Its swift rejection by several trader bodies is as unsurprising as it is disappointing. For decades, efforts to improve tax compliance from this segment have been met with fierce resistance, shutter-down strikes and political pressure.

While trader representatives have branded the scheme “ridiculous” and “unacceptable”, they have conveniently ignored that what is truly ridiculous and unacceptable is that an estimated 3.5 to 4 million retailers and traders, generating between Rs10 to 15 trillion annually, contribute negligibly to the exchequer, leaving compliant taxpayers bearing a disproportionate share of the fiscal burden.

The trading community has clearly internalised the lesson that outright rejection and threats of disruption often yields concessions from governments, especially those led by the PML-N, which has repeatedly buckled under pressure from a segment that forms one of its most dependable electoral support bases, and continues to wield influence through its high nuisance value.

Coming to the scheme’s key features, it is targeted at retailers with annual turnover of up to Rs200 million over the preceding three years, offering a simplified fixed-tax framework under which eligible businesses would pay one percent of declared turnover, subject to a minimum annual liability of Rs25,000.

Participation remains voluntary, allowing businesses either to opt in or continue filing standard income tax returns. Those who join would be registered through the FBR’s IRIS system, issued a plaque displaying their NTN and a QR code, and brought under a simplified compliance framework based on a one-page return. The design is explicitly non-coercive.

Participants would remain exempt from routine tax inspector visits and from mandatory POS installation, while audit exposure would be significantly restricted and largely limited to risk-based selection or credible evidence of concealment.

The scheme is not without its limitations. Even if fully realised, its Rs50 billion revenue target remains modest in fiscal terms.

As noted elsewhere in this paper, however, its real value lies not in immediate revenue generation, but in the “documentation infrastructure it begins to create”, by establishing “a mechanism through which millions of informal retailers can be progressively brought into the system”. That ambition though raises a practical concern: how to verify whether participating businesses remain within the Rs200 million turnover threshold. This will remain a critical implementation challenge requiring a credible monitoring mechanism to prevent misuse.

In most systems, such oversight would rely on mandatory POS integration. Yet the scheme explicitly exempts participants from POS requirements, primarily due to longstanding objections by retailers over cost and compliance burdens. But if cost is the central constraint, it logically follows that the government should subsidise POS deployment, treating it as an investment in documentation rather than expenditure.

While the upfront fiscal outlay may be considerable, the long-term gains from a properly documented retail base could be immeasurable.

In any case, exemptions cannot amount to a surrender of even basic oversight.

The scheme’s design gaps, then, must be resolved before implementation, particularly around monitoring, compliance verification and threshold enforcement. But once addressed, the real test will be political resolve.

The government must demonstrate that it will not retreat at the first sign of resistance.

The PML-N needs to shed its long-standing reputation of conceding too readily to trader agitation at the cost of fiscal discipline and economic stability as Pakistan can no longer afford such political expedience. Any effort at widening the tax base must be pursued with consistency and firmness if it is to mean anything at all.

Copyright Business Recorder, 2026

The decline in cotton production alone illustrates the scale of the problem. Pakistan once regularly produced between 12 and 15 million bales annually. In recent years, output has collapsed to around five million bales, among the lowest levels in decades. That decline carries consequences far beyond the farm sector. The textile industry, which remains the backbone of the country’s export earnings, requires around 16 million bales annually.

The gap must therefore be filled through imports, placing additional pressure on foreign exchange reserves and increasing production costs for exporters.

The damage extends across the broader agricultural landscape. For decades, Pakistan has spoken of agriculture as the foundation of the economy while failing to modernise the sector in any meaningful way.

Irrigation systems remain inefficient, water management practices remain outdated and technology adoption continues to lag behind regional competitors. Policymakers regularly acknowledge these weaknesses, yet meaningful reform has often arrived years after the need became obvious.

The result is visible in comparative performance. India, operating under similar climatic conditions across much of the subcontinent, consistently achieves significantly higher yields across a wide range of crops.

While numerous factors contribute to that difference, the gap reflects a willingness to adopt improved seeds, biotechnology, mechanisation and modern farming practices at a scale Pakistan has struggled to match.

This is why the biotechnology policy matters. Agricultural biotechnology is no longer an experimental field reserved for advanced economies. It has become an integral part of modern farming systems around the world.

Improved seed varieties, genetically modified crops where appropriate, disease resistance and productivity enhancements have helped many countries raise output while coping with climate pressures, water constraints and growing populations.

The irony is that Pakistan possesses many of the ingredients needed to benefit from these advances.

According to the Ministry of National Food Security, the country already has a regulatory framework, biotechnology research centres and a sizeable pool of scientific expertise. What has been missing is a coherent strategic direction capable of translating research and policy intentions into practical outcomes.

That absence of direction reflects a broader governance failure. Agriculture has often been treated as a sector that can somehow continue functioning through inertia while policy attention shifts elsewhere.

Meanwhile, structural problems accumulate. Water scarcity intensifies, productivity stagnates and farmers struggle with rising input costs while receiving limited support in improving yields and efficiency.

Climate change makes these weaknesses even more dangerous. Pakistan faces increasing heat stress, water shortages and weather volatility. Maintaining agricultural output under such conditions will require better seeds, improved technology and more efficient use of resources.

Continuing to farm largely as previous generations did is no longer a viable option.

Still, policy approval is only the beginning. Pakistan has no shortage of strategies, frameworks and declarations that generated headlines but produced little measurable change on the ground.

The success of this initiative will depend entirely on implementation. Research institutions, provincial governments, regulators and the private sector will all need to work together if biotechnology is to move beyond official documents and reach farmers in a meaningful way.

There must also be transparency and public confidence. Biotechnology often generates legitimate questions regarding regulation, safety and environmental impact. A credible framework requires rigorous oversight, clear standards and continuous scientific evaluation.

The larger lesson, however, is difficult to avoid. Pakistan’s agricultural decline was never inevitable. It was the product of years of neglect, delayed reform and resistance to modernisation. The collapse in cotton output merely exposed the consequences more dramatically than most crops.

The biotechnology policy therefore represents something more than an agricultural initiative. It is an opportunity to begin reversing a pattern of decline that has weakened both rural livelihoods and the country’s export base.

The opportunity is real. The challenge now is ensuring that it does not become another promising policy that arrives years late and delivers too little.

Copyright Business Recorder, 2026

Compounding the problem, the government has failed to achieve the target of 4 percent GDP growth this year, and the chances of reaching that mark next year appear slim as well. The mantra remains unchanged: stabilization is the priority.

This will be the fifth consecutive budget under the current Prime Minister and the third under the current finance minister, yet the economy is still struggling to achieve meaningful stability.

The patience of people, particularly those forming the formal sector and the salaried class, is wearing thin. However, signs of stabilization fatigue are beginning to emerge.

We are reaching a stage where many of the previous administrations have succumbed to abandoning the IMF (International Monetary Fund) programme to embark upon spurring growth in the economy with disastrous consequences.

It is, therefore, essential that we bite the bullet as time is running out. The government can no longer afford to sidestep the issue. It must deliver, and that delivery must come in the form of broadening the tax base. Nothing short of that will suffice.

The government needs additional fiscal revenue, while the overtaxed sectors desperately need relief. Both objectives cannot be achieved unless those who remain untaxed or under-taxed are brought into the tax net.

Whenever this issue is raised with the federal government, officials often attempt to absolve themselves of responsibility by arguing that many of these areas fall under provincial jurisdictions and that their hands are tied.

This is a lazy argument; take agriculture, for example. More than half of the sector consists of livestock, which the FBR itself acknowledges falls within its tax domain. Yet, virtually no progress has been made. Eid-ul-Azha has just passed, during which tens of billions of rupees worth of livestock changed hands across the country. Yet there is no meaningful tax collection on these transactions or on the income earned by sellers. Except for two days in a week, thousands of animals are sold for slaughter in abattoirs without attracting any tax.

Every year there is an attempt to woo traders and retailers into the tax net through announcements of simplified tax schemes. More than a dozen such attempts have been made but without success as the traders and retailers refuse to budge and continue to contribute little in taxes. The proposed fixed tax of Rs25,000 per month for retailers in the upcoming budget is nothing short of a joke.

Where the FBR cannot directly assess income in certain sectors, it often resorts to taxing deemed income. In other words, taxes are collected on revenues rather than actual profits, and in some cases the effective burden does rise as high as 15 percent of turnover.

What began as a presumptive tax regime eventually evolved into a minimum tax system, payable regardless of whether an enterprise is profitable. It is an inherently unfair mechanism that discourages investment in affected sectors. The result is weaker economic activity and another obstacle to achieving sustained growth.

The government needs to think outside the box and provide meaningful relief to the formal sector through lower tax rates. It should present a clear three- to five-year roadmap for reducing tax rates income of businesses whether corporate or non-corporate and salaried persons and immediately begin phasing down, if not eliminating altogether, the super tax and various surcharges.

The resulting revenue gap must be filled by bringing into the tax net those who currently do not pay their fair share. More of the same cannot continue as the country cannot live indefinitely on stabilization policies. Stability without growth is an illusion. There can be no lasting economic stability without creating jobs for the large and growing number of new entrants to the labour market.

Copyright Business Recorder, 2026

The reference is to the over 46 billion-dollar contracts signed under the umbrella of the China Pakistan Economic Corridor (CPEC), mainly Chinese Independent Power Producers (IPPs), during the visit of President Xi Jinping to Islamabad on 20-21 April 2015 during the government of Pakistan Muslim League-Nawaz (PML-N). The contracts were hailed at the time as a major source of foreign direct investment (FDI) into the country, a claim that had merit as at the time FDI was less than a billion dollars per year. The assumption was that higher supply of electricity would be absorbed by rising demand due to an optimistic projection of growth rate, that did not materialise. This optimism also accounted for contracting a Liquefied Natural Gas (LNG) contract with Qatar that, prior to the country declaring force majeure due to the ongoing Middle East conflict, accounted for diversion of more than half of the cargoes that had been contractually agreed that could not be absorbed with any difference of price between the rate agreed with Qatar and the sale of the cargo to be borne by Pakistan.

The contracts with Chinese IPPs therefore had the same clauses as those previously signed with other IPPs - during the Benazir Bhutto, Musharraf and Nawaz Sharif governments - notably take-or-pay, indicative of capacity payments to the IPPs irrespective of whether electricity was actually purchased as well as dollar indexation of payments. There has been an attempt by all administrations post Covid-19 to renegotiate terms with the IPPs. While local IPPs and those that had signed contracts under the 2022 and 2012 policies did renegotiate the terms (their contractual period was near completion though) with only a reported 43 paisa per unit reduction in tariffs, the Chinese IPPs have consistently refused to change the terms of the agreements, arguing that this would lead to renegotiations with other countries as well.

With the current fragile state of the economy where, by and large, the bulk of the country’s foreign exchange reserves are debt-based, poverty levels calculated at calorific value is at a high of over 42 percent, unemployment has risen to 22 percent if the Labour Force Survey is used as a yardstick (though the government claims it is around 7 to 8 percent) and the bulk of the employed – 93 percent of the workforce (excluding the 7 percent paid wages at the taxpayers’ expense and lucky enough to get a pay raise in excess of inflation) have not had a pay raise since almost the Covid-19 crisis of 2020.

There was some optimism that the recently concluded visit of Prime Minister Shehbaz Sharif’s high level delegation of which Leghari was a member, may succeed in convincing the Chinese to renegotiate but to no avail. To make matters worse, the government actively encouraged solar panels, which reduced grid demand, thereby raising capacity payments. It is critical that the government takes a holistic approach to this poorly managed sector and does not get side-tracked by following previous ad hoc measures, including (i) setting up a coal generation plant away from the source of coal that simply raised costs including health costs, (ii) borrowing or rescheduling loans (the government approved a 1.25 trillion-rupee loan recently whose costs are passed onto the hapless consumers and inexplicably gave rewards to those who proposed this measure).

To conclude, it is necessary for the government to focus on improving efficiency of this badly performing sector and till the expiry date of the Chinese IPPs do not focus on increasing supply from other than existing generation plants.

Copyright Business Recorder, 2026

They reflect one of the most consequential economic failures in Pakistan’s recent history. Cotton was once among the country’s greatest comparative advantages. Allowing it to deteriorate to this extent has imposed enormous costs on farmers, exporters and the national economy alike.

The scale of the decline is staggering. Punjab, historically the backbone of Pakistan’s cotton sector, has seen cultivation shrink dramatically. Production in the province has fallen from over 12 million bales in 2011-12 to just 2.54 million bales in 2025-26. Yields have deteriorated sharply as well. Meanwhile, Pakistan has become increasingly dependent on imports to satisfy the needs of its textile industry, importing billions of dollars worth of cotton that was once produced domestically.

The consequences extend far beyond agriculture. Cotton is not simply another crop. It sits at the foundation of the textile sector, which remains Pakistan’s flagship export industry and one of its most important sources of employment and foreign exchange earnings. Every bale that must be imported adds pressure on foreign exchange reserves, increases production costs and weakens the competitiveness of exporters operating in already challenging international markets.

The question that naturally follows is how a country with suitable land, a long history of cotton cultivation and a textile sector dependent upon local supply allowed such a decline to unfold. The explanations offered by growers are familiar: poor-quality seeds, inconsistent policies, water shortages, rising input costs and uncertainty over prices. None of these problems emerged suddenly. Most have been identified repeatedly over many years.

That is what makes the current situation so troubling. This crisis was not caused by an unforeseeable shock. It developed gradually while warning signs accumulated across successive seasons. Farmers shifted away from cotton because alternative crops offered more predictable returns. Research institutions weakened. Seed quality became a recurring complaint. Productivity stagnated while competitors invested in technology, improved genetics and modern farming practices.

The comparison with international producers is particularly revealing. While Pakistan’s yields have fallen to barely above 500 kilograms per hectare, countries such as China have achieved yields exceeding 2,200 kilograms per hectare. Such disparities cannot be explained by climate alone. They point to differences in research, technology adoption, seed development and policy execution.

The government’s newly announced revival strategy therefore deserves support in principle. Efforts to strengthen the seed system, encourage biotechnology, import hybrid seeds and improve research coordination all address genuine weaknesses. The problem is that these measures are arriving after years of decline rather than before it. Pakistan has rarely suffered from a shortage of plans, committees or policy announcements. Implementation has historically been the missing ingredient.

That concern is reinforced by reports that progress on previous revival initiatives remains slow. The Cabinet Committee on Special Crops and Cotton approved a revival plan months ago, yet the sector continues to contract. Farmers cannot be expected to respond to strategies that remain largely confined to official documents while conditions on the ground continue deteriorating.

The broader lesson should be impossible to ignore. Comparative advantages are not permanent assets. They require protection, investment and competent management. Countries lose them when policymakers become complacent or fail to adapt to changing realities. Pakistan’s cotton sector offers a textbook example of how neglect can transform strength into vulnerability.

The tragedy is that the damage was avoidable. A country that once produced enough cotton to support its textile industry now spends billions of dollars importing a commodity it should be exporting. The costs are borne through weaker exports, greater pressure on foreign exchange reserves and reduced incomes for farming communities.

Pakistan can still reverse the decline, but the margin for error is narrowing. The latest figures should be treated as a national alarm bell. Allowing white gold to lose its shine was a serious mistake. Allowing the decline to continue would be far worse.

Copyright Business Recorder, 2026

The fact that such activities have reportedly continued for years despite existing laws and regulatory mechanisms raises serious questions about the effectiveness of oversight institutions and the accountability of those entrusted with safeguarding public welfare.

The case of Dr Fawad Mumtaz, an assistant professor of plastic surgery at the government-run General Hospital in Lahore, illustrates the alarming extent of the problem. Despite facing multiple cases involving illegal kidney transplants and being dismissed from government service in 2022 on that account, he allegedly continued to perform transplant surgeries and was subsequently arrested during a police raid in Taxila. This sequence of events points not only to individual wrongdoing but also to systemic weaknesses that allowed an unscrupulous medical practitioner to remain active in a highly sensitive field. Such lapses reinforce the perception that influential offenders can evade meaningful consequences.

The observations made by the Supreme Court bench during Wednesday’s hearing are particularly significant in this regard. Justice Muhammad Hashim Khan Kakar’s remark that “the control of the relevant authority in Punjab is negligible” highlights a glaring regulatory failure. The result is an underground market in which wealthy patients can procure kidneys with relative ease while poverty and desperation are cynically exploited for profit. This thriving black market survives because of a network of facilitators, middlemen, medical professionals and complicit officials who either actively participate in or deliberately ignore these crimes.

Justice Salahuddin Panhwar’s concern over the alleged involvement of doctors, hospital staff and government institutions further underscores the depth of the challenge. Organ trafficking cannot flourish without organised collaboration. Consequently, focusing solely on individual perpetrators will not suffice. The authorities must dismantle the entire chain of illegal activity—from recruiters who prey on impoverished donors to medical personnel who perform unauthorised procedures, and officials who fail to enforce the law.

The Punjab government deserves credit for challenging the Lahore High Court’s acquittal order before the Supreme Court rather than allowing the matter to fade into obscurity. Its appeal reflects a welcome commitment to accountability in matters involving public health and ethical considerations. However, lasting reform will require much more than legal proceedings. Regulatory bodies must strengthen monitoring mechanisms, conduct regular audits of transplant centres, and establish transparent systems for tracking organ donations and transplant surgeries. Equally important is the need for stringent penalties against all those found guilty of participating in organ trafficking.

The Supreme Court’s intervention should serve as a catalyst for meaningful reform. Unless decisive and coordinated action is taken, the poor and vulnerable will continue to be exploited while criminal networks profit from human suffering.

Copyright Business Recorder, 2026

The plan envisaged the country achieving highly audacious export targets of USD60 billion by FY2028-29 and USD100 billion over the next seven to eight years.

A meeting of the National Assembly Standing Committee on Commerce on June 2, however, has thrown into sharp relief just how far reality has drifted from aspiration. JUI-F MNA Aliya Kamran pointedly questioned why exports had not only stagnated, but regressed in the 1.5 years since Uraan’s launch.

Over the first 10 months of FY2025-26, exports plunged to USD25.21 billion, a six percent decline from USD26.89 billion in the same period last year.

How the architects of the Uraan programme expect the country to vault to its lofty export targets will remain a mystery unless a fundamental structural transformation takes root that pulls the export sector out of its chronic dependence on low-value, low-complexity goods and equips it to compete in an increasingly volatile domestic and global environment.

The commerce secretary’s intervention at the meeting offered some explanation for the regression, painting a picture of an industrial sector buckling under a punishing cost burden: energy tariffs among the highest in the region, prohibitive financing costs, a byzantine and punitive taxation regime, and steep input and transportation costs that have collectively eroded the export sector’s productivity and international competitiveness, making Pakistan one of the most expensive places in the region to do business, let alone export from.

The volatile security environment along our borders and across the wider region hasn’t helped matters either.

The rupture in relations with Afghanistan has stripped away approximately USD850 million in exports and transit earnings. Meanwhile, the US-Israel war on Iran threatens to carve out a further USD600 million in exports to GCC markets, while also simultaneously driving up logistics and energy costs, further eroding the competitiveness of local producers.

The impact of these external shocks has only magnified the fragility of an export base already operating under severe strain.

If Pakistan is serious about its export ambitions, root-and-branch reform of the energy sector and taxation structure is where that seriousness must first be demonstrated through the rationalising of punishing energy tariffs, and dismantling a tax playbook built around minimum taxation on turnover and a withholding regime that extracts its pound of flesh at every stage of commercial activity.

But these structural reforms alone will not move the needle without an equally radical shift in approach of both businesses and government that abandons the deeply entrenched default disposition of selling domestic surpluses abroad.

What Pakistan needs is a deliberate, forward-looking export philosophy that identifies where global demand is heading, builds productive capacity around it and positions Pakistani industry as a supplier of choice in that area.

The constricted, reactive vision that has kept Pakistan tethered to the bottom of the export value chain – a commodity-driven basket dominated by basic textiles and raw or semi-processed goods that the world has long since moved beyond paying a premium for – must give way to a decisive move up the value chain. That means upgrading product quality and manufacturing processes to meet evolving global standards, investing in market intelligence to track shifting consumer preferences and tightening regulatory requirements across key export destinations, and building the kind of institutional capacity in branding, innovation, technology adoption and supply-chain reliability that regional competitors built years ago.

Pakistan must summon the political will and institutional courage to rebuild its export economy from the ground up; otherwise, the USD100 billion export target will remain just a number on paper.

Copyright Business Recorder, 2026

The finding that 70-80 percent of foreign businesses are delaying or reconsidering investment decisions therefore does not reveal a new problem so much as it confirms the scale of an existing one.

What makes the latest survey particularly troubling is that it captures a sharp deterioration at a time when the country can least afford another setback to investor confidence.

The headline figures are difficult to ignore. Overall business confidence has fallen from a positive 22 percent to 13 percent, while the New Investment Index has collapsed to just 2 percent.

Businesses surveyed expect disruption to persist well beyond six months, and more than a third now anticipate a negative outlook over the coming half year. The message from investors is unmistakable: uncertainty is rising, confidence is weakening and new investment decisions are increasingly being deferred.

The Middle East war has undoubtedly played a significant role in this deterioration. Rising fuel prices, disrupted trade routes and heightened geopolitical uncertainty have created fresh pressures across the global economy. Pakistan, already vulnerable because of its dependence on imported energy and external financing, has inevitably felt the impact more acutely than many other countries.

Yet attributing the problem solely to external events would miss the larger point. The OICCI survey identifies inflation, taxation, currency concerns and inconsistent government policies among the leading obstacles to business growth. None of these challenges originated in the Middle East. There have been recurring complaints from investors for years.

That is what makes the latest findings so concerning. Geopolitical shocks tend to expose underlying weaknesses rather than create them from scratch. A resilient investment environment can absorb external turbulence and continue attracting capital. A fragile one sees uncertainty magnified. Pakistan’s economy falls closer to the latter category.

The country’s investment story has long been characterised by unrealised potential. Successive governments have spoken of attracting foreign direct investment, expanding industrial capacity and integrating Pakistan more deeply into global supply chains. Yet actual inflows have remained persistently weak. Policy reversals, regulatory unpredictability and a tax regime frequently criticised by businesses have combined to create an environment where investors often prefer caution to commitment.

The latest survey suggests that this caution is becoming entrenched. When foreign companies begin restructuring supply chains and postponing capital deployment, the consequences extend beyond immediate investment figures. Delayed projects mean delayed employment, delayed technology transfer and delayed economic growth. The effects accumulate over time.

Particularly worrying is the collapse in near-term investment intentions. Capital is highly sensitive to uncertainty. Investors can tolerate difficult conditions if they believe policy direction is clear and long-term prospects remain favourable. What they struggle to accommodate is unpredictability. When businesses cannot confidently assess future costs, taxation levels, exchange-rate stability or regulatory treatment, investment naturally migrates elsewhere.

The survey’s findings should therefore serve as a warning rather than merely another data point. Pakistan’s economy requires sustained private investment to generate growth, create jobs and strengthen exports. It cannot rely indefinitely on external borrowing, remittances and periodic support packages while productive investment remains subdued.

There is, however, a small but important reason for optimism. Business confidence among OICCI member companies remained positive at 28 percent, and there is growing interest among leading firms in technologies such as generative artificial intelligence. That suggests investors have not abandoned the Pakistani market altogether. They continue to see long-term potential beneath the current uncertainty.

The challenge for policymakers is to ensure that potential translates into action. Restoring confidence requires more than declarations of intent. It requires consistency, predictability and a credible commitment to reducing the costs and uncertainties that businesses face. Foreign investors have heard promises before. What they are looking for now is evidence.

The latest survey should therefore be viewed as a wake-up call. Pakistan’s investment outlook was already weak before the latest geopolitical turmoil arrived. Allowing those underlying problems to persist while external pressures intensify risks, turning a difficult environment into an uncompetitive one. That is a luxury the economy cannot afford.

Copyright Business Recorder, 2026

Exports shrank during the first eleven months of the current year by 5.61 percent – from 29.563 billion dollars in 2025 to 27.9 billion dollars in 2026 while imports rose from 59.1 billion dollars July-May 2025 to 62.66 billion dollars in the comparable period this year – a rise of nearly 6 percent. For May exports rose this year to 2.7 billion dollars against 2.67 billion dollars May 2025 while imports declined from 5.66 billion dollars in May 2025 to 5.287 billion dollars in May 2026.

The question is whether the May data can be seen as a turnaround for Pakistan rather than an aberration fuelled by supply disruptions as a consequence of the Middle East crisis that includes oil, LNG, fertilizers and minerals that include helium, within the context of the entire fiscal year.

On 2 June 20-26 Secretary Ministry of Commerce clarified to the national assembly committee on commerce on a calling-attention notice that the country’s exports face a dual shock: tensions with Afghanistan that have wiped out exports and transit earnings of 850 million dollars while the Middle East crisis has raised the dollar cost of critical imports while throttling exports.

He also highlighted an entire range of domestic policies that he claimed had an anti-export bias, including high energy costs (due to the International Monetary Fund’s condition to ensure full cost recovery), high taxes (with the Fund not allowing zero taxation under the ongoing programme), cheap transport (the supply disruptions have raised costs of transport within and without the country) and high financing costs (with the policy rate at 11.5 percent at present which is more than double the regional average barring Afghanistan). These factors account for poor productivity compared to regional competitors.

The IMF programme is critical for the country to avert the threat of default and this is evident from the fact that the bulk of our 17.14 billion-dollar foreign exchange reserves as on 22 May 2026 stem from debt, including more than 10 billion dollar roll-overs from two friendly countries – Saudi Arabia and China – who have explicitly linked an annual rollover to staying on the IMF programme.

The Fund’s rationale for ending what the Secretary Commerce refers to as the anti-export bias is irrefutable notably: “The tax system has been extensively used to provide non-transparent support through exemptions for privileged sectors like real estate, agriculture, manufacturing, and energy, as well as, through the proliferation of Special Economic Zones (SEZs).

The government’s intervention in price setting, including for agricultural commodities, fuel products, power, and gas (biannual), combined with high tariff and non-tariff protection tilted the playing field in favour of selected groups or sectors. Despite all this support, the business sector has failed to become an engine of growth, and the incentives eventually weakened competition and trapped resources in chronically inefficient (including perpetually “infant”) industries.”

The government must desist from extending incentives to those that have been the recipients of incentives at the taxpayers’ expense for a long period and are at present as well, clamoring for restoration of the incentives.

What is required is for the government to begin to extend incentives to those industries that are high-tech and guide them into competing abroad. Unless the productive base is changed the country’s export targets, however ambitious they are, will not be met.

Copyright Business Recorder, 2026

After two months of relative improvement, the figures serve as a stark reminder that the country’s security challenge remains far from resolved and that militant groups retain the capacity to regroup, adapt and strike with deadly effect.

Particularly alarming is the return of suicide attacks as a preferred tactic. Six such attacks were recorded in May, including four vehicle-borne bombings, compared with just one in each of the previous two months. Pakistan has paid an enormous price for this form of violence over the past two decades. Entire communities, markets, mosques, schools, and security installations have been targeted by militants seeking to spread fear and undermine the authority of the state. Any increase in the frequency of suicide attacks therefore deserves immediate attention.

The concentration of violence in Balochistan is equally troubling. The province accounted for 71 attacks during the month, more than double the number recorded in April. The sharp rise in kidnappings, with 52 of the 54 reported abductions nationwide occurring in Balochistan, points to a deteriorating security environment and a growing confidence among militant networks operating in the area. Khyber Pakhtunkhwa continues to face similar pressures as well, demonstrating that the country’s two most vulnerable regions remain under sustained threat.

It is important to recognise that security forces have not been passive in the face of these challenges. According to the same report, 270 militants were killed and 15 arrested during counter-terrorism operations conducted across the country. These figures reflect an aggressive operational response and underscore the sacrifices being made by security personnel on a daily basis. Yet the persistence of attacks despite these efforts suggests that the threat has evolved into something more complex than a purely military problem.

Pakistan’s security agencies have repeatedly pointed to external sponsorship and facilitation of terrorism directed against the country. Successive official statements have accused hostile intelligence networks of financing, training and supporting militant groups operating within Pakistan’s borders. These allegations have become a recurring feature of the country’s security discourse, particularly in relation to violence in Balochistan and along the western frontier.

Whether viewed through the lens of regional geopolitics or internal security, the broader conclusion remains the same: the operating environment facing Pakistan has become more complicated. Militant organisations are no longer isolated actors functioning independently. They increasingly exploit regional instability, digital communications, cross-border networks and external sources of support to sustain their campaigns. That reality requires a response that is equally comprehensive.

Military operations remain indispensable, but lasting success also depends on intelligence coordination, border management, financial surveillance and the disruption of recruitment pipelines. Local communities must be protected from intimidation, while development efforts in conflict-affected regions need to continue despite the security risks. The objective must be to deny militant groups both physical space and social space in which to operate.

The timing of this escalation is particularly concerning. Pakistan is navigating a difficult economic environment while simultaneously seeking to attract investment and strengthen regional connectivity. Persistent violence threatens both objectives. Investors and development partners inevitably take note when security indicators begin moving in the wrong direction.

Also, the country has seen before where complacency can lead. Years of sustained counterterrorism efforts succeeded in reducing violence from its peak levels, but those gains were never guaranteed to be permanent. The latest figures demonstrate that militant networks remain determined to challenge the state whenever opportunities emerge.

The lesson from May is therefore clear. Vigilance cannot be episodic. Pakistan’s enemies, whether domestic or external, continue to exploit every opening available to them. The state’s response must remain equally determined, because the costs of allowing terrorism to regain momentum are already well known to a nation that has paid for peace with far too much blood.

Copyright Business Recorder, 2026

While the recovery of 1,405 missing persons offers some reassurance, the fact that 1,853 women and girls remain untraced raises serious questions about the effectiveness of the mechanisms meant to protect vulnerable citizens. Lahore High Court Chief Justice Aalia Neelum’s observation that the non-recovery of so many missing girls reflects poorly on the performance of the Punjab Police is difficult to dispute.

The disappearance of women and children is not merely a law-and-order issue; it is a matter of public safety, human rights and public confidence in state institutions. Every missing girl represents a family living in uncertainty and anguish, often for years. Delays in investigation can significantly diminish the chances of recovery, making timely intervention imperative.

At the same time, the statistics presented by the police reveal a more complex reality than is often assumed. According to the DIG Investigation, nearly 80 percent of the recovered women and girls had entered into marriages of their own choice, resulting in the subsequent cancellation of kidnapping cases.

Another 15 percent voluntarily returned to their families. These figures suggest that many reported abductions may actually arise from family disputes, resistance to personal choices, or social pressures surrounding marriage and relationships.

However, these explanations must not become a pretext for institutional complacency. The large number of unresolved cases demands urgent attention. Among those who remain missing may be victims of trafficking, exploitation, forced marriage, abuse, or other serious crimes. The failure to trace them, in some cases for several years, points to shortcomings in investigation, coordination, and follow-up, requiring immediate remedial action.

In declining the police request for an additional two months, the court highlighted the prolonged delays that have marked many of these cases. As Chief Justice Neelum observed, years have already passed in numerous instances, and repeated extensions without tangible progress risk undermining public confidence. Her directive to submit a comprehensive progress report within 15 days reinforces the need for greater accountability and urgency.

A robust and responsive system is badly needed for dealing with such’ missing’ cases. Equally important is greater public awareness of legal rights, particularly the right of adult women to make personal choices free from coercion.

The figures presented before the Lahore High Court highlight not only a policing challenge but also a broader social problem. Effective law enforcement, coupled with respect for individual autonomy and stronger safeguards against exploitation, is essential to ensuring the safety, dignity, and rights of women and girls.

Copyright Business Recorder, 2026

This delay or postponement has raised multiple questions, especially given the press release issued by the International Monetary Fund (IMF) team after a recently concluded week-long visit to Pakistan (13 to 20 May), which explicitly stated that the focus of the visit was on recent economic developments, reform implementation and budget strategy for fiscal year 2027.

Taken in conjunction with the detailed documents released on 15 May on the third review of the ongoing Extended Fund Facility (EFF) programme and the second review of the Resilience and Sustainability Facility (RSF), which contained an assessment of the recent economic developments (with the remark that the Middle East conflict’s fall-out on Pakistan has been ‘contained’ so far), reform implementation (with emphasis on keeping fuel and energy tariffs in line with cost recovery to avoid unaffordable subsidies and fiscal costs, while protecting vulnerable consumers with targeted support and continuing to implement reforms to address the high costs of energy), and the budget strategy, which implied discussions and agreement on the proposed budgetary expenditure and revenue sources.

What is patently obvious since the 2019 EFF programme - Pakistan has secured three additional programmes since notably the 2023 nine-month-long Stand By Arrangement, the 2024 EFF and the 2025 RSF - that neither the IMF nor the friendly countries (Saudi Arabia and China) are receptive to any phasing out of the harsh upfront conditions that the Fund is insisting on due to our appalling track record in implementing the agreed conditions in the previous programmes.

Thus it stands to reason that any failure to implement any of the recently agreed conditions, agreed two weeks ago, will generate a delay in the fourth review of the EFF and the third review of the RSF, thereby leading to not only a delay in the next tranche release, and refusal of the friendly countries to delay the over 9 billion dollars rollovers that are critical to strengthening foreign exchange reserves but may eventually lead to a suspension of the programmes as happened in 2023.

In this context the delay is being attributed to the Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal’s lament that the funds budgeted by the Finance Ministry for Public Sector Development Programme (PSDP) fall far short of requirements/demand by a whopping 3 trillion rupees – funds that in Pakistan spearhead growth. Others argue that the Federal Board of Revenue (FBR) has expressed concern that the target set is just too high or that the revenue source identified may not generating the projected funds.

These are legitimate concerns; however, it is relevant to note that the provincial surplus required in the federal budget in the outgoing year, 1,464 billion rupees, was only budgeted to be met by the Punjab government (740 billion rupees) while all other provinces presented budgets that failed to meet their targets – Sindh budgeted a deficit of 38.45 billion rupees, Khyber Pakhtunkhwa a surplus of 157 billion rupees and Balochistan a surplus of 51.5 billion rupees.

The total revenue agreed between the Fund and the government constituted three major sources: (i) audit which is likely to be met, given FBR’s proactive approach however there is danger that this may strengthen capital flight and/or relocation of industry outside the country; (ii) GST compliance efficiency ratio, an indirect tax whose incidence on the poor is greater than on the rich, that the Fund argued has fallen from around 27.4 percent to 22 percent over the past ten years and requires a levy on other items that may well increase the poverty levels that when calculated at calorific value are at a concerning level of 43 percent; and (iii) raising enforcement of GST through “production monitoring, adoption of digital invoicing and FBR retailer registration,” while provinces “should accelerate the collection of GST on services by strengthening enforcement,” particularly relating to agricultural income tax. These recommendations reflect political resistance in the past, and one is hard-pressed to concede that it would be easy to implement next fiscal year.

To conclude, the ideal solution initially would be to curtail current expenditure by at least 2 trillion rupees in the current year, a curtailment not based on the assumption that the policy rate will decline as in the current year - an assumption that did not materialize - and instead to slash all budgeted outlay that is not earmarked for operational expenses that would automatically reduce the pressure on tax revenue and hopefully raise allocation for PSDP.

Copyright Business Recorder, 2026

Israel’s intensified air raids, expanded ground incursions, and repeated evacuation warnings to Lebanese villages constitute a deliberate strategy to alter realities on the ground through military force.

The recent seizure of the historic Beaufort Castle and Prime Minister Benjamin Netanyahu’s declaration that its capture represents a “dramatic stage and a dramatic shift” in Israeli policy have further heightened fears that the conflict is entering a more dangerous phase. His pledge to push deeper into Lebanese territory has fuelled widespread apprehension that Israel is pursuing its undisguised expansionist goals.

The stated plan to occupy territory up to the Litani River in order to establish a “defensive buffer zone” has revived painful memories of previous occupations and conflicts that brought immense suffering to the people of Lebanon.

At the same time, developments in Gaza paint a deeply troubling picture. Israel’s military has steadily expanded its control over 60 percent of the enclave with Netanyahu calling for 70 percent control, while military operations continue towards a complete takeover of the enclave despite the existence of a ceasefire arrangement. The continued loss of civilian lives and the destruction of homes and infrastructure have intensified the humanitarian crisis.

Reports of at least 930 Palestinian deaths and thousands of injuries since the Gaza ceasefire took effect last October underscore the urgent need for a durable cessation of hostilities and meaningful protection for civilians.

What makes the current situation particularly alarming is the apparent disconnect between ongoing diplomatic initiatives and realities on the battlefield. While Lebanese and Israeli delegations were still in Washington for US-sponsored discussions aimed at resolving the conflict, military operations continued to expand. Such actions risk undermining confidence in diplomacy and sending the message that negotiations are merely a cover for advancing military objectives. Lebanese Prime Minister Nawaf Salam’s description of Israel’s actions as a “scorched-earth policy” and “collective punishment” reflects the growing frustration felt across Lebanon.

Similar concerns have been voiced by numerous countries, including France and several Muslim-majority states, which have called for urgent international action. France’s push for an emergency meeting of the UN Security Council highlights the seriousness with which many governments view the unfolding crisis.

The broader international community must not remain passive. The principles of the UN Charter, respect for sovereignty, territorial integrity, and the protection of civilian populations in occupied lands are not optional standards to be applied selectively. If military force is allowed to redefine borders and political realities without meaningful accountability, the consequences will extend far beyond Lebanon and Gaza.

Sustainable peace in the Middle East cannot be achieved through occupation, territorial expansion, and the collective punishment of civilian populations. It requires adherence to international law, genuine diplomatic engagement, and equal application of legal and moral standards to all parties. The international community must act decisively to halt further escalation, protect civilians, and ensure that negotiations, rather than military might, determine the future of the region.

Copyright Business Recorder, 2026

Be that as it may, three very disturbing admissions were highlighted during the APCC (annual planning coordination committee). The projected growth rate for next year of 4 percent is slightly lower than the 4.1 percent target set by the International Monetary Fund (IMF) under its ongoing Extended Fund Facility programme (in its third review documents released less than three weeks ago) while it projected a rate of 3.5 percent for 2026-27.

It is also relevant to note that core inflation, a prime determinant of the policy rate was raised in May by one percentage point – to 9 percent from 8 percent. This will, in all probability, herald a rise in the policy rate on the next scheduled meeting of the Monetary Policy Committee on 15 June.

The reason: when core inflation rose by 0.6 percentage points – from 7.4 percent in March to 8 percent in April in the MPC meeting held on 27 April the policy rate was raised by 100 basis points to 11.5 percent – a rate that is double that of other regional competitors with obvious negative repercussions on the budgeted borrowing costs as well as input costs for the private sector.

Secondly, only 51 percent of the one trillion rupee earmarked for PSDP this year was disbursed by end April and the possibility of any further disbursement till the end of the fiscal year on 30 June is unlikely, given the supply disruptions due to the Middle East crisis that has upped the Consumer Price Index to 11.7 percent in May as per the Pakistan Bureau of Statistics (PBS).

In other words, political considerations require that the government continues to subsidise key consumer items, a policy thrust that has been reversed after the recent IMF mission visit to Pakistan to reach a consensus with the authorities on next year’s budget but which may have to be revisited in the event of public unrest.

The plan also acknowledged that allocations for PSDP are being made under the spectre of a shrinking budget in spite of growing social and physical infrastructure needs.

One would hope that this would compel the budget formulators to not only desist from allocating current expenditure earmarked for influential people based on their demand, a usual practice, but to severely curtail this outlay in next year’s budget by at least 2 trillion rupees (the current year’s budgeted allocation was 18.286 trillion rupees).

This, if implemented, will reduce the pressure on not only slashing the planned outlay for PSDP but also the unplanned slashing during the year, again a usual practice, as and when the budget deficit reaches unsustainable levels.

It is relevant to note that the IMF third review documents note that the external funding programme target for next fiscal year was 19.12 billion dollars; however, the projected target has been revised upward to 21.197 billion dollars or a rise of a whopping 2 billion dollars, which does not reflect favourably on the Prime Minister’s consistently stated pledge that the current Fund loan will be the last ever that the country will secure. What is required is out of the box solutions; notably, slashing current expenditure and increasing PSDP.

Copyright Business Recorder, 2026

For more than six decades, the Indus Waters Treaty stood as one of the few examples of sustained cooperation between two hostile neighbours. It survived wars, military crises and prolonged political tensions. That durability mattered because it demonstrated that water, perhaps more than any other shared resource, could be insulated from geopolitical disputes through clear legal frameworks and mutual obligations.

The danger today is that this principle is being tested. As Dr Malik pointed out, climate stress, changing political realities and weakening respect for multilateral mechanisms are creating new vulnerabilities for countries dependent on shared river systems. The response to those pressures should be stronger cooperation, greater transparency and improved dispute-resolution mechanisms. Using climate change as a justification for unilateral reinterpretation of established agreements points in the opposite direction.

Pakistan’s concern is therefore entirely legitimate. Water security is inseparable from food security, economic stability and social cohesion. For a lower-riparian state dependent on river flows originating upstream, predictability matters as much as volume. Farmers make planting decisions, irrigation systems are designed and reservoirs are managed on the assumption that agreed frameworks will continue to operate. Once uncertainty enters the equation, the consequences extend far beyond diplomacy.

The implications are also global. Shared river basins exist across Asia, Africa, Europe and the Americas. If upstream states begin treating treaty obligations as optional whenever political tensions arise, the resulting precedent will not remain confined to one region. Countries across multiple river systems could face growing uncertainty regarding access, allocation and long-term planning.

This is precisely why the minister’s call for stronger international protections deserves serious consideration. The international system already contains enforcement mechanisms in areas such as trade, nuclear safeguards and financial regulation. Yet water governance continues relying heavily on assumptions of good faith and voluntary compliance. Those assumptions become increasingly fragile when geopolitical tensions intensify.

The recent court of arbitration ruling referenced by Pakistan further underlines the importance of legal processes. Disputes over technical issues are inevitable in complex water-sharing arrangements. The proper response is adjudication through agreed mechanisms rather than unilateral action. That principle is central to the rule-based order many states claim to support.

The broader context makes the issue even more urgent. Climate change is accelerating glacier retreat, altering rainfall patterns and increasing pressure on already stressed water systems. Pakistan, despite contributing a tiny share of global emissions, remains among the countries most exposed to floods, droughts and climate-related disruptions. The combination of environmental stress and political uncertainty creates risks that neither diplomacy nor development planning can ignore.

There is also a humanitarian dimension often overlooked in strategic discussions. Water disputes are ultimately about people. Reduced certainty over water availability affects farmers, rural communities and households whose livelihoods depend directly on stable access to shared resources. The costs are measured not only in economic indicators but in lost incomes, food insecurity and increased vulnerability.

Pakistan’s proposal for stronger international covenants, compulsory third-party dispute resolution and meaningful consequences for violations reflects a recognition that existing safeguards may no longer be sufficient. Whether those ideas gain wider support remains to be seen, but the underlying concern is difficult to dismiss.

The principle itself is straightforward. Treaties exist precisely to provide stability during periods of tension. If agreements that have survived decades of conflict can be weakened by unilateral political decisions, confidence in international commitments inevitably erodes. Water is too essential a resource, and the stakes too high, for such uncertainty to become the new normal.

The international community should therefore treat this debate with the seriousness it deserves. Water can be shared, managed and governed. It cannot be allowed to become a political or economic weapon.

Copyright Business Recorder, 2026

Years of rising tax rates, coupled with complex compliance requirements and heavy-handed enforcement measures have imposed a disproportionate burden on the corporate sector, salaried individuals and compliant taxpayers, even as the tax base remains stubbornly narrow.

A simplified tax system as demanded by retailers and wholesalers is undeniably the need of the hour. Yet there is an unmistakable irony in such demands for relief emerging from a segment long mollycoddled by successive governments, while much of the documented economy continues to shoulder the weight of a dysfunctional and inequitable fiscal structure.

The distortions embedded within the existing taxation framework are best illustrated by the fact that nearly every formal sector economic activity is subjected to minimum taxation on turnover regardless of profitability. In any rational tax system, tax liability is linked to net income, allowing losses to be carried forward and offset against future earnings.

In Pakistan, however, turnover-based minimum taxes effectively penalise businesses simply for operating by taxing their gross incomes. The inevitable consequence is the erosion of profitability, and shrinking incentives for formal-sector expansion. This burden is further exacerbated by a withholding tax regime that extracts taxes at virtually every stage of commercial activity.

Enterprises operating across supply chains, from manufacturing and distribution to retail face repeated taxation at each transaction point, inflating operational costs of compliant businesses throughout the production cycle.

The economic consequences of such a regime are well established, with a World Bank Group study observing that higher effective corporate tax rates are directly associated with lower private investment and reduced business formation, noting that a 10 percent increase in effective corporate rates can reduce investment by as much as two percent of GDP while also suppressing new business entry.

On top of the highly punitive taxation that compliant businesses face, they also have to contend with relentless scrutiny through repeated audits, ever-expanding bureaucratic hurdles as well as delays in receiving tax refunds. Meanwhile, undocumented segments, particularly retail and wholesale, as well as agriculture continue to operate with far fewer obligations.

The result is a system that disproportionately squeezes documented businesses while incentivising large segments of the economy to remain outside the tax net.

The government has demonstrated little urgency to bring sectors like agriculture into the tax net, and the limited progress that has been made in recent times to tax this segment has largely been driven by IMF pressure rather than genuine political will.

The reason for that is not difficult to discern: the agriculture sector commands enormous political influence within the corridors of power. Similarly, the trading community has repeatedly demonstrated its nuisance value by resorting to shutter-down strikes and protests at the drop of a hat whenever even modest attempts are made to document or tax the sector more effectively.

In effect, political influence and the capacity to exert pressure have come to define the government’s approach to tax reform and expansion of the tax base.

The result is that the FBR has increasingly relied on targeting the lowest-hanging fruit, prioritising ease of collection over meaningful structural reform. While there is undoubtedly a pressing need for a simplified taxation framework, its benefits must extend across the economy rather than being tailored primarily towards politically influential constituencies.

More importantly, any simplification must go hand in hand with a serious, broad-based effort to expand the tax net, without which the inequities of the present system will continue to persist.

Copyright Business Recorder, 2026

Total allocation for pensions was budgeted at 1.066 trillion rupees in the ongoing year – a whopping 6.4 percent of total current expenditure against 716 billion rupees budgeted for Benazir Income Support Programme (BISP) earmarked for the poor and vulnerable (or under 4.1 percent of the total current expenditure) in spite of rising poverty levels to an appallingly high - nearly 43 percent if the calorific value method is used.

The budgeted and realised amount for pensions last fiscal year was 1.014 trillion rupees (perhaps the only revised outlay at the end of the year that precisely matched its budget). This accounted for 6.18 percent of the revised current expenditure and 5.8 percent of the budgeted current expenditure in 2024-25.

The percentage decline in the revised estimates is therefore not due to a decline in total pensions, which incidentally was not expected as the retirement of those civilian recruits hired last year is too far along to make a difference, but due to a decline in the mark-up attributable to lower policy rate as well as rescheduling of loans.

The need to reform the pension system and, like in other countries, make it a contributory system, was acknowledged during several previous administrations. Task forces were set up, studies carried out at state expense, and the consensus of all was to initiate a DCP.

Sadly, reforms were continuously postponed with critics alleging that the 7 percent of the total work force that is employed by the state and paid for at the taxpayers’ expense, used its considerable influence and prevailed upon the government of the day to defer the decision. This is reminiscent of the agricultural income tax that was imposed in the provincial budgets last year, a key International Monetary Fund condition, to be effective from 1 January 2025 and yet its collections are so poor that the Fund has now insisted that collections be more in synch with the income of the rich landlords.

Reports suggesting that the government is considering not only raising the salaries of its employees but also pensions are extremely disturbing and make a mockery of this reform that has been so long in coming.

To conclude, there is concern that the DCP, as applied from last year, may not begin to show dividends before thirty to forty years as and when their retirement becomes due; and additionally, even if these funds are meagre, their collection still allows the government to potentially finance other non-development current expenditures, which should not be the objective.

That the government began implementation of DCP last fiscal year must be supported; however, it is hoped that the Finance Minister would share the total amount collected from those newly recruited by the civilian government, and reveal whether this amount has been placed in a dedicated pension fund to be used for investment purposes or whether the treasury operates the amount collected on the basis that money is fungible.

Copyright Business Recorder, 2026

Although the NFC Award allocates resources among provinces using four indicators – population, revenue generation, inverse population density, and poverty and backwardness – population alone commands an overwhelming 82 percent weightage.

This glaring imbalance has distorted national incentives, embedding demographic expansion into the logic of fiscal allocation even as the country grapples with an alarming population surge, while simultaneously struggling to contend with mounting economic strain.

Against this backdrop, a growing cross-party push for reform is gaining momentum, reflected in a pre-budget session of the Parliamentary Forum on Population held on March 20 that brought together legislators from national and provincial assemblies in an effort to convert long-standing concerns over population management into tangible budgetary proposals, including revisiting the NFC formula.

In recent decades, Pakistan’s demographic trajectory has evolved into becoming its gravest economic challenge. By 2050, its population is projected to swell to nearly 390 million, with roughly 256 million people expected to fall within the working-age bracket, a significant swathe of whom will be under the age of 30.

In many economies, such a youthful population has served as a powerful demographic dividend, fuelling productivity, industrial expansion and long-term growth. But as Senator Sherry Rehman noted at the forum, in Pakistan the potential risks are mutating into a corrosive demographic liability.

The country is failing to generate the economic capacity, employment base and human development infrastructure required to absorb this rapidly expanding young population.

Without sustained investments in education, healthcare, skills development and employment generation, Pakistan’s youth bulge risks intensifying unemployment, economic fragility and social strain. But these investments cannot be mobilised at the scale or pace required as long as the nation’s resources remain perpetually outpaced by the demands of a population expanding at breakneck speed, trapping Pakistan in an unending cycle of underdevelopment and fiscal strain.

It is, then, a spectacular failure of governance that successive governments have sustained systems, which by design continue to reward population growth. And this is not confined to the NFC Award formula alone.

From the allocation of parliamentary seats and the distribution of public sector job quotas at federal and provincial levels to access to admissions in government-run professional colleges, all are heavily calibrated on population shares.

Rather than prioritising indicators such as poverty incidence, revenue contribution and climate vulnerability, the system remains anchored to population-centric frameworks, pushing development needs, the principles of equity and evidence-based governance to the margins.

It is important to note that empirical evidence has consistently shown an inverse relationship between population growth rates and literacy levels: lower literacy is associated with higher fertility, while expanding education helps ease demographic pressure. This underscores the urgent need to broaden access to education, not only to improve human capital outcomes but also to build public awareness around the socioeconomic benefits of lower fertility and responsible population management.

Equally important is the fact that evidence across diverse contexts demonstrates that women’s education and economic participation are among the strongest determinants of smaller family sizes, with empowered women more likely to delay childbirth and make informed reproductive choices.

So, alongside urgently prioritising the revision of the NFC Award’s population-heavy formula, Pakistan must also pursue far-reaching, well-resourced family planning initiatives nationwide, firmly anchored in education and women’s empowerment.

Strengthening primary healthcare systems, expanding reproductive health services and integrating population awareness into school curricula will be critical to sustaining such efforts.

The cost of delay will only exacerbate demographic pressures and further narrow an already shrinking window for much-needed change.

Copyright Business Recorder, 2026

With the document being termed a manifesto for AI, the pope’s warning that “a race for ever more powerful algorithms and larger datasets, driven by the desire to secure geopolitical or commercial dominance” is already well underway, but most governments and tech giants have so far lacked both the will and the framework to answer it with anything more binding than good intentions. That the leader of over a billion Catholic Christians has chosen AI regulation as the defining cause of his papacy speaks volumes about how rapidly, within barely four years of ChatGPT’s launch, the technology has moved from Silicon Valley novelty to a force consequential enough, and dangerous enough, to demand a papal response.

What has compelled the pope to act is an accumulating body of real-world evidence about AI’s increasingly destabilising impact. It is already reshaping labour markets at a pace that outstrips any workforce’s ability to adapt, with Goldman Sachs estimating as far back as 2023 that up to 300 million jobs globally could be automated away in the coming decade.

Moreover, AI is turbocharging disinformation and enabling the mass production of deepfakes that corrode trust in democratic institutions. Most distressingly, it has concentrated economic power with breath-taking speed in the hands of a few corporations that now control the data, computing infrastructure and the algorithms that increasingly mediate how billions of people work, learn, make decisions and form opinions. And equally worryingly, it is now finding its way onto the battlefield, with autonomous weapons systems capable of making lethal decisions without human intervention, raising the spectre of warfare conducted at machine speed while potentially remaining unencumbered by any meaningful accountability. It is clear, then, that if left ungoverned, AI threatens lives, livelihoods, democratic institutions, privacy and the very idea of truth.

All these dangers are exacerbated by the glaring absence of binding legal guardrails around AI’s development and deployment.

As recently as last week, the Trump administration shelved an executive order that would have mandated safety reviews of new AI models. That retreat exposed just how little appetite exists among the most powerful governments for meaningful oversight of AI. Such a disposition was already on full display when both the US and the UK refused to sign a declaration at the 2025 Paris AI Action Summit committing to ethical and responsible AI development, a pointed signal that two of the most consequential AI powers have little intention of reining in the technology’s insidious impacts or of pushing back against the unchecked powers of the firms driving it. This approach has prioritised AI’s commercial and strategic dominance over a more human-centred approach to its development.

It would be a mistake to cast the encyclical as a rejection of AI and its incredible transformative potential. It is important to note that the pope did not call for rejecting technology, “but preventing it from dominating humanity” and making it “human-friendly”, universally accessible and subject to open debate rather than the closed deliberations of a powerful few. That the manifesto was presented with Anthropic’s co-founder in the room is itself telling as that underscores that apprehensions regarding AI’s trajectory are shared by some of the very people building it.

The question the pope has put before the world, then, is not whether AI should exist, but who it should serve. The answer, his encyclical rightly insists, must be humanity, and not the other way around.

Copyright Business Recorder, 2026

The mission was, therefore, not in-country to initiate a staff level agreement on the fourth review of the ongoing 7 billion-dollar Extended Fund Facility (EFF) and the third review of the Resilience and Sustainability Facility (RSF) or to engage in Article IV consultations, but specifically for approval of the budget and one may well regard this exercise as a “prior” condition.

The press release noted that the government remained committed to achieving a primary surplus (excluding grants) of 2 percent of GDP in 2027, a projection made in the recently released third review of the EFF and the second review of the RSF documents, with the current year’s programme target of 3.4 percent missed by 0.1 percent (3.5 percent). What is perhaps more relevant is the figure cited under underlying primary balance (excluding grants) that did not include one-off transactions was estimated at 1.6 percent in the current year, 1.3 percent programme target with 2 percent as the projection for next fiscal year; hence not included is the 1.25 trillion rupees borrowed by the government to retire the energy sector circular debt with interest payments to be passed onto the consumers as well as the sale of the Pakistan International Airlines that has netted the government 10 billion rupees with the remaining over 125 billion rupees to be in the form of equity into the airlines at a later stage with no deadline.

The note also refers to support for measures that will ensure fiscal sustainability and this too is explained in the third review documents as follows: tax revenue mobilization is envisaged by: (i) eliminating sales tax expenditures, through increasing GST C-efficiency ratio that has declined from 27.4 percent to 22.8 percent over the past ten years – defined as a measure of how effectively a country collects its Goods and Services Tax by comparing actual revenue collected against the theoretical revenue that would be generated if the standard GST rate were applied universally to all consumer spending without any exemptions or collection losses - sales tax is an indirect tax whose incidence on the poor is greater than on the rich; (ii) improving compliance through the proactive application of the audit function of the Federal Board of Revenue; and (iii) increasing provincial revenues mainly through the implementation of the agriculture income tax at the same rate as is levied on all other sources of income.

And finally, the press release notes: “State Bank of Pakistan reiterated its commitment to maintaining an appropriately tight monetary policy stance to anchor inflation expectations and will continue to closely monitor potential second-round effects from energy price increases. Furthermore, exchange rate flexibility should continue to serve as a key shock absorber, and efforts should continue to build a deeper foreign exchange interbank market.” The supply disruptions due to the ongoing Middle East conflict need to end before inflation can come down not only in Pakistan but other countries that rely, directly or indirectly, on Gulf countries, as well; however in the case of Pakistan the policy rate, at a high of 11.5 percent which compares extremely unfavourably with other regional competitors today, is expected to rise further with further negative implications on the debt service component of the budget as well as on lower private sector credit – elements that will constrain growth that in turn will increase unemployment that would no doubt raise the risk of staying on the programme.

To conclude, one must wait for budget to be presented to parliament to gauge exactly what the authorities agreed to that would have serious consequences for the common man’s kitchen budget though, sadly, indications are that it would be an extremely harsh budget for the common man.

Copyright Business Recorder, 2026

Climate experts warn that if the phenomenon strengthens into a rare Super El Nino, it could disrupt weather systems globally, triggering deadly heat waves, erratic monsoons, floods, droughts, wildfires, and food shortages. For countries like Pakistan, already struggling with economic instability and weak climate resilience, the consequences could be severe. In fact, climate change is no longer a distant threat for this country; it is an immediate and escalating reality demanding urgent national action.

Pakistan’s recent experience serves as a painful reminder of the devastation climate disasters can cause. The catastrophic floods of 2022, triggered by exceptionally heavy rains, submerged a third of the country, displaced millions, destroyed crops and infrastructure, and caused economic losses worth billions of dollars. Scientists now say that a stronger El Nino event could similarly disrupt South Asia’s monsoon patterns, resulting either in excessive rainfall and flooding or dangerously low rainfall leading to drought and water scarcity.

Particularly alarming for Pakistan is the threat posed to agriculture and food security. As an agrarian economy, the country depends heavily on farming, while millions rely directly or indirectly on agriculture for their livelihoods. Extreme temperatures, water shortages, and unpredictable rainfall can severely damage wheat, rice, and cotton production, increasing inflation and worsening food insecurity. Rising food prices would inevitably hit poor households the hardest, deepening poverty and social distress.

The warning signs are clear, yet preparedness remains inadequate. Pakistan urgently needs a comprehensive climate adaptation strategy that prioritizes disaster preparedness, water conservation, and climate-resilient agriculture. Early warning systems must be strengthened, urban planning improved and emergency response mechanisms modernized. Equally important is public awareness. Communities need timely information about heat safety measures, water conservation, and disaster risks before extreme events occur.

Regardless of whether El Nino itself is a natural phenomenon, its effects are likely to be far more destructive in a world already strained by rising temperatures, environmental degradation, and weak disaster preparedness. For Pakistan, the real challenge lies not merely in understanding climate threats, but in building resilience through better planning, improved water management, and stronger emergency response systems.

While scientists caution that forecasts still carry some uncertainty, the rapid warming of Pacific Ocean temperatures suggests that the world may indeed be heading toward another major El Nino event. Waiting for absolute certainty would therefore be irresponsible and dangerous. Authorities at both the federal and provincial levels must take these warnings seriously and prepare for the worst while hoping for the best.

Copyright Business Recorder, 2026

The latest concerns raised over the Diamer-Basha Dam and Tarbela 5th Extension projects therefore deserve to be treated as far more than routine bureaucratic irregularities.

Planning Minister Ahsan Iqbal’s frustration over escalating costs and delayed PC-I revisions reflects a problem that has become painfully familiar in Pakistan’s development sector. Diamer-Basha’s approved cost has ballooned dramatically since 2018 while revised project documents reportedly remained pending for years. Tarbela’s 5th Extension has also seen massive cost escalation, with concerns now openly being raised regarding project management standards, consultant selection and transparency in decision-making.

These are not minor administrative lapses. They point toward a systemic inability to manage strategic infrastructure projects within reasonable financial and operational discipline. When projects involving hundreds of billions of rupees repeatedly experience delays, revisions and opaque procedural decisions, the public has every right to question whether incompetence alone explains the outcome.

The shadow of the Neelum-Jhelum disaster looms heavily over this discussion. That project became one of the clearest examples of how poor planning, technical flaws, delayed maintenance and questionable oversight can convert a flagship national asset into a prolonged financial burden. Pakistan simply cannot afford to continue repeating the same pattern while expecting different results.

The deeper concern is institutional memory, or the lack of it. Every few years, another inquiry identifies familiar weaknesses: weak due diligence, inadequate supervision, flawed procurement practices, poor contract management and insufficient technical oversight. Yet despite repeated reports and committee findings, the same failures continue surfacing across successive projects.

This is precisely why transparency must become mandatory rather than optional. Strategic projects involving public money on this scale should be subjected to structured half-yearly progress reports released publicly and reviewed independently. Timelines, cost revisions, technical milestones and procurement decisions should all be documented transparently so that problems are identified before they spiral into national liabilities.

Such reporting would not merely improve public confidence. It would also strengthen project discipline itself. Delays and cost overruns thrive most easily within opaque systems where accountability becomes diffused across overlapping bureaucracies and changing administrations.

The Mangla compensation issue reflects the same culture of negligence from another angle. Thousands of people displaced by a national infrastructure project are reportedly still awaiting compensation years after agreements were reached. The defence ministry’s warning that unresolved grievances could trigger protests serious enough to affect internal security should have alarmed policymakers long before matters reached this stage.

Infrastructure development cannot succeed sustainably if displaced populations are treated as secondary administrative inconveniences. Compensation and resettlement are not peripheral obligations attached to mega projects; they are integral components of the projects themselves. Delayed payments, unresolved claims and bureaucratic inertia undermine both public trust and social stability.

The irony is that Pakistan genuinely needs these water and hydropower projects. Energy shortages, water stress and climate vulnerability make reservoir expansion and hydropower development strategically essential for long-term national stability. But strategic importance cannot become an excuse for weak governance standards. In fact, projects of such importance require even stricter scrutiny precisely because of the scale of public resources involved.

There is also a broader fiscal dimension that deserves attention. Every massive overrun ultimately feeds into the country’s debt burden, development pressures and future electricity costs. Public sector inefficiency on this scale is not absorbed abstractly by the state; it is transferred to taxpayers, consumers and future budgets.

The recurring nature of these failures suggests that the problem is no longer technical alone. It is institutional and cultural. Mega projects continue to operate within systems where delays rarely produce consequences, inquiries often fade quietly and lessons are seldom internalised.

Pakistan’s infrastructure ambitions will remain trapped in this cycle unless accountability becomes real, transparency becomes routine and project governance is treated with the seriousness these investments demand. Otherwise, every new flagship project risks becoming merely another expensive chapter in a familiar national story of delay, cost overruns and regret.

Copyright Business Recorder, 2026

By declaring that countries such as Saudi Arabia, Qatar, and even Pakistan should “immediately” sign on to the Abraham Accords as a condition for participating in a broader regional settlement, Trump has once again demonstrated a troubling disregard for the political realities and moral sensitivities of the Muslim world.

The proposal ignores the vastly altered regional environment since the signing of the Abraham Accords in 2020 during Trump’s first term. At the time, the UAE and Bahrain normalised relations with Israel under a framework heavily promoted by Washington as a breakthrough for Middle Eastern peace.

Even then, the agreements were controversial because they effectively side-lined the Palestinian question. Today, however, the regional situation has deteriorated dramatically.

Israel’s ongoing military campaign in Gaza, which has claimed tens of thousands of Palestinian lives, its relentless bombardment of civilian infrastructure, the expansion of illegal settlements in the occupied West Bank, its widening military campaign in Lebanon and increasingly belligerent stance towards Iran have intensified anger and resentment across the Muslim world.

Under such circumstances, expecting Muslim states to normalise relations with Israel is irrational. Public opinion in countries such as Pakistan and Saudi Arabia remains firmly aligned with the Palestinian cause.

No responsible government can ignore the widespread outrage generated by the humanitarian catastrophe unfolding in Gaza. Trump’s attempt to pressure these states into joining the Abraham Accords therefore is detached from regional realities.

More significantly, linking Arab-Israeli normalisation to negotiations with Iran makes little strategic - even common - sense. The two issues are fundamentally distinct and require separate diplomatic tracks. Iran’s regional role, its nuclear programme, and the broader security concerns of the Gulf States are complex matters that cannot be resolved through pressure tactics.

Trump’s remarks therefore appear aimed less at achieving genuine regional peace than at placating hard-line Republican constituencies and the highly influential Jewish lobby in the US while simultaneously pursuing a deal with Tehran.

Pakistan’s position on the issue has consistently been principled and clear. Islamabad has repeatedly stated that any consideration of normalisation with Israel depends upon the establishment of a viable and sovereign Palestinian state based on the pre-1967 borders, with Al-Quds Al-Sharif (Jerusalem) as its capital. This stance reflects not only Pakistan’s longstanding foreign policy but also international law and the broader consensus within the Muslim world.

Peace and stability in the Middle East cannot be built on coercion, political pressure, or transactional diplomacy that ignores Palestinian rights.

The Abraham Accords may have succeeded in creating formal diplomatic ties between Israel and a handful of Arab states, but they failed to address the root cause of regional instability: the unresolved Palestinian question.

Any sustainable regional order must therefore be grounded in justice, respect for international law, and recognition of the Palestinian people’s legitimate right to self-determination.

Copyright Business Recorder, 2026

The latest warnings by residents, activists and legal experts over unchecked commercialisation in residential areas simply expose another layer of a breakdown that has been visible for years.

The tragedy is that none of this is new. Karachi’s infrastructure has been deteriorating under relentless pressure for decades while governments, civic bodies and regulators moved from one temporary arrangement to another without addressing the city’s structural problems.

Roads collapsed under uncontrolled expansion, drainage systems deteriorated, water shortages intensified and untreated sewage continued flowing into the sea while the population exploded far beyond the capacity envisioned in planning frameworks dating back to the 1950s.

The consequences are now impossible to disguise. Karachi ranking near the very bottom of the global liveability index alongside conflict-ridden cities should have triggered national outrage long ago.

Instead, the city’s dysfunction has become so normalised that every new crisis simply blends into the next. Traffic paralysis, overflowing drains, power failures, water mafias, collapsing roads and mounting pollution are now treated almost as routine features of urban life rather than symptoms of a governance catastrophe.

Unchecked commercialisation threatens to deepen that crisis further. Residential areas designed for families and neighbourhood life are increasingly being converted into offices, restaurants, clinics, warehouses and commercial outlets without corresponding upgrades in infrastructure.

Roads built for residential traffic now absorb commercial congestion. Sewerage systems already operating beyond capacity face additional strain. Parking chaos spills into streets never designed for such density. The result is not urban development. It is urban exhaustion.

The warnings issued by urban planners and environmental experts therefore deserve serious attention. Karachi’s drainage and sewerage systems are already collapsing under existing pressure.

Even moderate rainfall regularly overwhelms the city because stormwater and sewage networks were allowed to deteriorate simultaneously. Introducing heavier commercial activity into these same spaces without infrastructure expansion will inevitably worsen flooding, pollution and public health risks.

Environmental degradation adds another layer to the emergency. The continued discharge of untreated sewage into the sea is destroying marine ecosystems and mangrove forests that once served as natural buffers against coastal erosion and climate shocks.

Karachi’s worsening environmental profile now intersects dangerously with climate vulnerability, rising temperatures and increasingly unpredictable rainfall patterns.

Perhaps the most alarming aspect of the situation is the complete absence of long-term planning.

Karachi’s population has expanded from under two million during the era of its original master planning framework to roughly 25 million today, yet the city still operates without coherent metropolitan governance capable of managing modern urban realities. Institutions overlap, jurisdictions conflict and accountability dissolves into bureaucratic fragmentation.

This institutional vacuum has encouraged precisely the kind of unchecked commercial expansion now alarming residents.

When regulation weakens and enforcement becomes inconsistent, land use gradually shifts according to commercial incentives rather than urban sustainability. The city effectively begins consuming itself piece by piece.

There is also a broader economic cost often ignored in these discussions. A dysfunctional Karachi weakens the national economy itself.

Pakistan’s commercial capital cannot continue operating with collapsing infrastructure, chronic congestion and deteriorating liveability without damaging productivity, investment confidence and long-term growth prospects. Urban decline on this scale eventually becomes a national economic liability.

The most frustrating aspect of the crisis is that the problems are thoroughly documented and widely understood.

Experts, planners, environmentalists and civil society groups have warned repeatedly about over-commercialisation, infrastructure collapse and environmental degradation. Yet meaningful intervention rarely moves beyond meetings, reports and temporary crackdowns.

That pattern is what makes the future appear increasingly bleak. Karachi’s deterioration is no longer happening gradually.

Population pressures, climate stress and infrastructure decay are now accelerating simultaneously. Without serious metropolitan reform, transparent urban planning and strict enforcement of land-use rules, the city risks becoming even more unliveable in the years ahead.

Karachi was once celebrated as a symbol of opportunity, energy and economic dynamism. Watching it drift steadily toward dysfunction while authorities continue managing crises piecemeal is not merely unfortunate. It is a national disgrace.

Copyright Business Recorder, 2026

National Security Minister Itamar Ben-Gvir’s recent video on X captioned “welcome to Israel”, showing handcuffed activists kneeling with their foreheads to the ground while he mocks them and waves an Israeli flag, was not merely a display of arrogance. It was a calculated act of humiliation designed for public consumption, intended to send a message that even peaceful humanitarian solidarity with Gaza would be crushed without consequence.

That such conduct could be proudly broadcast by a senior Israeli minister reflects the broader moral collapse witnessed during more than two and a half years of Israel’s genocidal campaign in Gaza.

Since the beginning of the devastating assault on the besieged enclave, Western governments, with only a few honourable exceptions, have failed to impose meaningful political costs on Israeli leaders despite horrendous civilian casualties, vast destruction, and mounting evidence of war crimes documented by international human rights organisations Predictably, this absence of accountability has emboldened extremist figures like Ben-Gvir, whose political career has long been associated with inflammatory rhetoric and ultranationalist provocations.

The flotilla activists were not armed combatants. They were citizens, parliamentarians, doctors, aid workers, and campaigners – including Irish President Catherine Connolly’s sister – attempting to challenge the blockade of Gaza through nonviolent means.

Yet they were treated as criminals and paraded in a manner reminiscent of the collective punishment and public degradation routinely inflicted upon Palestinians in both the Gaza Strip and the occupied West Bank. Hamas has rightly described the scenes as evidence of the Israeli leadership’s “moral depravity and sadism.”

What makes this episode especially significant is the sharp reaction from European governments. France, Spain, Belgium, and Ireland have all condemned the treatment of their citizens, while EU Commissioner Hadja Lahbib stated that “no one should be punished for defending humanity.” Even US Ambassador Mike Huckabee, a staunch supporter of Israel’s expansionist goals based on biblical theology, felt compelled to criticise the “despicable actions,” albeit while dismissing the flotilla as a “stupid stunt.” Officials of most Western governments express outrage only when their own citizens become direct victims of Israeli excesses.

For the Palestinians in Gaza, however, humiliation, detention, bombardment, death, and deprivation have become a daily reality for months despite declaration of ceasefire and international appeals for restraint. Many of the same governments now expressing indignation over the treatment of mostly European activists have remained hesitant to demand an immediate end to the blockade, suspend military cooperation, or impose sanctions on Israeli officials responsible for actions widely condemned across the world.

As long as powerful Western nations shield Israel from consequences, figures like Ben-Gvir will continue to believe they can act with complete disregard for international laws and norms, humanitarian principles, and basic human dignity.

The flotilla episode therefore is a symptom of a deeper international failure — one that has allowed impunity to flourish while the suffering of Gaza’s people continues unabated.

Last but not the least, it is important to note that the freed flotilla activists have expressed severe indignation over Israel’s treatment of detainees during the interceptions of the Global Sumud Flotilla. Needless to say, their outrage is strongly characterized by their feelings against humiliation, abuse and ministerial taunting or heckling.

Copyright Business Recorder, 2026

Local refineries are now warning that illegal petroleum inflows are beginning to disrupt refinery operations and distort the formal supply chain, creating an urgent challenge the government can no longer afford to treat as secondary.

The scale of the problem is already alarming. Estimates cited by industry sources suggest that nearly 5,000 tonnes of high-speed diesel are being smuggled into the country daily, accounting for almost a quarter of national diesel consumption.

The associated revenue losses through unpaid petroleum levies and customs duties are immense.

More importantly, the unchecked inflow directly undermines formal refinery operations at a time when Pakistan’s domestic energy infrastructure already operates under considerable strain.

The concerns raised by local refineries are therefore legitimate. Companies cannot realistically be expected to invest billions of dollars into upgrading refining capacity and maintaining operational sustainability if illegal products continue undercutting formal supply channels.

Refinery economics become impossible to manage when legitimate producers must compete against untaxed and unregulated inflows moving through informal networks.

At the same time, the situation also reveals the harsh contradictions produced by economic distress. Some communities and market participants view the smuggled fuel as a temporary cushion against soaring international oil prices triggered by the Strait of Hormuz crisis and the wider US-Iran war.

Pakistan’s oil import bill has already surged sharply amid disrupted global supply chains and elevated crude prices. In a country where inflation and energy costs weigh heavily on households and transport networks alike, cheaper fuel inevitably finds willing buyers.

That reality does not justify the smuggling. But it does explain why the problem persists despite repeated crackdowns. Economic pressure creates demand for informal alternatives, particularly when formal supply remains expensive and vulnerable to global volatility.

The challenge for policymakers is therefore more complex than simply increasing enforcement operations along border regions.

The broader energy backdrop makes the issue even more sensitive. Pakistan has long failed to develop adequate strategic oil reserves despite repeated warnings about external supply vulnerabilities.

The present conflict has once again demonstrated how dangerously exposed the economy remains to disruptions in Middle Eastern shipping routes. Emergency cargo support from Saudi Arabia and Kuwait may provide temporary relief, but they do not alter the underlying structural weakness.

Against that backdrop, the emergence of a parallel fuel market becomes both economically dangerous and politically tempting. Illegal inflows may temporarily ease shortages or soften price pressures in some regions, but they simultaneously weaken the formal energy system upon which long-term stability depends.

Allowing such networks to deepen would further damage regulatory credibility, encourage organised smuggling operations and undermine already fragile state revenues.

The reports regarding calls to effectively tolerate or regularise smuggled diesel within parts of Balochistan, therefore, deserve careful scrutiny.

While local economic pressures are real, normalising illicit supply chains would send deeply damaging signals to both investors and formal industry participants. It would also risk institutionalising a shadow energy economy operating beyond meaningful oversight.

There is another dimension policymakers cannot ignore. Smuggling networks of this scale rarely function without broader governance failures.

Previous investigations had already exposed extensive collaboration involving petrol pumps, smugglers and corrupt officials. If such networks are once again expanding, then enforcement failures must be examined with seriousness rather than treated as isolated lapses.

Pakistan’s energy vulnerability cannot be resolved through informal coping mechanisms. Stability requires a functioning formal supply chain, credible enforcement and long-overdue investment in strategic reserves and domestic infrastructure.

The current situation demonstrates how quickly external geopolitical conflict can spill into internal economic disorder when underlying structural weaknesses remain unresolved.

The government, therefore, needs to act urgently on multiple fronts simultaneously: strengthen anti-smuggling enforcement, stabilise refinery operations, accelerate plans for strategic reserves and ensure that legitimate supply channels remain economically viable.

Allowing the present drift to continue would deepen both fiscal losses and energy insecurity at a moment when the country cannot afford either.

Copyright Business Recorder, 2026

The attack, in which an explosives-laden vehicle rammed into a crowded shuttle train carrying passengers to Quetta railway station, claimed at least 30 lives, including women and children, while injuring dozens more.

The devastation extended far beyond the railway tracks. Nearby homes were destroyed, roofs collapsed, and entire neighbourhoods were shaken by the intensity of the blast. The fact that most victims were ordinary civilians – passengers, pedestrians, and local residents – underlines the sheer brutality and indiscriminate nature of this act of terror.

The banned Balochistan Liberation Army (BLA) quickly claimed responsibility, once again exposing the dangerous resurgence of militant violence in Balochistan and Khyber Pakhtunkhwa. The attack also revived painful memories of the March 2025 Jaffer Express tragedy, which resulted in the killing of 33 terrorists and several hostages during a militants’ siege.

Taken together, these incidents point to a deeply worrying escalation in insecurity, particularly in regions bordering Afghanistan, where militant networks continue to find space for organisation, movement, and support.

The Human Rights Commission of Pakistan has rightly expressed alarm over the deteriorating security situation, pointing out that civilians, workers, passengers, and law enforcement personnel are increasingly vulnerable to violence and attacks on public infrastructure.

There is little doubt that hostile external forces exploit Pakistan’s internal vulnerabilities for strategic advantage.

Pakistan has repeatedly maintained, with verifiable evidence, that India supports separatist and militant elements to destabilise the country, especially in Baluchistan. In the current regional climate, marked by heightened tensions after “Operation Sindoor,” these concerns have gained greater significance.

However, while foreign interference may aggravate the problem, it cannot alone explain the persistence of insurgency and unrest in that province. A pressing question is why militant narratives continue to find sympathy, fear, or silence among sections of the local population.

This is where the state must recognise a hard truth: no single solution can serve as a universal key to ending terrorism and insurgency in Baluchistan. Relying exclusively on force may suppress violence temporarily, but it cannot eliminate the underlying grievances that militants exploit.

At the same time, a purely conciliatory approach without ensuring the writ of the state won’t work. Complex and deeply-rooted challenges demand a balanced and multidimensional response.

Baloch nationalist leaders, meanwhile, have repeatedly argued that alienation in the province stems from political exclusion, enforced disappearances, underdevelopment, and the lack of local ownership over natural resources. Whether one agrees fully with these claims or not, they cannot simply be dismissed.

Pakistan certainly needs stronger intelligence coordination, more effective border management, and decisive action against terrorist networks. But it also needs sincere political dialogue and inclusion, accountable governance, and economic justice for the neglected regions.

Terrorism cannot be defeated by military means alone; nor by negotiations alone.

Only a comprehensive strategy – one that combines firmness against terrorism with efforts to address legitimate public grievances – can break the cycle of violence that continues to haunt the province and threaten national stability.

Copyright Business Recorder, 2026

The government wants car production to reach 500,000 units by 2031 from the existing base of 200,000. The aim is to have 30 percent of locally assembled vehicles as NEVs.

These targets are still achievable, though they are not easy. However, other targets, such as 80 percent localization and $1 billion in exports by 2031, are nothing but pipe dreams.

Nevertheless, the policy has some interesting elements. With the sharp increase in petroleum prices, the transition to NEVs has accelerated. Most of the new cars introduced in the last few months are NEVs.

The continuation of this trend would depend on what kind of incentives are given to NEVs in the new policy. Any car that can drive a minimum of 50 kilometres on pure EV mode is likely to qualify for NEV incentives. This would include BEVs, REEVs and PHEVs that meet the above condition. Right now, there is 1 percent GST on BEVs and REEVs, while it is 8.5 percent for most PHEVs. Then there are some advantages in the duty structure.

The government may offer the same incentives to all NEVs, with GST possibly at either 1 percent or 8.5 percent.

On the other side, GST on most ICE vehicles in a similar category is 25 percent, along with the carbon levy. That has created the price delta needed to bring NEVs, which are expensive, closer to the price of similar ICE vehicles. If the government increases the delta, NEV sales will increase, and vice versa.

The government must maintain the delta, if not increase it, for faster adoption of NEVs, which can reduce the fuel import bill and lower carbon emissions in increasingly polluted cities. The shift from petroleum to electricity is not only environmentally friendly but also better for Pakistan’s economy, as a major chunk of power is produced from local fuels and renewables, including solar.

A more pressing need is to convert two- and three-wheelers into EVs, where the government may have to provide subsidies, as ICE two- and three-wheelers are dirt cheap and highly localized. However, their contribution to fuel consumption is high, and their contribution to carbon emissions is even higher, as age-old technology is still being used.

In this category, given that fuel prices are likely to remain high, a natural transition is very much on the cards — much like what happened with solarisation when power prices skyrocketed.

In the case of cars, a push is required. The government is ready to provide one, but perhaps not by reducing overall prices; rather, by maintaining the delta. Given the growing car imports amid rising import pressure, the government may introduce a 5 to 15 percent environmental levy on ICE cars in addition to the existing carbon levy.

Automobile assemblers are split on this, but the government should support NEVs. However, all automobile assemblers are united against the used car lobby. The IMF wants duty protection on used cars to end.

However, that should not happen without adequate safety and environmental standards. There are already no standards for old cars on the road, and opening up used car imports could make the problem bigger. Plus, it would be detrimental to job creation and economic value addition. All the government should do is reduce the delta to let assemblers become more efficient.

And, they are becoming more efficient. Unlike in 2015, when there were only three assemblers and consumers were deprived of choices, there are now more than a dozen assemblers, with the latest cars being introduced in Pakistan, and competition is bringing prices down.

Let competition spur further and let there be a similar fight for market share in NEVs. However, nothing will work optimally without correcting the macroeconomic environment. Pakistan’s car sales have yet to cross the critical threshold, as per capita income remains low. Every now and then, import curbs are introduced to discourage car imports, even in CKD form.

The SBP (State Bank of Pakistan) limits car financing, and now that is being pushed in the policy, although it should not have been an issue in the first place.

Overall, the policy should increase localization and enhance the share of NEVs, but the key to success lies in correcting economic structural weaknesses that have little to do with the auto policy itself.

Copyright Business Recorder, 2026

The latest debate surrounding the expansion of the Third Schedule under the Sales Tax Act has once again exposed the deeper flaw at the heart of the system: policymakers remain trapped in a cycle of squeezing documented businesses harder while the black economy continues operating largely beyond reach.

That imbalance has persisted for years. Retailers remain overwhelmingly undocumented despite repeated enforcement campaigns, additional taxes on non-filers and increasingly punitive measures aimed at forcing compliance. Yet every failed drive produces the same outcome.

The state misses its revenue targets, the informal economy adapts and the compliant sector absorbs more pressure.

The result is a distorted arrangement where manufacturers and organised businesses effectively subsidise widespread non-compliance elsewhere in the system. Companies already registered within the formal economy face audits, withholding requirements, advance taxes and regulatory scrutiny, while vast sections of retail commerce continue functioning outside meaningful documentation.

The burden therefore falls disproportionately on those easiest to monitor rather than those most responsible for leakage.

That is why the discussion around the Third Schedule deserves serious attention. The proposal to collect GST earlier in the supply chain, based on printed retail prices, reflects an acknowledgment that the current downstream collection model is failing in practice.

In sectors where retail informality remains deeply entrenched, collecting tax at the manufacturing or import stage may offer a cleaner and more enforceable mechanism.

There is practical logic behind this approach. Pakistan’s retail economy remains fragmented, cash-based and weakly documented, particularly outside major urban centres.

Attempting to enforce full invoice-based compliance across such a system has repeatedly produced administrative complexity without commensurate gains in documentation. Meanwhile, compliant manufacturers continue absorbing costs linked to leakage and non-payment further down the chain.

Consumers could also benefit from greater price visibility. Printed retail pricing reduces space for arbitrary mark-ups and improves transparency in markets where enforcement capacity remains weak. For essential packaged goods such as cooking oil, dairy products and flour, clearer pricing mechanisms can offer some protection to households already struggling under persistent inflationary pressure.

Still, the Third Schedule should not be mistaken for comprehensive reform. At best, it is a transitional corrective measure within a much larger structural problem. Pakistan’s tax system remains excessively dependent on indirect taxation while documentation incentives remain weak and enforcement uneven. A durable solution requires broader redesign rather than another patch layered onto an already distorted framework.

The deeper issue is that the present system actively discourages formality. Businesses operating transparently often face higher effective costs, more intrusive oversight and greater compliance burdens than those functioning informally. Under such conditions, the incentive structure itself becomes counterproductive. Informality is rewarded while documentation becomes commercially punitive.

This also explains why the tax net remains persistently narrow despite years of reform rhetoric. Governments repeatedly respond to shortfalls by targeting already visible taxpayers because expanding genuine documentation requires institutional capacity, political resolve and long-term consistency. Raising rates, imposing surcharges or intensifying audits is administratively easier than restructuring the system itself.

The economic consequences are substantial. A narrow and distorted tax base weakens state capacity, increases dependence on borrowing and pushes policymakers toward repeated reliance on indirect taxation and petroleum levies. These measures then feed inflationary pressures that ultimately fall hardest on salaried and lower-income households already carrying much of the formal tax burden.

The immediate case for expanding the Third Schedule may well be valid for certain sectors. But the broader lesson is more important.

Pakistan cannot continue operating a tax regime where compliance becomes economically disadvantageous while informality remains commercially survivable.

At some stage, policymakers must stop treating tax collection as an exercise in extracting more from the documented minority and begin designing a framework that genuinely broadens participation fairly and sustainably.

Until then, revenue targets will continue being missed, distortions will deepen and the black economy will continue thriving alongside a formal sector carrying an increasingly unsustainable burden.

Copyright Business Recorder, 2026

The judgement’s central argument is difficult to dismiss. Depression and mental illness are undeniably major contributors to suicide across the world, including Pakistan. But they are not the sole explanation in every case. The court rightly pointed out that attempts may also arise in contexts involving coercion, extremist influence, political agitation, online manipulation, financial desperation or organised incitement. A blanket legal exemption based on an assumed mental health condition, therefore, creates obvious complications both legally and socially.

That concern becomes even more relevant in an age where online platforms and digital influence increasingly shape vulnerable behaviour. The court’s reference to dangerous online challenges and manipulative networks reflects a genuine modern problem. If the underlying act itself carries no legal consequence whatsoever, questions inevitably emerge regarding those who encourage, exploit or orchestrate such behaviour, particularly among children and vulnerable individuals.

There is also the constitutional dimension, which cannot simply be brushed aside in Pakistan’s legal framework. The court’s ruling rests not only on criminal law considerations but on the broader Islamic principle that life is sacred and deserving of protection. Since Pakistan’s constitutional order explicitly requires laws to conform to the injunctions of Islam, the court’s reasoning follows a coherent legal path within that structure.

At the same time, the ruling should not be interpreted as a dismissal of mental health concerns. That would be both inaccurate and dangerous. Pakistan continues to suffer from severe underinvestment in psychiatric care, weak public awareness regarding mental illness and widespread social stigma surrounding psychological treatment. Many individuals experiencing severe emotional distress still avoid seeking help because mental health struggles are either trivialised or misunderstood.

This is where the state’s response must become more sophisticated. Criminal law alone cannot address a deeply complex social and medical issue. The court itself acknowledged that existing legal provisions already allow exemptions for persons of unsound mind. What remains urgently lacking is a stronger system for early detection, intervention and treatment before situations deteriorate into crisis.

Pakistan’s healthcare system remains badly underprepared in this area. Mental health services are limited even in major cities and virtually inaccessible in many rural districts. Schools, workplaces and communities often lack even basic mechanisms for identifying severe psychological distress. Families frequently confront such situations without professional guidance or institutional support.

That gap matters because prevention is always more effective than punishment after the fact. Greater investment in counselling services, crisis hotlines, psychiatric care and public awareness campaigns would likely do far more to reduce suicide rates than legal deterrence alone. The absence of such support structures leaves many vulnerable individuals isolated until their condition becomes acute.

The debate therefore should never have been framed as a simplistic choice between compassion and criminality. A functioning legal system is capable of recognising both the sanctity of life and the reality of mental illness simultaneously. The challenge lies in designing policies that deter abuse of the law while ensuring genuine psychological suffering receives humane treatment rather than neglect.

The Federal Shariat Court appears to have recognised that balance more carefully than many critics may admit. Its objection was directed at the blanket nature of decriminalisation rather than the existence of mental health struggles themselves. That distinction is important.

Pakistan now needs to move beyond symbolic legal debates and confront the deeper institutional weaknesses surrounding mental healthcare. Restoring legal deterrence without strengthening treatment capacity would leave the underlying problem unresolved. But pretending every suicide attempt emerges from identical circumstances was never a realistic basis for law-making either.

The real test will therefore lie in whether policymakers can now combine legal clarity with serious investment in mental health support before more vulnerable lives are lost in silence.

Copyright Business Recorder, 2026