Pakistan plans to limit Sovereign Wealth Fund to local companies

The government plans to restrict investments by the Pakistan Sovereign Wealth Fund (PSWF) to domestic companies, according to 24 News Business. The finance ministry said the fund lacks the capacity to invest in foreign companies under the law approved in 2023.

The proposals were discussed on Wednesday at a meeting of the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla. The committee reviewed the Pakistan Sovereign Wealth Fund (Amendment) Bill 2026.

Ministry officials told the committee that the Pakistan Sovereign Wealth Fund Act was passed in 2023 and gave the fund a much broader scope, which the government now intends to narrow. Under the changes, the fund would focus only on domestic businesses.

The amendments would also transfer dividends generated by companies under the fund to the government. They seek to reduce bureaucratic control and strengthen the role of professionals in the fund's management.

Mandviwalla questioned whether the amendments were being introduced at the IMF's direction. He said the proposed changes ran contrary to the original law passed three years ago.

Finance Minister Muhammad Aurangzeb also briefed the committee on Pakistan's debt position. He said the government is working to reduce external borrowing and repay short-term, expensive loans, and that extending loan maturities is a priority because frequent rollovers exposed the country to significant risks.

According to Aurangzeb, foreign debt had previously risen by $6 billion to $7 billion a year. Pakistan repaid $4.5 billion last year, and repayments are expected to be around $4 billion this year, falling to $3 billion next year.

Aurangzeb said the budget deficit has been brought down to 2.5 per cent and the current account deficit fell to 0.1 per cent of GDP. He expects the current account deficit to stay between zero and one per cent this fiscal year, and said reserves have reached historically high levels.