fallen to 0.1 per cent of GDP, which he expects to remain between zero and one per cent this fiscal year. He also said Pakistan had avoided fuel shortages despite regional tensions, with no queues at petrol stations, and that foreign exchange reserves had reached historically high levels.
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