Economic, trade and investment policy uncertainty in Pakistan eased sharply in September 2026, according to the Lahore School of Economics. Its Policy Uncertainty Index fell 24.21% month-on-month to 162.46, suggesting businesses and investors saw a more stable policy environment.
The decline was driven by the State Bank of Pakistan holding its policy rate at 11.5% in September, foreign exchange reserves rising to $26.8 billion and the Federal Board of Revenue meeting its overall first-quarter revenue target. On Monday, however, the central bank raised the rate by 50 basis points to 12%.
Concerns remained. Income tax collection missed its target, and uncertainty stayed high in areas tied to energy pricing. The government kept adjusting fuel prices daily, held the petroleum levy at a high level and introduced a fuel subsidy scheme that raised concerns at the IMF. The study said review talks with the IMF stayed stalled over fuel subsidies, gas-sector receivables and circular debt, which could cap any recovery in confidence if left unresolved.
Trade policy uncertainty also fell but stayed relatively high. The school's Trade Policy Uncertainty Index dropped 22.1% to 192.89 in September, helped by a narrower trade deficit in August and a 7% year-on-year rise in July-August exports. The government also pressed on with tariff rationalisation, including lower duties on imported mobile phones.