The ups and downs are a norm. The company is still making decent money. However, the conversations happening beyond meeting rooms have started sounding somewhat patchy. If it was just a seasonal feel and things normalize nothing to worry, but if it lingers, the need to dig deeper is imminent. What you are outside and what you are inside must have some alignment. Leaders who are not real find it very difficult to create consistent connections. If your intent and actions are in conflict, trust is the first casualty.

Real and authentic leadership has to be mindful of how their words and actions reinforce each other. In today’s world a leader’s tenure is getting shorter. Leadership roles are getting tougher. They are under immense pressure to be quicker, faster, leaner. These pressures have made most leaders resort to quick-fix mode. The focus is to do some media amplifying quickies to get the buzz going. The world today is brimming with the “show-and-tell” leaders. The main focus is to “image perfect” their work and life.

Many leaders hire a personal social media team that creates a carefully curated persona. They are “shown” as people of intent and values. They are seen in the right places. They are getting the right podcasts with well-known interviewers. Their social media team is sitting with a well crafted agenda. This is not really real leadership as the intent is only to create a great image for the leader. There is no doubt that social media is a business imperative. Leaders must be savvy on using it. However, the “one man show” is not what real leadership is all about. The problem with the OMS or one man show is that it may not align with real leadership. The social media is making many leaders fabricate the following images:

Image#1: The sporty Leader – The trend for fitness is a big craze in today’s world. Many leaders love to show themselves in the gym. It is an excellent way of keeping up with your fitness and inspiring others to follow. The only problem is that many of these images are just for the image. People can pick out a real fitness freak and just a poser.

Image#2: The people’s man – Another favourite Instagram caption that leaders love is “teamwork is dreamwork”. They hashtag it with a wonderful picture of sitting casually with the team and laughing with them. Great picture that will get many likes. The only problem is when the reality is different. Some employees who are disgruntled may tag the picture and say he is the opposite. Even those who do not go on this route feel disconnected and disenchanted with this personality fake up.

Image#3: The intellectual – Another image fabrication is the intellectual leader. These leaders fantasize themselves as the philosophers and poets. Their social media team creates posts that use deep discussions on values, history and science etc. Such posts are very appealing. People get impressed by the depth of the words. The irony is that all these leaders are those who would have a shelf full of the best hardbound leadership bestsellers that they have never read. That is why many times such intellectual stuff gets laughed at. These AI crafted messages by their PR team are too perfect and distant from a man who in reality can hardly utter a few meaningful lines.

Image#4: The nature lover – Another profile is of the outdoorsy leader. Special photographs of mountains and trees are taken. Some pictures show animals and birds. The leader is feeding them. Sitting in serene surroundings he or she is musing over the beauty of the nature. These are great attractions. Unfortunately, many times they are only part of the PR campaign. Recently somebody posted a video of such a leader going in his big black car in a park, a worker carrying his umbrella to protect him from the sun, posing for a few shots and rushing back to his air-conditioned car. That was the unpleasant end to the nature lover campaign.

This is not to say that projection is not needed for real leaders. This is to say that the image leaders present have to be real enough to distinguish it from reality TV comedy. Social media needs to be used astutely by the leaders. With its massive reach real leaders need to treat it as a tool to spread their message. With a balanced approach the leader needs to ensure that all the examples of the vision and values that he wants others to follow are reaching his target audience by:

Real Leaderhip#1: Connect to the purpose – Real leaders will always make the organization bigger than themselves. Real leaders will always make the purpose bigger than the organization. This intent is visible in most of their interactions. Meetings will be more about gaining more about aligning to the purpose draining people about the leaders own glory. Townhalls will start with the larger picture. Social media will be highlighting employees as heroes rather than the leader.

Real Leadership#2: Living the values stories – Real leadership is all about living the values they choose for their organization. If the value is equality, their actions and their social media will show them standing in line to enter through the general driveway of the office. If their value is respect, and somebody is caught in an offensive action, the story will highlight how he, regardless of the rank, was penalized.

The era of Artificial intelligence has made it so easy for leaders to become artificial leaders. It is like the DP photo people have on their profile. Many a times it seems as if it is of another person. Yes, social media can improve your image, it can connect you far and wide. Artificial intelligence can change your look, background, dress, hair style. What it cannot change is the heart, mind and soul of a leader. That is why “real” intelligence will always have an edge over artificial intelligence.

We talk endlessly about foreign exchange reserves, IMF programmes, tax-to-GDP ratios, circular debt, exports and fiscal deficits, as if Pakistan were a functioning state with a difficult balance-sheet problem. That is a comforting fiction.

Behind the economic emergency lies a deeper breakdown: the citizen-state relationship has been degraded, while inequality, corruption, disorder and human deprivation have become routine.

A state that cannot finance basic services transfers its failure to households. Families pay more for electricity, gas, schooling, healthcare, transport and security, while wages and opportunities fail to keep pace. Hardship becomes a loss of dignity, patience and faith in the future.

When living standards fall year after year, society does not remain still. Frustration hardens, trust erodes and anger searches for targets. If adjustment continues to fall mainly on those least able to bear it, Pakistan risks a social crisis with deeply unpleasant consequences.

Pakistan has gradually become a hard state for the weak and a remarkably accommodating one for the powerful.

For millions of ordinary citizens, the state appears mainly as a policeman, tax collector, electricity bill, bureaucratic obstacle or instrument of coercion. Those with money, influence or connections encounter another Pakistan: one where rules can be negotiated, files moved, taxes avoided, land acquired, police managed and consequences delayed.

Nowhere is this contrast clearer than in the lives of senior state functionaries. Deputy commissioners, secretaries and other powerful officials often inhabit a world of official residences, staff, cars, fuel, security, clubs, protocol and discretionary authority. The ordinary citizen, by contrast, waits outside offices, pays inflated bills, navigates broken services and pleads for decisions that should be routine rights. A civil service created to serve has too often become a privileged class insulated from the consequences of the system it administers.

This is not simply corruption in the conventional sense of bribes changing hands. It is a political economy of opportunism.

Once rules are selectively enforced, influence matters more than compliance. If rule-breakers prosper while rule-followers struggle, dishonesty acquires an economic premium. Public office becomes a route to privilege, patronage replaces merit, and corruption becomes one of the ways the system works.

The consequences are visible everywhere. Pakistan enters the technological age with levels of deprivation that should be politically intolerable: roughly four in 10 children under five are stunted, a large share of the population lives in or near poverty, and millions of children remain outside school.

A stunted child is not simply shorter. Chronic malnutrition can impair cognitive and physical development. Across millions of children, Pakistan is damaging its future human capital before many of them ever enter a classroom or the labour market.

No country can neglect nutrition and education on this scale for decades and then wonder why productivity is low, the tax base remains narrow, exports fail to become sophisticated and growth repeatedly runs into structural limits.

The employment outlook is darkening too. Artificial intelligence may raise productivity, but it is also squeezing the entry-level and mid-tier jobs through which young people and ordinary professionals once built experience, confidence and mobility. When the first rung of the ladder disappears and middle careers become insecure, the damage is not only economic. It settles into the national psyche as anxiety, humiliation and a sense that the future is closing.

For decades, jobs in the Middle East acted as Pakistan’s social safety valve. They kept families afloat, absorbed workers the domestic economy could not employ and generated remittances that helped keep the country itself afloat. That outlook is now bleaker after the Iran war and continuing instability in the Gulf. As workers return and new jobs become harder to secure, remittances could fall rapidly, removing one of the few cushions that has protected households – and the state – from the full force of domestic economic failure.

The poverty is especially offensive because Pakistan is not uniformly poor. Islands of wealth exist beside extreme deprivation. Expensive SUVs pass children begging at traffic lights; gated communities with private security, generators, water and manicured landscapes coexist with settlements struggling for sanitation, clean water and secure shelter.

The wealthy have purchased private substitutes for the state: private schools, private hospitals, solar power, water tankers, boreholes and guards. They need little from the public state beyond property protection and access to influence. The poor cannot opt out; they remain dependent on the institutions that function worst.

Energy shows how inequality is built into basic services. Only around 23 percent of households have piped natural gas; most rely on LPG, firewood, biomass, coal and other fuels. Yet public debate often treats piped gas as a universal entitlement. It is not.

The inequity is perverse. Households outside the gas network are often poorer than those connected to it, yet pay more for useful energy. LPG can cost several times more than regulated pipeline gas, while poorer rural and peri-urban families may burn wood, crop residues, dung or coal, exposing women and children in particular to damaging indoor air pollution.

This is not merely energy-policy failure; it is distributional failure. Where a household lives can decide whether it cooks with pipeline gas, pays multiples of that price for LPG, or burns dirty fuels because even LPG is unaffordable. The poorest often pay the highest effective price for the worst service.

A serious social contract would treat clean cooking energy as part of human dignity. The objective should be affordable access to clean energy for all households, including the majority that never had a gas connection.

Housing reveals the same divide. Formal urban housing has moved beyond the reach of much of the population, while land and property remain vehicles for speculation and wealth accumulation. The result is informal settlement, overcrowding and slums – after which we blame the poor for living in them.

Pakistan is fast becoming a country of land development rather than real development. Urban expansion is organised around plots, gated colonies and speculative real estate, leaving little room for the poor and too little planned commercial density where innovation, commerce and productive enterprise can thrive. Land becomes a store of wealth, not a platform for opportunity.

The mismatch is financial too. Massive savings are mobilised from rural Pakistan, yet only a fraction returns as credit. If nearly 80 percent of deposits are collected from rural areas but less than 10 percent is lent back to them, the banking system becomes another channel through which resources flow from villages and small towns to urban centres. Rural Pakistan supplies capital; urban Pakistan captures it.

Public space tells the same story. Garbage, sewage, broken pavements, encroachments, dust, polluted waterways and chaotic construction have become so common that many of us barely register them. This is not an aesthetic complaint. The condition of public space reveals the condition of the social contract.

When nobody believes the street, park, drain or pavement belongs to everyone, each person has an incentive to appropriate or neglect it. The wealthy retreat behind walls while the common realm deteriorates.

The crisis of the state is most serious in justice. A functioning society needs more than laws on paper; it needs credible enforcement and efficient dispute resolution. When litigation takes years, justice becomes prohibitively expensive. Delay becomes a weapon. The powerful can afford lawyers, influence and time. The poor cannot.

This contradiction is dangerous: a judicial system too often unable to deliver timely justice exists alongside coercive institutions capable of enormous discretionary power. Counterterrorism bodies perform an essential function in a country scarred by terrorism. But precisely because they possess exceptional powers, accountability, due process and external oversight are indispensable.

A state cannot demand obedience to law while its own institutions appear above meaningful accountability. That corrodes legitimacy.

The same deterioration has infected politics and administration. Too much of Pakistan’s governing system revolves around access: access to the right politician, bureaucrat, police officer, businessman, journalist or intermediary.

Dynastic politics has become part of this norm. Public office is too often treated as family inheritance, constituency as private estate and party leadership as bloodline entitlement. When politics itself teaches that access is inherited rather than earned, it deepens the public belief that institutions exist to preserve privilege, not to serve citizens.

The citizen learns a destructive lesson: do not build institutions; cultivate relationships. Politicians seek rents, businesses seek exemptions, officials seek postings, professionals seek patronage, and citizens search for someone who “knows somebody”. Merit becomes subversive because it threatens networks built on discretion.

It would be lazy to conclude that Pakistanis are culturally predisposed to corruption. Put the same Pakistanis inside functioning institutional environments abroad and many obey rules, pay taxes, queue, protect public space and build successful enterprises. People respond to incentives. Pakistan has spent decades creating terrible ones.

If violating a building regulation produces a profitable plaza while complying with it produces delays and expense, violations proliferate. If tax evasion creates competitive advantage, honest taxpayers are punished. If political loyalty advances careers faster than competence, institutions fill with loyalists. If an encroachment is subsequently regularised, legality becomes irrational.

That is where Pakistan’s problem has deepened. Adaptation, repeated long enough, becomes culture. The shortcut becomes ingenuity. Influence becomes “source”. Tax evasion becomes smart business. Encroachment becomes entrepreneurship. Public property becomes nobody’s property. We have developed an impressive vocabulary for making institutional failure sound acceptable.

Meanwhile, Pakistan continues to perform poorly on human-development measures compared with countries that began with comparable, or even weaker, economic circumstances. That comparison should embarrass us. Nations are not ultimately judged by motorways, property developments or official GDP. Development is measured by what happens to human beings.

The real tests are simple: whether a child can eat adequately, attend a decent school, obtain healthcare without financial ruin, find productive work, secure justice, travel safely, live decently, breathe clean air and walk through a city not drowning in garbage.

Pakistan cannot indefinitely excuse failure by invoking colonialism, geopolitics, terrorism, India, the IMF, foreign conspiracies or previous governments. All have shaped the country’s trajectory. None explains away decades of domestic choices.

That requires Pakistan’s elites to accept what they have resisted for decades: rules must apply to them as well.

Pakistan needs a fairer and more capable state: strong enough to collect taxes, enforce rules against rich and poor alike, dismantle mafias rather than accommodate them, protect property without protecting privilege, and police effectively while remaining accountable to law.

And above all, a state that understands that feeding and educating children is not welfare expenditure. It is nation-building.

We have normalised malnutrition, children outside school, slums, garbage, endless litigation, privilege and corruption. We have even normalised the extraordinary proposition that some Pakistanis must obey the law while others may negotiate with it.

Countries rarely collapse in one dramatic moment. More often they decay slowly: public finances weaken, services deteriorate, households absorb the cost, and each generation lowers its expectations.

The broken pavement stops bothering us. Then the garbage. Then the school without teachers. Then the hospital without medicine. Then the bribe. Then the injustice. Eventually dysfunction becomes normal life.

The country has enormous private wealth, entrepreneurial ability, professional talent and institutional memory. What it lacks is not intelligence or resources. It lacks a sufficiently powerful consensus that the present arrangement is morally unacceptable and economically unsustainable.

A country cannot speak seriously about becoming an economic power while four in ten children are stunted, millions remain outside school, justice is inaccessible, and gated prosperity stands beside informal deprivation.

These contradictions will collect their price. A society forced to accept declining living standards, unequal sacrifice and visible impunity cannot be expected to remain calm indefinitely. It is a tinderbox waiting for a spark.

Oscar Wilde’s The Picture of Dorian Gray captures this kind of denial. A society can preserve the appearance of normality while the real damage accumulates elsewhere – in hungry children, broken schools, collapsing services, captured institutions and shrinking hope. But concealment is not escape. Eventually the portrait must be faced, and when the realisation comes, it lands like a ton of bricks.

Pakistan’s most important reform is therefore not another tax, tariff, subsidy or administrative reshuffle. It is the reconstruction of the bargain between citizen and state.

One law. One standard. One citizenship.

Until Pakistan gets there, economic crises will keep returning in different forms, each one further compressing ordinary lives. The balance-sheet crisis is only a symptom; the deeper danger is what prolonged decline does to society.

Changing course is not government’s responsibility alone. It is a collective duty of elites, institutions, businesses, professionals and citizens to insist on fairness, pay the real cost of reform, reject privilege where it harms the common good, and rebuild a state that serves rather than extracts. The alternative is to drift towards a crisis that will not remain confined to spreadsheets, budgets or negotiating roomsbut will spill onto the street.

The issues included in the first article related to overall macro-economic targets for 2026-27 in the scenario of continuing war in the Middle East and supply interruptions.

The case for reduction of the petroleum levy was presented. The unusual transactions proposed in 2026-27 between the federal and the provincial governments were highlighted and their impact on national public finances indicated. The failure in development of the agricultural income tax as a significant source of provincial tax revenues was also highlighted.

READ MORE: IMF programme’s fourth review

The IMF projections are that the rate of inflation will gradually decline to a single-digit by the end of 2026-27. This is also the view of the SBP. Currently, there are mixed trends. The Sensitive Price Index has shown in its latest estimate a year-to-year rate of inflation of over 11 percent compared to 9 percent a month ago. As opposed to this the Consumer Price Index has shown a fall in the rate of inflation from 11 percent to 10 percent. There is a need by the IMF and the government to carefully project the rate of inflation in the next three quarters of 2026-27.

The next issue relates to the performance of FBR revenues in the first quarter of 2026-27. Apparently, FBR has surpassed the quarterly target of Rs 3,053 billion by Rs 30 billion. IMF was informed of this success.

However, the growth rate achieved during the quarter in the revenues is only 7 percent. The target growth rate for the year is 17.3 percent with revenues rising to Rs 15,264 billion by the end of 2026-27, compared to the actual level of Rs 13,010 billion in 2025-26. Clearly, the first quarter target of revenues by FBR was significantly understated.

The IMF Staff Mission has been articulating an important issue relating to the adoption of a market-determined exchange rate policy. This is considered essential for preserving not only the competitiveness of exporters but also for restricting imports at a time when the trade deficit may rise due to higher import prices of oil and fuel.

However, the SBP has effectively maintained a policy of very small adjustments in the value of the rupee with respect to the US dollar. It currently stands at the selling rate of Rs 279.13 per US dollar. The SBP estimates itself that the Real Effective Exchange Rate index 00of the Rupee is close to 108. This implies that the rupee is overvalued by almost 8 percent.

The IMF projections for 2025-26 and 2026-27 of the rupee exchange rate have been derived from the Third Review report of May 2026. The projected value of the rupee by the IMF was Rs 284.20 per one USD at the end of 2025-26 and Rs 311.57 per one USD by the end of 2026-27. This implies that according to IMF projections the rupee is currently significantly overvalued and that it needs to depreciate by 11.6 percent by the end of June 2027.

The risk factors associated with the continuing war in the Middle East and the explosion of the prices of oil and fuel products means that the current account position is vulnerable. The extraordinary growth seen in the first quarter of remittances is unlikely to be sustained. As such, the position taken by the IMF on the exchange rate policy is appropriate and the SBP should move towards a market-based policy on the exchange rate.

We come next to another important issue. This relates to the subsidy currently being given to owners of motorcycles and small cars in the price of petrol. As highlighted in the previous article, this subsidy does not benefit the lowest income group who do not own motorcycles or small cars.

The IMF proposal to direct the subsidy through the Benazir Income Support Program (BISP) to the identified poor households is also an appropriate recommendation. There are currently 9 million beneficiary families across Pakistan. The Programme provides quarterly financial assistance of Rs 13,500 to Rs 14,500 per family under the Benazir Kafalat Programme. The hike in fuel prices has led to the increase in the prices of food and other items due to rise in transport costs.

The financial assistance to motorcycle owners is Rs 100 per litre up to 20 litres of petrol per month. The cash assistance in the BISP may be raised by Rs 4500 per quarter, implying a rise in the quarterly transfer to Rs 18,000 to Rs 19,000 per month. The additional cost of this subvention quarterly will be Rs 40.5 billion. There is a provision in the federal budget of 2026-27 for emergency spending of Rs 430 billion. This should be the source for financing the additional cash assistance.

There is need to highlight that the BISP coverage of poor households is somewhat limited. Currently, it is estimated that the incidence of poverty in Pakistan by the World Bank and the SPDCI is close to 43 percent. This implies that there are over 17 million households below the poverty line. Therefore, there is need for a reduction of the petroleum levy for across-the-board benefit to all households.

There are also a set of measures related to governance to implement that the government of Pakistan has agreed to implement with the IMF, following the report by the IMF on Governance and Corruption Diagnostic Assessment. These include, first, appropriate amendments in the NAB Ordinance. Second, amendment to the Civil Servants Act to ensure that asset declarations of high-level public officials are digitally filed and publicly accessible. Third, publication of an action plan to mitigate corruption vulnerabilities in identified departments. Fourth, amendment of the SWF Act to adopt an appropriate governance mechanism. These are appropriate measures for tackling corruption and should be implemented on a top priority basis.

The IMF Staff Mission has started by raising an appropriate set of issues in a high-risk environment with the on-going Middle East War. Hopefully, there will be sufficient understanding and sympathy by the IMF for sustaining the GDP growth to the extent possible and preventing any increase in the already high incidence of poverty in Pakistan.

Copyright Business Recorder, 2026

There is nothing inherently wrong with giving PIA a new visual identity. Uniforms matter. They contribute to brand identity, employee pride and the passenger’s perception of an airline. But such initiatives are most powerful when they reflect a transformation that passengers can already see and experience.

For a newly privatised airline emerging from years of financial and operational difficulty, there is a more fundamental question:

Is this the priority right now?

Our national pride, PIA, as we all know, has never really faced criticism over the design of its crew uniforms. What has dwindled over the years is not the appeal of the uniform, but the image of the airline itself—and that decline has been driven by far more fundamental operational and commercial issues.

PIA today has challenges in airline economics, operational efficiency, fleet utilisation, product reliability and, perhaps most importantly, customer confidence. Against this backdrop, the immediate challenge facing the new management is changing how the airline operates and not the crew uniforms.

The turnaround must begin with priorities

Privatisation has given PIA something it has not enjoyed for decades: an opportunity to fundamentally rethink the business without many of the constraints associated with state ownership. That opportunity should not be confused with an invitation to spend. Successful airline turnarounds are generally built around discipline: disciplined capacity, disciplined costs, disciplined capital allocation and disciplined execution. Every rupee invested during the initial restructuring period should therefore face a simple test:

Will this expenditure help PIA fly more reliably, utilise its aircraft better, reduce its unit costs, improve revenue, strengthen the passenger proposition or build capabilities essential to the turnaround? If the answer is no, management should at least ask whether the expenditure can wait.

Think like a 20-aircraft airline, not a 100-aircraft airline

One of the most important decisions being taken by the new management will be recruitment. Bringing experienced Pakistani aviation professionals from successful international airlines can be extremely valuable. But there is also a risk that deserves attention.

An executive accustomed to working inside an airline operating 100, 200 or 300 aircraft may have been surrounded by sophisticated systems, large departments, substantial technology budgets and extensive specialist resources. PIA today is a very different organisation. The challenge is therefore not simply to recruit people who understand world-class airlines.

PIA needs people who understand how to build one from a constrained starting point.

Those are different skills. A solution that makes economic sense for a 150-aircraft fleet may be unnecessary for an airline operating only a fraction of that. Enterprise platforms, consulting programmes, organisational structures and technology architectures can quickly become over-engineered if they are imported wholesale from much larger airlines. PIA cannot afford transformation through imitation. It needs transformation through right-sizing.

The question management should repeatedly ask vendors, consultants and its own executives is not; “What do the world’s leading airlines have?”

It should be: “What does PIA actually need at its present scale, and what measurable business problem will this investment solve?” Aircraft utilisation comes before aesthetics.

Reliability should become PIA’s first brand campaign

This is where marketing needs to be reconsidered. Fashion shows generate visibility. But PIA’s immediate marketing challenge is not primarily awareness.

Pakistanis already know PIA, and so does the international aviation community, owing to the airline’s rich and vibrant history and its longstanding legacy as Pakistan’s national carrier. The challenge is trust.

The most powerful marketing campaign PIA can run over the next two years would therefore not necessarily begin with advertising. It would begin with operational performance. Instead of merely telling passengers that there is a “new PIA”, management should progressively give them evidence of one. Imagine a campaign built around measurable improvements: That is marketing backed by operational reality. For an airline recovering from reputational damage, performance itself becomes the brand.

A recent example highlights the importance of reputation management. Former Ethiopian Airlines CEO Tewolde Gebremariam, reportedly considered to lead PIA’s turnaround, was subsequently appointed CEO of Air India. Some International and Indian media portrayed the development unfavourably for PIA, yet there was little visible communication from the airline to manage the narrative. At this critical stage, PIA’s marketing must go beyond brand imagery and events—it must actively protect and rebuild the airline’s reputation.

What should success look like?

The first objective should be much simpler. PIA should become a smaller, reliable, commercially disciplined and consistently profitable airline. Once that foundation exists, growth can follow.

There is something symbolically powerful about a new uniform representing a new beginning. Perhaps that is exactly what PIA’s management intends. But symbols become powerful only when they represent something real.

The greatest marketing opportunity available to the new owners is therefore not to convince Pakistan that PIA has changed. It is to change PIA—and allow passengers to discover the difference themselves. Ten designers can create a new uniform. The much harder task for PIA’s new leadership is to create the airline worthy of wearing it.

Copyright Business Recorder, 2026

This arrangement is destroying the commercial foundations of the energy system. SNGPL and SSGCL need to be rebuilt around a different purpose: transporting gas efficiently for competing suppliers, with independently measured performance and no licence to pass every failure downstream.

The reported gas-sector circular debt reached Rs3.607 trillion in March 2026. Almost Rs1.723 trillion represented late-payment surcharges. That is a monument to accumulated non-payment, not merely an engineering problem. Nor is the entire stock the value of stolen or leaked gas. Conflating debt, subsidy arrears and unaccounted-for-gas (UFG) would weaken the indictment. The documented failures are serious enough without embellishment.

The UFG record nevertheless exposes an expensive failure of stewardship. SNGPL reported 30.026 billion cubic feet in FY2025, or 5.27 percent overall. SSGCL’s assessed, provisional figure was 34.8 billion cubic feet, or 12.07 percent; its lower company claim remained disputed. SNGPL’s reductions over earlier years deserve recognition. They do not excuse the remaining losses, or SSGCL’s much worse performance.

At the September 2026 RLNG distribution prices used in our analysis, the two FY2025 volumes have a combined gross tariff-equivalent value of roughly USD 951 million. Using the Indian city-gas operator Mahanagar Gas’s 2.3 percent as an illustrative comparator, the excess amounts to about USD 658 million. Applying the same comparator and RLNG prices to FY2020–FY2025 produces approximately USD6 billion cumulatively.

These are illustrative replacement-value calculations, not audited historical import expenditure or guaranteed recoverable savings. Network characteristics differ and UFG includes commercial and measurement errors. The evidence supports hundreds of millions of dollars annually and billions cumulatively. That is already an appalling burden. We do not need to invent billions every year to establish the urgency of reform.

The engineering remedies have been discussed for more than a decade. Meter the system properly. Reconcile energy at each network boundary. Restore corrosion protection. Repair the worst zones first. Test meters instead of replacing them indiscriminately. Isolate abandoned mains. Measure actual savings rather than celebrate raids, disputed recovery notices and kilometres of new pipe. Management should earn rewards for verified performance, not for persuading the regulator to enlarge the bill.

The abandoned World Bank project makes the institutional failure harder to dismiss. A USD200 million operation approved in 2012 closed in 2016 without fieldwork. The Bank’s cancellation review documents weak ownership, restrictive specifications, procurement delays and failure to appoint the owner’s engineer. Only the USD250,000 front-end fee was disbursed. SNGPL had opted to pursue other financing.

This record justifies demanding answers about resistance to procurement discipline. It does not prove that protecting kickbacks caused either company’s decision. SSGC also objected to the government’s on-lending terms. The charge that can be sustained is devastating enough: institutions expected to manage major networks failed to execute a programme intended to reduce the losses their customers were financing.

Then came the absurdity of expensive imported gas displacing domestic production while local producers waited for payment. OGDCL’s nine-month report to March 2026 recorded more than Rs508 billion overdue from the two Sui companies. It attributed average production curtailment of 141 MMcfd to RLNG oversupply and weak demand, alongside reduced oil and LPG output. These were period-specific findings, not evidence of a permanent nationwide surplus. They still expose the cost of disconnected procurement and payment decisions.

When metered RLNG is diverted to households at prices below its attributable cost, that gap does not become UFG. It becomes an unfunded obligation unless somebody explicitly pays. Hiding it in industrial tariffs or upstream arrears merely moves the damage. Poor households deserve support; they do not deserve to be used as the explanation for opaque accounts. A transparent, eligibility-based, BISP-like mechanism should fund assistance from the budget and show the subsidy separately on bills.

The commercial price of gas should reflect supply and service costs. Differences justified by pressure, distance, load profile and reliability are legitimate. Government social obligations are not a cost of serving an exporter.

Industrial tariff categories create another invitation to abuse. SSGCL’s published July 2025 schedule lists process gas at Rs2,300/MMBtu and captive gas at Rs3,500 before additional levies. Such gaps reward misclassification and make decisions about connections and inspections commercially valuable. That creates opportunities for collusion and selective enforcement. A tariff architecture that makes the label on a connection worth a fortune is economically perverse.

SSGC should publish the findings of its reported recent enforcement drive: inspections, confirmed misuse, volumes, recoveries and disciplinary action. We have not obtained official results establishing its scale. Suspicions should be investigated, not inflated into statistics. Equally, enforcement alone cannot cure a pricing system that manufactures incentives to evade it.

Efficient cogeneration deserves particular attention. It produces electricity and useful industrial heat from the same fuel. Judging it solely on electrical efficiency ignores the fuel a separate boiler would consume. Punitive captive levies can penalise productive efficiency to support an underused grid. Energy costs are a major constraint on export competitiveness, even though they are not the only explanation for weak exports. Industry cannot repeatedly absorb the cost of institutional failure and remain competitive abroad.

Ad hoc levies and discretionary charges damage the entire energy system. They distort fuel choices, undermine investment and can strand capacity. Every new charge should face a published cross-sector assessment. Existing distortionary levies should be repealed or redesigned. A functioning market cannot survive if every competitive advantage attracts a new tax designed to eliminate it.

The structural answer is one national gas transmission company and multiple distribution companies serving smaller, clearly defined areas. Combine the trunk networks; make local distributors accountable for their own assets, metering, safety and losses. Neither should trade gas. Domestic producers and licensed LNG suppliers should contract directly with consumers, using published, regulated transport terms. Customers must be able to change supplier without changing the pipeline that serves them.

Smaller distributors will still be monopolies. They need independent regulation, transparent accounts and enforceable service standards. Real market opening requires available capacity, terminal slots, nominations, balancing, payment security and timely dispute resolution. Issuing supplier licences while withholding usable access is administrative theatre.

The boards must also change. Serving officials and former civil servants feature in published board profiles; SSGCL lists three ex-officio directors. This does not establish a serving-official majority. But bureaucratic domination is no credible foundation for commercial reform. Appointments by rank or patronage should end. Require a genuinely independent expert majority, published conflicts and annual performance assessments. Government ownership must not turn company boards into ministry extensions.

Integrated energy planning is indispensable. Gas procurement must be aligned with power dispatch, indigenous coal, seasonal hydel, renewables, transmission, and industrial demand. Planning each fuel in isolation can leave LNG commitments stranded during high hydel output and insufficient flexible supply during dry periods. Pakistan needs the lowest reliable total system cost, not a separate empire maximising the use of each fuel.

That requires a serious appraisal of merging NEPRA and OGRA into an independent energy regulator. Conflicting tariff and investment decisions cannot produce coherent outcomes across gas and electricity. A unified mandate should include upstream oil and gas regulation, licensing and concession administration, pipelines, terminals and downstream supply, with the necessary legal changes and respect for provincial responsibilities. Ministries should retain policy and fiscal responsibilities. They should not retain fragments of regulation that defeat the purpose of integration.

Give this programme twelve months. Establish the legal and financial foundations in the first three, begin independently settled third-party deliveries by month six, and complete the transmission and distribution restructuring by month twelve. Sustained engineering rehabilitation will continue, but institutional reform must not become an endless precondition for action.

A high-level committee of independent energy experts should monitor delivery and integrated planning every month, reporting publicly to Cabinet. Assign named owners, require corrective plans within fifteen days of missed milestones and escalate unresolved failures. Oversight must enforce accountability without taking over tariffs, tenders or dispatch.

Pakistan has spent years asking how much more consumers must pay to keep this system alive. The question now is why the system is allowed to keep failing them. Another tariff increase is easy. Ending the entitlement to pass failure on to others is the reform that matters.

Copyright Business Recorder, 2026

“If you are going to rate the two narratives after the failure of the talks between the government and the party founded by The Man Who Must Remain Nameless, Faceless and Voiceless…”

“There were three groups at the table.”

“Right PML-N, hey by the way where was the Deputy Prime Minister? It’s not like him to pass an event which is The Event of the day with coverage galore and….”

“You will understand why when you realise the third party present at the table.”

“The jiyalas were there but their line was kinda the same as the nawalas.”

“I would lump those two together – and then there was the Interior Minister at one end of the government side and his loyalist at the other end – TC.”

“TC as in Top Cat?”

“TC as in Talal Chaudhary.”

“But couldn’t the Deputy have been sent to the Interior Minister’s house instead of the Prime Minister himself going there to get a briefing…”

“Shut up, anyway the legacy media or what we refer to as mainstream media is no longer the only source of information; the alternate social media and…”

“Can I cite the wise words delivered by Moldovan President while on a state visit to Finland – both countries led by globalists not nationalists.”

“How can that be?”

“Well European globalists have sanctioned cheap oil imports from Russia, I reckon they are onto their twenty third sanction package, that is costing their people but their support for Ukraine is unwavering.”

“Yeah, the German Chancellor landed in Kyiv to support Ukraine and bad mouthed Russia as expected but you know in order to get to Kyiv and forestall the possibility of a Russian attack on his train from Poland the German government had to get an NOC from Russia….”

“Yep these guys take a train from Poland to Ukraine and request Russia for safe passage.”

“And Russia allows it because these trips make their people hate them all the more – Mertz’s popularity is 13 percent, Macron’s is 18 percent and they are still putting more of their taxpayers’ money into Ukraine – the most corrupt….”

“Yeah but the classic statement was made by the Moldovan President while in Finland during her ongoing visit there – she said that the Kremlin deliberately relies on citizens’ genuine everyday concerns, making its influence extremely difficult to recognize. In Moldova itself, the main information attacks are aimed at the country’s accession to the European Union, an application for which Chisinau submitted in March 2022.”

“Ï don’t get it – genuine concerns?”

“There you go, that’s the new definition of propaganda.”

Copyright Business Recorder, 2026

Against this backdrop, Pakistan is considering greater access to foreign cotton germplasm, including high yielding varieties and hybrids from Ethiopia, Greece and China. The proposal deserves serious consideration, but it should not be treated either as a guaranteed solution or as a threat to domestic breeding.

The real question is whether foreign genetic material can deliver measurable advantages under Pakistani agro ecological conditions.

Pakistan urgently needs access to new genetic material capable of addressing low productivity, weak seed quality, climatic stress, diseases and insect pests. The production problem, however, is not limited to acreage or water availability. A narrow genetic base, poor quality seed, Cotton Leaf Curl Virus, whitefly, pink bollworm, extreme heat, imbalanced nutrient management and declining fibre quality all affect both farm productivity and textile competitiveness.

The appropriate response, therefore, is neither to close the door to imported germplasm nor to open it without safeguards. Pakistan needs a scientific, transparent and risk based system under which foreign genetic material is tested first and commercialized only after it demonstrates clear value.

This approach is particularly relevant because Pakistan has already moved towards conditional importation of hybrid cottonseed. Under the framework reported in 2026, imported hybrid seed is to undergo two years of successful cultivation across different cotton zones and obtain certification before commercial imports can proceed. The challenge now is to ensure that such trials generate independent scientific evidence rather than becoming a formality for commercial entry.

Ethiopian cotton material may be of particular interest because cotton is cultivated there under relatively hot conditions and, in some areas, with limited irrigation. If imported material carries traits for heat tolerance, drought tolerance, early maturity or improved boll setting, it could have potential in parts of Southern Punjab and Sindh.

There is already evidence that Ethiopian hybrid material is being tested in Pakistan. Reported field trials in Punjab and Sindh have shown promising early results, although these results require independent verification through replicated and multi-location trials before they can support broader commercial conclusions.

Environmental similarity, however, should not be confused with genetic suitability. The response of Ethiopian material to Cotton Leaf Curl Virus, whitefly, pink bollworm, local soils, irrigation regimes and Pakistan’s specific heat patterns must be established through controlled testing.

Greek cotton material also deserves evaluation, particularly for potentially useful traits such as fibre length, strength and maturity. However, Pakistan has limited independent and detailed published evidence on the performance of Greek material under its own agro climatic conditions.

Greek cotton has developed under Mediterranean conditions that differ from those of Pakistan. Temperature patterns, night time heat, photoperiod, soil conditions and pest complexes are not identical. A variety that performs well in Greece cannot automatically be assumed to perform similarly in Southern Punjab or Sindh. Greek material should therefore initially be treated as experimental and breeding germplasm rather than as proven commercial seed.

Chinese cotton genetics may offer significant potential because China has invested heavily in hybrid breeding, yield improvement, fibre quality and adaptation to different production environments. Pakistan has already had practical experience with Chinese cotton material. Trials of single and triple gene Chinese Bt cotton varieties have been conducted at the Central Cotton Research Institute, Multan, to evaluate high yield, long staple and disease resistance under Pakistani soil and climatic conditions.

This experience demonstrates an important principle: the value of foreign genetics cannot be determined by its performance in the country of origin. It must be measured under Pakistani conditions. Chinese material should therefore be compared with locally approved varieties for seed cotton yield, lint yield, boll weight, ginning outturn, fibre length, strength, micronaire and response to diseases and insect pests.

Claims regarding virus or pest resistance should also be independently verified under local pressure.
Pakistan’s cotton growing areas are highly diverse. Southern Punjab, including Multan, Bahawalpur, Rahim Yar Khan, Muzaffargarh, Dera Ghazi Khan and Khanewal face high temperatures, heat stress and increasing water related pressure. Sindh has its own combination of temperature, irrigation, salinity, humidity and pest challenges. Central Punjab experiences greater monsoon influence, higher humidity and different irrigation conditions.

A genotype that performs well in Southern Punjab may not perform equally well in saline areas of Sindh or under the more humid conditions of Central Punjab. This makes multi-location testing essential rather than optional. Imported material should therefore be integrated into the existing scientific testing framework rather than evaluated through isolated commercial demonstrations.
One of the most important weaknesses in the current cotton debate is the tendency to treat yield as the primary measure of success. For the farmer, higher yield matters.

For the textile industry, however, yield without acceptable fibre quality may provide limited value.
Imported varieties should therefore be assessed for seed cotton yield, lint yield, boll weight, ginning outturn, fibre length, fibre strength, uniformity, micronaire, maturity and contamination. Resistance or tolerance to major diseases and insect pests should also be measured. A variety producing more seed cotton but inferior lint may not improve the competitiveness of Pakistan’s textile industry. The objective should be higher economic value per acre, not simply higher biological yield.

The economics of hybrid seed deserve equal attention. Hybrid seed can carry a higher upfront cost and may require farmers to purchase fresh seed each season. Higher seed costs may also be accompanied by different requirements for fertilizer, irrigation and crop protection.

The correct question is therefore not simply whether an imported hybrid produces more bolls or more seed cotton. The question is whether the additional yield and fibre value generate a higher net return after accounting for seed, royalty, irrigation, fertilizer, crop protection and other production costs.

Before commercial approval, each imported genotype should have a basic economic profile showing seed cost per acre, expected yield advantage, lint quality and market value, additional input requirements, royalty or technology fees, irrigation requirements, crop protection requirements and expected gross margin and net income per acre. Farmer profitability should become a formal component of varietal evaluation rather than an issue considered after commercialization.

The greatest long-term value of imported cotton genetics may not come from direct commercial cultivation. A foreign genotype may fail to outperform a local variety in overall yield but still possess one valuable trait. It may offer heat tolerance, drought tolerance, virus resistance, early maturity, better fibre strength or improved adaptation to a particular environment.

Such material can be crossed with locally adapted germplasm to develop new varieties suited to Pakistan. This is why imported seed should also be viewed as a source of genetic diversity. Pakistan should not become permanently dependent on foreign hybrids. The objective should be to use international germplasm to strengthen domestic breeding capacity and develop locally adapted varieties.

Pakistan’s own research institutions already possess breeding capacity. The Central Cotton Research Institute, Multan, for example, has a long running hybrid development programme and reports experimental hybrids with yield advantages over standard commercial varieties. The policy challenge is to connect this domestic capacity with carefully selected international germplasm rather than treating the two as competing alternatives.

Imported genetic material also carries risks that cannot be ignored. Seed may introduce seed borne pathogens, new pests or weed seeds. Genetically modified material may require additional regulatory assessment, including event identification, environmental risk assessment and consideration of gene flow.

Speed in approving useful material is desirable, but speed should come from an efficient regulatory process, not from eliminating scientific safeguards. The current requirement for multi-year testing and certification provides a useful starting point. The next step should be to make the testing process transparent, scientifically rigorous and publicly accountable.

The debate should not be reduced to a choice between foreign seed and local seed. The real issue is performance under Pakistani conditions. A foreign genotype should not receive preference simply because it comes from a country with higher cotton productivity. Likewise, a local variety should not receive protection from competition simply because it was developed domestically. The standard should be evidence.

Pakistan needs varieties that can withstand heat, water stress, diseases and insect pests while producing fibre that meets textile industry requirements and generating an economically viable return for farmers. That is a much higher standard than simply importing seed.

Imported cotton seed from Ethiopia, Greece and China represents a potential genetic opportunity for Pakistan, but it is not an automatic solution to the cotton crisis. The country should neither reject foreign germplasm outright nor grant it unrestricted commercial access. It should test it rigorously, compare it transparently and commercialise only what demonstrates a clear advantage.

The immediate priority should be a credible testing system that combines yield, fibre quality, climate resilience, pest and disease response, input requirements and farmer profitability. The longer-term objective should be even more ambitious: use the best available international germplasm to strengthen Pakistan’s own breeding pipeline and develop varieties that are genetically suited to the country’s changing climate and production systems.

Pakistan does not simply need more cotton seed. It needs better genetic choices, stronger evidence and a breeding system capable of converting useful genetics into profitable cotton production. That is where the real opportunity lies.

Artificial intelligence is steadily finding its way into healthcare, supporting areas ranging from medical imaging and clinical care to research and health-system management. Its ability to process enormous amounts of information and recognise patterns in seconds has opened doors that were once unimaginable. Yet the arrival of intelligent technology raises a question that reaches far beyond computers and machines: as technology becomes smarter, what happens to the people who stand at the heart of patient care?

The answer may be very different from the dramatic predictions of machines replacing humans. The future operating room is more likely to be defined by collaboration – humans and intelligent technologies working together, each contributing what the other cannot.

Modern surgery has already undergone a remarkable technological transformation. Advanced imaging, minimally invasive procedures, sophisticated monitoring systems, electrosurgical equipment, robotic platforms and digital technologies have changed the way operations are planned and performed. Artificial intelligence adds another layer to this transformation by helping healthcare professionals process information, identify patterns and, in appropriate applications, support clinical decision-making.

But there is an important line that must never be blurred: assisting is not the same as deciding.

A machine may identify a pattern in an image or generate a prediction, but a human professional must understand what that information means for a particular patient. A patient is not simply a scan, a laboratory report, a vital-sign graph or a collection of numbers. Behind every medical record is a person with a history, fears, expectations, physical characteristics and circumstances that may not fit neatly into a dataset.

That is why the future operating room should not be viewed as a contest between humans and machines. It should be viewed as a partnership.

The surgical team of tomorrow will be larger, more connected and more technologically sophisticated. Alongside surgeons, anesthetists, nurses and other specialists, intelligent systems may become part of the workflow. This will not eliminate the need for skilled healthcare professionals. Instead, it may create new responsibilities and demand new skills.

Someone will have to understand how the technology works. Someone will have to make sure that equipment is functioning properly. Someone will need to recognize when an intelligent system produces an unexpected result. Someone will have to distinguish an algorithmic recommendation from an actual clinical decision. And, above everything else, someone must remain responsible for remembering that there is a human being lying on the operating table.

This is where the role of the operation theatre technologist may become increasingly important.

Traditionally, the OT technologist has been closely associated with surgical instruments, sterilization, aseptic practices, equipment preparation and maintaining the readiness of the operating environment. As operating rooms become increasingly digital, this professional role may evolve into something even broader: a bridge between healthcare professionals and sophisticated medical technology.

Tomorrow’s OT technologist may work in an environment filled with AI-assisted systems, digital displays, advanced imaging, automated documentation and interconnected equipment. Understanding how these systems interact could become just as important as understanding the instruments used during surgery.

What happens if a digital system suddenly stops working? What if an AI-supported device produces an unexpected alert during a critical moment? What if a piece of equipment fails? How does the team safely move from a technology-assisted workflow back to a conventional one?

These questions reveal an important truth. Technology does not eliminate the need for skilled healthcare professionals; it changes the skills they need.

The operating room is also very different from a controlled laboratory. Surgery can change within seconds. A patient’s condition may deteriorate unexpectedly. Equipment may malfunction. An anatomical finding may force the surgical team to change its plan. An instrument that was not anticipated may suddenly become essential.

Human professionals can respond to these situations through experience, communication and judgment. They can recognize when something does not look right. They can communicate with colleagues. They can adapt when circumstances change. They can understand fear and uncertainty.

Artificial intelligence may process information at extraordinary speed, but speed is not the same as wisdom. A prediction is not the same as judgment, and information is not the same as understanding.

There is another danger that comes with sophisticated technology: trusting it too much. When an automated system appears highly advanced, people may be tempted to accept its recommendations simply because they came from a computer. This tendency, often described as automation bias, can become dangerous in healthcare.

The appropriate relationship should therefore be clear. The machine assists. The professional evaluates. The team communicates. The patient remains at the center.

Artificial intelligence should be a tool, not an unquestionable authority.

This principle becomes particularly important because AI systems depend on the data used to develop and evaluate them. A system that performs well in one population or healthcare environment may not perform in exactly the same way elsewhere. Differences in populations, resources, infrastructure and clinical settings matter.

For Pakistan, this issue deserves particular attention.

The introduction of AI into Pakistani operating rooms cannot simply copy the experience of wealthier healthcare systems. Hospitals across the country differ considerably in infrastructure, staffing, training, equipment and access to advanced technologies. Some operating rooms may have sophisticated digital systems, while others continue to function with limited resources.

Therefore, the real question is not simply whether hospitals can purchase advanced technology. The more important question is whether they are developing the human capacity and infrastructure required to use that technology safely.

An expensive machine cannot compensate for inadequate training. Advanced software cannot solve poor maintenance. Digital systems cannot guarantee safer surgery where cybersecurity is weak or responsibility is unclear. Investment in machines must be accompanied by investment in people.

This makes education one of the most important components of the future.

The OT technologist of tomorrow will still need strong knowledge of surgical instruments, sterilization, infection prevention, aseptic technique, patient safety, surgical procedures and equipment management. But alongside these traditional competencies, new areas of knowledge are likely to become increasingly valuable: digital healthcare systems, AI-assisted medical technologies, robotics, data privacy, equipment troubleshooting, human-machine interaction, cybersecurity, technology ethics and digital documentation.

This does not mean that every OT technologist needs to become a computer scientist. It means healthcare professionals must understand emerging technologies well enough to use them responsibly, recognize their limitations and protect patients when technology does not behave as expected.

Yet there is another dimension of surgery that technology can never make irrelevant – the human dimension.

Before an operation, a patient may be frightened. A family may be waiting anxiously outside. A patient may be thinking about children, work, responsibilities or simply whether they will wake up safely after the procedure.

Technology can monitor vital signs, process information and support clinical workflows, but reassurance remains human. Responsibility remains human. Compassion remains human.

The more technology enters healthcare, the more important it may become to protect the human side of medicine.

And then comes one of the most difficult questions of the AI era: who is responsible when artificial intelligence is wrong?

If an AI system produces a recommendation that leads to an unexpected outcome, responsibility cannot simply be transferred to “the machine”. Questions of accountability may involve healthcare institutions, clinicians, technology developers and other responsible parties. Clear governance, appropriate regulation, transparency, oversight, training and system validation will therefore become increasingly important.

Hospitals introducing AI into operating-room workflows will need clear policies and procedures. Healthcare professionals will need appropriate training. Systems will need to be tested and validated in the environments where they are actually used. Their limitations must be understood, and there must be mechanisms for reviewing failures and unexpected outcomes.

There is also a wider social question: who gets access to these technologies?

If advanced AI-assisted healthcare becomes available only in the most expensive hospitals, technological progress could deepen existing inequalities in healthcare. Innovation should therefore be discussed alongside affordability, infrastructure, training and accessibility.

The goal should not simply be to bring artificial intelligence into the operating room. The goal should be to bring it there safely, responsibly and fairly.

Perhaps the operating room of the future will look dramatically different from the one we know today. Surgeons may receive real-time digital assistance. Robotic systems may support selected surgical tasks. AI may analyze vast amounts of information within moments. Monitoring systems may identify patterns that deserve attention. Equipment may communicate with other equipment, while documentation becomes increasingly automated.

But in the center of this technological environment, one thing will remain unchanged: the patient.

Around that patient will still be a team – a surgeon, an anesthetist, nurses, an operation theatre technologist and other healthcare professionals. Intelligent machines may increasingly become part of that team, but the challenge will be to ensure that technology strengthens human teamwork rather than weakens it.

The most useful question is therefore not whether humans or machines will win. The more meaningful question is what healthcare professionals can accomplish with responsible technology that they could not accomplish as effectively without it.

AI may help process information, automate repetitive tasks, support decision-making and improve efficiency in appropriate applications. Human professionals, however, bring responsibility, judgment, communication, adaptability, empathy and accountability.

The future of surgery will depend on combining these strengths.

For operation theatre technologists, this transformation represents not only a challenge but an opportunity. Their profession has always existed at the intersection of people, procedures and technology. As operating rooms become more sophisticated, that position could become even more important.

The OT technologist of the future may not simply prepare instruments and equipment. The role may expand toward helping manage an increasingly intelligent surgical environment – making sure technology is prepared, functional, integrated and used safely.

That transformation must begin with education and curiosity. Healthcare professionals will need to ask not only, “How does this machine work?” but also, “When should we trust it? When should we question it? And what should we do when it fails?”

These questions may define the next generation of surgical care.

At the end of every operation, the instruments are counted, equipment is checked, the procedure is completed and the patient leaves the operating room. In that final moment, technology becomes secondary once again.

The patient is what matters.

Artificial intelligence may become faster. Machines may become smarter. Robots may become more sophisticated. Algorithms may process information beyond the capacity of any individual human mind. Yet the purpose of all this progress remains remarkably simple: to provide better care to a human being.

The future operating room will not necessarily belong to machines. It will belong to teams that know how to combine human judgment with technological intelligence.

The new surgical team, therefore, is not humans versus machines.

It is humans with machines.

And perhaps the most important professional of the future will not be the person who knows how to use the most advanced technology, but the person who knows when technology should be trusted, when it should be questioned, and when the human being must have the final word.

Because no matter how intelligent the operating room becomes, there will always be one thing that technology must never lose sight of: the person lying on the operating table.

The terms of reference of the US EXIM bank as uploaded on its website are as follows: “the official export credit agency of the United States. EXIM is an independent Executive Branch agency with a mission of supporting American jobs by facilitating the export of U.S. goods and services.

When private sector lenders are unable or unwilling to provide financing, EXIM fills in the gap for American businesses by equipping them with the financing tools necessary to compete for global sales.

In doing so, the agency levels the playing field for U.S. goods and services going up against foreign competition in overseas markets, so that American companies can create more good-paying American jobs. Because it is backed by the full faith and credit of the United States, EXIM assumes credit and country risks that the private sector is unable or unwilling to accept.

The agency’s charter requires that all transactions it authorizes demonstrate a reasonable assurance of repayment; EXIM consistently maintains a low default rate and closely monitors credit and other risks in its portfolio.”

The US EXIM noted on its website that since 2000 it provided 14.6 billion dollars to the US Treasury after paying all administrative and programme expenses.

The commercial interest reference rates (CIRR) charged by the US EXIM bank are the official lending rates of export credit agencies and are calculated on the US Treasury bond market. It will generally set the lending rate to the applicable CIRR at the time of first disbursement, except for aircraft transactions where the Large Aircraft Sector Understanding (LASU), or the Aircraft Sector Understanding (ASU) apply. While the website did not elaborate on the LASU or ASU yet it is relevant to note that with the ongoing Middle East and Russia-Ukraine conflicts and the continued weaponization of sanctions and the dollar has given rise to higher treasury rates due to (i) scaling down of US treasuries held by central banks of competitor countries - China - and allies (Japan) alike, (ii) increased use of digital Cross-Border Interbank Payment System set up by China a decade ago as opposed to SWIFT. Needless to add the low yield on US treasuries allowed the US government to access these funds at very cheap rates – a situation that no longer holds which explains the rising lament of independent US economists about the rising borrowing costs. Today the yields are as follows: (i) 3 month 4.1 percent, (ii) 6 month 4.32 percent, (iii) 2 years 4.86 percent, (iv) 5 years 5.08 percent, (v) 10 years 5.28 percent and 30 years 5.62 percent.

PIA was privatized amidst much fanfare in December 2025 with 75 percent shares sold for 135 billion rupees (25 percent retained by the government) to a consortium that included Arif Habib and Fatima Fertilizer (34.1 percent), Fauji Fertilizer (34 percent), Lake City Holdings (14 percent) and the remaining 17.9 percent shares held by City School, AKD Group. None of the consortium members had any prior experience in aviation.

The legacy debt estimated at between 268.5 billion rupees to more than double 650 billion rupees was reportedly parked into a PIA Holding Company (reminiscent of the Power Sector Holding Company) with taxpayers to fund roughly 30 billion rupees annually in restructured interest while the new buyers were tasked to manage a small amount, around 26 billion rupees, of the legacy debt.

In April 2026 the consortium acquired the remaining 25 percent shares for 45 billion rupees.

The consortium paid a total of 55 billion rupees to the government while the remaining 125 billion rupees is to be invested back in the company as new equity through a rights issue (defined as a corporate action that allows the existing shareholders the option to buy additional new shares in proportion to their current holdings, usually at a discount to the current market prices) in two tranches – an upfront payment of 83.25 billion rupees (equivalent to around 300 million dollars) with the remaining 41.625 billion rupees to be invested in 12 months.

One of PIA’s major sources of loss was its massive economically unviable over-staffing, with mainly Pakistan People’s Party accused of using PIA as a major recruitment centre for its loyalists: thus PIA’s staff strength was from 500 to 550 employees per aircraft while the global benchmark is 100 to 250 employees.

Unlike in the past when PIA privatisation came under discussion there was no strike action and the agreement provides job security to staff for around 12 to 18 months; it is unclear whether the proposal to extend it to three years is still under consideration. It is also not clear whether the redundancies expected around June next year would lead to strike action whose success would depend on the economic political system in place at the time.

So what promoted Aurengzeb to seek financing for PIA from the US EXIM Bank? Pakistan government agreed to facilitate access to financing and suppliers rather than in purchasing the aircraft directly and pledged that no taxpayer-funded loan or mandatory sovereign guarantee will be extended as financing can be secured directly against the aircraft based on creditworthiness.

Cost of a Boeing is estimated at 248 to 338 million dollars with 250 to 290 seats or, in other words, the upfront equity agreed with the government that was made part of the cost is sufficient to purchase one aircraft. Reports suggest that the new PIA management is in talks with Boeing to acquire sixteen 787 Dreamliners roughly at a cost of nearly 4 billion dollars. If the loan is for five years, perhaps a period too short to win back the clientele lost to other airlines due to ceding of routes to other airlines the annual repayment would be around 200 million dollars – an addition that would raise the cost of tickets to perhaps more than the rates prevalent in other airlines.

The question is what would be the terms if the purchase of the 16 Boeings is agreed with the US EXIM bank? The government, after approval of the International Monetary Fund, extended sales tax exemption on aircraft and parts, exemption from new taxes on jet fuel and income tax relief on dividend payments for 15 years and the legacy debt is minimal. However, the cons include the lack of experience of the private owners as well as the legacy labour problems that may resurface.

To conclude, one would hope that the new owners can make PIA a success and the need for the government held legacy debt/assets (including Roosevelt Hotel) as collateral does not arise and nor does a strike action materialize as the 16 new Boeing aircraft may well be able to adjust the excess staff.

Copyright Business Recorder, 2026

But meeting a lender’s targets is not the same as reviving an economy. The government has spent considerable political and economic capital restoring macroeconomic stability, and deserves credit for doing so. Yet stabilisation has largely run its course as a policy achievement. Without structural reform, it cannot carry Pakistan onto a durable growth path.

The finance minister often describes this phase as restoring “basic economic hygiene”. That message has landed. The more important question now is what comes after ‘hygiene’.

Behind the headline numbers, the quality of fiscal adjustment remains poor. Tax broadening is conspicuously absent, while the latest attempt to bring retailers and traders into the net appears to be going the way of its predecessors. Governments have been trying to tax this constituency since the early 1990s, with remarkably little success. Traders account for a substantial share of economic activity but contribute a negligible share of tax revenues, leaving formal businesses and salaried workers to carry a disproportionate burden.

The finance minister has recently asked the formal business community, and even the media, to help bring traders into the tax net. Corporate Pakistan would certainly welcome their inclusion. But it is difficult to see what businesses or journalists can do that the state itself cannot.

The prevailing perception is therefore not that the government lacks administrative capacity, but that it lacks political will.

The civilian administration and the military establishment are widely regarded as aligned, the courts have rarely prevented economic enforcement, and organised political opposition is weak. If any government possessed the political space to enforce taxation on traders, realtors and large agricultural landowners, this one does. Its failure to do so increasingly looks like a choice rather than a constraint.

Meanwhile, the squeeze on those already inside the system continues. Formal businesses complain of advance tax demands and delayed refunds as the FBR scrambles to meet collection targets. Effective tax rates are already punitive, yet enforcement remains concentrated on the small group of taxpayers that is visible, documented and easiest to squeeze.

The same asymmetry exists within the trading community. Larger traders are more likely to pay because their transactions, premises and supply chains are harder to conceal, which is one reason Karachi tends to perform better on documentation.

Smaller and medium-sized traders, particularly across Punjab’s commercial centres, remain far more resistant to registration. Successive governments have responded with negotiations, extensions and diluted enforcement, reinforcing the belief that organised non-compliance carries fewer consequences than formalisation.

This inequity is more damaging today because the compliant economy is already carrying unusually heavy burdens. Add high electricity costs, taxation and levies on captive power, regulatory costs and a widening array of withholding taxes, and the formal sector is effectively being asked to subsidise an economy that remains substantially informal. That is not merely unfair taxation. It is an incentive to stay small, remain undocumented or move activity outside the formal economy altogether.

The second grievance is austerity, or rather its conspicuous absence within the state itself. Pakistan recorded its lowest fiscal deficit in two decades in FY26, yet expenditure on running government continued to expand faster than many other categories of spending.

The finance minister regularly complains about bloated layers of administration, but the state remains much better at diagnosing institutional duplication than eliminating it.

Indeed, Pakistan’s instinct when an institution fails is often to create another institution around it. A regulator underperforms, so a facilitator is established. The facilitator struggles, so a council or authority is added. Instead of reforming weak institutions, the state layers new ones on top of them, producing more offices, more mandates and more expenditure without necessarily producing more capacity.

That makes the optics of austerity especially damaging. Households and formal businesses are repeatedly told that difficult adjustments are unavoidable, while federal and provincial governments show relatively little visible restraint themselves. Ministers and political leaders defend frequent foreign travel, large entourages and elaborate road protocols while asking taxpayers to absorb higher rates and fewer subsidies. Even where such expenditure is fiscally small, its political cost is not. Governments cannot demand sacrifice indefinitely while appearing exempt from it.

There is a similar contradiction in the state’s economic philosophy. On one side, the government is accelerating privatisation and promising a larger role for private capital. On the other, the public sector continues to expand through new authorities, companies, funds and interventionist mechanisms. That is hardly the architecture of a state committed to competitive neutrality or a genuinely level playing field.

Investors understand these contradictions better than policymakers sometimes acknowledge. Domestic capital is reluctant to enter the formal economy when formalisation means higher taxation, greater regulatory exposure and little corresponding protection from arbitrary policy changes. Foreign direct investment rarely solves that problem from the outside. Foreign investors generally follow the confidence demonstrated by domestic capital rather than substitute for its absence.

This is why Pakistan’s growth problem can no longer be explained primarily by macroeconomic instability. Stability was necessary, but it was never sufficient. The next phase requires making formal investment economically rational again.

That means broadening the tax base rather than repeatedly raising effective taxation on those already paying. It means taxing traders, property and agricultural incomes credibly and enforcing those taxes rather than endlessly negotiating their implementation. It means reducing the cost and footprint of government, dismantling administrative duplication and demonstrating restraint at the top. And as the base broadens, it means lowering the burden on compliant businesses and households.

Pakistan has secured stability by asking a narrow part of the economy to carry an extraordinary load. That may satisfy an IMF review and buy time. It cannot produce sustained growth.

Growth now has to be earned.

Copyright Business Recorder, 2026

In 2000, manufacturing accounted for a meagre 8.8 percent of Pakistan’s GDP. By 2026, its share had reached only 12.1 percent. More concerningly, after peaking at 12.5 percent in 2022, manufacturing’s share of GDP subsequently declined and failed to regain that level.

Özçelik and Özmen (2023) estimate that even developing African economies reached an average peak manufacturing share of around 14.5 percent of GDP. The concern, therefore, is not simply that Pakistan’s manufacturing growth has slowed, but that the sector appears to have stalled before acquiring sufficient scale, unlike economies that achieved a more mature stage of industrialisation.

One of the many reasons for this stagnation is the weakening of Pakistan’s textile value chain, the country’s largest export-oriented sector. Textile manufacturing carries the highest weight in Pakistan’s Large-Scale Manufacturing (LSM) index, at 18.16 percent, reflecting its scale, employment generation and extensive linkages with associated industries. Yet textile production has been contracting, most recently by 3.09 percent year-on-year in July 2026.

Given its significant share in production, sustained pressure on the textile value chain inevitably affects overall industrial performance. This is reflected in LSM’s declining contribution to GDP, which has fallen from around 10.46 percent in 2008 to 8.2 percent in 2026.

Investment has followed a similar trajectory. Real private fixed investment in LSM is now around 55 percent below its 2006 peak and 32 percent below its 2022 level, having contracted by a further 4.03 percent year-on-year in 2026 to its lowest level since 2012.

The consequences extend to exports. Among other factors, export capacity is fundamentally tied to manufacturing capacity and private investment. With both weakening, Pakistan’s export-to-GDP ratio has steadily declined from a peak of 13.5 percent in 2011 to 10 percent in 2025, and most recently to 8.9 percent in 2026 – the lowest level in the past decade.

A shrinking manufacturing footprint, dwindling investment and a falling export-to-GDP ratio point to a problem that, by now, is unmistakably structural.

Economic literature establishes that developing nations must build and sustain a sufficiently large manufacturing base to drive productivity growth, exports and, hence, convergence with advanced economies (Rodrik, 2016). However, when manufacturing begins to contract at relatively low income levels, before reaching the degree of industrialisation achieved by earlier industrialisers, an economy undergoes what Rodrik (2016) describes as premature deindustrialisation.

Pakistan increasingly appears to fit Rodrik’s description.

Together, these three declining indicators are creating pressure on the current account. Whenever Pakistan’s domestic demand or international orders gain momentum, imports increase significantly. However, exports fail to increase at a sustainable pace, as they remain constrained by a stagnant manufacturing base that accounts for just 12 percent of GDP. As evidence, between FY2024 and FY2026, textile exports grew by only 7.7 percent, while textile imports surged by 138 percent, thereby worsening the textile trade balance by 17.7 percent over the same period.

The pattern is simple: economic expansion generates import pressures, imports outpace exports, external imbalances widen, growth eventually confronts a balance-of-payments constraint, and Pakistan returns to external financing. The cycle repeats.

The only way out is export-led growth backed by strong manufacturing.

Pakistan’s textile export basket already demonstrates the potential of domestic value addition: around 86 percent of textile exports are apparel and made-ups, while only $2.5 billion of the $17.9 billion in textile exports comprises yarn and fabric. Further processing at home of even a portion of these intermediate exports into garments could generate annual export earnings much higher than the $2.5 billion currently earned from them.

For that, the reform sequence should focus on three immediate priorities.

1. Fix energy, fix manufacturing

The first prerequisite is lowering the prohibitive cost of production, beginning with electricity. Pakistani factories currently face power tariffs of around 11 to 13 cents/kWh, compared with approximately 5 to 9 cents/kWh among regional competitors. Textile manufacturing and exports cannot remain competitive at these tariffs.

Electricity tariffs must therefore be brought closer to the regional benchmark of around 7 cents/kWh.

2. Rationalise the tax burden on manufacturing and exports

Pakistan’s current fiscal architecture continues to strain manufacturing and restrict industrial liquidity. The standard 18 percent sales tax applied across processing stages, alongside structural minimum turnover taxes and overlapping federal and provincial levies, continues to drive up the cost of production for compliant, formal businesses. The tax burden on manufacturing must therefore be rationalised, while incentives should encourage non-exporting manufacturers to transition into high-value-added exports.

This brings us to the final recommendation:

3. Strengthen and vertically integrate the domestic value chain

Policy must enable domestic manufacturers to move further up the value chain through forward integration while also strengthening the domestic supply of competitively priced inputs required by firms that are already exporting.

This is particularly important when the economy is exposed to global and regional shocks, price shocks and resulting surges in imports.

Ultimately, a marginal increase in export revenue, when the value chain has the potential to bring in substantially more dollars, is a self-inflicted loss.

It is time to set the bar higher.

Copyright Business Recorder, 2026

In reality, the US economy added only 29,000 new positions, leading to a slight increase in the unemployment rate from 4.1 percent to 4.2 percent.

This report followed a series of weak inflation data that had been disclosed earlier that week, prompting some traders to speculate that the Federal Reserve might maintain the current interest rates during its upcoming October meeting. Current market assessments indicate an over 78 percent probability that the Federal Reserve will refrain from raising interest rates next month, as they appear to be relatively assured that the economy is not experiencing significant overheating.

For policymakers, inflation constitutes a more pressing concern than labour market conditions, as it consistently exceeds the Federal Reserve’s target of 2 percent.

Consequently, attention will be directed towards forthcoming economic data for further evaluation. Unless the consumer price index (CPI) data reflects substantial strength, the likelihood of an interest rate increase may be delayed to the December Federal Open Market Committee (FOMC) meeting.

Moreover, the US elections scheduled for November will be key factor in determining whether President Donald Trump’s Republican Party can retain control over both houses of Congress.

This scenario presents considerable challenges for the Trump administration, particularly in light of escalating inflation, which has elevated borrowing costs and consequently increased the cost of living.

The prospects of a US-Iran peace agreement remain difficult to achieve and ongoing trade tensions continue to impact the affected nations.

It is noteworthy that even if the Federal Reserve opts to pause interest rate adjustments, consumers may not experience relief, given that bond yields are at their highest levels in decades. The mortgage rate has surpassed 7 percent, escalating pressures on refinancing, thereby contributing to slower housing activity, reduced consumer spending, and slower job growth, resulting in a deceleration of employment rates.

While the economic data released last week pertaining to inflation and related factors indicated a softer tone, US bond yields present a contrasting narrative. Following the announcement of weaker employment figures, 10-year bond yields initially declined to 5.16 percent but subsequently rebounded to 5.27 percent.

This pattern suggests that the weak Non-Farm Payroll (NFP) data correlates more with growth concerns than inflationary pressures.

This suggests that, despite the possibility of the Federal Reserve opting for a pause, market participants hold different opinions, and long-term rates are unlikely to decline in the near future.

The forthcoming Federal Reserve minutes scheduled for release on October 7 are anticipated to provide critical insight regarding economic direction.

In response to the NFP announcement, the market reacted accordingly. Gold prices witnessed a surge, briefly testing highs around $4227 before retreating sharply, reflecting a belief that growth concerns prevail over persistent inflation, which remains elevated.

Consequently, the reversal in US bond yields can be attributed to investor demand for greater returns.

The market is finding it challenging to reconcile the normalization of conditions amid high US bond yields, a strong US dollar, geopolitical uncertainties, and an anticipated rate hike in December, as the Federal Reserve is expected to hold rates steady in October.

This scenario could pose significant challenges for gold prices to absorb.

It is crucial to monitor US 10-year bond yields, a rate below 5.20 percent would support gold prices, while a rate exceeding 5.30 percent would be bearish for the commodity.

Meanwhile, oil prices have experienced a slight decline following a significant development. On Friday, the G7 ministers agreed to release up to 100 million barrels of crude oil and diesel from emergency reserves, resulting in a price drop of approximately $5 per barrel. This G7 decision may impose a temporary ceiling on prices, but I anticipate continued high volatility, with the $100 benchmark becoming psychologically significant.

Although this cap may somewhat alleviate immediate economic concerns in Europe, it will not resolve underlying issues related to energy shocks, persistent inflation, and fragile growth.

In September, inflation in the Eurozone surged to 3.8 percent, accompanied by an increase in core inflation metrics. This trajectory is not supportive of the European Central Bank (ECB), as the economy necessitates softer conditions. However, energy-driven inflation advocates for a tighter monetary policy.

Conversely, the United Kingdom may be better positioned than the Eurozone concerning energy supply. Nonetheless, increased crude prices adversely impact transportation and household expenses, thereby exerting inflationary pressures that could compel the Bank of England to consider raising interest rates in November.

WEEKLY OUTLOOK - Oct 5-9

#GOLD @ $4140- Gold may face pressure this week as it must surpass $4235 to reach $4288. There is a risk that a drop below $4065 could lead it down towards the $4000-4010 range.

#EURO @ 1.1252- The euro will have difficulty rising unless it surpasses 1.1380. On the other hand, it has support levels at $1.1170 and $1.1130.

#GBP @ 1.3240- Pound Sterling may rise if it can maintain levels around 1.3140. On the upper side, there are resistance points at 1.3350 and 1.3410. Otherwise, it might fall to 1.3090.

#JPY @ 157.86- The pair might reach 158.80, targeting 159.50 or higher. However, any indications of intervention or an increase in US bond yields could drive it down to 156.10 or 155.20.

Copyright Business Recorder, 2026

Venture firms compete for capital from investors and for finding high-growth ventures. Entrepreneurs need to evaluate the experience of a manager in a certain area, his reputation and ability to raise next funding rounds. The ability to connect companies with customers and with experienced advisors is at least as valuable as the capital raised. The fund which can raise capital but cannot find and promote talented entrepreneurs will not earn enough to raise another fund.

Funding and implementation become important policy considerations in Pakistan, in addition to licensing. Who will provide the capital that may stay locked up for long periods of time? Will local management be able to put it into use? Will good businesses find buyers?

In the US, Sequoia Capital backed businesses like Apple and Google in a context where there is an interaction between entrepreneurship, research and financial institutions. Even public research plays its role in the process because according to the National Science Foundation, companies that received seed funding through its program later got additional investments and exited.

In Singapore, the government has established Startup SG Equity with both public investment and private partners whose commercial capabilities were one of the criteria. Enterprise Singapore reports that this program managed to attract investments from private companies along with public money. This is the main idea that Pakistan should consider while choosing commercial and valuable investors in terms of clear rules of public participation. A subsidy alone cannot reproduce those institutional strengths.

The current draft of Venture capital bill shared by the SECP on 25thAugust 2026 already considers the aspects of investor protection and disclosure. In turn, SECP can supplement this process with an actual application checklist, realistic processing timeframes, and detailed descriptions of how the operations of funds work. It is crucial that the manager knows what is expected from him before any fundraising starts and that the investor understands his rights.

The private capital industry association in Great Britain has developed templates for venture investing that correspond with the existing British legislation. Thus, the relevant Pakistani associations and attorneys could prepare similar templates for the local legal environment. Setting the terms of ownership, board composition, and share transfers could save many negotiations. Founders need to know what is negotiable with the investor and what is not.

Funding needs to be consistent with the development path of the young company. For instance, the investor can first pay for the product testing and then continue financing when the clients start paying for the product. The milestones need to be realistic and adaptable to changes in the situation. Moreover, the fund manager needs to say if there are still some funds available for following rounds. A good company can face problems because of its first investor spending all funds and not being able to finance further.

SECP, FBR and the State Bank must develop joint guidelines that will spell out how the investment is taxed and what documentation must be submitted to the banks for transferring profits abroad. Clarification of procedures will help to lessen unnecessary confusion, even if this won’t shield investors from currency risks and unfavorable business conditions.

Local business families in the country and qualified institutions may be sources of more reliable funding, but only if they have a commercial interest in investing. It should be clear to fund managers what fees they charge and how profits are divided and to what extent the capital invested has been repaid to investors. Existing companies can make contributions without establishing a dedicated investment fund. For example, a company that exports textiles can finance the trial use of the software and provide feedback to its developers. If the pilot project succeeds, a commercial deal will make it easier for the startup to prove to other customers and investors the demand for its product. Industrial organizations can coordinate such pilots for their members. The contract must allow the founders to keep the intellectual property and serve other clients.

Government support should follow the same commercial discipline. Where public money is committed, managers should be chosen openly on the basis of proven experience and the capability of bringing in private financing. Investment judgments should stay within the purview of competent professionals, and the conditions of public involvement should be known. The purpose is to finance sound businesses which experience a real funding shortage; subsidizing businesses that would otherwise have been started without government assistance would result in little.

Investors must also have a way of selling off their equity holdings. For numerous start-up ventures, a transaction where the business becomes owned by an existing business or another entrepreneur may be easier than going through the process of becoming a listed stock. Reliable financial information and clear ownership records make such transactions easy. Regulators should make sure that legitimate transactions take place while preventing abuses and making sure that public money is not stolen. They must also realize that some businesses are bound to fail no matter how hard everyone works.

The implementation of a new legal structure would be a sensible first step. What will happen next will be determined by how well the founders can arrange workable arrangements, how well the managers can develop the new companies, and how well the investors can turn their profits without interference. What will show whether the project is working will be whether the investors, seeing how things go, decide to invest in future venture funds in Pakistan.

Copyright Business Recorder, 2026

In 2010 Abu Dhabi decided to halt Rhodes grass planting because of excessive water demand. Thousands stopped growing it. Saudi Arabia followed in 2018, restricting domestic green-fodder cultivation to relieve pressure on exhausted water resources. Its policy anticipated a sharp fall in local production, with imports filling much of the gap.

Neither stopped feeding its livestock. They shifted the water burden. The animals stayed in the Gulf. The thirst moved abroad.

This is virtual-water trade in its clearest form. The crop crosses the border, but the water consumed in producing it does not. It has been withdrawn from a river, canal or aquifer in the exporting country.

Pakistan now wants to supply that thirst. In the fiscal year ended June 2025 the country exported nearly a million tonnes of animal feeding stuff and earned over $110 million. The industry is talking of turning this into a billion-dollar business within five years.

The opportunity looks straightforward: Pakistan grows grass, the Gulf feeds its animals, and foreign exchange comes home. But every bale also carries the water used to grow it. When that water comes from a stressed river or declining aquifer, Pakistan is transferring scarce water from its own account to the Gulf’s livestock economy.

The buyers have already done this arithmetic. Pakistan has not.

My earlier pieces on rice, cotton and sugar examined identifiable commodities whose water was ignored or mispriced. Fodder reveals a more basic problem. Pakistan is promoting the trade before it can distinguish crop residue from forage cultivated for export. The export target has arrived before the water account.

Before expanding, Pakistan needs three answers. What exactly is being exported? How much water does it embody? And what is that water earning? It cannot answer even the first question with confidence.

The headline figure of roughly $110 million mixes cereal straw and husks, hay and forage, bran, oilcakes and prepared animal feed. These products have different values and water claims. Straw and forage account for most of the volume but only about half the value. Ordinary straw and husks dominate, while higher-value forage such as lucerne and alfalfa forms only a small fraction. The return per tonne is modest, far from the success the headline suggests.

This distinction is crucial. Straw is a by-product of a grain crop. Only a fair share of the water used to grow the grain should be charged to the straw. Alfalfa and Rhodes grass grown specifically for cutting, baling and export are dedicated crops. The irrigation water they consume belongs directly in the export account.

Yet some shipments described as Rhodes grass have been declared under the broader cereal-straw category rather than under hay and forage. As a result, official figures cannot reliably separate genuine crop residues from deliberately cultivated forage. If policymakers treat dedicated Rhodes grass as if it were merely leftover straw, they will seriously understate the water cost of the trade.

Pakistan cannot calculate the virtual water in its fodder exports until it knows what is inside each bale. We are selling a category when we should be auditing the crop.

A deeper problem is the absence of a published Pakistan-specific water account. There is no district-level information on how much water export-grade Rhodes grass or alfalfa consumes under Pakistani conditions. The country is flying blind.

A serious account must distinguish canal water from groundwater, renewable supplies from aquifer mining, and water delivered to the field from water actually consumed by the crop. Location also matters. The same crop can be harmless in one district and damaging in another. National averages hide these realities.

Such accounting is more urgent with the spread of solar-powered pumps. When the cost of lifting water approaches zero and groundwater remains unmetered, a farmer has every incentive to irrigate whenever another saleable cut can be produced. What improves the farmer’s energy bill can accelerate aquifer decline.

Farmers are responding rationally to state-created incentives. If a Gulf buyer offers a reliable market and water carries almost no scarcity price, growing fodder for export can make commercial sense. The national balance sheet may tell a different story. Pakistan does not know how much export fodder uses canal water, renewable groundwater or declining aquifers. It is negotiating a sale without knowing the cost.

Other costs are missing. Exported hay removes nutrients that may need replacing. Green-fodder availability at home is already under pressure, so exporting the best forage carries a cost if Pakistani livestock is left with poorer rations.

The market is still narrow. Most exports go to a handful of Gulf states, led by the United Arab Emirates. Industry representatives say sales to Saudi Arabia remain small, while China has yet to approve the product. The billion-dollar ambition depends on destinations that are not currently buying in volume.

There is nothing wrong in principle with virtual-water trade. Countries short of water can sensibly import water-intensive goods and conserve their own resources. But the logic has to run in both directions. Pakistan should export water-intensive crops only when the earnings and wider benefits clearly justify the water that is used up. That judgement cannot be made while water does not appear on the invoice.

The solution is not a ban on fodder exports. It is to bring the trade inside a serious water policy.

Customs and the statistics authorities need clear product-level identification: Rhodes grass, alfalfa, wheat straw, rice straw and the rest. Declarations should be cross-checked with phytosanitary certificates so cultivated forage cannot disappear inside a generic straw category. Large shipments should be traceable at least to their district of origin. Where export fodder is grown with groundwater, large producers should also be subject to licensing and volumetric measurement. District-level water accounts must then show how much water each crop consumes and what value it generates.

Any public programme or incentive designed to expand irrigated fodder for export should be accompanied by a straightforward virtual-water assessment: how much blue water is used, how much of it comes from stressed sources, and what value is earned for each unit of that water.

Export success can no longer be measured only in tonnes and dollars. It must also be measured in the value earned from each unit of scarce water.

The Gulf states reached this conclusion earlier. They conserved their own water and chose to import the crop. Pakistan is now offering to grow that crop without first measuring the water that will be consumed. The Gulf is not buying Pakistani grass because it lacks understanding of water. It is buying because it has done the arithmetic and decided to import the thirst.

Until Pakistan knows what that water earns, the billion-dollar ambition risks becoming an unpriced transfer of its water, wrapped in twine.

Copyright Business Recorder, 2026

A regulator may have extensive legal powers, detailed rules and well-defined performance standards, but these instruments are effective only to the extent that they produce better behaviour and, ultimately, better outcomes. The story of Pakistan’s power-sector regulatory regime demonstrates why this distinction matters.

The public debate in Pakistan about the power sector reform remains heavily focused around tariffs, circular debt and capacity payments. These are important issues, but they also reflect deeper governance challenges. Persistent distribution losses, uneven recoveries, transmission bottlenecks, delayed investment and recurring financial interventions therefore raise a more fundamental question: how effective is the regulatory system in translating rules into better institutional behaviour?

The issue is not that Pakistan lacks regulatory instruments. In fact, Pakistan has developed an increasingly sophisticated electricity regulatory architecture over the past two decades: NEPRA’s mandate now extends well beyond tariff determination to licensing, performance standards, investment oversight, consumer protection, benchmarking, enforcement and electricity market development. Incentive-based elements in the regulatory system are already well introduced by multi-year tariffs, loss benchmarks and performance standards.

This architecture is further expanded by recent reforms. The Competitive Trading Bilateral Contract Market (CTBCM) intends to introduce greater competition and consumer choice; the Independent System and Market Operator (ISMO) is now operational and digital monitoring is expanding. Despite these increasingly sophisticated interventions – sometimes resulting in further fragmentation of the already thinly spread sector, NEPRA’s State of the Industry Report 2025, identifies familiar problems: excessive losses in parts of the distribution system, recovery shortfalls, feeder-based loadshedding, transmission constraints and continuing financial stress. The persistence of these poor outcomes makes the question of regulatory effectiveness more, not less, significant.

This raises some important questions: If Pakistan’s electricity regulatory framework has become progressively more sophisticated, why have many operational outcomes remained stubbornly familiar? If performance is increasingly measured, why do some performance deficiencies persist? If enforcement action is taken, why do some non-compliant practices recur? And if financial restructuring repeatedly stabilises the sector, why do the conditions producing financial stress continue to re-emerge? These questions should not be understood as an indictment of NEPRA. Rather, they go to the heart of what regulatory effectiveness requires.

Formal authority does not automatically translate into behavioural change. For a regulation to be effective, several reinforcing conditions must exist: incentives must reward performance; accountability must correspond with authority; institutions must coordinate where responsibilities overlap; regulatory decisions must be capable of implementation; and reforms must be sequenced with the operational and institutional conditions required to support them. Problems will remain when the regulatory intent encounters an institutional environment and governmental chokepoints, where these conditions are only partially aligned. This appears to be an important part of Pakistan’s power-sector challenge.

Circular debt helps explain this implementation gap. NEPRA reports that the stock of power-sector circular debt has declined from around Rs2.39 trillion in June 2024 to Rs1.61 trillion by June 2025. The reduction was substantial, but it was driven in significant part by stock payments and financial adjustments. At the same time, inefficiencies arising from distribution losses and under-recoveries continued to add hundreds of billions of rupees to the system. This distinction is important. Reducing the accumulated stock of circular debt is not the same as eliminating the conditions that generate its flow. What this means is that circular debt is not merely an accounting problem but is a governance outcome arising from the interaction of tariffs, subsidies, recoveries, operational performance, contractual commitments and public finance. NEPRA may disallow losses above approved targets, but disallowing a cost does not make the underlying cash shortfall disappear. The resulting shortfall may instead re-emerge as arrears, subsidy requirements, borrowing or unpaid obligations elsewhere in the supply chain.

There is also a legacy dimension. Earlier procurement and contracting decisions including long-term, power-purchase agreements and associated capacity obligations, were undertaken in response to legitimate policy objectives, particularly when Pakistan faced acute generation shortages. Those commitments are now inherited by today’s regulator and policymakers who must operate within contractual and financial commitments concluded under different circumstances. Such obligations cannot simply be wished away even when conditions drastically change. Regulatory effectiveness therefore also requires managing legacy commitments while ensuring that future procurement reflects demand uncertainty, transmission readiness, system flexibility and technological change.

Perhaps the clearest test of regulatory effectiveness comes from the distribution companies. NEPRA has already prescribed loss and recovery targets and has set quality of service standards but incentives work only when institutions are capable of responding to them. If a DISCO’s management is unstable, its operational authority is constrained or enforcement against theft depends on other agencies, then it cannot be reasonably held responsible for every outcome. Additionally, there are five specific externalities that constrict and inhibit operations of various DISCOs in a separate and distinct manner. These are the design and urban specific tilt of the “one size fits all” country-wide electricity tariff, the investments made during the last 35 years in specific DISCOs, the per capita income of a particular DISCO’s geographical jurisdiction, the HDI of the territory and lastly the level of governmental writ in the DISCOs. That all of these five specific externalities are of extreme nature is surely of great importance to contendwith whenever some action is contemplated to be undertaken.

The latest in the series of regulatory edicts are the brand-new Performance Standards (Distribution) Regulations, 2026, issued by NEPRA. This document requires DISCOs to leapfrog and start delivering a service that equals with the best of the power utilities of the world. That this would require complete overhaul and nearly a complete replacement of the present and existing infrastructure is surely mindboggling. On the other hand, this may also be an opportunity for the DISCOs to quickly graduate and join the best, if the Regulator allows and commits the needed finances as legit revenue requirement of DISCOs etc.

At the same time, such constraints cannot become a permanent explanation for avoidable losses or poor service. Accountability must therefore follow authority. Stable and professionally capable management, functional boards and measurable performance are essential elements of regulatory enforcement. Incidentally, the good results of the present effort by the government attest to this fact, and when great strides have been made under the auspices of the present professional content of the BoDs. This is also where ownership and regulation intersect. Where the government remains an owner while regulatory, policy and operational responsibilities are distributed among different institutions, clear lines of authority and accountability become particularly important.

Transmission raises the same issue from another direction. Pakistan substantially expanded its generation capacity, but network constraints continue to limit efficient dispatch. This is not merely an engineering problem – it concerns planning, project sequencing, procurement, financing and coordination. A regulator may establish standards and assess performance, but it cannot by itself deliver transmission projects, resolve land or financing constraints or coordinate with every agency involved. The mere fact that the grid lacks the strength and design to counter the present ingress of RE, further highlights the issue. The effectiveness of regulation therefore depends partly on whether the wider institutional framework enables regulatory decisions to be implemented.

Market reform provides yet another test. CTBCM can introduce competitive discipline, bilateral contracting and greater consumer choice but competitive markets do not emerge merely because regulations permit them. They require, among other things, credible and effective system operation and institutional arrangements capable of supporting contracting, settlement, enforcement and dispute resolution. Moving before these foundations are sufficiently developed risks creating new disputes and standard obligations. Regulatory effectiveness therefore requires sequencing, not competition for its own sake. Market reform must be supported by the operational, financial and institutional conditions that allow competition to produce better results.

The harder issue for Pakistan’s power sector is the alignment between regulation, ownership, authority, government policy and financial responsibility. Even where each institution formally performs its assigned functions, poor outcomes may persist when responsibilities overlap without corresponding accountability or when one institution is expected to deliver an outcome without control over the instruments required to achieve it. Pakistan has already built many of the formal elements of modern electricity regulation. The remaining weakness lies in completing the institutional chain that makes regulation effective. The true test of regulation is not how many determinations are issued, regulations notified or penalties imposed; it is whether utilities become more efficient, investments are delivered when needed, consumers receive more reliable service and the sector becomes progressively more financially stable.

The problem, therefore, is not that Pakistan’s regulatory architecture is too formal or too ambitious. Rather, it remains insufficiently connected to the institutions responsible for implementation and to the consequences that should follow non-performance. Until regulation is more closely tied to authority, institutional capacity and financial responsibility, Pakistan risks continuously producing increasingly sophisticated rules alongside disappointing outcomes.

IMF is well aware of this gap, having experienced non-compliance on its repeated demand for reforms in the energy sector, state-owned enterprises, enhancement of the tax base and fiscal reforms. And yet it is expecting that the legislative amendments could mend the lapses in the system.

Pakistan has repeatedly sought to reform state-owned enterprises, yet a majority remains a major fiscal burden. The IMF now calls for stronger SOE governance, greater transparency and a smaller state commercial footprint - being fully aware that the gap between what it calls for and what is implemented is only widening.

Pakistan is preparing around 174 amendments to existing laws under its IMF programmes. The proposed changes cover financial sector governance, state-owned enterprises, remittances, climate policy, regulation and other areas.

This brings to the surface the ground reality - “bundles of paper shall move from one state entity to another for an unspecified period, and any hope of relief to the public is a distant possibility”.

The number of legislation is not the real story. What matters is what it reveals about the Pakistani state governance.

For decades, Pakistan has responded to structural problems by creating laws, policies, committees, authorities and regulatory bodies. Yet the capacity to implement them has steadily weakened. The country has accumulated plans without execution, institutions without autonomy, regulations without enforcement and legislation without continuity.

The result is a state trapped in firefighting rather than strategic planning.

The decline of the Planning Commission (covered in my publication last week), illustrates this wider institutional erosion. Once a centre of economic thought and long-term planning, it gradually lost authority and capacity. The problem was not confined to one institution; it reflected a broader deterioration in the quality and continuity of governance.

The same pattern appears across the economy.

Tax reform similarly focuses on digitalisation, auditing, compliance and institutional restructuring - not because tax laws are absent, but because the state struggles to administer them.

The business environment tells a similar story. Pakistan has introduced investment policies, special economic zones, export processing zones and numerous incentives. Yet businesses still face regulatory uncertainty, overlapping jurisdictions, taxation problems and administrative delays.

The IMF programme now seeks regulatory simplification, a national regulatory registry and changes to corporate legislation. But passing another law will not solve the problem unless government has the discipline and capacity to make the system work.

Good governance is not created by legislation alone. It depends on competent institutions operating under clear rules, with measurable objectives, continuity, accountability and political ownership.

Pakistan has weakened many of these foundations.

The civil service, once the principal instrument of policy formulation and implementation and an effective one, is increasingly consumed by short-term administrative pressures and political demands. Frequent transfers, institutional restructuring and the proliferation of special-purpose bodies have eroded professional continuity and long-term policy expertise.

This has direct economic consequences. Investors assess more than tax rates and incentives. They seek reliability and consistency in state governance. Governance is not separate from economic growth. It is an economic variable.

Weak institutions raise business costs, discourage investment, reduce productivity and increase the risk premium.

Pakistan is also relying increasingly on the IMF to advance reforms that should form part of its own national governance agenda. External discipline can help governments overcome domestic resistance, but no country can indefinitely outsource institutional reform to an international lender.

The goal should be to reform because Pakistan understands what its economy and society require - It require a shift: from policy accumulation to execution; from ad hoc committees to permanent institutions; from political firefighting to strategic planning; and from counting laws passed to measuring outcomes achieved.

Parliament has an important role in this process. Legislation should not be treated as the final measure of reform. Every major law should include clear implementation mechanisms, designated institutions, measurable performance indicators and periodic independent review.

Pakistan must also restore excellence in governance. Competence, institutional memory, professional continuity, evidence-based policymaking and accountability must become central to the policy cycle - not merely invoked after failure.

The 174 proposed amendments should therefore be treated as a mirror reflecting the condition of the Pakistani state.

The country does not lack capable people or sound ideas. It is blessed with lots of it. Given the enabling environment their performance in foreign lands is enviable. The country lacks the institutional environment in which competence can consistently produce national results.

Pakistan cannot legislate its way to prosperity, borrow its way out of structural weakness or rely indefinitely on external programmes to compensate domestic shortcomings.

The real reform Pakistan needs is the restoration of state capacity: the ability to think beyond the next crisis, formulate evidence-based policy, implement decisions professionally and hold institutions accountable for results.

Until that happens, Pakistan will continue to produce laws, plans and reform programmes while confronting the same problems.

The ultimate test of governance is not how much legislation a state produces. It is whether the state can make its decisions work.

Copyright Business Recorder, 2026

Everyone has their own opinion on this, and at times things become rather emotional as each other’s opinion is challenged. I decided to have a global look at the question of more provinces so that we can form our judgments without becoming emotional and learn about this phenomenon from history.

The first thing I have learned about making new provinces is that this is not something unique which is only happening in Pakistan but is a global phenomenon. I don’t know about you, but I was surprised to find out that every country that started as a federation or a large unitary state has added provinces, states and regions as population grew.

Let me give you some examples. Let us look at our neighbour India which had nine major provinces at Independence that increased to 14 provinces by 1950, and today it has 28 states and eight union territories.

Nigeria is another example which had three to four regions at the time of independence in 1960 which increased to 12 than 19 and now has 36 states. Let us not forget Indonesia which had eight provinces in 1945 and now has 38 provinces.

The father of all examples - the one that we all try to emulate - the good old USA had only 13 states at its creation and now has 50 states. Another interesting example is the Philippines which created 30 new provinces on cultural and linguistic grounds.

Yes there has been opposition to this in the countries concerned, but the matter has finally been settled through dialogue though in some countries it has led to violence. It is also a question of how simple or how complicated is the process for making new provinces. Surprisingly the simplest method for creating a new province is found in India.

Under article 3 of the Indian constitution their parliament can form a new state by separating territory from any state, unite two or more states, increase or decrease the area of any state and alter the name of boundaries of any state.

You see how simple it is, but there is more to it than meets the eye. No bill for creating a new state can be introduced in parliament without the recommendation of the president of India.

The president sends the bill to the legislature of the state concerned and the state assembly is given a certain time period to give its view, but this is actually an exercise in futility as this opinion is not binding on parliament. The bill after completing these formalities is presented in Lok Sabha and Rajya Sabha and passed by simple majority.

Even in this crucial matter a two-third majority is not required. After parliament passes it the president signs it and the deed is done. So the federal parliament is really the supreme authority in such matters and the involvement of president or any other body is just ceremonial including the consent of the president. How does this get to the parliament in the first place is also interesting.

Usually there is a grassroots movement that grows and the seeds of a new province or territory are sown as happened in certain cases in India. In Pakistan it is a whole new ball game which can only get rolling if the provincial assembly of the province concerned must first consent, and the bill for this must pass with 2/3rd majority.

So the idea can expire even before it blooms as has happened recently. This is not the only hurdle but even if it passes the first one it has still to pass in the federal parliament and senate and yes you guessed it right with a two-third majority in both Houses.

The consent of the president in India is not mandatory, and he or she has to follow the instructions of the parliament. In Pakistan we have seen bills that have been held back at the presidency, and it will be interesting to see what happens if a bill of this nature some day awaits the consent of the president.

The question of new provinces is not dead as still there are politicians with great political influence who are openly favouring the idea and condemning the present state of affairs. Only time will tell whether there will be more provinces, or this movement will die down, and Pakistan will have to concentrate on other ideas for a successful political pathway that successfully addresses the challenges that it faces today.

Copyright Business Recorder, 2026

Banks here are already working, with the regulator, on sophisticated digital solutions, particularly in lending, and on stable coin-based settlement and remittance solutions, a step most comparable economies have yet to take, and one that will move value outside the traditional balance sheet altogether.

The innovation from outside that Dr Haque wants is arriving through exactly these doors; what limits it is not the pipe but the field, because an undocumented borrower is invisible to a fintech and a bank alike.

10. “KYC treats depositors as guilty; banks face no scrutiny”

Those rules are not written by banks. They are the universal obligations Pakistan accepted to leave the FATF grey list in 2022, an exit the whole economy needed and banks paid for in systems, staff and friction with their own customers.

READ ALSO: Cartel charge, fiscal fact—I

As for scrutiny: onsite inspection, a conduct regime, a banking ombudsman and a Competition Commission with full jurisdiction hardly amount to none.

11. “A banks-based economy is not a growth economy”

History disagrees, as outlined in Table 2. The World Bank literature associated with Levine and Demirgüç-Kunt found that bank-based versus market-based structure does not by itself explain growth; depth and institutional quality do — that’s exactly what Same Banks, Different Field alludes to.

Table 2: Financial structure and growth

12. “Equity, not credit; can a pension fund buy a PIB without a bank in the way?”

On equity I agree, but the argument must be followed to its source. Market capitalisation is under a tenth of GDP because family-owned corporates will not list, and Mr Kardar told us why: listing brings exposure to the tax authorities.

The equity market is starved by the same informality that starves credit. And risk capital is not the domain of banks anywhere; a deposit repayable on demand cannot fund a venture that takes a decade to pay back.

Equity needs pension funds and life insurers, and here those pools barely exist: pension assets are a fraction of one percent of GDP, against double digits in India and more than half of GDP in Malaysia. That is not a matter for the banks or their regulator to sort-out.

As for the claim that funds can buy government paper only through banks: that is no longer true. Government securities are listed on the Pakistan Stock Exchange, where funds and retail investors alike can buy them directly, and under a new arrangement the exchange can conduct their primary issuance as well.

National Savings offers the state’s own instruments to retail savers, often at better pricing than the market. The options are open at both ends of the market; where take-up is modest, the constraint is appeal, not access.

What I would co-sign

Most of Dr Haque’s reform list I support: retail access to government debt, non-bank primary dealers, open fund distribution, deeper FX participation, and a Sparkassen-style tier, of which the provincial banks are already the outline. But none of it changes the field.

A state that collects a tenth of national income in tax will borrow the difference from whoever holds the nation’s savings, and punishing those institutions with ever-higher rates and windfall levies only narrows the base that pays for it. Every bond market, pension fund and equity culture Dr Haque wants will be pre-empted by the same sovereign until the deficit narrows. Dr Haque’s latest column (“The sovereign-bank nexus and its pitfalls”, 30 September) already moves this way: the word cartel is gone, and shrinking the sovereign’s absorption of banking resources leads his own prescription — which is precisely the third ask below.

So let me add three asks, and invite Dr Haque to put his name beside mine. First, a legislated schedule that cuts corporate and bank tax rates as the base widens. Second, a documentation-linked credit incentive: a firm that files its accounts this year earns cheaper credit next year, through a first-loss guarantee funded from the revenue it helped raise. Financial Data Exchange is the answer. Third, a statutory ceiling on the sovereign’s borrowing from banks as a share of deposits, so that the state’s claim on the balance sheet is a benchmark, not a monopoly.

Do those three things and banks will do what banks do everywhere: find borrowers, price risk and compete.

Banks have been on the dartboard of criticism universally and throughout history, and Dr Haque’s article is no surprise. I had, as it happens, just finished Admati and Hellwig’s The Bankers’ New Clothes. My worry is not the criticism but the misdirection. Let us put the blame where it belongs, which is the narrow tax base; broaden it, and the remaining pieces, including whatever needs fixing on the regulatory side, will fall into place. Until we accept the facts on the ground, we will not find the solutions that close the gaps, to the larger benefit of everyone.–Concluded

Copyright Business Recorder, 2026

“Of course, it was the major news item and….”

“Did you notice anything?”

“Protocol was followed – there were two chairs titled towards each other clearly and unambiguously accepting that the President and the Prime Minister were chairing the meeting.”

“Yes and their selected party loyalists were seated on the side of their leader’s chair.”

“The PML-N leadership remains with Mian sahib?”

“Agreed anyway we had Sharjeel Memon, a Sindh government official seated there while Kundi sahib, who had been salivating at the possibility of Governor’s rule, was not there.”

“I heard Bilawal Bhutto Zardari gave Kundi a dressing down.”

“Kundi sahib does dress up doesn’t he? And then there is the matter of extremely carefully coifed hair and…”

“Dressing down has nothing to do with dressing, it means scolding.”

“Oh sorry anyway I noticed that the Interior Minister was sitting on the side of the Pakistan Peoples’ Party loyalists.”

“He is a neutral – the two men chairing the meeting supported his candidacy to parliament and cabinet.”

“Neutral as in Switzerland or neutral as in The Man Who Must Remain Nameless, Voiceless and Faceless…”

”You never do know when to stop! Anyway there could be two other reasons for Naqvi sahib’s placement - do you want to guess?”

“I heard from extremely well informed sources that the Deputy Prime Minister suggested the number of their party loyalists that would attend the meeting which left no chair empty for the Interior Minister.”

Right I heard the Deputy is not very happy with the interior Minister because the guy does not extend protocol to him as the Deputy Prime Minister.”

“That’s true the Interior Minister has yet to agree to the Deputy Prime Minister chairing any committee associated with his ministry, unlike other cabinet members - the Deputy sits on the sugar committee, the textile committee, the petroleum…”

“Don’t forget the Interior Minister has taken the lead role in the Foreign Ministry.”

“But I heard that after his stint in Musharraf’s jail the Deputy is kinda cautious…”

“As he should be, so back to the question: why did the Interior Minister sit on the side of the Peoples Party delegates?”

“By chance, once the League delegation sat down - the guests - the only empty chair was on the PPP side of the room and as we all know the waderas are very hospitable to their guests…”

“Right, right.”

Copyright Business Recorder, 2026

The Blue Economy has emerged as a global concept that promotes the sustainable utilisation of marine and coastal resources to generate economic growth, employment, trade and investment while ensuring the long-term protection of the marine environment. For a country like Pakistan, blessed with a coastline extending over 1,000 kilometres and strategically located at the crossroads of the Middle East, Central Asia and South Asia, the Blue Economy presents an enormous opportunity that has remained largely underutilised for decades.

Pakistan’s maritime sector extends far beyond ports and shipping. It encompasses fisheries, coastal tourism, offshore energy, shipbuilding, logistics, maritime services and numerous ancillary industries. Collectively, these sectors possess the potential to make a significant contribution towards GDP, employment generation and foreign exchange earnings. The Planning Commission deserves appreciation for recognizing that the maritime economy must become one of the future drivers of Pakistan’s economic growth, and that its development requires coordinated policy support, institutional reforms and greater private sector participation.

Pakistan’s maritime sector has experienced healthy growth, particularly since implementation of the landlord port model in the late 1990s whereby most cargo handling activities have been outsourced to the private sector on a long-term concession basis whilst the port authorities receive rents and royalties.

The adoption of the landlord port model proved to be a landmark reform for Pakistan’s ports. Under this model, the port authorities retained ownership of strategic assets such as land banks, navigation channels and common infrastructure while inviting private investors to finance, develop and operate specialized terminals through long-term concession agreements. This arrangement enabled the government to attract substantial private investment without imposing additional financial burdens on the public sector. It also introduced modern cargo handling equipment, improved operational efficiency and significantly reduced vessel turnaround times.

Today, Pakistan’s cargo terminals compare favorably with many ports in the region in terms of productivity and operational standards. Modern cargo handling equipment, computerised terminal operating systems, qualified human resources and continuous investments by terminal operators have substantially enhanced the country’s ability to handle increasing trade volumes. More importantly, the concession model has provided the port authorities with stable and predictable revenue streams through concession fees, land rentals and royalties while transferring commercial and operational risks to private investors.

Our port authorities have ample earnings and reserves and are able to self-fund their development budgets without relying upon PSDP allocations. One can therefore conclude the landlord port policy should be broadened to unlock greater value from Pakistan’s maritime assets. The outcomes of the landlord port policy are described in the tables below:

PQA:

KPT:

At present, the private sector is mostly engaged in cargo and terminal operations. However, there remain numerous areas of port operations where private investment and expertise can make a significant contribution. Services such as tug operations, pilotage support, dredging, repair and maintenance, safety and security, marine engineering, waste management and port support services can all benefit from greater private sector participation. International experience has repeatedly demonstrated that competition encourages efficiency, innovation and higher service standards while reducing the financial burden on government institutions.

Rather than concentrating exclusively on terminal concessions, future policy should encourage specialized operators with proven international expertise to participate in these complementary services with transparent regulatory oversight. This would not only improve operational performance but would also stimulate employment, technology transfer and local capacity building. The role of the government should increasingly evolve from being an operator to becoming an effective regulator and facilitator that ensures fair competition, safety standards and environmental compliance.

Another huge area of opportunity lies in the vast land banks owned by Pakistan’s port authorities. These valuable waterfront assets represent one of the country’s most underutilised economic resources. Instead of remaining idle or being used for low-value activities, these lands can be transformed into integrated commercial, residential, operational and recreational developments through carefully structured public-private partnerships.
The development of these land banks should not merely focus on real estate but should be integrated into the overall maritime ecosystem. International examples such as Singapore, Dubai, Rotterdam and Hamburg demonstrate how waterfront developments have become major economic assets by combining logistics, commerce, tourism and recreation within the port environment. Pakistan possesses similar opportunities, particularly at Karachi Port, Port Qasim and Gwadar, where substantial waterfront land remains available for future development.

The port authorities may contribute the land as equity whilst the private sector undertakes planning, investment, construction, operation and management of these facilities. Such a model would allow the ports to unlock the true commercial value of their assets without significant capital expenditure, whilst simultaneously generating recurring income through profit-sharing arrangements, leases and concession fees. This approach would also stimulate local and foreign direct investment and create thousands of direct and indirect employment opportunities.

Potential developments may include modern logistics parks, bonded warehousing complexes, distribution centres, office buildings, maritime business districts, hotels, conference facilities, crew accommodation, marine training institutes, ship handling centers and commercial retail developments. These facilities would not only enhance the attractiveness of Pakistani ports but would also strengthen their competitiveness against regional ports that already provide such comprehensive value-added services.

On the recreational side, there exists considerable scope for developing cruise tourism and waterfront entertainment facilities. Pakistan’s coastline offers immense natural beauty yet remains largely untapped from a tourism perspective. Cruise terminals catering to both domestic and international passengers, complemented by boardwalks, restaurants, cafés, shopping areas, cultural centres and public recreational spaces, could transform selected waterfront areas into attractive tourist destinations.

Many successful ports around the world have demonstrated that commercial ports and recreational waterfronts can coexist successfully. Developments such as Dubai Marina, Clarke Quay in Singapore and the waterfront districts of Sydney and Vancouver have generated significant economic activity whilst simultaneously improving the quality of urban life. Pakistan can adopt similar concepts whilst respecting local social and cultural values.

One may even suggest that designated and properly regulated hospitality facilities, including alcohol bars catering specifically to international cruise passengers and foreign tourists, could be considered within controlled port zones. Such facilities would be governed by existing laws and international hospitality standards, thereby enhancing Pakistan’s attractiveness as a regional cruise destination without compromising national regulations.

The recent geopolitical developments in the Middle East have unexpectedly highlighted Pakistan’s strategic maritime importance. Following the conflict involving the United States and Iran and the consequent uncertainty surrounding the Strait of Hormuz, shipping lines began evaluating alternative routing options to minimize operational risk and avoid potential disruptions.

The Strait of Hormuz remains one of the world’s most critical maritime chokepoints through which a substantial percentage of global oil exports and containerized trade passes every day. Any disruption, whether temporary or prolonged, has immediate implications for global shipping schedules, insurance premiums and freight costs. Consequently, shipping companies constantly seek reliable alternative ports capable of accommodating transshipment cargo whenever regional instability arises.

Pakistan’s ports benefited from this situation. The country witnessed a noticeable increase in transit and transshipment cargo, whilst vessel calls also increased compared with previous years. Even Gwadar Port experienced higher activity than witnessed in recent years, reflecting the growing international interest in Pakistan’s strategic location. Although these developments were primarily driven by extraordinary geopolitical circumstances, they nevertheless demonstrated the latent potential of Pakistan’s ports to serve as regional logistics hubs.

Most of the additional container traffic, however, was handled by Karachi Port due to the availability of Pakistan’s first state-of-art,modern deep-water container terminal, viz. South Asia Pakistan Terminals Limited (SAPTL). The facility possesses sufficient draft, modern ship-to-shore cranes and operational capacity to accommodate large mother vessels engaged in regional and international transshipment operations. This represents one of Pakistan’s most valuable competitive advantages, particularly as shipping lines increasingly deploy larger vessels in pursuit of economies of scale.

The ability to receive large container vessels has become increasingly important in global liner shipping. Modern container ships carrying more than 18,000 TEUs require deeper channels, stronger quay infrastructure, larger cranes and highly efficient terminal operations. Ports unable to meet these technical requirements risk being bypassed in favour of regional competitors. Pakistan has already made important investments in this direction; however, continuous dredging, infrastructure modernization and operational improvements remain essential if the country is to establish itself as a preferred transshipment destination in the region.

The opportunity created by the Strait of Hormuz crisis did not go unnoticed by Pakistan’s shipping community. Recognizing the possibility of attracting additional transshipment cargo, the Pakistan Ship’s Agents Association (PSAA) promptly submitted practical recommendations to the Government aimed at enabling Pakistan to capitalize upon the prevailing circumstances.

The association recommended permitting the storage of transshipment cargo at off-dock terminals by suitably amending the existing Customs rules and operational procedures and thereby significantly enhancing the flexibility of Pakistan’s logistics chain by reducing congestion inside the port, improving cargo handling efficiency and enabling terminals to accommodate higher cargo volumes during periods of increased demand. Off-dock facilities have become an integral component of modern port logistics throughout the world, allowing ports to optimize scarce waterfront space whilst maintaining efficient cargo flows between terminals, warehouses and inland destinations.

The Association also recommended permitting the handling of Less than Container Load (LCL) cargo for transshipment purposes. Although LCL cargo represents relatively smaller consignments belonging to multiple shippers, it constitutes a substantial segment of international trade (circa 25 percent). Many regional logistics hubs have successfully developed specialized consolidation and deconsolidation services for LCL cargo, thereby generating additional revenue, employment and value-added logistics activities. Allowing Pakistan to participate in this segment would further strengthen its position as a regional distribution and consolidation centre.

It is heartening to note that the Government responded positively to these recommendations and issued the necessary Statutory Regulatory Orders (SROs) within a relatively short period. Meanwhile, the port authorities reduced various charges applicable to transshipment cargo in order to improve Pakistan’s competitiveness. Such timely coordination between government agencies, regulators, port authorities and the private sector demonstrate what can be achieved when policy decisions are aligned with emerging commercial realities.

However, temporary policy measures alone will not be sufficient to establish Pakistan as a permanent regional transshipment hub. The real challenge now lies in converting this short-term opportunity into a sustainable long-term business model capable of attracting shipping lines even after regional geopolitical conditions return to normal. Shipping companies make investment decisions based upon reliability, efficiency, cost competitiveness and long-term policy stability rather than temporary incentives.

Accordingly, Pakistan now requires a comprehensive commercial and marketing strategy jointly developed by the Ministry of Maritime Affairs, port authorities, terminal operators, Customs authorities and the private sector. Such a strategy should actively promote Pakistan’s ports to international shipping lines, global logistics companies and cargo owners by highlighting the country’s strategic geographical location, modern terminal infrastructure, competitive costs and improving connectivity. Marketing our ports internationally should become a continuous exercise rather than an occasional response to extraordinary events.

Equally important is the need to simplify procedures, accelerate Customs clearances, improve digitalization, reduce documentation requirements and ensure predictable regulatory processes. Global shipping lines place immense value on certainty and efficiency. Even marginal improvements in turnaround time, documentation and cargo clearance can significantly influence routing decisions, creating millions of dollars of additional revenue.

The regional transshipment market is estimated at approximately 25 million TEUs annually. Even securing a modest share of this market would represent a transformational achievement for Pakistan’s maritime sector. Increased transshipment activity generates additional revenue not only for ports and terminal operators but also for shipping agents, freight forwarders, transport companies, warehousing operators, customs brokers, banks, insurance companies and numerous ancillary service providers. The resulting multiplier effect extends throughout the national economy, creating employment opportunities and strengthening Pakistan’s position within regional and global supply chains.

According to the Container Port Performance Index (CPPI) 2025, jointly published by the World Bank Group and S&P Global Market Intelligence, PQA’s score climbed to 60.1 in 2025 from a baseline of 8 in 2020, a 52-point gain thereby ranking fifth amongst the world’s 20 fastest-improving container ports over the 2020–2025 period. Meanwhile, KPT climbed thirty places, moving from 99th to 69th  position.

Another recent encouraging development is the improvement in Pakistan’s Liner Shipping Connectivity Index (LSCI), which increased from 150.90 to 161.55. The LSCI was developed by the United Nations Conference on Trade and Development (UNCTAD) in 2004, and Pakistan is now ranked among the top 5 percent of countries globally in liner shipping connectivity. Although this may appear to be a statistical indicator, it is, in reality, an internationally recognized measure of a country’s integration into global liner shipping networks. A higher connectivity index reflects better shipping services, increased vessel calls, improved network coverage and greater choices (i.e. competition) for importers and exporters. Ultimately, stronger connectivity contributes towards lower logistics costs, improved supply chain resilience and enhanced competitiveness of the country’s international trade.

The recent improvement in Pakistan’s connectivity index should therefore be viewed not as an end in itself but as an encouraging indication that the reforms undertaken over the past several years are beginning to yield positive results. Sustaining this momentum will require continued investment in port infrastructure, channel deepening, digital transformation, regulatory modernization and close collaboration between government institutions and private stakeholders.

The Blue Economy framework provides Pakistan with an opportunity to rethink the role of its maritime sector within the national economy. Rather than viewing ports solely as gateways for imports and exports, they should increasingly be regarded as engines of economic development capable of attracting investment, supporting industry, strengthening regional trade connectivity, generating employment and promoting tourism. Success will depend not only upon infrastructure investment but equally upon sound governance, commercial thinking and a willingness to embrace international best practices.

Pakistan possesses the geographical advantage, the basic infrastructure and the private sector capability necessary to become a significant maritime and logistics hub in the region. The challenge before policymakers is to build upon the progress already achieved, capitalize upon emerging opportunities and formulate long-term policies that inspire confidence among investors and the international shipping community. If this vision is pursued with consistency and determination, the Blue Economy can evolve from a policy document into a powerful engine of sustainable economic growth, making Pakistan’s maritime sector one of the country’s most valuable strategic assets in the decades ahead.

The foundations have already been laid. What Pakistan now requires is continuity of policy, sustained investment and a shared commitment by both the public and private sectors to realise the full potential of the country’s Blue Economy.

A legislature presented with a list negotiated elsewhere, under a disbursement deadline, may possess the formal power to vote but little practical room to deliberate. What precisely are these amendments? Which among them were proposed by Pakistan? Which are essential to a balance of payments programme? Their texts and reasons must be public before anyone calls their passage “reform”.

Reported subjects range from taxation and electricity distribution companies to the sovereign wealth fund, sugar policy and Islamic banking. The National Fiscal Pact with the provinces is also among the programme commitments. The committee has asked for measurable results, costs and timelines, and questioned the treatment of provincial surpluses, privatisation assets and consumer burdens. Those are the questions Parliament should have asked before commitments were made.

A tally of 174 does not, by itself, mean 174 constitutional amendments; the government must publish a provision-by-provision inventory so that ordinary statutory changes are not confused with alterations to the federal compact.

That compact is the 1973 Constitution. Adopted after the dismemberment of the country, it remains our hard-won consensus on how different peoples can inhabit one federation. Its Senate, provincial legislatures, Council of Common Interests (CCI), National Economic Council (NEC) and National Finance Commission (NFC) were designed to make disagreements negotiable.

The Eighteenth (Constitutional Amendment) Act of 2010 renewed this bargain through parliamentary consensus. Article 239 prescribes the demanding procedure for a constitutional amendment: a two-thirds majority of the total membership of each House.

A change to a province’s boundaries needs its assembly’s two-thirds approval as well. These safeguards are commitments to consent, not procedural inconvenience. No financial institution and no federal negotiating team can substitute its own timetable for that constitutional process.

The NFC is a particular target of convenient arithmetic. Islamabad says too much revenue goes to the provinces while debt service and defence remain with the centre. The provinces ask why federal expenditure did not shrink after functions were devolved, why federal authorities retain taxes and levies outside the divisible pool, and why districts receive so little power or money.

These are real questions. Calling Article 160(3A), which protects the aggregate provincial share against reduction in a later award, an obstacle to “stabilisation” answers none of them. The World Bank’s recent fiscal federalism study identifies the federal failure plainly: higher transfers after the Seventh NFC Award were not matched by lower federal spending, and revenue collection stagnated.

It also documents weak provincial tax effort, spending tilted towards salaries and pensions, and the neglect of local governments. Its published account presents reform options within the existing constitutional framework and calls for dialogue. That is a more useful starting point than treating the Bank’s analysis as a warrant to confiscate provincial fiscal space. Fiscal diagnosis does not confer constitutional authority.

Provincial governments cannot hide behind autonomy either. They must tax high agricultural incomes effectively, make property records credible, publish service outcomes and stop absorbing new resources into administration. Education, health, water and sanitation have to reach people, not merely budget documents.

Article 140A requires elected local governments with political, administrative and financial responsibility. Provincial Finance Commission awards, predictable transfers and meaningful own-source revenues must give that requirement life. The remedy for poor provincial performance is public accountability and deeper devolution, not another round of centralisation in Islamabad.

There is also a question of honest accounting. When petroleum sales tax is kept at zero and the petroleum levy rises, revenue that would have entered the sales-tax divisible pool is replaced by a receipt retained at the centre. The provinces’ protected percentage of the pool may remain unchanged while the pool itself is starved.

We have repeatedly argued that the economic incidence and constitutional consequences of this choice should be disclosed alongside every federal budget. Provincial cash surpluses extracted to satisfy an IMF target cannot be advertised as a durable solution while the underlying assignments of expenditure and revenue remain unresolved.

The Finance Division now describes the IMF programme as a “whole-of-government” exercise and acknowledges that agricultural taxation belongs to the provinces. Its own description reinforces the need for constitutional discipline. A finance secretary may coordinate negotiations, but cannot bargain away a provincial legislature’s competence.

A provincial executive may discuss a fiscal pact, but cannot bind its assembly to a hidden text. Parliament may amend an ordinary law, but cannot enact a constitutional change by disguising it as a technical condition in a finance bill.

Nor should Pakistan’s difficulties be blamed entirely on foreign lenders. Successive governments chose short cuts: taxing transactions instead of income, offering privileges to powerful sectors, borrowing for current expenditure and retaining devolved functions. They return to the IMF because these choices have made them dependent.

The creditor did not invent our failure to enforce agricultural income tax or create effective municipal governments. Its influence grows when elected representatives surrender their own responsibility. The answer is to recover that responsibility, not to pretend the economy needs no financing.

The IMF itself said this month that its new approach should favour fewer, deeper reforms tailored to a country’s capacity and ownership. How does a demand reportedly involving 174 legislative changes meet that standard?

The government and the Fund should distinguish binding structural benchmarks from negotiating proposals and domestic initiatives. They should explain the macroeconomic purpose, implementation cost and social impact of each. If a measure changes the balance between the federation and its units, the proper forum is the CCI, the NFC or Parliament, as the Constitution requires; a staff-level agreement cannot be the final word.

Start by publishing the complete list of amendments, the National Fiscal Pact, every relevant memorandum and the associated impact assessments. Give the standing committees time to call provincial finance ministers, independent economists, tax practitioners, businesses, workers and local-government representatives.

Place each proposed law before the competent legislature as a separate, intelligible measure. Publish the proposed provincial surpluses together with the federal expenditure cuts and revenue measures on which they depend. The Article 160(3B) implementation reports must be laid before Parliament and provincial assemblies, as the Constitution already commands.

Then convene a genuine NFC process. It can reconsider horizontal weights, fiscal need, provincial tax effort and service delivery while observing the constitutional floor on the provinces’ collective share. Federal ministries operating in devolved fields should be audited and rationalised.

Sales taxation and administration can be harmonised through consent, without extinguishing provincial taxing powers. Restore the NEC and CCI as working forums. Give elected cities and districts the funds and authority to deliver services and face voters. Such reforms require political courage because they confront patronage at every level.

Pakistan needs investment, external stability and a tax system that can pay for public services. A lender can supply finance and technical evidence; it cannot supply the consent on which a federation survives.

The 1973 Constitution is the last credible framework for holding this country together. Amend it, if necessary, after open public debate and agreement among its elected representatives and federating units. To let loan reviews set the terms of that bargain would be a political failure no tranche could repair.

Copyright Business Recorder, 2026

During the 1980s, Chinese policymakers engaged in vigorous internal debate regarding whether to adopt “shock therapy” policies. Ultimately, they rejected these measures to avoid the pitfalls of neoliberal austerity, which has produced profound economic misgivings globally over the last four decades.

A clear example of these misgivings can be seen in Pakistan, which has followed neoliberal austerity policies for decades by significantly reducing the public sector’s footprint in economic policymaking and regulation. This approach has elevated financial instability both within individual nations and globally, leading to more frequent and intense financial crises.

Also read: Learning from China’s economic philosophy and policy — IX

Consequently, these policies have accelerated the climate crisis, increased inequality, reduced economic resilience, and diminished the power of the political voice.

To highlight this aspect further with regard to the ‘transitional’ nature of Chinese economy, the same handbook pointed out: ‘On June 24, 2016, the then-governor of the People’s Bank of China (PBC), Zhou Xiaochuan, delivered the 2016 Michel Camdessus Central Banking Lecture, titled “Managing Multi-Objective Monetary Policy: From the Perspective of Transitioning Chinese Economy,” at the International Monetary Fund (IMF) in Washington, DC.

Also read: Learning from China’s economic philosophy and policy — VIII

During the lecture, Governor Zhou observed that “as China has the feature of both a large transition economy and an emerging market economy, the central bank of China and its monetary policy are yet to be well understood by the outside world.”’

Hence, given the success of the wholesome policy, and audit approach adopted by China, within which lies the role of monetary policy, and the extent of central bank independence are nested as subservient to the overall economy goals of the country in a coordinated, and unified way. This should provide an important learning opportunity for Pakistan, which apparently has not been served well through the neoliberal thought process in terms of reaching an appropriately desirable level of central bank independence.

Also read: Learning from China’s economic philosophy and policy — VII

Hence, the country should try to enhance its understanding of an otherwise not so ‘well understood’ monetary policy framework adopted by China.

Within the ambit of conduct of an appropriate monetary policy is to lower risk of non-performing loans (NPLs) in an overall effort to rein in profit-making to avoid financial crises as much as possible.

Diminishing role of regulation under the neoliberal assault led to the Global Financial Crisis 2007-08, whereby very risky loans were made over the years.

Also read: Learning from China’s economic philosophy and policy — VI

On the contrary, China by not adopting over-board deregulation, and liberalization policies under Neoliberalism, remained significantly cautious towards keeping the economy at a low risk level by putting in place a highly meaningful level of regulation of banking sector, and overall capital controls, in turn, not giving in to shock therapy policies of diminishing the role of public sector oversight of economy, including the financial sector.

In Pakistan, a primary reason for non-performing loans (NPLs) has been a loosening focus on implementing meaningful regulation and capital controls under a neoliberal policy mind-set over the years. Consequently, the financial sector has traditionally suffered from significant levels of NPLs.

This issue is driven by an overriding motivation to issue loans based purely on profit signals, rather than considerations of productive and allocative efficiencies.

Also read: Learning from China’s economic philosophy and policy — V

Furthermore, credit allocation has failed to maintain the policy space necessary to foster economic inclusivity and resilience through strategic financing.

The same handbook regarding China’s financial system pointed out in this regard: ‘In the late 1990s, as a result of the Asian financial crisis and management problems within the Chinese banks, substantial non-performing loans accumulated in China’s banking system, preventing the banks from making new loans.

To deal with the challenges caused by the financial crisis, the Chinese government urgently needed both to recapitalize the state-owned banks and to lower the amount of the non-performing loans. …The Chinese government created a new scheme that distinguished “good” banks from “bad” ones.

Also read: Learning from China’s economic philosophy and policy —IV

By carving out the nonperforming assets from “good banks” and concentrating the bad assets in “bad banks,” the Chinese government ensured that the “good banks” could operate normally.’

A distinguishing feature is the high level of democratic input, through the country’s ‘highest organ of state power’ in the shape of National People’s Congress (NPC) selecting banks for capital injections. This is in contrast to such decisions made under limited orientation of public sector under the neoliberal assault, whereby such decisions are considered mostly at the cabinet level, based on the input mainly from the central bank. This in China would be like taking the decision at the State Council level on the basis of central banks’ input.

Hence, not just the executive branch (SC) is involved but larger discourse is engaged in the shape of NPC to address how best public finance is utilized to support deserving banks.

Also read: Learning from China’s economic philosophy and policy — III

The extensive diversity of opinion reflected in the NPC can be gauged from the details provided by the ‘responsibilities’ section of NPC as ‘The NPC is the highest organ of State power in China. It is composed of NPC deputies who are elected from 35 electoral units according to the law. These units include people’s congresses of provinces, autonomous regions, municipalities directly under the central government, the servicemen congress of the People’s Liberation Army, the deputy election council of the Hong Kong Special Administrative Region, the deputy election council of the Macao Special Administrative Region and the Taiwan compatriots’ consultation election council.’

Also read: Learning from China’s economic philosophy and policy — II

Moreover, unlike the countries following neoliberal policies, whereby as a result of these shock therapy policies, overall reining in of regulation, which saw a diminishing trend, resulted in over-financialization that resulted in significant rise in risky loans made by the banks, which resulted in the increase in the frequency of financial crises over the decades, especially in terms of GFC 2007-08, China remained cautious, putting in place strong regulatory mechanisms over different phases of its overall financial sector situation, including banking sector. This provided it the financial stability that was necessary for the impressive economic growth, overall, for many years now; not to mention, as indicated before, the extensive footprint of government deposits in banks allowed it to play a meaningful role to balance the profit objectives of the banks with the overall efficiency, and productive needs of the real economy.

Also read: Learning from China’s economic philosophy and policy – I

The same handbook highlighted the overall extensive role of public sector guiding the financial sector in China in a purpose-driven way to deliver greater productive and allocative efficiency for the real sector in an inclusive, and mission-oriented way to overall boost economic growth, while placing macroeconomic stability on a strong footing by putting aggregate demand of finance towards more meaningful level of investments, resulting, in turn, in timely and more diverse scope of aggregate supply. This experience provides a substantial learning curve for countries, including Pakistan, which are following neoliberal policies, which favour virtually unfettered markets, and overall little role of public sector.

(To be continued…)

Copyright Business Recorder, 2026

Much of it I agree with: Pakistan’s financial system is bank-centric to an unhealthy degree, its capital markets shallow, its pension pools tiny, and savers deserve a menu, not a monopoly. On this, Dr Haque, Mr Shahid Kardar and I are of one mind.

But the article also levels a series of charges against banks and the State Bank, some resting on facts that need correcting, some more populist than precise. Let me take them one by one, beginning with the arithmetic, because everything else must be tested against it.

1. “Banks lend at almost exactly the rate anyone would”

This is the one point on which we agree, and it is the foundation of everything else. My Profit article asked how much Pakistani banks would lend if they operated on their neighbours’ field. Put each neighbour on Pakistan’s field, a money supply more than a quarter of which is cash, an economy barely half documented, and a sovereign absorbing three-fifths of bank assets, and every one of them lends at roughly Pakistan’s level (Chart 1). Dr Haque accepts the arithmetic and then calls “different field” an admission rather than a defence. It is neither; it is a diagnosis. If the field explains the behaviour, the field is the problem.

Chart 1: Private credit to GDP, as reported and on Pakistan’s field

2. “A cartel, supervised rather than disciplined; entry is club-based; FX runs only through banks”

Dr Haque, being a responsible intellectual, I am sure uses the word as a metaphor for a sector that has grown comfortable. Even as a metaphor it does not survive the facts. A cartel is a small, closed club that keeps newcomers out and coordinates what it charges. Pakistan has more than thirty scheduled banks, eleven microfinance banks and five digital banks licensed in 2023; RBS, HSBC, Barclays and Citi’s consumer franchise chose to leave, which no member of a rent-rich club ever does; the floor on savings deposits is set by the State Bank, lending is priced off a published interbank benchmark, and the yield on government paper is set in the state’s own auction, where banks bid against each other. When the largest borrower is also the price-setter, there is nothing left for a cartel to coordinate. Nor is entry club-based: five digital licences were issued in 2023 under published, risk-based criteria, and foreign exits alongside domestic mergers are what a contestable market looks like. And foreign exchange running through banks is not a Pakistani annexation; interbank FX is a dealer-bank market in every financial centre on earth, while retail FX here runs through licensed exchange companies that the State Bank has spent three years strengthening. The indictment fails.

3. “Banks bought the competition; NBFIs were forced to shrink”

The data say otherwise. Mutual fund assets stood at a record Rs 4.3 trillion in January, up from about Rs 3.5 trillion a year earlier; an industry being strangled does not post record after record. The largest managers are bank-sponsored, but so are India’s: SBI, ICICI and HDFC own its largest fund houses. Every such subsidiary here was licensed by the SECP, not the State Bank, and roughly half of the twenty licensed managers, including Atlas, Lakson, Lucky and Pak-Qatar, have no bank parent. And a money-market fund facing a sovereign that pays double digits will buy that paper whoever owns it.

4. “A spread of 7.82 against India’s 2.71”

A gross spread says little until one looks inside it. Four things widen Pakistan’s number before a rupee of profit is earned. Adjust for the four and the gap closes: the tax wedge alone accounts for over a percentage point, reserve costs for about half a point, the credit-cost differential for at least another, and the deposit-mix effect for much of the rest, leaving an underlying spread within touching distance of India’s 2.71. The levelling that closes the credit gap closes the price gap too.

Table 1: Decomposing the lending-deposit spread

5. “Profitability reflects pricing power, not productivity”

The profit story is the rate story. Net interest margins fell from about 5.8 to 4.5 percent in a single year as the policy rate came down from twenty-two percent, and the State Bank’s own review records profitability moderating in each of the last two years. A cartel’s profits do not track the policy rate; a banking system’s do. Return on equity tells the same story, and it bears on entry. It peaked in the mid-twenties when the policy rate stood at twenty-two percent and inflation ran higher still, so in real terms capital barely held its value, and it is now falling toward the low-to-mid teens where Indian banks sit, 13.5 percent last year on the RBI’s own count. If barriers to entry were protecting excess returns, global banks would have fought to get in rather than queued to leave; a risk-adjusted return this ordinary is what a contestable market produces. Strip out the tax and reserve costs in Table 1 and no regulator anywhere would call the residual pricing power.

6. “Allocative failure: three-fifths of assets in government paper”

This is not an allocation banks made; it is the residual the fiscal position leaves. Last year the government borrowed from banks more than four times what the entire private sector received. Dr Haque himself quotes Mr Kardar that the state’s financing need, arguably for all the right reasons, is the most important explanation for the system’s shape. Blaming the banks for the size of the sovereign’s claim is blaming the reservoir for the size of the dam.

Chart 2: Government securities as a share of bank assets, Pakistan and peers

7. “SBP injects liquidity, banks lend it back to the state; SBP is financing fiscal dominance”

This inverts the sequence. The government finances its deficit in the market, and every auction drains liquidity from the banking system into the treasury’s account. Open market operations replace what the government has withdrawn, at the policy rate, against collateral: the price of ending the old, direct fiscal dominance, not a new form of it. The stock is large because the deficit is large.

Nor is this peculiar to Pakistan. In the week Dr Haque’s article appeared, Bloomberg reported that London banks had drawn nearly £129 billion in a single week from the Bank of England’s repo facility at 3.75 percent to buy gilts yielding 5.4 percent, and the Bank said it welcomes the practice as normal liquidity management. What London treats as plumbing working as designed, we are asked to treat as a cartel, on a far thinner spread.

Money is, in any case, fungible. A rupee raised through an open market operation sits in the same pool as a rupee of deposits, and a bank with a documented, bankable borrower in front of it will lend it whichever door it came through. Banks lend to every borrower they can see and park the remainder in the only asset left. Funding was never the constraint; documentation was.

8. “No origination effort; managing a low-risk franchise”

Banks cannot lend to what they cannot see. Pricing risk requires audited accounts, tax returns and a traceable cash flow, and most Pakistani businesses choose to stay below the tax radar. That choice is theirs, not the banks’. Where the field has been levelled, the same management shows what it does: in three years The Bank of Punjab has delivered interest-free credit to around a million farmers and interest-free mortgages to hundreds of thousands of families, with recovery close to complete, because the province shared the risk and the borrowers were documented on the way in. Demand was never the problem; de-risked supply was.

9. “Fees rise unchecked, clearing is slow and banks earn float; and the innovation is only better plumbing for the same pipe”

Most bank charges are capped or scheduled by the State Bank and published; Raast transfers are free by regulation. Slow clearing described Pakistan a decade ago. Today Raast settles in seconds, 1Link transfers are near-instant and cheques clear next day. There is no float on a payment that settles before the customer has put the phone down. The numbers show how far the counter has emptied: digital transactions have grown six-fold since FY19 while counter transactions have stood still, and more than nine in ten retail payments are now made digitally.

(To be continued tomorrow)

Copyright Business Recorder, 2026

“That’s the protocol I think.”

“OK but I never saw that before – I mean that is not TO say that he didn’t salute the Prime Minister but it was never shown on television before or at least I never saw it….”

“In that case, we need to put Tarar sahib of the Information Ministry on the mat.”

“Tarar sahib is doing the best job possible, so perhaps he may have mentioned that all were following protocol but I just didn’t……”

“It’s not Tarar sahib place to talk of the titans, besides I don’t think he has been in the frame when, how shall I put, the titans meet.”

“What frame?”

“The picture frame.””

“OK neither have I, but you know all the cabinet members, just under 60 in number, have shown a preference for addressing the public on television rather than calling a press conference that would allow for questions from the media….”

“Those questions are answered on talk shows.”

“But the Titans don’t come on talk shows!”

“They are very busy - institutions have their media cells and political parties have designated those who can come on these shows and the number is not large….”

“How large?”

“Well far less than the cabinet.”

“Right anyway the two titans met at the Prime Minister’s house and momentous decisions were reportedly taken.”

“What decisions….”

“No press release has been issued by spokespersons of either of the two titans however speculation is rife…”

“Ah the birthing of a conspiracy theory!”

“OK but with the titans the life span of a conspiracy theory is very short.”

“How short?”

“From days to perhaps a week.”

“And given that we, as a nation, are lovers of conspiracy theories how long is the life span of non-titan….”

“Could be longer than a decade – our investigations sometimes last decades before being made public.”

“Shush.”

Copyright Business Recorder, 2026

Pakistan’s electricity debate has become fixated on capacity payments, and understandably so: consumers are paying for generation that is not always used, tariffs have risen, grid demand has weakened and circular debt continues to accumulate. But the argument usually stops at the power plant’s invoice. The more consequential test is whether the system can move the cheapest available electricity from where it is produced to where it is needed.

When it cannot, Pakistan pays a second capacity charge – one that is not separately named on the bill. Efficient plants are held back, more expensive units are dispatched closer to load, renewable energy is curtailed, industries face interruptions, and consumers pay for both the unused cheap capacity and the costly substitute. This is the hidden capacity charge of transmission congestion.

The bill we do not publish

The distinction matters. A contractual capacity payment compensates a generator for making capacity available under an agreed power-purchase contract. Congestion cost is different: it is the economic loss created when the network or system-operating arrangement prevents least-cost dispatch. The first is visible in invoices. The second is scattered across fuel-cost adjustments, out-of-merit generation, renewable curtailment, technical losses, load-shedding and foregone industrial output.

That distinction matters because transmission congestion converts an accounting debate into a system-performance debate. If the grid cannot deliver least-cost power, consumers still pay for capacity on paper while the economy pays again through higher dispatch costs, curtailment and lost production. Treating congestion as a measurable charge would give Pakistan a clearer reform target than another round of contract-by-contract argument.

NEPRA has repeatedly identified transmission constraints as a barrier to optimal dispatch. More pointedly, in a July 2026 determination on national-grid use-of-system charges, the regulator recorded a cumulative loss of around Rs60 billion from out-of-merit generation caused by system constraints. That figure is important because it puts a rupee value on a problem usually described in engineering terms. But it is still only the portion the accounting system can see; it does not fully capture curtailed renewable energy, unserved load, damaged industrial output or the higher risk premium faced by investors who cannot rely on evacuation.

The problem is not simply that Pakistan has built too few transmission lines. It is that generation and transmission have too often been planned as separate bureaucratic exercises. Power plants acquire contracts, financing and political sponsorship; the network is expected to catch up later. By the time a corridor becomes binding, the country is already paying capacity charges on the plant and higher operating costs because its output cannot reliably reach consumers.

This is why renegotiating generation contracts alone cannot cure the power sector. Even if a plant’s capacity charge is reduced, the system still wastes money whenever cheaper output is trapped behind a constraint. Conversely, a well-chosen network or flexibility investment can lower the delivered cost of power without reopening a single contract. Pakistan’s reform debate therefore needs to move from the price of individual assets to the cost of serving load across the whole system.

International evidence shows why counting kilometres of new lines is not enough. The US Department of Energy’s July 2026 draft National Transmission Needs Study found that about 85,000 circuit-miles were added or rebuilt between 2016 and 2024, yet congestion still cost roughly US$11 billion in 2023. Most of that cost was concentrated in only 5 percent of hours. The lesson for Pakistan is not to copy the US grid, but to recognise the pattern: a small number of locations and hours can create a disproportionately large bill, and targeted transmission, storage, demand response or operating changes may outperform indiscriminate network expansion.

Pakistan would not be starting from scratch. In the United States, organised power markets such as PJM use locational marginal pricing to make congestion visible by time and location, while PJM’s market data publishes binding transmission constraints and shadow prices. Great Britain’s National Energy System Operator publishes forward-looking, constraint-cost forecasts for major transmission boundaries and also releases constraint breakdown data explaining why balancing actions are taken. Australia’s Congestion Information Resource consolidates information on constraint risk, and AEMO’s constraint reports track constraint-equation performance, congestion patterns, pricing and dispatch impacts. Pakistan does not need to copy any one model wholesale; it can borrow the common principle that congestion should be measured, priced, published and used to rank the next rupee of grid or flexibility investment.

Create a national congestion ledger

Pakistan should begin by making the hidden charge visible. The system operator and regulator should publish a monthly national congestion ledger that records non-dispatched least-cost generation, out-of-merit dispatch, redispatch cost, renewable curtailment, unserved energy, binding corridors, transformer overloads and the duration of each material constraint. It should also identify the 10 costliest bottlenecks, estimate their rupee impact and show whether the cost came from fuel substitution, curtailment, unserved demand or network limitations.

This does not require Pakistan to implement full nodal pricing tomorrow. The system operator already possesses dispatch, plant-availability and network data. It can use that data to estimate internal nodal or zonal shadow prices: the marginal rupee value of relieving a particular constraint at a particular time. Even if the retail tariff remains uniform for now, publishing these values would show policymakers where an additional megawatt of transfer capability, storage or flexible demand is worth the most.

A congestion ledger would also change the quality of investment decisions. Transmission projects should be ranked by the total value they create: avoided fuel and redispatch cost, lower curtailment, reduced unserved energy, improved resilience and access to cheaper future generation. A line that looks expensive as an engineering asset may be cheap compared with 10 years of non-dispatch from efficient plants. Conversely, a politically attractive line may have little economic value if the same constraint can be relieved more quickly or more cheaply through topology changes, dynamic line ratings, reactive-power support, batteries or demand response.

The ledger should be independently auditable. Constraint codes, dispatch instructions and curtailment events must be time-stamped and linked to the relevant network element. The regulator should reconcile the system operator’s calculations with plant invoices and fuel-cost adjustments. Without such discipline, every institution will continue to define the problem in a way that protects its own performance: generators will blame the grid, the grid will blame plant availability, and distribution companies will blame demand. A common dataset is the beginning of accountability.

Plan the system, not a sequence of assets

The Indicative Generation Capacity Expansion Plan and transmission plan should therefore be co-optimised under common scenarios for demand, hydrology, fuel prices, distributed solar, storage and industrial load. Pakistan’s demand profile is changing rapidly as high tariffs push households and businesses towards rooftop solar and self-generation. Planning transmission against yesterday’s demand curve risks building the wrong corridors while neglecting the evening ramp and the nodes where new solar is already straining distribution networks.

Storage must enter this calculation as infrastructure, not as a fashionable solar accessory. A battery at a constrained node can provide fast balancing, defer a network upgrade, absorb curtailed energy and support the evening peak. Industrial demand response can achieve a similar result if consumers are paid to shift load during the few hours when congestion is most costly. Procurement should specify the service—response speed, duration, location and availability – rather than prescribe a preferred technology.

The same logic applies to market reform. A competitive wholesale market cannot function if all locations are treated as economically identical and network access remains uncertain. Prices must reveal scarcity by time and location, while regulated network charges must reward availability, loss reduction and timely connection. Uniformity may be politically convenient, but hidden locational costs do not disappear; they return as subsidies, capacity payments, circular debt or load-shedding.

That makes a congestion ledger a necessary pre-step for CTBCM and any proposed auction of capacity, even for those who remain sceptical about how much these reforms can deliver. In practice, CTBCM’s impact is likely to be modest unless it confronts the legacy costs embedded in wheeling charges, cross-subsidies and already-contracted generation capacity. If most capacity is already locked in, and if network charges continue to socialise past decisions rather than reveal the cost of serving load at particular locations, competition will remain little more than a footnote, let alone the foundation of a genuine market. A ledger would not solve those problems by itself, but it would expose where the system is actually constrained, where capacity has economic value, and where auctions or bilateral trading would merely repackage existing obligations.

Pakistan does need more transmission investment, but the answer is not another undifferentiated list of projects. It is a transparent system that measures constraints, assigns them a rupee value, compares wires with non-wire alternatives and holds planners accountable for delivery. The first reform should therefore be simple: publish the cost of the grid’s 10 largest bottlenecks every month. Once the country can see its hidden capacity charge, it can begin to reduce it.

Nor should Pakistan pretend that the massive cost of upgrading the system can be met by tinkering at the margins. A credible reform programme must decide upfront who pays for legacy obligations, domestic-sector subsidies and cross-subsidies, rather than hiding them in wheeling charges, uniform tariffs or future circular debt. Tariff redesign, aligned much more closely to cost of service, is the reform nobody seems eager to own; yet sector financial sustainability will remain elusive unless prices, subsidies and network charges are made transparent enough to show who is being served, what it costs to serve them and who is paying the difference. If those costs remain buried, new transmission investment will struggle to attract finance, competitive supply will be distorted before it begins, and every market signal will be asked to carry political decisions it was never designed to bear.

That transparency would also improve financing. Development partners and private investors are more likely to fund a corridor, battery or grid-enhancing technology when the avoided cost is visible, the beneficiary is identifiable and performance can be verified. Instead of asking lenders to finance another generic transmission programme, Pakistan could procure solutions to defined constraints and tie payment to transfer capability or congestion relief actually delivered. That is how an engineering problem becomes a bankable reform platform.

Transparency is therefore not a technical add-on to market reform; it is the condition that makes market reform credible. CTBCM, capacity auctions and bilateral contracting can only discover value if the system first reveals where power can actually move, where congestion destroys least-cost dispatch, and where new capacity or flexibility would lower the delivered cost of electricity. Without that visibility, Pakistan risks designing a market around legacy obligations and hidden subsidies. With it, the country can begin to turn competition from a slogan into a disciplined process for reducing the true cost of serving load.

Look at the motorcycle parked outside a small workshop. Look at the rickshaw waiting outside a hospital. Look at the delivery rider checking his phone for his next order.

Look at the man who fills his motorcycle before leaving for work every morning, already knowing exactly how much money he has in his pocket and how much of it will be left at the end of the day.

For these people, petrol is not a luxury. It is part of the cost of earning a living.

That is the starting point from which the Prime Minister’s Special Relief Scheme should be understood.

The recent turmoil in the Middle East and resulting pressure on international oil markets have created a difficult situation for countries such as Pakistan, which depend heavily on imported fuel. When international prices rise, the impact does not remain in global markets. It eventually reaches the petrol pump, the transport system, the price of goods and, ultimately, the household budget.

Read More: Fuel relief scheme: How to get Rs100/litre petrol subsidy?

The question for government is then straightforward: when fiscal space is limited, how do you provide meaningful relief to the people who feel that shock most directly?

The government has chosen a targeted answer.

Instead of subsidising petrol for everyone, the scheme focuses on motorcycles, rickshaws, Qingchis and vehicles up to 800cc.

That distinction matters.

A person using a motorcycle to get to work or make deliveries is not necessarily in the same economic position as someone filling the tank of a much larger vehicle.

Targeting the relief does not solve every problem. But it does recognise an important reality: when resources are limited, assistance has to be directed towards those who need it the most.

The most interesting part of the scheme, however, may not be the announcement itself. It is what happened after the announcement.

Within days, the government received feedback from citizens and changed the mechanism.

The five-litre minimum requirement for motorcycles, Qingqis and rickshaws was removed. Eligible users can now receive a Rs500 weekly token even if they purchase less than five litres of petrol. They can receive one such token every week, up to four tokens a month.

That may sound like a small administrative adjustment sitting somewhere inside a government notification. It isn’t.

Think about the person for whom even five litres may be difficult to purchase in one go.

For a salaried family or a daily-wage household, money is often managed day by day. A policy that looks perfectly reasonable from behind a desk can become inconvenient when it meets real life.

The government changed the rule. That is what responsive policy should look like.

The same applies to the decision to extend eligibility for two- and three-wheelers to vehicles up to 20 years old.

We sometimes talk about an old motorcycle as though it is simply an old motorcycle. For the family that owns it, it may be the vehicle that takes the father to work, the mother to the market, the child to school and a delivery rider to his next customer. Its age does not make it less important to that household.

In fact, the opposite may be true: people who cannot afford a newer vehicle are precisely the people for whom the cost of keeping an older one running matters most.

The scheme also continues to provide relief for vehicles up to 800cc, through three 10-litre tokens each month, with Rs100 per litre relief.

But there is another part of this programme that deserves considerably more attention: how the relief is being delivered.

Registration is being done through a simple SMS system using 9771. The government has made the registration SMS free, and the system links the applicant’s identification and vehicle information with the fuel-relief mechanism. Citizens can register without needing a smartphone or an internet connection.

This is important in a country where digital access is still uneven.

A government programme designed only for smartphone users can unintentionally leave behind the very people it is trying to help.

An SMS, by contrast, is something almost every mobile-phone user understands.

And there is an important principle here.

Good public policy is not just about what government decides. It is about how easily an ordinary citizen can access what government has decided.

Nobody standing at a petrol pump cares how complicated the policy was to design in Islamabad. They care whether the SMS arrives. Whether the token works. Whether the petrol station accepts it. Whether the promised Rs500 actually reduces the amount they have to pay.

That is why implementation matters as much as announcement.

The government has, in fact, been making adjustments to implementation. Arrangements have been approved for fuel stations in areas without reliable internet connectivity, including remote parts of the country. The authorities have also been monitoring registration, token redemption and payments to fuel stations.

This is the part of governance that rarely makes the front page. But it is the part citizens experience.

A policy can be announced in a press conference. Its credibility is earned at the petrol pump.

There will, of course, be questions about the scheme. Is the relief enough? Are all eligible citizens being reached? Are there technical problems? Are petrol stations being reimbursed quickly? Is the fiscal cost sustainable? Could other forms of assistance be more effective?

These are legitimate questions. They should be asked.

In fact, the strongest defence of a public programme is not to pretend that it has no weaknesses.

It is to show that the government is listening, measuring and fixing them.

The Economic Coordination Committee approved Rs75 billion for the scheme, with the stated objective of providing targeted relief to lower-income segments following the rise in petroleum prices. The Ministry of IT and Telecom is managing the digital Fuel Pass System intended to support transparent delivery and accountability.

That scale of public spending comes with an equally important responsibility: show the results.

The government should regularly tell citizens how many people have registered, how many tokens have been issued, how many have actually been redeemed, where problems are occurring and how quickly complaints are being resolved.

Transparency should not be treated as something that weakens a government narrative. It strengthens it.

There is also a bigger possibility here. The digital infrastructure being developed for targeted fuel relief could, with proper safeguards, offer the state a better way of responding to future economic shocks.

The next crisis may not be a fuel crisis. It could be a flood. A heatwave. A food-price shock. A disruption to transport. Another sudden increase in the cost of living.

If the state can identify vulnerable citizens and deliver targeted assistance quickly, without forcing them through layers of paperwork, that is an important improvement in governance.

But this comes with a responsibility that cannot be ignored.

Personal information must be protected. Data must be used responsibly. Citizens must have confidence that the information they provide for relief will not be casually misused.

Digital government should mean more convenience for citizens – not less trust.

Ultimately, however, the most important story about this scheme is not about technology, databases or even petrol.

It is about the relationship between the state and the citizen.

For a delivery rider, Rs500 may mean part of another day’s fuel. For a rickshaw driver, it may mean that less of the day’s earnings disappears into the petrol tank. For a worker commuting every morning, it may mean a little more money remains available for groceries, school expenses or a utility bill. For a household running an older motorcycle, it may simply mean one less financial worry that week.

These amounts may look small when viewed from the perspective of a national budget.

They do not necessarily feel small inside a household budget. And perhaps that is the right way to judge public policy. Not by the size of the announcement. Not by the number of press conferences. Not even by the political argument surrounding it. But by what happens to the person standing at the petrol pump.

If that person finds the system accessible, the relief real, the process dignified and the government responsive when something goes wrong, then a government intervention has achieved something more important than simply announcing a subsidy.

It has demonstrated that, even in a difficult economic moment, the state can see the citizen behind the statistics.

The real test of a petrol subsidy is not what is announced in Islamabad. It is what the citizen feels at the pump.

The third quarter closes with the bond market offering the clearest picture of the strain underneath. The yield on the benchmark 10-year US Treasury has risen 81 basis points since July, its steepest three-month increase since 2022, while the 30-year Treasury yield touched 5.621 percent this week, its highest since 2002. Nor is the selloff confined to America. German and French 10-year yields have climbed to 17- and 18-year highs, respectively, while Japan’s benchmark yield is near multi-decade highs after its sharpest quarterly rise in more than two decades.

So, what exactly are bond markets trying to tell us?

Part of the answer still runs through the Middle East. Seven months after Donald Trump made the ill-advised decision to attack Iran alongside Israel, the resulting energy shock has worked its way far beyond the oil market. Brent remains above $100 even after Middle Eastern crude exports recovered to their highest level since the conflict began. Inflation concerns have returned, central banks have turned more hawkish and investors increasingly expect interest rates to remain higher for longer.

The connection has become remarkably tight. The correlation between US benchmark oil prices and the 10-year Treasury yield recently jumped to its highest in 35 years, just short of the record reached around the first Gulf War. That makes every hopeful headline about Hormuz potentially relevant to the bond market and every fresh escalation potentially relevant to the Fed. How comfortable should investors be when one of the world’s most important borrowing costs has become so sensitive to developments in one of its most dangerous waterways?

Yet oil cannot explain everything. The 30-year Treasury yield climbed to a 24-year high this week even as crude prices fell and New York Fed President John Williams said there was “no need for urgency” about another rate increase. Government finances remain uncomfortable, debt issuance is heavy, economic growth has proved surprisingly resilient and the AI investment boom is creating enormous new demand for capital. The bond market appears to be worrying about several fires at once.

And then there are equities, apparently enjoying the view.

Stocks have largely shrugged off the surge in yields because earnings remain robust, global growth has held up and enthusiasm for AI continues to support the most influential part of the US market. But the higher yields climb, the more interesting the arithmetic becomes. Treasuries offer increasingly attractive returns without equity risk, while higher discount rates reduce the present value of future corporate earnings. Housing, consumer companies, utilities and other rate-sensitive sectors are already feeling the pressure, leaving market performance increasingly dependent on technology.

How much can AI be asked to carry?

That question may become more important in the fourth quarter. The third-quarter earnings season will soon test whether the enormous capital committed to AI infrastructure is producing profits quickly enough to justify valuations. At the same time, the borrowing required to finance that build-out is itself adding supply to a bond market already digesting enormous sovereign issuance. The technology expected to protect equities from higher rates may therefore also be contributing, indirectly, to the pressure keeping rates high.

There is a certain elegance to that arrangement.

The Fed complicates matters further. Its September increase was the first in three years, and policymakers have signalled that another move may be appropriate before year-end. Markets have recently pared expectations for an October hike, but the broader tightening cycle remains alive because inflation is still too high. If oil continues falling and growth cools, perhaps bond yields finally find a ceiling. But what if the Iran war escalates again, Hormuz is disrupted more severely or another energy shock arrives just as inflation expectations appear to be settling?

Asia has particular reason to watch the answer. Higher US yields pull global capital towards dollar assets and away from riskier markets. Foreign-equity outflows from Asian markets reached an estimated $192 billion through September 25, dwarfing the previous 2025 peak. Current-account-deficit economies have generally suffered greater currency pressure, which then feeds imported inflation and can force domestic central banks to tighten even as growth comes under pressure.

Pakistan hardly needs an introduction to that mechanism. Higher Treasury yields increase the return investors can earn in the safest dollar assets, raising the hurdle for capital flowing towards frontier markets. A firm dollar increases pressure on imported goods and external liabilities, while expensive oil threatens the import bill and domestic inflation. Should all three persist together – high US yields, dollar strength and elevated energy prices – how much room would policymakers in Islamabad really have to insulate the economy?

That is perhaps why the bond market deserves more attention than the record equity indices as the fourth quarter begins. Stocks can celebrate earnings, AI and resilient growth; bonds must continuously price inflation, fiscal credibility, debt supply, monetary policy and geopolitical risk. Lately, they have not seemed especially reassured by any of them.

Perhaps the fourth quarter will be kinder. Oil could retreat, diplomacy could prevail, inflation could soften and bond yields could finally stabilise. The Fed might even discover that September’s tightening has already done enough.

After the third quarter, though, who would want to bet on boring?

Copyright Business Recorder, 2026

Denmark underscores its sovereignty over Greenland, and the agreement still requires ratification by both the Danish and Greenlandic legislatures. It remains uncertain to what extent the new arrangement diverges from the 1951 treaty, which already sanctioned a significant American military presence. Nonetheless, the specifics indicate a broader scope than that of the Cold War-era accord.

President Trump asserts that no adversary of the United States will be permitted to establish a base or undertake sensitive investments in Greenland without prior explicit written approval from the United States. Moreover, his administration intends to swiftly augment the military presence on the island.

The strategic importance of Greenland is clear. It controls key North Atlantic routes that Russian submarines use to access open waters and lies beneath the shortest air and missile paths between Russia and North America. Its melting coastline is creating new shipping lanes that didn’t exist a generation ago.

Additionally, Greenland’s geology contains rare earths and critical minerals vital for batteries, defence, and wind energy, especially since China currently leads in processing these materials. For Washington, the island functions as a radar station, a maritime gateway, and a source of minerals.

From Beijing’s perspective, this deal seals a chapter that China’s Arctic outreach has spent years trying to open. China’s approach has never been about force but rather about patience, gradually gaining access through investments in mining, airport, and port projects, establishing research stations, and promoting the idea of a Polar Silk Road. This strategy hinges on engaging small jurisdictions one investment at a time.

However, the American veto on sensitive investments blocks this approach in Greenland and sets a precedent that might influence other Western-aligned regions to follow suit.

Moscow experiences this differently: its Arctic coast and military presence remain unrivaled, and Nuuk’s arrangements do not change that. Yet, an increased and permanent American presence raises costs for any plans involving the Greenland-Iceland-Britain route and complicates naval strategies that rely on that passage.

It would be inaccurate to label this as a defeat for Chinese and Russian strategies. Rather, it is a carefully targeted move in an ongoing contest, with costs that its supporters tend to downplay. The primary concern is the harm to the alliance that the deal aims to bolster.

Trump’s previous threats signalled that any effort to take the territory might lead to NATO’s disintegration. An agreement made under that threat, and reportedly negotiated partly outside NATO’s formal structure, might lead European capitals to see the United States as viewing allies as assets rather than partners to consult. Each European decision to distance itself from Washington benefits Moscow and Beijing strategically.

The second concern is consent. Small territories may be easy targets for external powers, but they tend to resist agreements they perceive as imposed. If Greenlanders view the deal as handing over their future to Washington rather than a partnership that offers investment, jobs, and security, they will provide rivals with grievances to exploit. Long-lasting agreements require Nuuk’s sincere support, not just Copenhagen’s signature.

The third point is straightforward arithmetic. Preventing Beijing and Moscow from establishing a presence in Greenland doesn’t affect their influence in the Indo-Pacific, Central Asia, or the Gulf. In fact, adopting a more assertive American stance in the Arctic could bring Beijing and Moscow closer together, which is exactly what Washington has aimed to prevent.

The lesson for countries in the Global South is sobering: the rules of great-power competition are evolving around strategic geography. Any nation located at a chokepoint, on a trade route, or with a critical resource will likely be targeted or courted by rival blocs. Pakistan, with its Arabian Sea coastline, proximity to the Strait of Hormuz, and position along the CPEC route, exemplifies this reality.

The best approach is not to pick a side or pretend neutrality is without cost. Instead, it’s crucial to strengthen economic resilience, diversify trade and energy sources, and negotiate while bargaining power remains strong.

Greenland serves as a preliminary example of the ongoing rivalry between America and its adversaries. It highlights how such contests will unfold: discreetly, through controlling basing rights, vetoing investments, and managing supply chains in strategically valuable locations. The major powers have recognized this pattern, and middle powers should consider adopting similar strategies.

Pakistan’s way forward

Build economic resilience before leverage is needed. Reduce the structural vulnerabilities that make Pakistan a price-taker in these negotiations: a narrow tax base, thin fiscal buffers, and chronic dependence on the IMF. A country negotiating from fiscal weakness gets worse terms than one negotiating from strength.

Diversify export markets and energy sources so no single relationship (Gulf oil, Chinese investment, US market access) becomes a point of coercion.

View CPEC and access to the Gulf/Hormuz as strategic assets rather than liabilities. Pakistan ought to actively incorporate its strategic location, including port access at Gwadar, an Arabian Sea presence, and proximity to Hormuz shipping, into its negotiations with China, Gulf states, and the US, rather than assuming these are already secured commitments.

The underscored importance of local support is essential for the sustainability of externally negotiated agreements. The authentic backing of Greenlanders surpasses the significance of Copenhagen’s signature. Likewise, in Pakistan, approval from provincial and local authorities is imperative; accords pertaining to Gwadar, Balochistan, or coastal security necessitate genuine local endorsement. Absent this, there is a risk that such agreements may generate long-term grievances susceptible to exploitation by opponents, a pattern already observed in security concerns related to CPEC.

Negotiate now, while bargaining strength still exists. Engage in negotiations when leverage remains intact. Pakistan’s influence derives from assets such as Gwadar, access to the Arabian Sea, and the China-Pakistan Economic Corridor (CPEC), which are contingent upon available alternatives that have not yet been exhausted.

Avoid the alliance-cost trap in reverse: Pakistan should watch for the dynamic in its own relationships with China on CPEC financing terms, with the US on counter-terrorism/trade cooperation, with Gulf states on energy and remittances, and resist arrangements that reduce it to an asset on someone else’s strategic map rather than a negotiating partner with its own interests.

Pakistan’s geography is an asset that is actively being priced by external powers right now, not a passive fact. The strategy is to shore up fiscal/economic resilience to negotiate from strength. Price chokepoint access explicitly rather than giving it away piecemeal. Secure genuine domestic/provincial consent for any security-adjacent arrangements, and move on diversification before external powers foreclose the alternatives.

Copyright Business Recorder, 2026

India and Sri Lanka recorded rapid growth in their GDP both due to substantial increase in number of technically skilled workforce and also owing to other improved production inputs, particularly the use of updated information technology in service and manufacturing sectors. Thus along with reduction in poverty, quality as well as quantity of jobs improved substantially in these counties. This also indicates that job quality has improved within each sector of economy rather than through labour movement from one sector to another.

However Pakistan, Bangladesh, and Nepal have experienced across-the-sector movement of labour since the last eighties. Spread of education in rural areas, though not satisfactory as depicted from recent gender parity report regarding Pakistan in particular showing rural female literacy rate at 27.52 percent and general rural being 47 percent.

However, it has facilitated transition from agriculture to better jobs in manufacturing and service industry. Massive migration of skilled workforce from South Asian countries to economically advanced countries and oil-rich economies of the Middle East have pushed real wages high for those remaining in the countries, by creating a strong demand for them in domestic labour market.

This phenomenon, on the other hand, boosted overseas workers’ remittances and has significantly contributed towards reduction of poverty in the region. This poverty reduction outcome is no doubt has been disturbed due to COVID onslaughts in recent past and growing oil crisis on global basis, affecting South East Asian region in particular.

The findings of various surveys conducted in the region relating to persistently high growth of workforce under the aegis of World Bank identify the need for generating employment opportunities for 12 million people per year by the end of 2030 when a slowdown is likely to occur in existing demographic transition trend in this region.

The reports state the sustained growth in the number of new entrants in the workforce would either be absorbed in jobs producing progressively lower output of goods and services in formal sectors or be forced to be labelled as self-employed/employed in informal sector.

Hence the challenge for whole of South East Asia is to create jobs, giving higher level of output per worker through up-skilling their talents in areas of information technologies like digitisation and Artificial Intelligence (AI). A number of East Asian countries like Thailand, Indonesia, and Singapore are focusing these skilling strategies on moving employees from declining roles into growing ones in the next five years as stated in World Economic Forum’s Future of Jobs Report 2025.

Female labour participation in economic process is very low in the region, particularly in Pakistan where four out of every five women of working age are not gainfully employed, followed by India and Bangladesh where two out of every three women are part of workforce. It is their household duties which account for their non-participation. With enhanced opportunities for higher and technical education for women, and the promotion of entrepreneurial skills among those who want to get self-employed, an increased proportion of working-age women will seek work.

Hence an estimated four million jobs need to be added to female workforce every year , building up total annual figure of jobs required in the region to 15 million as per World bank findings.

Apart from this enormous challenge of creating jobs for 15 million every year, how to generate quality jobs remains the burning issue for the region. Pakistan, India and Bangladesh have been identified as having large shadow/informal economies.

Lack of good governance, poorly-run institutions and excessive regulations compel workers and small businesses to slide to informal sector, where they can easily evade taxes and remain outside the purview of labour laws. World Bank survey’s report narrates how business firms faced with onerous regulation, inconsistent legal enforcement and corruption have an incentive to hide their activities in underground economy.

Actually, generally, institutions of these countries operate for benefit of a narrow elite class instead of pursuing economic well-being of masses. The prevailing political system in these countries is giving rise to unbridled shadow economies which, in turn, impeding the growth of quality jobs needed for high economic growth.

Job creation in the formal economy and utilisation of workforce at optimum level entail investment in both physical and human capital. Since development of needed infrastructure is essential for the growth of all sectors of economy, focus of governments of these nations, particularly of Pakistan, Nepal and Bangladesh, should be to ensure regular power and water supply most needed both for rural and urban sectors.

At the same time, it is necessary to enhance quality of technical and professional education and make it accessible to youth universally and indiscriminately on the basis of merit alone. To absorb workforce skilled in latest technologies in quality jobs it is essential that they from rural areas be facilitated to move to urban sector to get absorbed in manufacturing and service industry and urban youth from lower into higher productivity jobs within the industry.

Fast development of IT industry in India has facilitated use of new technologies in all fields of economy, and it not only created high profile jobs, but also mid-level executive jobs. Through export of soft-ware and its skilled manpower, the country is earning major chunk of its foreign exchange earnings. It is heartening to note that in very recent years Pakistan has also made headway in earnings from export of IT skilled manpower and software and it is expected that it will add more than USD 5 billion to the current fiscal year’s foreign exchange earnings.

Copyright Business Recorder, 2026

“All? Including those relating to the party founded by The Man Who Must Remain Nameless, Faceless and Voiceless?”

“He is in jail, in isolation, his sisters are in jail, and he is not being allowed to consult with his lawyers, a right of all those incarcerated including serial murderers and …”

“Yeah but what I am incensed about is that The Third Wife has been demanding her status in jail for a long time but to no avail.”

“What status?”

“Well she wants to have the status of a VIP to which she is entitled as the wife of a former Prime Minister but they have given her the status based on her degrees, or lack thereof.”

“I don’t have the jail manual, but do you think it is the jail superintendent’s prerogative?”

“You are so very bad. But that’s not the conspiracy theory I was referring to?”

“Oh were you referring to the rift between the King of Reconciliation and the establishment on establishing more provinces…?”

“The King of Reconciliation is Zardari sahib while the establishment is represented by the Interior Minister right?”

“Right now Zardari sahib has to follow the advice given by the Prime Minister so…”

“There are constitutional provisions that….”

“Don get side tracked – anyway the conspiracy theory that the impending rift between PML-N and the powers that be.”

“Well I heard from PML-N sources that Mian sahib is going to do another Mian sahib – and you know where that gets him – mujhe kyon nikala – why did you kick me out.:”

“Please tone down your language.”

“I don’t get you.”

“The phrase is not kicked out; the phrase is escorted out of the….”

“From the frying pan into the fire.”

“Ha, ha, that’s right anyway when the Prime Minister returned who was there at the front of the queue to receive him?”

“I missed that footage….”

“It was the Interior Minister.”

“Ahhhhh.”

“And the next welcomer was Tarar of the Information Ministry and he was sandwiched between the Minister of Interior and his Minister of State.”

“Gotcha.”

Copyright Business Recorder, 2026