By Qudsia Bano

Pakistan witnessed a sharp increase in new business formation during FY2025-26, with company registrations rising by nearly 25%, reflecting improving investor confidence and a more stable economic environment, according to the Finance Division.

The Monthly Economic Update & Outlook (June 2026) states that the country's improving macroeconomic fundamentals, ongoing structural reforms and stronger financial market performance are encouraging greater entrepreneurial activity and private investment.

According to the report, the Securities and Exchange Commission of Pakistan (SECP) registered 36,059 new companies during July-April FY2025-26, representing a 24.8% increase compared with 28,903 companies registered during the corresponding period of the previous fiscal year. The strong growth points to rising confidence among investors despite a challenging global economic environment.

The report attributes the improvement in business sentiment to Pakistan's sustained macroeconomic stabilisation during FY2025-26. Real GDP growth accelerated to 3.7%, the highest in four years, while fiscal and external sector indicators strengthened through improved revenue mobilisation, a current account surplus, stable exchange rate and rising foreign exchange reserves. These developments helped create a more predictable business environment for investors.

According to the Finance Division, investor confidence also received a boost from the government's continued implementation of the International Monetary Fund's Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) programmes. Sovereign credit rating upgrades by Fitch and Moody's, together with Pakistan's successful return to international capital markets through the issuance of a Eurobond and the launch of its first Panda Bond, further strengthened confidence in the economy.

The report notes that the improved investment climate was also reflected in the performance of the Pakistan Stock Exchange, where the benchmark KSE-100 Index reached an all-time high during the fiscal year. According to the Finance Division, stronger capital markets and improving financial conditions have complemented broader efforts to promote private sector-led growth.

The report further highlights that private sector borrowing from banks increased during the fiscal year, indicating greater demand for financing among businesses seeking to expand operations and invest in productive activities. At the same time, lower government borrowing eased pressure on the banking system, creating additional space for private sector credit.

According to the document, the government's Budget 2026-27 builds on these gains by focusing on export-led growth, improving business competitiveness, broadening the tax base, advancing energy sector reforms and encouraging greater private investment. These measures are intended to strengthen the business environment and sustain the momentum in corporate sector growth.

The Finance Division believes that continued macroeconomic stability, structural reforms and improving investor confidence will encourage more entrepreneurs to formalise their businesses and establish new companies. The report concludes that sustained growth in company registrations will support investment, employment generation and long-term economic development by expanding Pakistan's formal corporate sector.

Credit: INP-WealthPk