The Iran war has sharply contracted Middle Eastern trade, with the WTO forecasting a 17 percent decline in regional exports and a 15 percent fall in imports this year. Even if hostilities end and the Strait of Hormuz reopens, pre-war trade patterns may not return, as businesses may end up retaining the alternative routes and suppliers they have invested in to hedge against future disruptions.

It is important to recognise that the repercussions extend well past the immediate conflict zones, disrupting trade routes, supply chains and economic activity worldwide. For instance, the Red Sea, Bab al-Mandab Strait and Suez Canal form a vital shipping corridor, linking Asian manufacturers with European markets. Renewed hostilities between Saudi Arabia and Yemen’s Houthis have heightened risks to shipping and energy infrastructure along this route, demonstrating how instability around a single maritime chokepoint can disrupt supply chains across continents. The war in Ukraine has similarly altered established trade patterns, affecting Black Sea grain and oil exports and forcing exporters to find alternative routes and buyers to diversify supplies. The combined lesson is that geopolitical risk is fast becoming a structural cost of doing business. These disruptions are also accelerating the shift towards regional trade as countries seek to reduce dependence on distant suppliers and vulnerable shipping corridors. While this can strengthen regional economic ties, it also risks fragmenting global trade into competing blocs.

The Red Sea crisis since late 2023 illustrates how all these calculations are reshaping global shipping. Houthi attacks on commercial vessels have forced many shipping companies to reroute around the Cape of Good Hope rather than use the Suez Canal, increasing fuel consumption, insurance premiums and freight costs while delaying deliveries. Despite these geopolitical upheavals, the outlook for global trade appears resilient on the surface. The WTO recently raised its forecast for global merchandise trade volume growth to 3.9 percent in 2026 from 1.9 percent in March, largely because of booming demand for AI-related products. Yet Okonjo-Iweala cautioned that this strength could mask less favourable underlying trends. Higher energy and shipping costs raise production expenses, complicate inflation control and disproportionately burden import-dependent economies with limited fiscal and foreign exchange buffers. Developing countries face particular difficulties when more expensive freight and essential imports coincide with weaker currencies and rising debt-servicing costs. Diversification is therefore necessary, but it is not cost-free. Maintaining multiple suppliers, transport corridors and inventories can improve security, yet it also sacrifices efficiencies that made global supply chains competitive. The challenge for governments is to strengthen trade infrastructure, improve regional connectivity and preserve predictable, rules-based market access without allowing security concerns to become a pretext for indiscriminate protectionism.

Okonjo-Iweala is right to warn that some of the changes that have come about in global trade as a result of recent armed conflicts will likely persist even if war ends. Restoring peace though remains essential not only for humanitarian reasons but also for global economic stability. Open shipping lanes, reliable energy supplies and a functioning multilateral trading system are global public goods. The longer conflicts persist, the greater the likelihood that temporary workarounds become permanent divisions in the world economy.

Copyright Business Recorder, 2026

Pakistan Railways has rarely received the sustained policy attention its economic importance warrants. Successive governments have allowed road transport to assume an increasingly dominant role while railway infrastructure, freight capacity and operational efficiency have struggled to keep pace. This is particularly unfortunate in a developing economy where rail can offer substantial cost advantages for moving large volumes of goods over long distances. For passengers, too, affordable and dependable rail services can provide an essential public service, especially for lower-income households.

India offers a useful example of what sustained investment and policy attention can achieve. Its extensive railway network carries enormous volumes of passengers and freight, demonstrating the importance of rail transport in a populous country with substantial income disparities. Pakistan’s circumstances differ, but the underlying economic logic is similar. A functioning railway network can reduce transport costs, improve connectivity and ease pressure on roads. The country should therefore be treating railway development as a central component of economic policy rather than an occasional rehabilitation exercise.

The freight opportunity is especially significant. Pakistan’s principal seaports are in the south, while much of its industrial and commercial activity extends northwards. Imports must reach production and consumption centres, while export cargo must travel in the opposite direction. This creates a natural market for reliable, high-capacity freight services along the Karachi-Peshawar corridor. Greater movement of containers and bulk commodities by rail could reduce dependence on long-distance road haulage, improve logistics efficiency and strengthen the commercial viability of Pakistan Railways. ML-1 must be developed with this opportunity firmly in view, including adequate freight capacity, terminals and connections to ports and industrial centres.

The renewed attention to railway land is also overdue. Encroachments and weak asset management have deprived the organisation of effective control over valuable property, while successive administrations have failed to establish the transparency and discipline such assets require. Efforts to identify and recover encroached land deserve support, of course. However, a proper inventory, clear ownership records and a transparent assessment of each property’s present and future utility should precede decisions about commercial exploitation.

The constitutional and legal status of railway land also deserves careful examination. Land held or used by Pakistan Railways may have different ownership, acquisition and transfer histories, including arrangements involving provincial governments. Any financing model must establish clear title and the relevant legal rights before property is pledged, leased or developed. Equally important, land needed for future tracks, freight yards, terminals, stations and network expansion should be protected. Commercial returns from railway property must be weighed against its long-term transport value.

Ultimately, corporate-style reform must extend to operations, maintenance, financial accountability, freight marketing and service reliability. Borrowing against assets can help finance infrastructure, but the resulting obligations require credible revenue projections and careful risk management. The government should publish the financing framework, assess commercial viability independently and establish measurable milestones for implementation.

Pakistan Railways has spent far too long being treated as an expensive inheritance rather than a productive national asset. The prime minister’s initiative offers an opportunity to change that approach. The real achievement would be a railway that earns its keep by moving considerably more people and goods, with its land serving that larger purpose.

Copyright Business Recorder, 2026

Businesses have spent far too long navigating overlapping requirements, different procedures and regulations administered by authorities that can sometimes appear unaware of what another arm of government is doing. If implemented properly, a unified regulatory framework could remove one of the most persistent and unnecessary obstacles to doing business in Pakistan.

The scale of the exercise is encouraging. The Cabinet’s Regulatory Reforms Committee has approved 557 reforms across seven areas, which the government estimates could save businesses Rs460 billion annually.

The prime minister has also ordered nationwide implementation of the Easy Business Act, greater coordination with provincial governments and the creation of a registry bringing existing regulatory requirements, rules and regulations into one system. These are sensible measures because regulatory complexity carries a real economic cost, even when that cost never appears explicitly in a tax bill.

Pakistan’s problem has rarely been a shortage of rules. Businesses must contend with federal, provincial and local authorities, licensing requirements, approvals, registrations and procedures that can overlap or contradict one another.

The resulting uncertainty consumes management time, increases compliance costs and creates opportunities for arbitrary interpretation. It also particularly disadvantages smaller businesses that lack the legal, administrative and financial resources available to large corporations for navigating bureaucracy.

Greater uniformity could therefore produce benefits well beyond the government’s estimated savings. A business deciding whether to invest needs to know which rules apply, which authority administers them, how long approvals should take and whether the same requirements will remain in force tomorrow.

A comprehensive regulatory registry could provide that clarity if it becomes an authoritative, regularly updated source rather than another government portal added to an already crowded administrative landscape.

There is also merit in attempting to harmonise systems across provinces. Pakistan’s federal structure necessarily gives different levels of government their respective constitutional responsibilities, and regulatory reform must respect those boundaries.

Yet federalism does not require businesses to confront avoidable procedural incompatibilities whenever they cross a provincial border. Common standards, interoperable systems and coordinated procedures can reduce duplication while leaving legitimate provincial authority intact.

The SIFC’s proposed engagement with provincial governments should therefore concentrate on practical harmonisation rather than administrative centralisation.

The most important part of the prime minister’s instructions, however, concerns implementation and independent validation. Pakistan has produced enough reform announcements whose benefits looked considerably better in presentations than they eventually did on the ground.

The government says 557 reforms will generate Rs460 billion in annual savings. That is a substantial claim and should now become a measurable benchmark. Third-party validation must establish how those savings were calculated and, subsequently, whether businesses actually experience them.

The same discipline should apply to the Business Facilitation Centres. Processing thousands of applications is useful, but the more meaningful measures will be processing times, reductions in required approvals, compliance costs, rejection rates and feedback from businesses themselves.

Ministries should also be held to the implementation deadlines already ordered, with progress published periodically so that delays and institutional resistance cannot disappear inside the bureaucracy.

The government has identified a genuine problem and, on paper, proposed a credible way of addressing it. Bringing scattered regulations into one accessible system, reducing contradictions and coordinating procedures across jurisdictions could materially improve the business environment.

The private sector should now be involved continuously in identifying where the reforms work and where regulatory friction remains.

For once, the right hand and the left hand are being asked to read the same rulebook. The real test is whether the bureaucracy actually opens it.

Copyright Business Recorder, 2026

The tragedy at Al-Khair School has again exposed an appalling failure to protect children entrusted to an educational institution, with preliminary reports pointing to a structurally weak building burdened by additional construction.

The precise death toll has varied across reports, but the enormity of the tragedy is beyond dispute. Children went to school for an ordinary day of learning and never returned home. There can be no acceptable explanation for allowing such conditions to develop, and no official or institution responsible for their safety should escape scrutiny.

The circumstances emerging from the investigation are deeply disturbing. Police have indicated that the building was structurally unsound, while reports suggest that concerns about its condition had previously been raised. These allegations require thorough examination, including whether the additional construction was authorised, whether qualified engineers assessed the building’s capacity and whether school management ignored warnings.

The owner has reportedly been arrested, but the investigation must establish responsibility through evidence and extend to every person whose actions or omissions contributed to the disaster.

Equally serious questions confront the departments responsible for approving buildings, registering educational institutions, and enforcing safety regulations. According to the provincial private schools regulator, Al-Khair was registered in March, although technical personnel were absent from the inspection. That disclosure alone should trigger an examination of the entire registration process.

How could an institution accommodating so many children receive approval without adequate scrutiny of the premises? Which authorities were responsible for verifying structural safety, and what records exist of inspections, permissions and subsequent alterations? Worse, how many more such buildings are still accommodating children, waiting for another disaster to expose the same failures? The public deserves specific answers, supported by documentary evidence.

The provincial government must accept its share of institutional responsibility. Regulation and enforcement are fundamental functions of government, and their effectiveness cannot be measured by the number of committees established after a catastrophe.

The authorities have announced inspections of private school buildings, but such exercises must lead to independent structural assessments, immediate action against dangerous premises, and enforceable safety requirements. Findings should be made public, with clear responsibility assigned for corrective measures and follow-up inspections.

Officials found to have neglected statutory duties must face consequences alongside private individuals whose negligence is established.

There is also the disturbing matter of repetition. 14 children died when a tuition centre roof collapsed in Lahore in June, followed shortly afterwards by another fatal school roof collapse in the city. Those incidents should have prompted a nationwide examination of the safety of schools, tuition centres and other premises accommodating children. Their recurrence raises serious questions about whether warnings from earlier tragedies have produced any meaningful preventive action.

Every provincial administration should now examine the adequacy of its inspection arrangements, particularly for educational institutions operating in converted residential buildings or premises that have undergone structural alterations.

Accountability must be accompanied by lasting reform. Building approvals, educational registration and periodic safety certification should operate within a coordinated regulatory framework, with structural assessments undertaken by qualified professionals.

Unauthorised construction must attract effective penalties, and unsafe institutions should remain closed until independent certification establishes that they can operate safely. Parents must also have access to reliable information about the safety of premises where their children spend much of their day.

Compensation for bereaved families is necessary, as is support for the injured, but neither can discharge the state’s responsibility for preventing such disasters. The investigation must establish the full chain of decisions and failures that preceded the collapse, and its findings must lead to prosecution wherever criminal responsibility is established.

Pakistan has allowed preventable failures of public safety to claim innocent lives for far too long. The children of Peshawar deserve justice, and every child still attending school deserves the protection that these victims were denied.

Copyright Business Recorder, 2026

The latest United Nations Development Programme figures show that 38.3 percent of Pakistan’s population suffers from multidimensional poverty, facing overlapping deprivations in health, education and basic living standards.

Another 12.9 percent remains vulnerable to such poverty. These findings should cause considerable discomfort in official circles, particularly among an economic team that has become adept at presenting improvements in macroeconomic indicators as evidence of a broader recovery.

The comparison with neighbouring countries is especially troubling. India’s multidimensional poverty rate stands at 16.4 percent and Bangladesh’s at 14.9 percent, although the underlying surveys were conducted in different years and therefore cannot support a strictly contemporaneous comparison.

Even allowing for that qualification, Pakistan’s position is deeply disturbing. The intensity of deprivation among its multi-dimensionally poor population stands at 51.7 percent, indicating that those classified as poor experience more than half of the weighted disadvantages measured by the index. These are substantial failures in the provision of basic necessities that should have commanded sustained government attention long ago.

The findings also expose a fundamental weakness in the way economic performance is discussed in Pakistan. Stabilisation of external accounts, improved reserves, lower inflation or progress towards fiscal targets may be important achievements when they occur. But their significance must ultimately be judged against improvements in employment, purchasing power, education, healthcare and living standards.

An economy can appear healthier in official presentations while millions of households continue struggling with inadequate nutrition, interrupted schooling, unsafe water and poor sanitation. The distance between these two realities is precisely where economic policymaking has repeatedly failed.

That failure deserves particular scrutiny because poverty of this kind perpetuates itself across generations. Children deprived of adequate nutrition and education face diminished opportunities throughout their lives. Poor health reduces earning capacity, while inadequate sanitation and unreliable access to essential services impose further costs on already vulnerable households.

The consequences extend beyond individual hardship to labour productivity, economic competitiveness and the country’s long-term growth potential. Pakistan is effectively allowing a substantial part of its human capital to deteriorate while continuing to debate recovery largely through financial aggregates.

The government’s economic team must therefore explain how its policy priorities are expected to produce measurable improvements in these conditions. Fiscal discipline is necessary, but the composition and effectiveness of public expenditure matter enormously. Resources directed towards education, primary healthcare, nutrition, drinking water and sanitation must be protected and used efficiently.

Federal and provincial governments also need to confront the persistent weaknesses in service delivery, including inadequate oversight, poor coordination and the diversion of scarce resources towards politically convenient projects with limited developmental impact.

Equally important is the need to make poverty reduction a measurable test of economic policy. Governments should establish clear targets, publish regular assessments and identify the districts and communities facing the most severe overlapping deprivations.

Social protection must be linked with better access to essential services and opportunities for productive employment. Provincial administrations, which carry major responsibilities for health, education and local services, must be held accountable for outcomes rather than expenditure announcements.

The UNDP’s findings describe a global problem, with 1.2 billion people living in multidimensional poverty.

Pakistan’s particularly poor showing, however, demands a distinctly national response. The country cannot afford to regard poverty reduction as a secondary benefit that will eventually follow macroeconomic stabilisation.

The government’s economic managers have spent considerable time explaining why the numbers suggest recovery. They must now explain why so many Pakistanis remain unable to experience it.

Copyright Business Recorder, 2026

According to figures released by the Ministry of Maritime Affairs, export receipts rose 74.40 percent year-on-year to $125.4 million, compared with $71.9 million in the corresponding period last year.

Such growth deserves appreciation, particularly in a sector whose potential has remained under-exploited for far too long.

The challenge now is to convert this encouraging performance into sustained expansion through a coordinated strategy for market access, investment, quality assurance and institutional development.

The figures also underline the importance of examining what is driving export growth. Shipment volumes reached 61,679 metric tonnes during July-September 2026, compared with 43,995 tonnes a year earlier. This suggests that increased quantities have been an important driver of higher earnings.

The next objective should therefore be to secure greater value from each tonne exported through better processing, packaging, product diversification and access to markets willing to pay more for products meeting their requirements.

Pakistan’s marine fisheries sector offers considerable opportunities for earning foreign exchange while supporting employment and livelihoods along the coast. Yet exploiting those opportunities requires a far more systematic approach than celebrating periodic increases in export figures.

The opening of Russia as a market for Pakistani seafood is a positive development, and the authorities should now pursue additional destinations through sustained commercial diplomacy, technical negotiations and direct engagement with international buyers.

Export promotion agencies, trade missions, fisheries regulators and private exporters must work towards clearly defined market-access targets rather than operating in separate administrative compartments.

Particular attention should be given to resuming shrimp exports to the United States and improving access to the European Union. These markets demand rigorous compliance with food-safety, inspection, traceability and certification requirements.

Meeting such standards requires investment throughout the supply chain, from hygienic handling at landing sites and reliable cold storage to processing facilities, laboratory testing and documentation.

Government and industry must identify the precise regulatory and technical obstacles affecting each market and establish time-bound plans to address them.

The proposed revival of the fishing licensing regime in Pakistan’s Exclusive Economic Zone also deserves priority. Proper licensing, monitoring and enforcement can support more orderly commercial activity and improve the management of marine resources.

However, expansion must remain consistent with sustainable fishing practices. Unregulated exploitation, inadequate stock management and destructive fishing methods could eventually undermine the very export potential the government is seeking to develop. Reliable fisheries data and effective oversight are therefore essential components of a credible growth strategy.

Human-resource development is equally important. The maritime minister’s call to restore the Marine Fisheries Department’s Fisheries Training Centre should be acted upon promptly.

Pakistan needs trained personnel in fisheries management, seafood processing, quality control, laboratory testing, vessel operations and international compliance. Dedicated training programmes, developed in consultation with exporters and technical specialists, could help build the professional capacity required to compete in demanding markets.

Smaller fishing operators and coastal communities must also have access to improved skills, equipment and market opportunities.

The government should now translate these priorities into a comprehensive export development programme with measurable targets, clear institutional responsibilities and regular independent assessment.

Greater coordination between federal and provincial authorities, private exporters and fishing communities will be indispensable. Investment in infrastructure, easier access to finance and faster certification procedures should accompany efforts to secure new markets.

With Pakistan facing persistent pressure to strengthen its external account, every viable opportunity to earn additional export revenue deserves serious attention. Seafood exports have demonstrated encouraging momentum.

The government must now ensure that the sector can sustain it, increase value addition and make a more substantial contribution to the balance of payments. A bigger catch is welcome; securing a bigger share of international seafood markets would be considerably better.

Copyright Business Recorder, 2026

The finance minister, Mohammad Aurangzeb, is still talking about basic economic hygiene. He still admires economic stabilization. In the short run, this mantra works. However, maintaining stabilization by strangulating the economy for five straight years could rather be counterproductive. The issue is that fiscal reforms are missing—both in broadening the tax base and curtailing the government’s running expenditure.

No doubt, the government is running a fourth straight year of primary fiscal surplus, while the consolidated fiscal deficit is at its lowest level in over two decades. However, that does not help alleviate poverty. As per World Bank data, extreme poverty (people living below $3 per day) was at 23 percent in Pakistan in 2024, which is over four times that of Bangladesh (5.9 percent) and India (5.3 percent).

Almost half of Pakistan’s population struggles to afford adequate food, housing, education, healthcare, and other essentials, as 48 percent of the population lives below $4.2 per day, which is more than double the proportion in the other two countries.

The current stabilization policies are making the situation even worse. The vulnerable people need employment opportunities, and these can only be generated through higher growth. Stabilization is only giving comfort to the elite while making life miserable for most. Growth requires fiscal spending on development and rationalizing taxation in the formal sector. Both are missing.

There is no visible decline in the government running expenditure; consequently, the public perception is highly unfavourable. Foreign trips and private jet travel are only increasing. The number of ministers and advisers continues to grow, and there is no end to the rewards for the ruling elite.

And, to meet the fiscal targets, the axe only falls on development spending. The federal PSDP (public sector development plan) averaged 0.6 percent of GDP over the last five years, compared to 1.3 percent in the preceding five years. This situation is worsening every year. Cutting development spending is tantamount to cutting your own flesh; there is a limit to how much can it be cut.

Some would say that lower federal spending is compensated for by higher provincial spending. However, this year, the provinces are giving an extra Rs1 trillion to the federal government and, in turn, they are cutting spending on development, health, and education. This is criminal in a country where 25 million children (35 percent of the total) aged 5 to 16 are out of school and 40 percent of children under five are stunted.

There should be a health and education emergency in the country but, on the contrary, governments are cutting this expenditure to meet the IMF’s targets while doing nothing to reduce their own slack.

The government needs to create space for development and social sector spending by lowering all other types of expenditure. And, additional revenues should be generated by broadening the tax base and bringing retailers, traders, and others into the net. There should be no discrimination. The culture of untouchability should end before it is too late. The government needs to confront this problem head-on. Without doing so, the country may keep falling into the abyss, and the disconnect between the masses and the ruling elite may continue to widen. There is a limit to how long things can be allowed to slip like this. Eventually, this could explode and wash away everything.

Copyright Business Recorder, 2026

Every such accident raises disturbing questions: how long must passengers continue to risk their lives, and when will the government treat railway safety as a national priority rather than respond with routine condolences, inquiries and compensation?

Unfortunately, this tragedy is not an isolated incident. In February 2025, three coaches of the Shalimar Express derailed near Lahore’s Shahdara Bridge. In May, all 15 coaches of the same train derailed following a collision with a tractor-trolley at an unmanned level crossing near Faisalabad, injuring six passengers. In August, the Islamabad Express suffered a major derailment near Kala Shah Kaku, while the Awam Express derailed near Lodhran, killing one passenger and injuring 33. In March 2026, seven coaches of the Tezgam Express derailed near Adam Wahan in Lodhran, injuring 26 passengers. In a particularly devastating incident in August 2023, ten cars of a Rawalpindi-bound passenger train derailed and overturned near Nawabshah, killing 30 people and injuring more than 90 others. These recurring accidents point to persistent weaknesses in railway operations, equipment maintenance, and infrastructure management.

Although the precise causes vary, the pattern raises serious concerns about ageing tracks, defective rolling stock, inadequate maintenance and shortcomings in signalling and switching systems. Preliminary findings into the latest accident reportedly identified a mechanical problem involving a passenger coach. A thorough and independent investigation must establish whether the derailment resulted from a defective coach, damaged track, faulty points system or a combination of failures. Equally important, investigators must determine why existing safety checks failed to prevent the disaster. Without addressing these underlying deficiencies, inquiries will achieve little beyond identifying immediate causes.

The government’s response, regrettably, follows a familiar script: expressions of grief, compensation promises, investigations and assurances of accountability. While necessary, these measures cannot replace preventive action. Railways Minister Hanif Abbasi’s assurance that problems involving locomotives, coaches and wagons would be addressed by December 31 must be backed by adequate funding, a transparent action plan and measurable safety targets. Priorities should include track renewal, regular inspections of locomotives and coaches, modern signalling, effective protection at level-crossings and independent safety audits. Investigation findings must be made public, and officials found negligent must face appropriate consequences regardless of their rank or political connections.

Pakistan Railways remains an affordable and essential means of transport for teeming millions of this country, particularly low-income families who cannot readily afford alternatives. These passengers deserve safe journeys, not an endless cycle of accidents and official promises. The government cannot indefinitely invoke financial constraints while lives are lost because essential infrastructure and equipment may not be receiving the attention they require. Sustained investment in railway safety is not an optional expense; it is a fundamental responsibility of the state. Until passenger safety becomes a demonstrable priority, railway accidents will continue to expose the cost of official neglect, and every journey will carry an unacceptable risk.

Copyright Business Recorder, 2026

These projections are dated, made at least three months ago, and may have been based on optimism over the resolution of the Middle East crisis and the Russia-Ukraine conflict – conflicts that are widening with time rather than reaching a diplomatic solution.

The Middle East conflict has created fuel shortages with global implications that are raising inflation world-wide. In addition, Western countries, including the United States and Europe, are facing a rise in their bond yields, thereby making it increasingly more expensive for them to secure loans that are required for meeting the costs of war – both in Ukraine and the Middle East for the US and in Ukraine by the Europeans.

The US dollar has been particularly hard hit as the era of the petrodollar is over due to severely constrained oil supplies from the region, a major source of export revenue for the Gulf countries who had agreed to purchase US treasuries with their large annual surplus that enabled the US to borrow money at very cheap rates.

At present, Japan and the Gulf countries are increasingly looking to sell their US treasury bonds to meet their liquidity shortages though, to date, the US Treasury Secretary has staved-off some of these demands to sustain the dollar value. How long he will be able to do so remains in question.

Sanctioning Russia’s oil imports has crippled European industry with ongoing de-industrialization leading to inflation and lower growth.

The European leadership’s insistence that they would divert their output from civilian products to military output through access to the equity market is raising their bind yields as well.

In this emerging scenario, IMF’s growth projection for Pakistan may be an over-statement on two counts. First, implementing severely contractionary monetary and fiscal policies as well as raising utility prices as part of the extremely rigid upfront ongoing IMF programme – policies that are anti-growth; and secondly, exports to the Middle East are lower than projected as shipping to these countries remains affected, making exports via air quite expensive.

While remittance inflows have risen in recent months, due to Pakistanis not opting to return due to the Middle East crisis unlike other nationalities and those who opted to return getting paid a lump sum yet this may not be sustainable, which may increase reliance on more borrowing to fund the budget deficit that is an inflationary policy.

Inflation projection is a high of 9.9 percent, a projection that was surpassed in August at 11.1 percent and 10.3 percent in September.

Sadly, the rise in poverty rates, estimated at 44.7 percent by the World Bank, make it a challenge for the government to deal with these poverty levels and there is, therefore, a need for the government to slash its current expenditure that is rising each year accounting for around 93 percent of the total budget outlay.

And finally, unemployment has been projected at 6.5 percent though independent economists place it at a worrisome 22 percent based on the Labour Force Survey uploaded by the Pakistan Bureau of Statistics.

There is an urgent need for the government to try to create leverage with the Fund staff and, given the existing geopolitical constraints, there is no other option but to slash current expenditure which would require major sacrifices by the government – to the tune of 2 trillion rupees at least for the next two years; but if achieved it would raise the prospect of the country not requiring the twenty-sixth Fund programme loan after the current one ends.

Copyright Business Recorder, 2026

The central challenge, therefore, is not whether Pakistan should embrace ESG, but whether it can build a system in which environmental and social commitments are credible, verifiable and capable of producing tangible results.

With hundreds of companies listed on the Pakistan Stock Exchange, the availability of detailed and independently verifiable information on emissions, resource consumption, waste and environmental impacts remains limited.

More importantly, a glossy sustainability report cannot substitute for evidence of cleaner production, reduced emissions or responsible resource use. This distinction matters more and more as our businesses operate in a global marketplace where environmental standards are becoming part of trade and investment decisions.

Exporters will face growing pressure to demonstrate the environmental footprint of their products as major markets introduce stricter climate-related requirements. ESG, therefore, is no longer simply a matter of corporate reputation; it is increasingly an issue of competitiveness and market access.

Yet regulation must be designed carefully. Pakistan’s private sector already faces substantial taxation, high energy costs and regulatory pressures. Simply adding another layer of compliance without providing practical means to meet it could increase costs without delivering meaningful environmental gains.

An effective approach would be to combine mandatory and standardised disclosures with incentives that make cleaner investment commercially viable. Such a framework would encourage compliance while giving businesses a realistic pathway towards improved environmental performance.

The proposed Pakistan Green Taxonomy could play an important role in this regard. A common classification system can help businesses, banks and regulators distinguish genuinely sustainable activities from superficial claims. But a taxonomy will be useful only if it is accompanied by clear standards, independent verification and credible enforcement.

Otherwise, ESG could become yet another exercise in paperwork. The question of verification is particularly important: companies should not be allowed to assess their own environmental performance without adequate external scrutiny.

Regulators will need sufficient technical capacity to examine disclosures and compare them with conditions on the ground, while penalties should be proportionate and focused particularly on deliberate misrepresentation and persistent non-compliance.

Equally important is the creation of a realistic transition pathway, as rightly advocated by Senator Rehman, to make cleaner production economically viable. Industries such as cement manufacturing cannot transform overnight.

Cleaner technologies, energy efficiency, waste reduction and lower-emission production processes require substantial capital and technical expertise. Incentives, concessional financing and predictable regulations can help businesses make that transition without placing undue burden on them.

Ultimately, ESG policy must not be treated as a contest between government and business.

The objective should be neither regulation for its own sake nor voluntary sustainability promises without accountability. It should be a system in which transparency is expected, genuine improvement is rewarded and misleading claims carry consequences.

Only then can ESG evolve from a report filed for compliance into a practical instrument for building a cleaner, more resilient, and competitive economy.

Copyright Business Recorder, 2026

There is overwhelming evidence that proves the veracity of his assessment: Public Sector Development Programme (PSDP) expenditure was budgeted at 5 percent of the total outlay this year (one trillion rupees against an outlay of 18.771 trillion rupees) against 6.25 percent budgeted last year (one trillion rupees against the total outlay of 167 trillion rupees) though the documents do not indicate by how much this outlay was slashed as is the usual practice especially when the country is on an International Monetary Fund programme to keep the deficit within sustainable levels as agreed.

In this context, the Minister would be well advised to revisit some of the overarching priorities of his party, notably road construction, considered critical to providing connectivity within the country as well as a magnet for votes, yet care must be taken to ensure that the associated procurement process is rigidly followed to minimize charges of nepotism and corruption.

There is an urgent need for the construction of reservoirs, given that Pakistan is defined as a severely water-stressed country and therefore more of the scarce PSDP allocations would need to be invested in this sub-sector.

Private sector-led growth (the policy thrust rhetorically supported by the cabinet including Finance Minister Aurengzeb) is hostage to the negative flow of credit to the private sector – negative 364.5 million rupees 1 July to 11 September 2026 against negative 170 million rupees 1 July to 12 September 2025.

True that the large-scale manufacturing sector has, as per the Pakistan Bureau of Statistics shown a growth rate of 3 percent in July FY27 as opposed to 4.98 percent for FY26 yet this has been challenged by various productive units, especially the textile sector, a major exporter, that in an anecdotal survey carried out by Business Recorder lamented the closure of 150 units while other major industrial subsectors have complained of the rising input costs, including the 11.5 percent policy rate that is double the regional average, which has made their products uncompetitive in the region and in some cases even domestically as the very large porous borders have again become a beacon for smuggling.

Iqbal’s lament over a rise in borrowing is also legitimate and the debt management policy is focused on shifting reliance on short-term treasury bills to medium to long-term bills offer a higher yield though the actual repayment period is further down the line.

And, recently, the successful dual tranche issuance of 3 billion dollar Eurobonds with 1.75 billion dollars 5 and-a-half year maturity period at 7.5 percent coupon rate and the remaining 1.25 billion dollars with a ten-year maturity and a 7.9 percent coupon rate – rates that may create serious issues as the repayment deadline approaches if the country remains on a boom-bust cycle and the budgets continue to be heavily financed by reliance on borrowing.

According to Debt Management Office, total public debt was 86.7 trillion rupees by end of June 2026 comprising of 59.4 trillion domestic and 27.3 trillion-rupees external debt.

In the current year debt budgeted is lower, however; this may not reflect the ground realities at the end of the year, given that last year’s budget indicated net external resources of 105,523 million rupees while the revised estimates for the year were a whopping 1,534,027 million rupees. The current year’s budgeted amount is 813,057 million rupees.

The Minister further contended, citing a World Bank report, that one out of every two poor people in the region spanning the Middle East, North Africa, and Afghanistan lives in Pakistan.

Perhaps his most critical projection from a political perspective was his warning: the government must alter its growth trajectory before the next election cycle begins, so it can present real results to voters rather than simply stating, “We inherited an economic crisis.”

His argument underscores the need to establish a forum where the Ministry of Finance is required to present its baseline projections through fiscal year 2028-29, including the expected growth trajectory, the likely state of the economy, and a credible post-IMF medium-term scenario.

However, both the IMF (in its quarterly review documents under the ongoing program) and the Finance Ministry already undertake such forecasting exercises as part of their standard functions.

A more effective suggestion would have been for the Planning Minister to urge the Finance Ministry to formulate an innovative, in-house solution designed to increase leverage with IMF staff. This strategy must include massively slashing current expenditures by 2 to 3 trillion rupees this year, as well as over the next two years, providing the necessary impetus to put the economy on a high, inclusive growth trajectory.

Copyright Business Recorder, 2026

According to the Annual Prisons Data Report 2026, the country’s prisons hold 110,513 inmates against an authorised capacity of approximately 68,832, operating at over 160 percent of their intended capacity.

Even more alarming is that 75 percent of these prisoners are awaiting trial. These figures demand urgent action, for behind every statistic is a human being whose liberty, dignity and future are at stake.

The most troubling aspect of this crisis is the prolonged incarceration of under-trial prisoners.

Under the principle of justice, every accused person is presumed innocent until proven guilty. Yet, thousands remain behind bars for months or even years as their cases proceed slowly through the judicial system. For many, punishment begins long before a court has established their guilt.

Some may ultimately be acquitted, only to emerge from prison having endured prolonged suffering, social stigma, and economic hardship. No judicial verdict can restore the lost time, compromised health, disrupted family life or employment opportunities sacrificed during such detention.

Overcrowding also creates conditions incompatible with prisoners’ fundamental rights. Inadequate living space, poor sanitation, insufficient clean water, limited healthcare and exposure to infectious diseases threaten physical and mental well-being.

Violence, exploitation and psychological distress become greater risks in congested facilities where resources and supervision are stretched beyond their limits. Rehabilitation, an essential purpose of imprisonment, becomes increasingly difficult when inmates lack access to education, vocational training, counselling, and other constructive activities.

The situation is particularly concerning for women and children, who face distinct vulnerabilities in custody. The report’s finding that 86.2 percent of imprisoned children are awaiting trial underscores the urgent need to protect young lives from the damaging consequences of detention.

Children should not lose their education, emotional security and prospects of rehabilitation because of procedural delays. Similarly, the sharp rise in the number of incarcerated women calls for gender-sensitive policies and greater use of non-custodial measures where appropriate.

The government and judiciary must treat prison overcrowding as an urgent criminal justice concern. Bail procedures should be reviewed to ensure that poverty does not determine who remains imprisoned. Courts need adequate resources to expedite trials.

As the report recommends, expanding the use of probation, parole, diversion, and other alternatives to imprisonment for eligible offenders could help reduce the prison population. Drug-related offences also warrant a review of prosecution and sentencing policies to ensure that imprisonment is necessary and proportionate.

Justice should mean more than punishing those found guilty; it must also protect the innocent from needless suffering.

A person acquitted after years behind bars has paid an immeasurable price for a system’s failure.

Reducing overcrowding is therefore not simply a matter of improving prison management; in fact, it is essential to upholding constitutional guarantees, preserving human dignity and preventing systemic failures, particularly prolonged pre-trial detention and delayed trials, from turning the criminal justice system into a source of injustice.

Copyright Business Recorder, 2026

Although federal ministers sought to justify the move at a press conference by accusing the PTI government in KPK of failing to effectively tackle militancy and cooperate with the Centre on security, and of frustrating repeated attempts at a negotiated settlement, whether overriding the electorate’s mandate was the most appropriate response to the province’s precarious security situation remains a troubling question.

There is little doubt that militant violence in KPK has escalated in recent years, demanding a more effective response and a concerted effort to restore the writ of the state and the rule of law. The PTI government, too, has had its failings on security and governance, particularly with its persistent emphasis on dialogue with militant groups despite evidence of their unwillingness to renounce violence and continued defiance of the state. But the problem extends beyond the performance of any one administration.

Law enforcement agencies have repeatedly warned that the gains made through military operations are difficult to sustain without meaningful political engagement with local communities and effective civilian governance in affected areas. Without these, militant networks can re-emerge, undoing gains secured at considerable human and financial cost.

For local communities, this cycle is deeply dispiriting. They endure repeated operations, displacement and livelihood losses, only to see militancy persist or return. This erodes trust in the state’s ability to deliver lasting peace, weakening residents’ willingness to support operations or cooperate against militants for fear that the latter will eventually return.

Breaking this cycle requires not only effective security measures but also political outreach, responsive administration and a sustained state presence after operations conclude. These are objectives that depend on functioning civilian institutions and the cooperation of elected representatives, making political engagement more, not less, important.

Against this backdrop, the Centre’s decision to impose governor’s rule appears to be a step too far.

The deteriorating security situation warranted decisive intervention, but the federal government could have limited itself to imposing an emergency under Article 232, allowing the chief minister, the provincial cabinet and the KPK Assembly to continue functioning while granting Islamabad extensive powers to address the security crisis. These include the power to legislate on provincial matters during the emergency, with federal law prevailing over conflicting provincial legislation.

Such an arrangement would have strengthened the Centre’s hand without suspending the entire elected provincial executive. Instead, governor’s rule under Article 234 transfers executive authority to the governor and places the provincial assembly’s legislative powers in Parliament’s hands.

The decision, then, signals not only the Centre’s profound distrust of the PTI administration, but also ends up disregarding the mandate given to it by KPK’s voters.

The immediate priority must now be to prevent this confrontation from becoming another obstacle to lasting peace in the province. The federal government and the PTI must return to the negotiating table to agree on a workable counterterrorism strategy, ensure effective coordination between federal and provincial authorities, and pave the way for the restoration of the elected KPK government.

Governor’s rule must not become an extended substitute for political engagement. Its purpose, if it is to be justified at all, must be narrowly defined and temporarily, with the restoration of the elected government as the overriding objective.

KPK’s people deserve security, functioning governance and a meaningful say in their future. They should not have to choose between the state’s protection from militancy and their democratic right to be governed by their elected representatives.

Copyright Business Recorder, 2026

The provincial surplus budgeted for 2026-27 is 1794 billion rupees distributed according to the province-wise share ratios agreed in the last National Finance Commission (NFC) award with Punjab at 51.74 percent, Sindh at 24.5 percent, Khyber Pakhtunkhwa at 14.62 percent and Balochistan at 9.09 percent.

The continued reliance on provincial surplus to meet the federal government’s budgeted target indicates the failure of successive administrations to implement the 2010 Eighteenth Constitutional Amendment and the 2010 seventh NFC award in letter and spirit.

The Eighteenth Constitutional Amendment was viewed as a transformative measure as it envisioned the transfer of legislative, administrative, and fiscal authority from the federal government to the provinces and eventually to local governments while the NFC award represented fiscal alignment that enhanced the provincial share from the divisible pool to 57.5 percent from the earlier 49 percent.

Why is it that sixteen years after parliament unanimously passed the Eighteenth Amendment and the provinces and the federation agreed to the fiscal realignment (to be fully achieved within a few years) during which time the provinces agreed to generate a surplus for the federal government continues to this day.

The NFC award also envisioned a one percent annual rise in tax revenue as a percentage of GDP each year for five years that would ensure that federal revenues would rise and the need for a provincial surplus would recede with time.

Sadly, none of these salutary decisions backed by all political parties at the time were proactively implemented subsequently, and the result today is the failure of provinces to meet the social sector needs of their people.

What is inexplicable is that successive finance ministers, including those who had supported the constitutional amendment and the NFC award, continued to lament a dearth of finances at the Centre to meet their financial requirements.

And communicated this to multilateral lenders who in their documents emphasized the need to create a balance between the Centre and provincial resources – a balance that would require a constitutional amendment as the Eighteenth Amendment also stipulated that the provincial share cannot be reversed in later awards.

There has been much chatter recently on the legacy media, fuelled by periodic statements of support by Interior Minister Mohsin Naqvi, emphasising the need for a system “re-set” defined as the creation of multiple provinces or, as some analysts maintain, an increase in the number of administrative units to ensure improved provision of services to the grassroots.

The Sindh government has already opposed this move and there are unconfirmed reports that the PML-N leadership is not too enamoured of this proposal either. Ironically, no one has bothered to revisit the Eighteenth Amendment and the NFC award, backed by an across-the-board political consensus, that would achieve the objective.

The cabinet would be well advised to revisit and implement amendments already approved by parliament and the consensus NFC award in letter and spirit, instead of creating an unnecessary controversy in political circles that are negatively impacting on market sentiment.

Copyright Business Recorder, 2026

Beyond inadequate investments and poor planning, the crisis reflects a governance structure unable to translate policy into effective service delivery.

At its core lies the abject failure of provincial governments to devolve meaningful authority, finances and accountability to elected local bodies, undermining efforts to combat illiteracy, improve healthcare and nutrition, and manage population growth.

These governance shortcomings are compounded by the sheer scale of Pakistan’s demographic challenge.

With the country’s population growing at a runaway rate of 2.55 percent annually, it is driving the demand for schools, healthcare facilities, nutrition and employment faster than the state can expand provision.

Yet successive governments have failed to align their population policies with the incentives embedded in the country’s governance and resource distribution systems. Under the NFC Award, for instance, population accounts for 82 percent of the formula for distributing resources among provinces while parliamentary representation and public sector job quotas are also linked, directly or indirectly, to population size.

Such arrangements reward demographic expansion without adequately rewarding improvements in human development. The state cannot credibly declare a population emergency while retaining structures that privilege population numbers over development outcomes.

The consequences are evident in Pakistan’s dismal human development indicators.

Ranked 168th among 193 countries on the Human Development Index, Pakistan has a Human Capital Index score of just 0.41, meaning a child born today is expected to achieve only 41 percent of their potential productivity. Some 26 million children remain out of school, stunting affects 40.2 percent of children, while maternal mortality stands at 186 deaths per 100,000 live births, all figures among the worst in the neighbourhood, representing social deprivation, lost productivity, diminished earning potential and a weakened foundation for economic growth.

Reversing this trajectory requires a governance structure capable of turning resources and policy commitments into tangible improvements in people’s lives.

This is where the question of devolution becomes critical. The 18th Amendment sought to bring decision-making closer to citizens by devolving substantial responsibilities to the provinces.

Yet 16 years on, progress has fallen well short of expectations. As the planning minister observed, a single provincial secretary cannot effectively address the needs of an entire province. Too often, authority transferred from Islamabad has remained concentrated in provincial capitals, leaving districts reliant on distant bureaucracies for decisions affecting schools, health facilities and basic services. Without empowered local institutions, resources and accountability cannot reach the level where needs are identified, priorities set and performance effectively monitored.

Provincial governments must be held accountable for failing to establish and sustain genuinely representative local government systems. Devolution must mean more than shifting power between bureaucracies. Elected local bodies need predictable funding, administrative autonomy and the authority to hold frontline service providers accountable, identify underserved communities and tailor services to local needs.

A national emergency must therefore drive structural reform, with the federal government providing evidence-based planning, national standards and coordination, and provinces devolving budgets and operational authority to the local level.

Population stabilisation must also be integral to this effort through voluntary family planning, reproductive healthcare, girls’ education and public awareness. The NFC formula, meanwhile, should reward measurable gains in population management and human development rather than demographic size alone.

Pakistan cannot achieve lasting economic or social progress while its population grows faster than its capacity to educate, employ and care for its people. The emergency has been acknowledged. What we now need is meaningful devolution, accountable governance and tangible improvements in people’s lives.

Copyright Business Recorder, 2026

Now the IMF is linking its board’s approval of the tranche to the passage of amendments to the SOEs law. That would result in better reporting and governance and help in attaining overall efficiency in the medium to long term. However, in the short run, there could be higher losses due to better accounting and provisioning – especially in the case of PSO, where huge RLNG carrying costs are being hidden.

In 1HFY26, overall aggregate losses remained flat at Rs343 billion. However, profits dipped by 7 percent to Rs243 billion. Resultantly, net adjusted profits dipped by 30 percent to Rs81 billion.

The issue is that profits are concentrated among a few companies – the top four companies, OGDC, NBP, PPL and PARCO, contribute 40 percent of profits. On the other hand, losses are concentrated in power and infrastructure companies, with NHA at the top, followed by a few power distribution companies. The story is nothing new, as more of the same continues.

What raises eyebrows is the nearly one-third increase in government support for SOEs to Rs804 billion in 1HFY26. The support is in the form of equity injections, loans, subsidies, and grants. The highest increase is in equity injections – up by 190 percent to Rs225 billion – mainly in the power sector related to circular debt. That is how the circular debt stock is being kept from growing.

Government support for SOEs is significantly eating into taxpayers’ contribution. Based on 1HFY26 FBR revenues, every ninth rupee of tax revenue went towards supporting SOEs. That is staggering.

Thus, overall net fiscal inflows are down to one-tenth of their previous level as described at the start. However, that is not where all the worry lies. There is more to the story. For one, SOE debt is growing at a rapid rate – up by 14 percent to Rs10.1 trillion in the period under review. The buck does not stop here, as there are also Rs2.1 trillion in sovereign guarantees and Rs198 billion in unfunded pension liabilities. The cherry on top is Rs3.9 trillion in combined gas and power circular debt.

All these are adding to the government’s exposure to SOEs, while returns to the government are diminishing. The scorecard is better in the financial and oil and gas sectors, from where the profitability is coming. On the other hand, the weaker links are infrastructure and power, which are adding to direct and indirect debt, apart from accumulating losses.

The government, under the IMF’s guidance, is transitioning to full IFRS accounting, and that may increase provisioning in the oil and gas sector by around Rs500 billion.

The bottom line is that despite having a privatization programme and a stated policy of reducing SOE losses, the overall picture is not improving. More needs to be done. Now the IMF is pushing for amendments that will expose the losses where they are. There will be no more hiding under the carpet, or at least less of it.

Let’s hope better reporting and all will push the government to undertake much-needed reforms and bring efficiency to the sectors where it is required.

Copyright Business Recorder, 2026

The Security Council’s central difficulty is not simply that too few countries have permanent seats. Rather, it is that permanent membership has created a structure in which a handful of states enjoy extraordinary influence over matters affecting the entire international community. The veto power of the five permanent members has repeatedly prevented effective action on major conflicts and humanitarian crises. Adding more countries to this privileged club would risk creating more opportunities for deadlock, rather than making the Council more democratic, representative and accountable. As Ambassador Ahmad rightly put it, “adding any new individual permanent members would only aggravate the problem. … The problem cannot be the solution.”

To make the Council more representative, the more logical approach, advocated by the Uniting for Consensus group, is to expand elected membership and introduce medium-term, rotational seats based on periodic elections. Such an arrangement would enable a wider range of countries—particularly developing, middle-sized and regional powers—to contribute to international peace and security without creating another class of permanent privilege. It would also ensure that representation reflects changing geopolitical realities rather than permanently entrenching the power structure established in the aftermath of the Second World War.

There is also a practical concern. Giving permanent seats to a select few additional countries would inevitably leave others dissatisfied. Which states should qualify, and on what basis—population, economic strength, military capability, regional importance or financial contribution to the UN? Any formula would generate competing claims and regional rivalries. In Asia, Africa and Latin America in particular, choosing one country over another could itself become a source of diplomatic tension. Permanent expansion, therefore, risks replacing one problem of representation with another.

A rotational model would be considerably fairer. Countries with the diplomatic capacity and commitment to contribute to peacekeeping, conflict prevention and dispute settlement could earn Council seats through periodic elections. Medium-term elected seats could provide continuity without conferring permanent privilege. Such an arrangement would also encourage member states to strengthen their diplomatic capabilities and contribute constructively to the UN system, rather than compete for an exclusive status that can never realistically be extended to all deserving states. Pakistan’s own experience during its 2025–26 Council term illustrates that countries do not need permanent status to make meaningful contributions to international peace and security.

The Security Council certainly requires reform, but the international community must resist the temptation to reproduce an outdated hierarchy—created by the victors of the Second World War—on a larger scale. Reform should mean broader representation, greater accountability and more democratic participation, not simply expanding the ranks of those enjoying permanent privilege. The answer to an unequal system is not more permanent power, but a fairer system of rotation in which more countries have a meaningful opportunity to serve.

Copyright Business Recorder, 2026

Ground-level ozone presents a particularly difficult challenge because it forms when pollutants released by vehicles, industry and other sources react in sunlight. Higher temperatures favour its formation, creating a dangerous relationship between rising heat and deteriorating air quality. Unlike the thick smog that periodically engulfs Lahore, ozone pollution can reach harmful concentrations without producing an equally visible warning. Exposure can aggravate respiratory illnesses, impair lung function and damage crops, extending its consequences well beyond the immediate burden on hospitals.

The scale of the wider problem should concentrate official attention. The assessment found that 34 percent of the world’s population experienced extremely poor ozone conditions between January and mid-September, with Asia particularly badly affected. More than half the continent’s population was exposed to the highest pollution category. These findings are especially troubling as climate change creates conditions favourable to ozone formation, while extreme heat and wildfires increasingly compound the effects of emissions from transport and industry.

For Lahore, the warning exposes the inadequacy of treating air pollution primarily as a winter emergency. Seasonal restrictions, temporary closures and hurried administrative measures have become familiar responses whenever smog reaches intolerable levels. The emergence of another serious pollution threat under warmer conditions requires a more comprehensive approach. Reliable year-round monitoring of ozone and its precursor pollutants, stricter enforcement of vehicle and industrial emission standards, and sustained action against uncontrolled burning should become permanent features of environmental management.

The government must also recognise that this problem extends far beyond Lahore’s municipal boundaries. Pollutants travel across provincial and international borders, while the wider region shares many of the conditions responsible for deteriorating air quality. Pakistan, India and Bangladesh have a clear common interest in exchanging atmospheric data, improving early-warning systems and coordinating measures to reduce emissions. Political disagreements cannot alter the movement of polluted air across the region, and the health consequences will continue to be shared regardless of diplomatic relations.

Ideally, that cooperation should begin with practical arrangements between meteorological agencies, environmental regulators and scientific institutions. Comparable monitoring standards, timely exchange of pollution forecasts and joint research into regional pollution patterns would improve each country’s ability to anticipate dangerous episodes. Pakistan should pursue these arrangements while strengthening its own monitoring infrastructure and ensuring that provincial authorities have the resources and expertise required to act on the information they receive.

The immediate priority is to move from emergency reaction to prevention. Lahore needs a credible programme with measurable emissions reductions, reliable public warnings and clear institutional responsibility. The authorities have already had ample experience of the economic disruption, illness and public distress caused by polluted air. Another warning should prompt a serious reassessment of the policies that have allowed the problem to persist.

Lahore’s pollution calendar is evidently expanding. The government would do well to ensure that its capacity to respond expands considerably faster.

Copyright Business Recorder, 2026

Finance Minister Mohammad Aurengzeb stated in Karachi the same day that Pakistan’s economy is moving in the right direction and outlined six priorities aimed at consolidating macroeconomic stability and creating an enabling environment for private sector-led growth and investment: bringing permanence to macroeconomic stability, through lasting fiscal and external resilience and stronger shock absorbing capacity, shifting from stabilization to sustainable inclusive and responsible growth driven by productivity, exports and jobs.

The most recent data uploaded on the Finance Division website indicates that the flow of credit to the private sector at negative 364.5 million rupees (July-August this year) against negative 170 million rupees in the same period last year, exports rose marginally from 5.24 billion dollars July-August 2025 to 5.44 billion dollars in the same period this year while imports rose from 10.4 to 11.6 billion dollars.

The International Monetary Fund (IMF) document dated 10 October 2024 titled Article IV Consultation and Request for an Extended Fund Arrangement argues that “Economic volatility has only increased over time, with a tight correlation between Pakistan’s boom-bust economic outcomes and its macroeconomic policies over past decades. These cycles disrupt economic growth, undermine confidence, and adversely affect people’s living standards.

Understanding the role of monetary policy in these cycles can help develop strategies to achieve economic stability.” And in Appendix IV of the document the Fund clarifies that “repeated attempts to boost economic activity through fiscal and monetary stimulus have not translated into durable growth, as domestic demand increased beyond Pakistan’s sustainable capacity, resulting in inflation and depletion of reserves, given a strong political preference for stable exchange rates. Each subsequent bust has further harmed Pakistan’s policy making credibility and investment sentiment.”

Today, macroeconomic policies remain very tightly associated with the ongoing EFF – Pakistan’s policy rate at 11.5 percent is one of the highest in the region, tariffs on electricity and gas are higher than in competitor countries, thereby raising input costs to levels that make our exports uncompetitive as well as providing a disincentive to many manufacturing units to produce for the home market because the large porous borders make smuggling extremely attractive. According to independent economists, the unemployment rate has reached a high of 22 percent when considering the Labour Force Survey, while poverty has risen to 44 percent according to the World Bank.

Be that as it may, it is important to note that the economy remains quite fragile. This fragility is evident from two statistics that point to stabilization having been achieved. First, foreign exchange reserves held by the State Bank rose to a historic high of 21,439.2 million dollars as of September 25, 2026. While this amount would have covered more than eight months of imports on February 27 of this year (prior to the conflict in the Middle East), today it is estimated to cover just over three months of imports—the bare minimum recommended by donor agencies.

Second, following improvements in Pakistan’s credit rating (which still remains below investment grade), access to commercial credit has risen; however, this credit typically carries a higher interest rate than loans from multilateral and bilateral lenders.

To increase leverage with multilateral, bilateral, and international commercial markets, the government must focus on creating space within the macroeconomic conditions imposed by the IMF.

Needless to say, consistent implementation of these policies is always critical to reaching the staff-level agreement (the IMF reached staff-level agreement with Pakistan a couple of days ago), which forms the basis for tranche releases as well as debt rollovers by China and Saudi Arabia.

The options are limited given the pervasive influence of the Fund on both national policies and specific sectors. Indeed, the October 10 document argues that “deviations from consistent implementation of programmed policies have created significant domestic and external imbalances”—a serious charge given that Pakistan is currently on its 25th IMF programme.

Finance Minister Aurangzeb’s focus must therefore be on reducing budgeted current expenditure by at least 2 to 3 trillion rupees. This can be achieved by ushering in pension reforms, slashing all non-operational expenses, and desisting from salary increases at the taxpayers’ expense. To raise revenue, the Federal Board of Revenue would be well advised to seek guidance from the Tax Reform Coordination Group recommendations (2010–13), which were highly appreciated at the time but never implemented.

Copyright Business Recorder, 2026

Governments cannot be allowed to create, prolong or simply neglect procedural hurdles and then cite those same hurdles as reasons why citizens must continue waiting for elected local representation.

The constitutional principle is clear. Article 140A requires every province to establish a local government system and devolve political, administrative and financial responsibility and authority to elected representatives, while responsibility for conducting local government elections rests with the ECP. That constitutional arrangement deserves far greater respect than Pakistan’s political governments have historically shown it. Local elections have repeatedly suffered delays, changing laws, fresh delimitations and administrative manoeuvering, turning what should be a routine democratic exercise into an intermittent political concession.

That reluctance reveals the deeper problem. Local government represents democracy at the level where citizens encounter the state most frequently. Municipal services, sanitation, local infrastructure, neighbourhood development and numerous everyday problems require responsive institutions close to the communities affected by them. Provincial capitals cannot efficiently administer every street, neighbourhood and district, nor should provincial legislators be expected to function as substitute councillors. A functioning federation requires authority to travel downward rather than accumulate indefinitely at the top.

Yet Pakistan’s political parties have traditionally been far more enthusiastic about devolution when power is moving towards them than when they are required to pass it further down. Provincial autonomy is vigorously defended, while meaningful local autonomy often encounters hesitation. The reason is hardly mysterious. Genuine local government requires provincial administrations to surrender authority over functions, development spending and administrative decisions to elected representatives closer to the grassroots. That inevitably reduces the patronage and political influence concentrated at provincial level.

There is considerable irony in Pakistan’s experience under General Pervez Musharraf. His military government introduced the Devolution of Power Plan in 2000, followed by elected local governments under the 2001 ordinances, transferring substantial administrative responsibilities to district governments. The system had serious weaknesses, including its creation under an unelected military regime and the absence of an elected provincial tier during its formative period. Yet it represented one of the country’s most ambitious attempts at institutionalised devolution to the district and local levels. Democratic governments that followed have repeatedly struggled to provide local government with comparable continuity and political ownership.

That contradiction should trouble political parties claiming democratic legitimacy. Democracy cannot logically stop at the provincial assembly. Periodic national and provincial elections accompanied by prolonged gaps in elected local representation leave the democratic structure incomplete. Nor should every electoral cycle require the ECP to chase governments for legislation, notifications, data, and other prerequisites that should have been completed routinely and well in advance.

The commission should therefore proceed firmly within its constitutional and statutory authority, while federal and provincial governments must remove every legitimate outstanding obstacle promptly. Where laws require amendment, amend them. Where delimitation data are required, provide them. Where statutory requests or administrative lists are necessary, there is little justification for withholding them.

Pakistan’s politicians have spent decades demanding that power be devolved to the people. The difficulty, apparently, begins when the people live below the provincial capital.

Copyright Business Recorder, 2026

The data pertained to last fiscal year ending on 30 June, with the exception of inflation, and the press release noted that “real GDP growth reached 4 percent in the first three quarters of FY26, and although higher energy prices and supply disruptions weakened somewhat the momentum, FY26 growth is estimated at 3.6 percent. Headline inflation, after peaking in May, moderated to about 10.3 percent in September, while core inflation remained contained. The current account was broadly balanced in FY26 supported by strong remittances, and gross reserves rose to about US$21½ billion by end-September.”

Two observations are critical. First, according to the Pakistan Bureau of Statistics, headline inflation has not peaked since May, when it clocked in at 3.5 percent. Furthermore, the 44.7 percent of Pakistanis operating below the poverty line (as per the World Bank) are unlikely to support the use of the word ‘moderated’ to describe September’s 10.3 percent year-on-year inflation rate, which is down by 0.8 percent from 11.1 percent in August.

Core inflation, non-food and non-energy (items that impacted majorly on the poor and vulnerable) did decline from 9 percent in May to 8.6 percent in September. And, secondly, one can argue that the rise in the growth rate was undoubtedly not the outcome of the contractionary monetary and fiscal policies agreed with the Fund but due to higher consumption levels, particularly as food and energy costs rose, as well as the low GDP growth base in previous years.

Be that as it may, remittances rose quite unexpectedly, given the ongoing Middle East conflict, with reports suggesting that it was due to the Pakistani overseas workers opting not to return to the country even as other nationalities did. And current account was broadly balanced though there are concerns that with the rise in import of raw materials/semi-finished products the prospect of the re-emergence of the boom-bust cycle may be activated again.

Total foreign exchange reserves are a historic high of $21 billion though with the rise in the prices of petroleum and products as well as fertilizer and food due to the Middle East conflict account for roughly 3.2 months of imports for Pakistan – three months considered the minimum required by multilaterals.

The Fund also acknowledged that “sovereign rating upgrades and renewed international market access also point to stronger policy credibility. Nevertheless, risks remain high, particularly from geopolitical tensions, volatile energy prices, tighter global financial conditions, and trade disruptions.” This claim is supported by the recent two-phase issuance of $3 billion in Eurobonds last month on the London Stock Exchange.

The first tranche—$1.75 billion with a maturity of five and a half years—carries a 7.5 percent interest rate, while the remaining $1.25 billion with a 10-year maturity sits at 7.9 percent. These rates are at least double those available from multilateral and bilateral sources. While the sovereign spread represents the additional yield investors demand to hold the bond—and borrowing costs are rising across Western nations, with the US at 5.02 percent for a five-year bond—this issuance is nonetheless an achievement. This is especially true since this source of funds was declared too expensive to secure by the caretaker finance minister in 2023, though she did not mention the actual yield on offer at the time.

Finally, the Fund’s press release included a graph—sourced from the Fraser Institute, World Bank, World Wide Governance Indicators, Economic Freedom of the World, Budina et al., and staff calculations—titled “Structural Indicators in Governance, Business Regulation, and External Sector Show Large Catch-up Potential for Pakistan with Emerging Markets and Developing Economies.”

Details of what was discussed, what was agreed upon, and the time-bound structural benchmarks—whether upfront actions or waivers—will be available once the detailed report is uploaded to the website, which usually occurs at least a month after the end of the mission. However, the fact that a Staff-Level Agreement (SLA) was reached at the concluding stage of the mission, unlike in the last review, indicates that the Fund not only accounted for external factors, such as the negative impact of the Middle East conflict on the economy, but also that the authorities are adhering to its prescriptions in letter and spirit to the greatest extent possible.

Copyright Business Recorder, 2026

This followed encouraging declines in violence during the first two quarters of the year, making the reversal all the more concerning despite sustained counter-terrorism operations. The geographical concentration of the violence also calls for serious attention.

Baluchistan and Khyber Pakhtunkhwa together accounted for 98 percent of all fatalities, demonstrating that Pakistan’s security challenges remain heavily concentrated in its western provinces bordering Afghanistan, which continues to provide operating space and sanctuaries to Pakistan-focused militant organisations, particularly the TTP and BLA, enabling them to plan, organise and launch cross-border attacks into Pakistan.

Baluchistan witnessed the highest number of violent incidents, with 186 cases, representing more than 48 percent of the total recorded during the quarter.

KP followed closely with 173 incidents, or nearly 45 percent. The concentration of violence in these two provinces underscores the need for a security strategy that takes account of their distinct political, economic, social and geographical circumstances.

Baluchistan’s situation is particularly alarming. Fatalities there more than tripled from 265 in the second quarter to 829 in the third, an increase of 213 percent. The province alone accounted for nearly 59 percent of the country’s violence-linked deaths and also recorded the highest number of violent incidents. Baluchistan remains a major national security challenge requiring, alongside necessary kinetic action, sustained political, administrative and economic attention.

Meanwhile, the authorities need to avoid measuring success solely by the number of militants eliminated in security operations. Counter-terrorism operations are necessary, but eliminating militants cannot by itself address the underlying drivers of violence.

A sustainable response requires better intelligence, stronger border management, more effective policing, and closer coordination among security institutions.

At the same time, legitimate political grievances, poor governance, economic deprivation and alienation in violence-affected areas must be addressed through credible civilian institutions and genuine engagement with representatives of the Baloch people.

The emergence of the TTP as the deadliest group among those claiming responsibility, alongside attacks attributed to the Baluchistan Liberation Army (BLA) and other organisations, highlights the complexity of the threat. Pakistan is confronting multiple militant networks with differing motivations, structures and operational capacities.

A uniform response is therefore not workable. What is needed is a coherent, long-term national strategy combining robust counter-terrorism measures with effective border management, diplomatic pressure on Kabul, through its few remaining friends and diplomatic interlocutors, to fulfil its obligation to prevent Afghan territory from being used for attacks against Pakistan.

Unless the state addresses both the immediate security threat and the conditions that allow militancy to take root, temporary reductions in violence risk giving way to yet another cycle of escalation and loss.

Copyright Business Recorder, 2026

FBR field officers will be visiting markets alongside trader representatives, identifying individual shops and creating awareness about registration and filing.

The scale of the task is evident from the gap between the country’s roughly 4.3 million commercial WAPDA electricity meters and the only 600,000 or so commercial meter holders who filed tax returns.

The Asaan Tax Scheme represents the umpteenth attempt by successive governments to bring the retail sector into the tax net. There is, however, an important difference this time.

The government appears to have gone about the task in a relatively more organised and consultative manner, involving trader bodies and market representatives in designing and implementing the scheme. It offered retailers a relatively simple route into the formal tax system, reducing the procedural burden and, for many small traders, limiting the immediate tax liability.

The scheme nevertheless left much to be desired. By taxing turnover rather than strictly applying the principle of taxing income, it departed from a fundamental principle of a fair tax system. Yet if its immediate purpose was to document businesses, register retailers and establish a culture of filing returns, it could have served as a useful starting point. That opportunity, however, appears to have been largely squandered thus far.

According to the latest figures cited by the FBR, around 190,000 retailers had registered under the scheme. This remains a small number relative to the size of the sector, and registering for the scheme, it must be remembered, is not the same as filing returns and paying the tax due.

The FBR now intends to target between 500,000 and one million retailers, with the balance brought into the net through enforcement.

The mapping initiative is therefore welcome, but it must not become another documentation exercise that produces little beyond lists and databases.

Once the government knows where the shops are and who operates them, it must demonstrate the political resolve to act on that information. Non-filers must face meaningful consequences, while those willing to register and comply should continue to receive practical assistance.

The penalties announced so far – Rs10,000 in the first month after the filing deadline, Rs25,000 in the second and Rs50,000 in the third – hardly appear sufficient to deter a business generating substantial sales. If penalties are to change behaviour, they need to be sufficiently consequential, consistently imposed and, crucially, actually recovered.

The modest revenue ambition of the scheme also deserves attention. Against an overall potential tax contribution from retailers that according to some estimates amounts to as much as Rs3 trillion, the scheme’s target of just Rs50 billion was hardly an onerous demand. In revenue terms, this is little more than chump change.

But the significance of the exercise goes beyond the immediate collection target. If the state cannot secure compliance with a scheme deliberately designed to make entry into the tax system easier, the credibility of future tax reforms will inevitably suffer.

The government has now taken the sensible step of mapping the sector. The next test is whether it will follow through. Retailers have repeatedly demonstrated their capacity to resist taxation through political pressure and disruption. This time, that pressure must not once again trump the state’s resolve to build a broader and fairer tax base, with compliance treated as an obligation rather than something to be negotiated, and the rules applied consistently across the board.

The credibility of the entire reform effort will ultimately depend on whether this resolve is sustained.

Copyright Business Recorder, 2026

The change acknowledges an obvious reality: young people involved in begging are often victims of circumstances and exploitation rather than perpetrators of a social nuisance.

The tougher penalties for parents and guardians who involve children in begging, along with provisions for rehabilitation and reintegration, are therefore steps in the right direction and represent a more humane approach to a problem too often viewed primarily as a law-and-order issue.

Yet the reform stops short of where it ought to go. The law should draw a clear distinction between a child and a minor, while recognising that, for purposes of protection from exploitation, every person below 18 requires the protection of the law.

The choice of 16 as the new threshold is difficult to justify. A 16-year-old does not become substantially less vulnerable to coercion, exploitation or abuse than a 15-year-old simply by crossing an administrative age boundary.

Indeed, adolescents aged 16 and 17 may remain particularly vulnerable to exploitative work, including begging. They may be physically more capable than younger children, but they are still not adults and may lack the independence, resources and protection necessary to resist exploitation.

The amendment is also notable for strengthening the administrative machinery of the law.

The proposed controller is to coordinate anti-vagrancy operations across the province, monitor welfare homes and rehabilitation facilities, maintain a centralised database, and oversee rehabilitation and reintegration. Such arrangements could improve consistency and accountability, provided they are accompanied by proper oversight and adequate safeguards for those taken into custody.

The more fundamental question, however, is how the state views children found begging. They should not be reduced to statistics in an anti-vagrancy campaign, nor should their presence on the streets automatically make them subjects of punitive enforcement. A child begging at a traffic signal may be a victim of poverty, neglect, family pressure or organised exploitation.

The appropriate response must therefore include protection, education, and rehabilitation, alongside firm action against those who exploit children.

This is particularly important in the case of 16- and 17-year-olds. If the law recognises that young people below 18 can remain vulnerable and in need of special safeguards, there is little reason to exclude them from the ambit of the vagrancy framework.

The more coherent approach would be to recognise all persons under 18 as minors for purposes of protection against exploitation, while placing the burden of enforcement on those who use them for begging.

Raising the threshold from 14 to 16 is a step forward. But the government should go further and ensure that no minor is left outside the law’s protective ambit simply because he or she has crossed the age of 16.

Copyright Business Recorder, 2026

It has also been reported that no new upfront, time-bound, or structural conditions were proposed by the Fund for the release of the next tranches. This reflects the fact that the government has not deviated from the Fund’s prescriptions—which are considered harsh on the general public—specifically those relating to raising tariffs to achieve full cost recovery for utility companies, as well as tight monetary and fiscal policies that negatively impact both growth and employment opportunities.

The rationale for these tight conditions was to check the rate of inflation; however, the ongoing Middle East conflict has seriously compromised their effectivity. Needless to add, higher inflation than forecast at the start of the current calendar year is equally evident globally and unless the conflict is resolved there is little likelihood of a reprieve for the general public.

Be that as it may, until the document detailing the staff-level agreement is uploaded to the IMF website—an action that on average takes at least a month—one cannot definitively state that all conditions were met without waivers, or that no new conditions were agreed upon. Furthermore, it remains unclear whether the Fund team has sanctioned the loosening of fiscal and monetary policies. Such a loosening is a prerequisite for fulfilling the repeated public pledges made by both Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb: that with stabilization now achieved, the government will embark on pro-growth policies to fuel employment and lower the high poverty levels, which are currently estimated at 44.7 percent by the World Bank.

In the event that the Fund team will disallow a loosening of fiscal and monetary policies the only recourse left to the government is to try to reduce current expenditure. There is overwhelming evidence that the Finance Ministry’s capacity to reduce outlay is largely limited to slashing the Public Sector Development Programme (PSDP) that is no more than 5 percent of total outlay which, by the end of the fiscal year, may well fizzle down to under 3 percent – even less than the 4 percent allocated for Benazir Income Support Programme (BISP).

What our Finance Ministry has never been able to budget are the following expenditures: debt servicing around 43 percent of the total, pensions 6 percent, defence 16 percent, running of civilian government 5.7 percent and subsidies another 6 percent or a total of 85 to 86 percent. If one adds the outlay on keeping poorly performing state-owned entities afloat, then a cynic may well conclude that the Finance Ministry’s power to allocate and then actually disburse is limited to the PSDP (public sector development programme) – a power that it uses mercilessly each year but especially when on an IMF programme to keep its deficit sustainable.

To change the status quo would require not cosmetic surgery but a painful transplant or, in other words, the government must limit itself to budgeting as many loans as would reduce the flow as well as stock of loans each year while seeking major recipients of the current expenditure to voluntarily make a sacrifice for at least three years for that alone would lead to inclusive growth – the objective of the Prime Minister and the Finance Minister.

Copyright Business Recorder, 2026

Pakistan has long accused India of reaching for the same playbook whenever violence in Kashmir or elsewhere creates an opportunity to implicate Islamabad. New Delhi routinely rejects such charges, and Pakistan’s description of particular incidents as false-flag operations remains an allegation unless supported by evidence. This episode, however, raises questions that India must answer. Who exactly was killed? How was he identified? How did the identity of a retired Pakistani soldier, complete with details of his military service, become attached to the dead man? Producing Asif alive does not by itself establish everything Pakistan alleges about the operation, but it demolishes a central element of the version circulated after it.

That matters particularly because the consequences of such accusations can extend far beyond propaganda. India and Pakistan came dangerously close to a much wider conflict after the Pahalgam attack last year. In a relationship between two nuclear-armed states, claims connecting terrorist attacks to the Pakistani military cannot be thrown into the information space casually and corrected later, if at all. Evidence must precede accusation, especially when that accusation can become the justification for military action.

There is also a larger reason why Pakistan’s charges concerning Indian covert activity deserve more serious international attention today than they once received. Investigations far removed from the subcontinent have exposed deeply troubling activity allegedly connected to Indian state personnel. In the United States, Indian national Nikhil Gupta pleaded guilty earlier this year to participating in a plot to assassinate a US citizen and Sikh separatist activist in New York. US prosecutors say Gupta acted at the direction of Vikash Yadav, who was an Indian government employee and whom they have charged with directing the murder plot. Yadav has not been arrested and the allegations against him remain to be adjudicated.

Canada has separately accused agents of the Indian government of involvement in violent criminal activity on Canadian soil, against the backdrop of its investigation into the 2023 killing of Sikh activist Hardeep Singh Nijjar. India has rejected the Canadian allegations. Yet when serious accusations of extraterritorial operations emerge from countries with no conceivable interest in advancing Pakistan’s narrative, New Delhi faces a growing credibility problem. What Islamabad has described for years as India’s willingness to pursue security objectives covertly beyond its borders can no longer be dismissed simply because Pakistan is making the charge.

Pakistan, for its part, handled the latest episode effectively. Instead of merely trading accusations, it produced the man India had reportedly identified and allowed the contradiction to speak for itself. That is precisely how serious propaganda should be challenged: with evidence capable of being examined rather than another louder claim.

India can still establish who was killed in Kashmir and present whatever evidence it possesses regarding that individual’s identity and affiliations. Until then, the questions raised by this episode remain substantial. New Delhi has spent years pointing towards Pakistan whenever terrorism enters the conversation. Increasingly, however, scrutiny is travelling in the opposite direction.

And this time, the dead man’s problem is that he turned up alive.

Copyright Business Recorder, 2026

As Hemnani noted, provincial budgets are framed on federal revenue projections, while actual transfers depend on FBR collections, and any shortfall in the latter consequently reduces provincial budgetary resources.

The Sindh government’s complaint points to a wider fiscal dilemma: provinces receive 57.5 percent of the federal divisible pool under the NFC Award, which has meant that they have grown heavily dependent on these transfers, while doing little to broaden their own revenue bases.

They need to remember that any slowdown in their development spending also reflects their failure to discharge a basic responsibility of government: raising sufficient revenue to fund the services and development programmes under their charge. This chronic weakness leaves them vulnerable to every fluctuation in federal collections, turning a shortfall at the Centre into a development constraint for the provinces.

Provinces have jurisdiction over several sizeable tax bases, but their own-source revenues remain remarkably small. A recent IMF assessment has identified agriculture as Pakistan’s single-largest under-taxed sector, with real estate and business services also contributing substantially to economic activity relative to tax collection.

Agriculture is the clearest example of the provinces’ failure to raise revenue: it accounts for 24.6 percent of value-added across Pakistan, yet its effective tax rate is just 0.3 percent. Since agricultural income taxation falls within the provincial domain, this sharply illustrates the gap between the sector’s economic contribution and its contribution to provincial revenues.

Even the recent effort to bring agricultural incomes more fully into the tax net has been driven by IMF requirements rather than a recognition of its importance to fiscal responsibility.

Real estate is another glaringly underused source of revenue. Property values have risen substantially over the years, but property tax assessments and valuation mechanisms have often failed to keep pace. Sindh’s recent decision to expand its recorded urban property tax base from 397,000 properties to 2.15 million is therefore welcome, but the scale of the expansion illustrates how much revenue potential remained outside the tax net for years. There are numerous smaller sources that could also be tapped.

Fees and charges for provincial services, including commercial vehicle fitness certificates, should not be allowed to remain unchanged for years while the cost of providing those services continues to evolve. A systematic review of taxes, fees, licences and other non-tax revenues could cumulatively make a meaningful difference.

What is missing is a sustained institutional effort to identify and mobilise revenue. Provincial governments should establish revenue mobilisation commissions tasked with conducting comprehensive reviews of their tax and non-tax bases. These bodies should identify under-taxed sectors, assess collection gaps, review outdated valuations and rates, examine exemptions and concessions, and recommend measures to improve enforcement and compliance. Their recommendations should carry clear implementation timelines and be subject to regular public reporting.

We must remember that when the NFC Award mandated 57.5 percent share of the divisible pool to the provinces, it was meant as an important step towards correcting Pakistan’s historically centralised fiscal structure. But the reality on the ground is now much-transformed, and fiscal autonomy must be accompanied by fiscal responsibility. Provincial governments cannot continue to attribute every constraint on development spending to fluctuations in federal transfers while leaving substantial parts of their own tax bases untapped.

The time has come for provinces to rectify this by strengthening collections and shouldering a greater share of the cost of their own development.

Copyright Business Recorder, 2026

Developments immediately prior to the meetings underlined just how narrow the space for compromise had become. Following a multi-party opposition meeting, senior opposition leaders adopted a firm position on the proposed protest and on reports that the federal government was considering governor’s rule or emergency in Khyber Pakhtunkhwa (KP).

National Assembly Opposition Leader Mahmood Khan Achakzai rejected the prospect of meeting the prime minister at the PM Office or PM House, while Senate Opposition Leader Raja Nasir Abbas said the opposition was prepared for dialogue but would not accept talks conducted under pressure.

At the same time, the PTI appeared to have prepared itself for the extreme consequences, repeatedly threatened by federal ministers and government spokesmen. PTI Chairman Barrister Gohar Ali Khan warned against imposing emergency or governor’s rule in KP, while reiterating that the party remained willing to negotiate.

This was precisely the moment when political wisdom was required. The government had been publicly discussing extraordinary constitutional measures, citing the security situation in KP, while the PTI remained determined to proceed with its protest.

Yet neither side had completely closed the door on negotiations and subsequent developments eventually produced an important opening: an agreement for government and opposition representatives to meet. But alas two days of negotiations have not borne result.

The breakdown of talks notwithstanding; disagreement does not have to become confrontation. The real test of political leadership is the ability to manage differences without allowing them to threaten peace, stability or democratic institutions.

Difficult political disputes are rarely resolved when one side insists on getting everything it wants. Negotiation necessarily involves adjustment, accommodation and compromise. These are essential elements of democratic politics, not signs of weakness.

There is also a potentially important step the government could take to reduce the immediate temperature. Implementing the Supreme Court’s directions concerning the PTI founder’s medical treatment and access to his family could help remove one of the most contentious issues surrounding his incarceration.

The court had directed that he be shifted to Shifa International Hospital for examination and treatment, while the issue of regular meetings with his family has also figured prominently in the dispute. Whatever legal objections the government may have raised to the hospital-transfer order, adherence to judicial directions is important.

Facilitating the medical treatment and family access sought by the PTI could remove a major source of tension and create greater space for political dialogue. Both sides — especially the government - need to avoid confrontation, making it easier for all involved to step back from the brink without losing face.

The hope is that the breakdown in talks will not lead to another confrontation. Pakistan has seen enough political brinkmanship. Politicians do know that difficult issues are often resolved through give and take; what is required now is the willingness to practise what politics at its best demands.

Copyright Business Recorder, 2026

The government and SBP are incentivizing the formal segment to capture the share of the informal hundi-hawala market, and they are largely being successful. Earlier, the government provided a subsidy routed through banks, which has now been terminated. A new mechanism has now been devised under which banks are providing support on their own to ensure that the growth remains intact.

The buck doesn’t stop here, as SBP and PBA (Pakistan Banks Association) have recently announced a new lottery scheme known as the Pasban Remittance Reward Scheme, under which Rs16 billion in annual cash prizes are to be offered by banks to remitters. There would be 2,521 winners per quarter, receiving a total of Rs4 billion in cash. The idea is to encourage more people to use formal channels and become part of the lucky draws.

That is good. Evidence shows that remittance incentives do work. In 2009, the Pakistan Remittance Initiative (PRI) was jointly launched by SBP, the Ministry of Finance and the Ministry of Overseas Pakistanis to facilitate remittances through formal channels by making them faster and cheaper. That did work, as remittances have been on a steady growth path since then, compared to a mere $7.8 billion in FY09.

Thereafter, whenever government support was held back, the flows invariably moved to informal channels. The latest example is FY23 when the then PDM (Pakistan Democratic Movement) government rolled back the subsidy and remittances dipped from $31.3 billion in FY22 to $27.3 billion in FY23. Thereafter, the then caretaker government restarted the subsidy, and inflows started moving up again. There were other reasons for the dip and resurgence as well, but surely the lack of incentives was one of them.

Later, some banks had reportedly started exploiting the subsidy through excessive spending on marketing, which included foreign trips for local employees. Plus, the IMF and other stakeholders did not like this subsidy. Anyhow, it is now over, and banks are assuming the cost, which is making them more prudent and smarter in their spending. The fate of the new lottery scheme is similar.

Banks in Pakistan make more money than any other sector. However, increasingly, the business model relies on taking deposits from all over and investing primarily in government securities. The banks’ focus is on lowering costs by increasing the share of current accounts, which carry zero cost, and they attempt to mis-sell to consumers at times. On the other hand, private-sector credit is shrinking.

External-account vulnerabilities are the biggest exposure, and growing remittances are providing a cushion against them. Thus, it is a win-win for the government, SBP and banks to let the latter assume the cost and facilitate higher and more resilient formal remittances.

The system is working fine. Banks’ risk is associated with sovereign risk, as predominantly banks’ assets are deployed in government papers and securities. Thus, it is in the mutual interest of banks and the government to lower these risks.

It is, however, pertinent to point out that reward schemes based on a lottery have been held to be un-Islamic by the Islamic Ideology Council in the past. We wonder if this scheme has been announced after obtaining their approval.

Furthermore; to mitigate the cost of this scheme to the banks, the State Bank has withdrawn the condition of Minimum return on deposits held with the banks (Minimum Deposit Rate) that was restricted to 1.4 percent below the policy rate.

Henceforth, it would only apply to deposits in savings accounts of up to ten million only. For a country that suffers from a dismally low national savings rate this represents an unkind cut to the savers and penalises savings within the banking system above ten million rupees in an account. Thus, it is appropriate to let the banks bear the cost of incentives provided to remitters instead of making broader taxpayers and savers pay for them.

Copyright Business Recorder, 2026

Allegations of democratic backsliding have followed the administration for years, but the latest dispute concerns the institution responsible for protecting the credibility of elections themselves. Reports of serious objections within the Election Commission over voter additions, deletions and electoral software have raised questions that require considerably more than routine official assurances.

For a government already facing criticism over its treatment of dissent and the growing concentration of executive power, the prospect of widespread public distrust in electoral administration is particularly damaging. Millions of names have reportedly been removed from draft electoral rolls, while concerns have emerged about the transparency of the revision process and the handling of electoral data. The Election Commission maintains that its procedures are lawful, but public confidence cannot be restored through assurances alone. Every eligible voter must have an effective means of challenging exclusion, and decisions affecting the electorate must be open to independent scrutiny.

The emergence of the youth-led Cockroach Janta Party has given this controversy a significance extending well beyond the immediate dispute. Having attracted attention through its earlier agitation against the Modi government, the movement is now demanding Chief Election Commissioner Gyanesh Kumar’s resignation and preparing nationwide protests. Its growing visibility points to an important development in Indian politics: younger citizens are increasingly seeking ways to challenge established institutions through grassroots mobilisation, outside the conventional structures of parliamentary opposition.

The CJP’s ability to turn an arcane electoral controversy into an issue capable of generating street protests deserves particular attention. Its campaign seeks to bring together students, civil society and political organisations around demands for electoral accountability. There is considerable irony in a movement bearing such an irreverent name confronting one of India’s most powerful constitutional institutions over a matter as fundamental as the right to vote. Its political significance will ultimately depend on whether the mobilisation translates into sustained public scrutiny and meaningful institutional accountability.

The controversy also exposes weaknesses in the safeguards surrounding the Election Commission’s independence. Under India’s 2023 legislation, the government effectively controls two seats on the three-member committee responsible for recommending election commissioners. That arrangement has attracted criticism because an institution entrusted with supervising elections must command the confidence of political competitors and voters alike. The present dispute demonstrates how quickly questions about appointments can become questions about the legitimacy of the entire electoral process.

The BJP’s critics have long argued that India’s democratic institutions have become increasingly vulnerable to executive influence during Modi’s tenure. The electoral-roll controversy has brought those concerns into sharper focus, although allegations of deliberate manipulation still require independent examination. The Election Commission must establish whether eligible voters have been wrongly excluded, disclose the basis of disputed decisions and demonstrate that its procedures operate independently of political considerations.

The CJP’s intervention has added a new and potentially consequential dimension to that demand for accountability. Its emergence illustrates the capacity of youth-led movements to broaden political participation and challenge institutional complacency. India’s electoral authorities now face a test whose implications extend well beyond the next election: whether they can restore confidence in the impartiality of the machinery through which citizens exercise their most fundamental democratic right.

An electoral-roll exercise intended to strengthen Indian democracy has instead exposed how fragile confidence in its electoral institutions can become when transparency and independence are called into question.

Copyright Business Recorder, 2026