If Pakistan wants a stronger economy, better public services, and lower dependence on debt, it must finally confront an uncomfortable reality.

The country cannot achieve sustainable fiscal stability without taxing its elite more effectively.

Pakistan’s tax system has long suffered from a narrow tax base.

Millions of citizens pay indirect taxes whenever they purchase goods, fuel, electricity, mobile phone services, or other products.

However, many wealthy individuals and influential sectors contribute far less than they should in relation to their income and assets.

This imbalance creates a system that is not only inefficient but also unfair.

The Federal Board of Revenue (FBR) has improved tax collection in recent years.

According to official figures, the revenue board achieved around Rs11.9 trillion in tax collection during FY2024-25, representing a growth of more than 26 per cent, compared with the previous year.

Direct taxes accounted for around 49 per cent of the federal tax revenues, while sales tax, customs duties, and federal excise duties made up the remainder.

The government has also set even higher revenue targets for subsequent years, reflecting increasing pressure to finance public spending and debt obligations.

Despite these gains, Pakistan’s tax effort remains weak, compared with many developing economies.

Tax revenue remains low against the size of the economy, and only a small percentage of the population pays income tax.

Reports indicate that approximately 1 to 2 per cent of Pakistanis pay income tax, one of the lowest proportions among major economies.

This suggests that the issue is not simply tax rates. The larger problem is that too many wealthy individuals and sectors remain outside the effective tax net.

One reason for this situation is elite capture.

Elite capture is when powerful groups use their influence to make rules that help themselves rather than the wider public.

In Pakistan, powerful landowners, large traders, property investors, and politically connected groups have often resisted efforts to broaden the tax base.

As a result, governments repeatedly find it easier to increase indirect taxes or place additional burdens on the existing taxpayers than to challenge entrenched interests.

The consequences are visible across society. Salaried employees generally have taxes deducted directly from their income and have limited opportunities to avoid payment.

Formal businesses face extensive documentation requirements and regular scrutiny.

Meanwhile, significant wealth can remain lightly taxed or untaxed through loopholes, exemptions, weak enforcement, or political influence.

This creates resentment among compliant taxpayers and reduces confidence in the fairness of the system.

Agricultural income taxation remains one of the clearest examples of this imbalance.

Agriculture contributes a substantial share to Pakistan’s economy, yet agricultural income taxes generate only a tiny fraction of the overall revenue.

Studies have estimated that agricultural taxation has the potential to generate billions of rupees annually if implemented effectively, but actual collections remain extremely low.

The issue is not about taxing small farmers who struggle with rising costs, water shortages, and uncertain incomes.

Any serious reform must protect small landholders and subsistence farmers.

The focus should instead be on large commercial agricultural operations and wealthy landowners who earn substantial incomes.

There is little economic justification for treating high agricultural income more favourably than the income earned in manufacturing, services, or professional occupations.

Agricultural taxation is also important for reasons beyond revenue.

When certain sectors receive preferential treatment, economic decisions become distorted.

Investors may structure activities to qualify for lower tax rates rather than pursuing the most productive opportunities.

Equal treatment across sectors promotes fairness, efficiency, and transparency.

The retail and wholesale sectors present another major challenge.

Retail trade contributes significantly to economic activity, yet tax compliance remains limited.

Large numbers of businesses operate largely outside the documented economy.

Successive governments have launched schemes to bring traders into the tax net, but progress has been slow because of resistance from powerful interest groups and weak enforcement.

Real estate is another area where reform is needed. Property has long served as a preferred store of wealth.

While real estate investment can support economic development, excessive tax advantages encourage speculative activity rather than productive investment.

Large gains from property transactions often receive more favourable treatment than the income earned through productive enterprise.

This diverts capital away from industries that create jobs, exports, and innovation.

Pakistan should, therefore, move towards a more comprehensive taxation of wealth and capital gains.

Accurate property valuation systems, improved land records, and greater transparency can help reduce tax avoidance.

Modern technology makes these reforms increasingly feasible.

Digital databases, electronic transactions, and data sharing between institutions can improve compliance while reducing opportunities for corruption.

Reforming elite taxation is not only about collecting more money.

It is also about strengthening the social contract between citizens and the state.

People are more willing to pay taxes when they believe the system is fair.

When ordinary workers see wealthy individuals avoiding taxation while public services remain inadequate, trust in government declines.

This weakens compliance and encourages further tax evasion.

The government has already started using technology to improve enforcement.

FBR has expanded digital monitoring systems, data integration, and compliance initiatives.

Authorities have also introduced efforts to identify discrepancies between declared income and visible lifestyles.

These measures can help improve documentation and reduce evasion.

However, technology alone cannot solve the problem if political will remains weak.

True reform requires confronting vested interests. This is often difficult because many influential groups possess significant political and economic power.

Yet postponing reform only increases the burden on future generations.

Every year that potential revenue remains uncollected, the government must either borrow more, reduce spending on fundamental services, or place additional taxes on those already complying.

Education, healthcare, infrastructure, and public safety all require funding.

Pakistan’s development needs are enormous. Millions of children remain out of school, healthcare services are under pressure, and infrastructure investment continues to lag behind the needs of a growing population.

Without stronger domestic revenue mobilisation, these challenges will remain difficult to address.

International experience offers useful lessons. Countries that successfully expanded their tax bases did not rely solely on higher rates.

Instead, they improved documentation, reduced exemptions, strengthened institutions, and ensured that wealthy individuals and powerful sectors contributed their fair share.

Broad-based taxation tends to be more stable, efficient, and equitable than systems that depend heavily on a small group of taxpayers.

Therefore, Pakistan should pursue a balanced reform agenda.

First, agricultural income taxation should be applied effectively to large landowners, while protecting small farmers.

Second, retail and wholesale sectors should be gradually documented through digital payment systems and improved record-keeping.

Third, property taxation and capital gains taxation should better reflect actual market values.

Fourth, unnecessary exemptions and special privileges should be reviewed and reduced.

Finally, tax administration should continue modernising to improve transparency and reduce opportunities for corruption.

At the same time, government spending must become more efficient.

Citizens are more likely to support tax reforms when they see tangible improvements in public services.

Taxation and accountability must go hand in hand. Raising revenue without improving governance will not generate lasting public trust.

Pakistan has made progress in increasing tax collection, but the deeper structural challenge remains unresolved.

The formal sector, salaried workers, and ordinary consumers cannot continue carrying a disproportionate share of the burden, while significant pockets of wealth remain lightly taxed.

Sustainable economic progress requires a broader and fairer tax system.

The choice is ultimately between preserving privilege and building prosperity.

Expanding the tax base, taxing large agricultural incomes, documenting under-taxed sectors, and reducing elite capture will not solve every economic problem.

However, these reforms would represent a major step towards a more equitable and financially stable Pakistan.

A country of more than 240 million people cannot rely indefinitely on a narrow group of taxpayers.

If it is serious about fiscal reform, it must understand that those who benefit the most from the economy should contribute their fair share to its future.

President Trump’s manipulation of the oil market subsequent to the 28 February 2026 launch of the US/Israel war on Iran has been frequent - through statements on social media timed to impact the market on a Monday, or so allege his critics. This generated genuine bafflement at the seeming naïveté of those operating in the oil market in being so easily convinced of the veracity of the President’s widely divergent announcements that he continues to make – announcements that alternate from an interpretation of the Memorandum of Understanding (MoU) widely different from Iran’s interpretation, followed by threats to obliterate Iran interspersed with periodic attacks on Iran invariably trailed by Iran’s retaliation.

The question is what motivates President Trump to manipulate the market? Perhaps he miscalculated on two counts: (i) failure to recognise the interconnectedness of the energy global market or, in other words, to understand that a world supply shortage as a consequence of the Middle East conflict would impact on gas prices in the US, in spite of the country being as a major oil producer; and (ii) insider trading, deliberate or otherwise, that may leave him open to charges of enriching his friends.

Soon after the war began the US had large stocks of oil; however, as the war has stretched into its fifth month stocks have begun to reach dangerously low levels, threatening the onset of a recession. This has angered Americans in general, including his support base, with severely negative repercussions on his personal popularity rating that is likely to impact on the impending mid-term elections scheduled for 6 November 2026.

All 435 seats are up for elections in the House of Representatives while 35 out of 100 are up for re-election in the Senate. Presently, surveys suggest that Republicans safe seats are 140, they are likely to win another 55 seats while 45 of the seats they hold today are likely to go either way. Democrats have 182 safe seats, they are likely to win another 10 and only 3 seats that they hold today could go either way. In the Senate, the Republicans have only 4 safe seats, one they will probably win and 4 could go either way while Democrats have 18 safe seats, another 6 they are likely to win and 6 could go either way. In the event that Republicans fail to secure majority in the two houses as it is being projected today President Trump maybe impeached, a concern he has already publicly admitted.

There are growing allegations that the President’s statements on deals or strikes against Iran are enriching a few traders. At present, the Commodity Futures Trading Commission is investing irregular trading activity, of up to 800 million dollars at last count. Be that as it may, it is relevant to note that the oil price decline in the event of President Trump announcing an imminent deal with Iran is in the futures market, which has yet to impact on the price of oil at the gas pump. In this context the Pakistani public urging the government to reduce petrol prices at the pump is certainly premature unless of course we have access to subsidised imported oil.

Survey after survey reveals that with the pump prices not lowered the US public is not heeding President Trump’s narrative that the war is over and the matter resolved – a factor that indicates that the general public is never convinced of the veracity of any narrative if the value of each unit of currency they earn continues to erode.

The Pakistani public, too, has remained indifferent to government claims of a decline in inflation though in our case both the narrative and the data are being manipulated. The narrative in Pakistan is that the economy is on a growth trajectory and the proof is in a buoyant stock market. Given that less than one percent of Pakistan’s population engages in the stock market, frequent references by finance ministers, including the incumbent, to a bullish market as indicative of the success of their policy decisions is simply not tenable. This is strengthened by several research studies, including that of Hussain and Tariq Mehmood, who concluded that “a disturbing feature of Pakistan’s stock market is that it cannot be characterized as a leading indicator of economic activity and in the absence of other strong indicators shooting up stock prices may indicate a speculative bubble.”

Empirical studies further suggest that the Pakistan Stock Market is dominated by brokers, a tight-knit club, with the capacity to manipulate the market. Its uptick especially at times when the incumbent finance minister is facing criticism has led many a critic to maintain that the leverage of the government rests with a threat to raise taxes. There is a 15 percent general sales tax on listed securities for filers and 30 percent for non-filers; however, there is a relatively low rate on actual transactions and capital gains compared to other countries; for example, India levies a Securities Transaction Tax (STT) on every trade, in addition to Long-Term Capital Gains (LTCG) and Short-Term Capital Gains (STCG) taxes.

The International Monetary Fund in its October 2024 report highlighted important shortcomings in data that impacts on one-third of our GDP – an observation supported by independent economists that led to a technical assistance to the Pakistan Bureau of Statistics. But to reiterate manipulating inflation figures does not convince the general public.

To conclude, a narrative may initially convince some of the people some of the time but even die-hard supporters will withdraw their support if they see a steady erosion of the value of each unit of currency they earn. And inflation is one statistic whose impact is evident to a householder as soon as he/she goes to the market to purchase any item or service. The lesson to be learned is to back claim of achievements with data that resonates with ground realities facing the public.

For decades, Pakistan’s electricity system has struggled with ageing infrastructure, frequent power outages, technical inefficiencies and electricity theft. These issues have not only affected households but have also placed significant pressure on businesses and industries that rely on a stable supply of electricity to operate efficiently. As the country seeks to strengthen its economy and attract investment, improving the performance of the power sector has become increasingly important.

The World Bank funding is expected to support upgrades to key parts of the national electricity grid. A stronger grid will allow electricity to move more efficiently from power plants to homes, businesses and factories. By reducing losses during transmission and distribution, more electricity can reach consumers instead of being wasted through outdated systems and technical faults.

Many energy experts believe that one of the most immediate benefits of the project could be a reduction in power interruptions. Loadshedding and unexpected blackouts have long been a source of frustration for the citizens across the country.

During the hot summer months, when temperatures often rise to extreme levels, electricity shortages can become particularly difficult for the households. Businesses also suffer financial losses when production is interrupted by unreliable power supplies.

Supporters of the project argue that a more dependable electricity system could have far-reaching economic benefits. Reliable power is considered one of the foundations of economic growth.

Factories require uninterrupted electricity to maintain production, while commercial enterprises depend on stable supplies to serve the customers and expand operations. Improved infrastructure could help increase productivity, encourage investment and create employment opportunities in different sectors of the economy.

The funding also comes at a time when Pakistan is witnessing rapid growth in renewable energy, particularly solar power. Across the country, households and businesses are increasingly turning to rooftop solar systems to reduce dependence on the national grid and manage rising electricity bills. However, integrating renewable energy into an ageing electricity network presents significant technical challenges.

Experts say that modernising the grid is necessary if Pakistan wants to make greater use of clean energy sources in the future.

Another important advantage of the project is its potential contribution to climate resilience. Pakistan is among the countries most vulnerable to the effects of climate change, facing repeated floods, heatwaves and other extreme weather events.

Stronger and more modern electricity infrastructure can help reduce the risk of widespread power failures during emergencies and improve the ability of fundamental services to continue operating during difficult conditions.

There is also hope that better technology and improved monitoring systems will strengthen the financial performance of electricity distribution companies. These companies have long struggled with operational inefficiencies, losses and weak revenue collection. Modern systems can help improve monitoring, billing and maintenance, potentially reducing costs and improving service delivery over the long term.

Despite the positive expectations surrounding the funding, concerns remain about the challenges that could affect the project’s success. One of the most frequently raised issues is Pakistan’s growing debt burden. Although World Bank financing is generally provided on favourable terms, compared with the commercial borrowing, it still adds to the country’s financial obligations.

Critics argue that Pakistan must be careful not to become overly dependent on external financing to address structural problems.

Questions have also been raised about implementation. Pakistan has launched numerous infrastructure projects in the past, but some have faced delays, cost overruns and management difficulties.

Observers say that securing funding is only the first step. Effective planning, transparent procurement processes and strong oversight will be necessary to ensure that the investment delivers the expected results.

Electricity theft continues to be another major obstacle. Illegal connections and unpaid bills contribute significantly to the financial losses within the power sector. Analysts point out that upgrading infrastructure alone will not eliminate these problems. Broader reforms, stronger enforcement and improved governance will also be required if the sector is to achieve lasting improvements.

Many consumers are also wondering whether the project will eventually lead to lower electricity bills, as rising power tariffs have become a major concern for the households and businesses alike. While improved efficiency may reduce some operational costs over time, experts caution that the consumers should not expect immediate reduction in electricity prices. The benefits of infrastructure improvements often take years to become fully visible.

There are also concerns about whether all regions of the country will benefit equally from the investment. Large infrastructure projects often prioritise major urban centres and economically important areas.

Some observers argue that the policymakers must ensure rural and less-developed regions are not overlooked when decisions are made about where improvements will take place.

Environmental and social considerations will also need careful attention. Construction and infrastructure upgrades can sometimes disrupt local communities or require land acquisition. Ensuring that environmental standards are maintained and that affected communities are treated fairly will be important for the project’s long-term success.

Energy specialists argue that Pakistan’s electricity challenges extend beyond transmission and distribution networks. The country continues to grapple with circular debt, regulatory weaknesses and broader structural issues within the power sector.

While grid modernisation is an important step, they believe it should be accompanied by wider reforms to create a more sustainable and financially stable energy system.

Even with these concerns, the World Bank’s approval of $376 million is widely regarded as a significant opportunity for Pakistan. The investment has the potential to strengthen infrastructure, improve service reliability and support future economic growth. If implemented effectively, it could help modernise a sector that has struggled with inefficiency and underinvestment for many years.

The coming years will determine whether the project delivers on its promise. Success will depend not only on financial resources but also on sound management, transparency and the willingness of the policymakers to pursue broader reforms.

For millions of Pakistanis who continue to face the challenges of unreliable electricity and rising costs, the hope is that this investment marks the beginning of meaningful and lasting improvements in the country’s power system.

As Pakistan seeks to balance economic development, energy security and environmental sustainability, the strengthening of the national electricity grid may prove to be one of the most important infrastructure initiatives of recent years.  Whether it becomes a turning point for the country’s energy sector will ultimately depend on how effectively the opportunity is used.

According to the Pakistan Economic Survey 2025-26, agriculture contributes around 23.4% of Gross Domestic Product (GDP) and employs approximately 33.1% of the national labour force. The fertile plains of Punjab, the productive lands of Sindh, the orchards of Khyber-Pakhtunkhwa, and the fruit-growing valleys of Balochistan provide the country with rich agricultural resources.

However, rapid population growth, climate change, water shortages, outdated farming methods, and weak infrastructure continue to threaten food security. Therefore, modernising agriculture is not merely an option but a top priority for the country.

Food security means that every citizen has regular access to sufficient, safe, and nutritious food. It is not only about producing more crops but also about making food affordable and available throughout the year. Although Pakistan has increased agricultural production over time, millions of people still suffer from food insecurity and malnutrition.

Rising food prices, natural disasters, and unequal access to resources have made healthy food difficult for many families to afford. As the population continues to grow, improving agricultural productivity has become necessary to ensure national food security.

Agriculture remains one of the strongest pillars of Pakistan’s economy. The Economic Survey of Pakistan 2025-26 recorded an overall agricultural growth rate of 2.89%, despite difficult weather conditions. Wheat production reached around 29.61 million tonnes, rice production nearly 9.99 million tonnes, and sugarcane production around 89.45 million tonnes.

Livestock, the largest agricultural sub-sector, also grew 3.75%, showing its increasing importance for rural livelihoods and food production. While these figures are encouraging, the country still performs below its agricultural potential because many farmers continue to depend on traditional cultivation methods, poor quality seeds, outdated machinery, and inefficient irrigation. Modernisation is, therefore, important to bridge this gap.

One of Pakistan’s greatest strengths is the Indus Basin Irrigation System, one of the largest contiguous irrigation networks in the world. Yet, a large amount of water is wasted through flood irrigation, canal seepage, and poor water management.

Climate change has also reduced water availability through shrinking glaciers, irregular rainfall, and prolonged droughts. Modern irrigation techniques such as drip irrigation, sprinkler systems, laser land levelling, and digital water management can save water while increasing crop yields. Improving canal infrastructure and constructing additional water reservoirs are equally important for securing the country’s future food supply.

Climate change poses one of the greatest threats to Pakistan’s agriculture. The devastating floods of 2022 destroyed millions of acres of farmland, displaced farming communities, and caused billions of dollars in economic losses.

Since then, Pakistan has experienced severe heatwaves, irregular monsoon rains, droughts, and pest attacks, all of which have reduced agricultural productivity. These challenges demand climate-smart agriculture. Farmers should be encouraged to use drought-resistant and flood-tolerant seed varieties, modern weather forecasting systems, and scientific farming methods to minimise losses and ensure stable crop production.

Technology has transformed agriculture around the world, and Pakistan must adopt these innovations more rapidly. Farmers can now benefit from satellite imagery, drones, mobile applications, weather forecasting, and precision farming techniques. Mobile phones provide timely information on fertiliser use, pest control, weather conditions, and market prices.

Digital platforms also connect farmers directly with the buyers, reducing the role of middlemen and increasing profits. Precision farming enables fertilisers and pesticides to be used only where needed, reducing production costs while protecting the environment.

Mechanisation is another important step towards agricultural modernisation. Many farmers in Pakistan still depend on manual labour or outdated machinery, which reduces efficiency and productivity. Modern tractors, harvesters, seed drills, and laser land levellers allow the farmers to cultivate larger areas in less time while reducing labour costs.

Laser land levelling also improves irrigation efficiency by distributing water evenly across fields. Government support through affordable machinery rental schemes and low-interest agricultural loans can help the small farmers benefit from modern equipment.

Scientific research has a major role in improving Pakistan’s agriculture. Agricultural universities and research centres continue to develop better crop varieties and farming methods, but these innovations often fail to reach ordinary farmers.

Agricultural extension services should provide practical guidance on soil testing, fertiliser use, disease control, pest management, and climate adaptation. Regular training programmes can help the farmers adopt modern technology confidently and improve their productivity.

Pakistan also loses a significant amount of food after harvest because of poor storage facilities, weak transport systems, and inefficient marketing. Farmers often have no choice but to sell their produce immediately after harvest at low prices. Building modern warehouses, cold storage facilities, refrigerated transport, and food processing industries would greatly reduce these losses.

Better roads and transport networks would also enable the farmers to deliver fresh produce quickly to markets. Reducing food waste is as important as increasing food production because it strengthens food security without expanding cultivated land.

Similarly, small landholdings present another major challenge. Many farmers own only a few acres of land, limiting productivity and reducing profits. These farmers often lack access to quality seeds, machinery, fertilisers, and financial services.

Easy agricultural loans, crop insurance, cooperative farming, and financial support can help these farmers modernise their farms. Inclusive agricultural development is necessary if the benefits of modernisation are to reach all rural communities.

The government has a leading role in transforming agriculture. Investment in dams, irrigation projects, rural roads, electricity, internet connectivity, and agricultural research provides the foundation for modern farming.

Agricultural subsidies should promote efficient water use, improved seed varieties, and environmentally-friendly farming instead of encouraging wasteful practices. Fair market policies can protect both the farmers and consumers while encouraging exports of high-quality agricultural products.

Another pillar of agricultural development is education. Many farmers still rely on traditional knowledge and have limited access to scientific information. Expanding agricultural education and vocational training can improve farming practices and increase awareness of modern technologies.

Universities should encourage young people to pursue careers in agricultural engineering, biotechnology, agribusiness, and digital farming, making agriculture an attractive and profitable profession.

Young people can play a transformative role in Pakistan’s agricultural future. Many leave rural areas because they consider farming unprofitable. However, modern agriculture offers opportunities in precision farming, food processing, agricultural technology, and agribusiness. With proper training, financial support, and access to technology, young entrepreneurs can establish innovative agricultural enterprises that generate employment and improve productivity.

Women can also contribute significantly to Pakistan’s agriculture, particularly in livestock management, dairy production, harvesting, and kitchen gardening. Despite their contribution, they often lack equal access to education, finance, land ownership, and modern technology. Providing women with training, microfinance, and equal opportunities can significantly improve agricultural productivity, household incomes, and family nutrition. Empowering women farmers is, therefore, needed to achieve sustainable food security.

Environmental sustainability must remain key to agricultural modernisation. Excessive use of chemical fertilisers and pesticides has damaged soil fertility and polluted water resources in many areas.

Sustainable farming methods such as crop rotation, conservation agriculture, integrated pest management, organic farming, and efficient water use can increase productivity while protecting the environment. Tree plantation, soil conservation, and responsible groundwater management will ensure that the future generations inherit productive agricultural land.

Pakistan can also learn from countries such as The Netherlands, China, Australia, and Turkey, which have transformed agriculture through scientific research, efficient irrigation, mechanisation, and modern supply chains. Adapting these successful practices to local conditions can significantly improve Pakistan’s agricultural performance. International cooperation in agricultural research, climate adaptation, and technology transfer can further strengthen national food security.

The private sector also has an important role to play. Seed companies, fertiliser manufacturers, machinery producers, financial institutions, and food processing industries can accelerate agricultural growth. Investment in storage facilities, modern technology, and value-added agricultural products creates employment, reduces food waste, and increases farmers’ incomes. Public-private partnerships can speed up the adoption of modern farming practices throughout the country.

Food security is closely linked to national security. A country that cannot feed its people becomes vulnerable to inflation, economic instability, social unrest, and dependence on food imports.

Pakistan spends valuable foreign exchange on importing edible oil, pulses, and other food items that could partly be produced locally through higher agricultural productivity. Increasing domestic food production will reduce imports, strengthen exports, create employment, and support economic growth.

Recent global crises, including the COVID-19 pandemic, climate change, and international conflicts, have shown how vulnerable food supply chains can become. Countries with modern and resilient agricultural systems were better able to protect their populations during these disruptions.

Therefore, Pakistan must build an agricultural sector capable of withstanding future shocks through scientific research, efficient irrigation, digital technology, and sustainable farming practices.

Pakistan possesses all the basic resources needed to become a food secure nation. It has fertile land, hardworking farmers, abundant sunshine, one of the world’s largest irrigation systems, and a growing number of educated young people. What is needed is political commitment, long-term planning, increased investment, and effective implementation of agricultural reforms. Every improvement in farming increases food production, strengthens rural livelihoods, reduces poverty, and promotes national development.

It has been given the title of Uraan, Pakistan. The Plan contains the targets for 2026-27 for key macroeconomic variables.

The target generally most focused on is the GDP growth rate. The Annual Plan for 2025-26 had set a GDP growth rate target of 4.2 percent.

There has been a significant shortfall and the actual growth rate is likely to be 3.7 percent.

However, the surprise is the big difference in the sectoral growth rates in 2025-26 between the Annual Plan and the estimates of Pakistan Bureau of Statistics (PBS).

It is indeed a remarkable coincidence that despite the big differences in sectoral growth rates, the overall GDP growth rate arrived at is the same at 3.7 percent.

Administratively, the PBS is attached to the Ministry of Planning and Development, and yet there appears to be a lack of coordination.

The sectoral performance in 2025-26 has implications for the projection of the sectoral growth rates and the overall GDP growth rate. The Annual Plan projections are as follows:

The targeted growth rate in 2026-27 in the Annual Plan is 4.0 percent, a marginal step forward from the growth rate of 3.7 percent in 2025-26.

A big jump is proposed in the growth rate of agriculture from 1.5 percent to 3.6 percent.

This appears unlikely given the crisis in the cultivation of cotton and the lack of access of farmers to a profitable price of wheat.

The growth rate of industry is actually expected to fall from 5.6 percent in 2025-26 to 4.5 percent in 2026-27.

This probably adjusts for the jump in 2025-26 due to the 60 percent increase in the automotive industry following the big increase in imports.

The growth rate of the services sector is expected to accelerate somewhat from 3.1 percent to 4.1 percent, according to the Annual Plan.

The sub-sectors in the services sector that showed high growth rates in 2025-26 were public administration and defence, education, health and information and communications.

Ideally, from the viewpoint of employment creation, the faster growth sectors should be wholesale and retail trade and transport.

Overall, the targeted GDP growth rate of 4 percent in 2026-27 is potentially an attainable target, especially if the situation in the Middle East returns to normal and the flow of ships freely commences in the Strait of Hormuz. Also, a return to oil and gas imports at lower prices from Iran will facilitate economic growth.

The investment target has been set at 15 percent of the GDP in 2026-27 as compared to 14.4 percent of the GDP in 2025-26.

The last time the investment level reached 15 percent of the GDP was in 2021-22.

Achieving the higher level of investment in 2026-27 will require a quantum decline in interest rates

Also, the issue is one of the sectoral distribution of investment in the country.

There has been a process of diversion of private and public sector investment from manufacturing to real estate. In 2015-16, investment in manufacturing was 38 percent above the level of investment in real estate. A decade later, in 2025-26, it is 44 percent below the level of investment in real estate.

The 2026-27 Federal Budget has actually increased, albeit wrongly, the incentives for investment in real estate.

The rate of inflation is targeted at 7.5 percent in 2026-27.

Before the commencement of the war in the Middle East, the inflation rate had remained low at 5.5 percent from July to February in 2025-26. Since then, it has averaged 10 percent up to May 2026.

The big impact on the rate of inflation was the quantum jump in oil prices, due to the big increase in international prices.

However, there has been a big fall recently in prices of HSD oil and Motor Spirit. This ought to facilitate a decline in the price level and a big reduction in the rate of inflation.

The projected rate of inflation at 8.5 percent may actually turn out to be somewhat on the high side if peace returns on a sustainable basis in the Middle East.

This ought to also facilitate some reduction in interest rates by the SBP in 2026-27.

The projections of the current account in the balance of payments for 2026-27 are conditional, especially on the performance of exports.

They have declined by 5 percent in the first eleven months of 2025-26. However, now the expectation in the Annual Plan for 2026-27 is that they will show a high growth rate of almost 9 percent.

This is unlikely unless exporters are facilitated with a market-based exchange rate policy.

As of May 2026, the level of the Real Effective Exchange Rate (REER) is 106.15.

This implies significant overvaluation of the rupee. The SBP will need to focus on this issue in 2026-27.

Further, there are reports of some contraction in the capacity of the textile industry due to numerous factory closures. The budget of 2026-27 should have come with strong fiscal incentives for investment in export-oriented industries.

Imports have already registered a growth rate of 8 percent in 2025-26. The Plan anticipates the growth rate at 5.6 percent in 2026-27. This will, of course, hinge on the level of oil prices.

Remittances are expected to show a modest growth rate of only 2.9 percent in 2026-27. This is a realistic projection.

However, there will be a need to focus especially on developments in the UAE and Saudi Arabia.

The current account deficit is projected at USD 3.6 billion in 2026-27, as compared to only USD 1.1 billion in 2025-26. This will, of course, hinge on the export performance next year.

Overall, the Annual Plan targets for 2026-27 need to be achieved if there is to be a modicum of growth combined with stabilisation of the economy.

However, achievement of the 4 percent GDP growth target will still imply a rise in the unemployment rate in the economy.

The ambitious Uraan plan targets will need to be achieved in years to come.

“Indeed, so here is a restraining order.”

“Don’t be facetious.”

“OK, how about absence makes the heart grow fonder of someone else?”

“Shush, be serious.”

“OK, so why mention absence? Who is absent in your life?”

“Well, this is with reference to President Trump.”

“I agree he is never absent — even when he is not present, he makes his presence felt.”

“You mean the Truth Social uploads and his calling up his favourite reporters to give them scoops and picks up their phone in case they call and…”

“Indeed, but he is the President of the US – if he wasn’t then many would be quoting him or seeking a sound bite from him….”

“Yeah, yeah, anyway, when I quoted the proverb absence makes the heart go fonder, I was actually not referring to President Trump, well, not directly.”

“There is no one absent that he wants around him. I mean, you can’t….”

“Stop, his Secretary of State, Marco Rubio, is not a chief negotiator, right?”

“He isn’t even a side negotiator, I would reckon he is a tertiary negotiator – see chief is the principal, leads strategy, and that is Witkoff and Kushner, then there is a side negotiator who handles internal communication and relays intelligence and the tertiary who acts as a support scribe or observer.”

“Well, Rubio is not into peace negotiations – you know, with Russia or Iran, but a…”

“Stop right there, he is the lead in South America, a neighbourhood where he hails from and need I say those South Americans are way easier to deal with than these Asians and Russians…”

“All I wanted to mention to you is that our Rubio is Ishaq Dar….”

“Hey, there was no seat available on the flight to Switzerland.…”

“I thought the Prime Minister’s plane….”

“Technical teams took up the bulk of space and…”

“Doesn’t he occupy a technical seat?”

“Well, for your information, he is a deputy prime minister, so in the US parlance, he is JD Vance.”

“That I believe.”

By conventional measures, this counts as progress. Yet it has also obscured a deeper and more dangerous problem: a labour market crisis that now runs through every layer of the workforce, from fresh graduates to mid-career professionals to senior executives.

The official unemployment rate has risen to 7.1 percent, up from 6.3 percent a year earlier.

Most economists suspect the real number is higher. But even that debate understates the problem.

Pakistan is not merely producing too few jobs.

It is producing the wrong workers for the jobs that exist, and too few firms are capable of absorbing the workers it produces.

Start with education. Public spending remains far below what is required for a country with Pakistan’s demographic profile.

Good private schooling exists, but only for a narrow elite. For the majority, the system does not produce literacy, numeracy, discipline, communication skills, or technical competence at any meaningful scale.

Universities continue to release graduates into the market, but too many arrive without the baseline skills employers require. The result is not just unemployment. It is unemployability.

That, however, is only half the story. The other half is demand. Even a better-trained workforce would struggle in an economy where private investment is weak, new firms are not being created at scale, and existing businesses are expanding cautiously.

Pakistan has a human capital problem, but it also has a job-creation problem. The two now feed on each other.

Pakistan’s industrial base has thinned. Manufacturing is no longer creating employment at the pace it once did, and several sectors remain below the momentum they had before the post-2022 squeeze.

Industry has historically been one of the country’s main absorbers of young workers; it has largely stopped playing that role.

The financial sector, more dynamic before the 2008 crisis, has stagnated and added few meaningful new positions.

Telecom, once among Pakistan’s fastest-growing sectors, has matured. Multinationals are leaner.

Across industries, consolidation has narrowed the space for middle- and senior-management roles.

Employers complain that universities are not producing usable graduates.

In many cases, they are right. Entry-level roles exist, especially in export-oriented services such as IT, but firms cannot afford to train underprepared workers for global competition.

At the same time, young graduates argue, also correctly, that there are too few good jobs to absorb them.

The market is stuck in a bad equilibrium: firms say they cannot find talent, workers say they cannot find jobs, and both are telling part of the truth.

Artificial intelligence is likely to make this worse before it makes it better. The first jobs to be squeezed will not be the most sophisticated ones.

They will be the routine, low-skill, entry-level tasks through which young workers normally learn discipline, execution, and judgment.

If those stepping-stone roles disappear, Pakistan’s already weak school-to-work transition will weaken further.

Mid-career professionals face a different bind. Formal domestic employers struggle to retain talent against two pressures: overseas employment, particularly in the Gulf, and remote work for foreign firms.

The Gulf option is now narrowing, but remote work has created a powerful arbitrage.

A Pakistani professional working remotely for a foreign client can often face an effective tax burden far below that of a comparable salaried employee in the domestic formal sector.

Add flexibility, foreign-currency income, no commute, and freedom from office politics, and the choice is not difficult.

This is not merely a lifestyle shift. It is a labour-market distortion.

Pakistan effectively penalises formal domestic employment while lightly taxing the export of labour services.

That may support foreign exchange inflows, but it also weakens the domestic corporate talent pool.

The state cannot keep taxing formal salaried workers heavily while pretending not to notice that comparable workers are moving into lightly taxed offshore arrangements.

At the top end, the squeeze is different but equally structural. Senior talent is not scarce.

It is increasingly surplus. The expansion years of banking, telecom, FMCG, and multinational growth produced a generation of capable managers with another ten or fifteen working years left.

But new institutions are not being created fast enough to absorb them, and existing institutions are cutting exactly the layers in which they sit.

Boards and executive suites remain dominated by an older generation that rarely exits on time.

Below them, companies are flattening hierarchies, merging functions, trimming costs, and replacing senior professionals with cheaper junior substitutes.

A few years ago, experienced professionals with strong credentials had little difficulty finding work.

Today, many sit idle, consult informally, trade on the side, or accept roles far below their competence. This is wasted human capital, and it is becoming a serious economic loss.

The problem may deepen further. As Gulf job prospects soften and some workers return home, Pakistan’s pool of unemployed and underemployed middle-aged professionals will grow.

This is not the unemployment story policymakers are used to discussing.

It is not just young people waiting for their first jobs. It is also experienced workers being pushed out of formal productivity, while still having years of useful work left.

None of this is irreversible, but it requires treating labour-market failure as seriously as Pakistan now treats fiscal failure.

The tax anomaly between domestic formal employment and remote offshore work needs correction. Education reform must focus less on enrollment and more on usable skills.

Investment policy must be judged by jobs created, firms formed, and productive capacity added, not merely by headline inflows.

And Pakistan’s surplus of experienced professionals should be treated as an asset, not debris from corporate cost-cutting.

Properly deployed in training, mentoring, governance, and enterprise-building roles, they can help offset years of underinvestment in human capital.

Stabilisation was necessary. But stabilisation is not a growth model.

An economy cannot stabilise its way to prosperity. At some point, it must create firms, absorb workers, reward skills, and give people a credible path into productive work.

Without that, Pakistan’s macro recovery will remain what it too often has been: a pause between crises, not an exit from them.

In Pakistan, both public and private universities contribute to the higher education system, but over the past decade or so, private universities have become increasingly dominant in terms of demand, especially among middle-class families in urban areas. This shift is mainly due to the concerns about quality, infrastructure, and academic environment in many public institutions. However, the rising fee structures of private universities and their admission policies have created concerns about affordability and fairness.

Private universities in Pakistan have significantly increased their tuition fees over time. Many institutions charge not only tuition but also admission fees, registration fees, examination fees, laboratory charges, technology fees, and miscellaneous administrative costs.

These additional expenses often make the total cost much higher than what is initially advertised. For example, at institutions such as the Lahore University of Management Sciences (LUMS), the annual cost of undergraduate education in some programmes can exceed Rs1.5 million, excluding hostel and living expenses. Similarly, universities such as the Institute of Business Administration (IBA) Karachi, Habib University, SZABIST, FAST National University, Bahria University, and the University of Central Punjab charge substantial semester fees that can range in millions per semester depending on the programme. Even universities that were once considered moderately priced have gradually increased their fees.

For middle-class families, these rising costs have become extremely difficult to manage. While wealthy families can afford these charges, and some low-income students may receive scholarships, the middle class often falls into a difficult gap. They earn too much to qualify easily for financial aid but not enough to comfortably afford continuous fee increases.

As a result, many parents are forced to use savings, take loans, sell assets, or make major sacrifices in their household budgets to support their children’s education. In families with more than one child pursuing higher education, the financial burden becomes even heavier.

The total cost of studying at private universities does not end with the tuition fees. Students must also pay for accommodation, transport, books, internet, and other academic materials.

For those studying in cities away from their homes, hostel and living expenses add a significant additional burden. When all these costs are combined, higher education in private universities becomes unaffordable for a large portion of the population. This situation has raised concerns about equal access to education in society.

Another important issue is admission policies in some private universities. While merit remains a formal requirement, financial capability often plays a significant role in access to education.

In many cases, the students with strong academic records struggle to secure admission because they cannot afford the fees, while the students with weaker academic performance may gain access due to their ability to pay. This raises questions about fairness and equal opportunity. Ideally, higher education should prioritise talent, ability, and merit, allowing students from all backgrounds to compete on equal terms.

At the same time, the admission process and fee structures are often not fully transparent. Many families are not clearly informed about the total cost of a degree programme at the time of admission.

Initial fee announcements may appear manageable, but additional charges and annual increases often make the overall cost much higher than expected. This lack of clarity creates financial uncertainty and makes long-term planning difficult for the parents.

The situation becomes even more worrisome compared with the condition of government universities in Pakistan. Public-sector universities such as the University of Karachi, Punjab University, and other provincial institutions continue to play an important role in providing affordable education.

However, many of these institutions face serious challenges, including overcrowded classrooms, a shortage of faculty, outdated curricula, limited research facilities, and insufficient funding. Laboratories, libraries, and infrastructure in several public universities are often underdeveloped due to financial constraints. These limitations affect the overall quality of education and reduce the students’ exposure to modern academic and industry practices.

As a result, many students and parents prefer private universities despite their high fees, believing they offer better academic environments, modern facilities, and stronger career opportunities. This creates a clear imbalance in the education system.

Public universities remain financially accessible but often struggle with quality issues, while private universities offer better facilities but are increasingly unaffordable for the majority of families.

The rising cost of private education also has wider social consequences. Education is supposed to be a tool for reducing inequality and promoting upward mobility. However, when it becomes too expensive, it risks strengthening social divisions.

The students from wealthy backgrounds continue to access high-quality education and secure better job opportunities, while the students from the middle- and lower-income families face increasing barriers. This can lead to long-term inequality in income, employment, and social status.

There is also a growing concern about student financial stress. Many students take part-time jobs or depend heavily on their families to manage expenses. This financial pressure often affects their academic performance and mental well-being.

Instead of focusing fully on the studies and skill development, the students may spend significant time worrying about fees and expenses. In some cases, they are forced to drop out of university due to financial difficulties.

Another issue is the increasing reliance on student loans or informal borrowing. While loans may help the students complete their education, they often begin their professional lives with financial debt. This can delay important life decisions such as further studies, business investments, home ownership, or family support responsibilities.

Supporters of private universities argue that high fees are necessary to maintain quality education. Modern laboratories, digital learning systems, qualified faculty, research facilities, and international collaborations require significant investment. This argument is valid to some extent, as maintaining high standards does involve high costs.

However, the challenge lies in balancing quality with affordability. Education should not become a luxury only available to a small section of society.

This is where stronger regulation and oversight are needed. The Higher Education Commission (HEC) and relevant government bodies should play a more active role in monitoring fee structures.

Universities should be required to justify significant fee increases and provide full transparency regarding how funds are used. Regular audits and public reporting could help ensure accountability and build trust between the institutions and families.

In addition, clear limits on annual fee increases could be introduced, linked to inflation or other economic indicators. This would help protect families from sudden and unpredictable financial burdens. Universities should also be encouraged to expand scholarship programmes and financial aid opportunities. Merit-based and need-based scholarships should be made more widely available so that talented students are not excluded due to financial limitations.

Admission policies should also be reviewed to ensure fairness. Financial capacity should not outweigh academic merit. Universities must ensure that capable students are not denied access simply because of their economic background. Flexible payment plans and instalment options could also help reduce the immediate financial burden on families.

Improving public universities is equally important. Instead of allowing the gap between public and private institutions to widen further, the government should invest more in upgrading infrastructure, hiring qualified faculty, improving research facilities, and modernising curricula in public-sector universities. Strengthening these institutions would reduce pressure on private universities and make higher education more balanced and inclusive.

Collaboration between the government, private universities, and the corporate sector can also play a role in improving access to education. Industry partnerships, sponsored scholarships, and educational grants can help support the students from lower- and middle-income families. Education should be seen not only as a private investment but also as a national priority that benefits society as a whole.

The rising fee structures of private universities, combined with the challenges faced by the public universities, have created a complex and unequal higher education system. Middle-class families are particularly affected, as they struggle to balance quality education with affordability. Without proper regulation, transparency, and investment in public education, this gap is likely to increase further.

A strong system of checks and balances, along with the expanded financial support and improved public universities, is necessary to ensure that higher education remains accessible, fair, and capable of serving the needs of all segments of society.

Education should remain a pathway to opportunity, not a privilege reserved only for those who can afford it.

The writer is a seasoned journalist and a communications professional.

Today, when critics target the Central Cotton Research Institute (CCRI) or the Pakistan Central Cotton Committee (PCCC), they invariably pose a single question: “The world has advanced so far; why have we lagged?”

However, the fundamental question we must ask is: how did the world reach those heights? Was it merely the seed that guaranteed success for the United States, China, India, and Brazil, or did these nations systematically integrate research, policy, market dynamics, the farming community, and infrastructure into a cohesive value chain?

At its peak, Pakistan’s cotton production approached nearly 15 million bales; today, over recent years, it has plummeted to a mere 5.5 million bales. Attributing this decline entirely to the narrative of a “bad seed” is an evasion of reality.

Leading global cotton producers did not depend on laboratories alone.

Instead, they allocated billions of dollars to research and development, instituted farmer protection mechanisms, stabilised markets, modernised irrigation, promoted mechanised farming, and maintained continuity in agricultural policies.

Presently, China invests over 2.4 percent of its Gross Domestic Product (GDP) into Research and Development (R&D), the United States allocates over 3 percent, Brazil invests approximately 1.2 percent to 1.4 percent, and India similarly spends manifold more on agricultural research than Pakistan. Conversely, Pakistan’s total investment in R&D has dwindled to a negligible 0.16 percent of its GDP.

The dilemma then arises: how can we reasonably compare institutions in nations investing trillions in research—where scientists are equipped with cutting-edge laboratories, sustained funding, advanced genomics, machinery, meteorological data, and robust policy support—with local institutions that occasionally lack the resources even for basic salaries, field trials, fuel, machinery, and fundamental infrastructure? It is equivalent to handing someone a bicycle and expecting them to win a Formula One race.

Crop yield is not determined by genetics alone; rather, it is a product of the interplay between genetics, environment, and management practices (Yield = Genetics × Environment × Management).

Even the highest-quality seed becomes ineffective under poor water quality, extreme heat, substandard spraying practices, imbalanced fertilisation, counterfeit pesticides, market volatility, and flawed policy frameworks.

Unfortunately, the success or failure of cotton in Pakistan has been reduced strictly to the quality of the seed.

If the yield is favourable, the seed is praised; if the crop fails, the research institution is condemned.

• Is it the mandate of research institutes to enforce crop zoning?

• Is a scientist responsible for setting support prices?

• Is the containment of counterfeit pesticides the duty of a plant breeder?

• Do research institutes regulate the pricing of electricity, diesel, fertilisers, and agricultural inputs?

• Is a researcher accountable for ensuring equitable water distribution or stabilising the cotton market?

If farmers are shifting away from cotton toward sugarcane, rice, or alternative crops, the driving forces are economic realities, not merely seed quality.

In countries where cotton cultivation has succeeded globally, governments, policymakers, markets, industry, extension systems, and research institutions operate as a synchronised team.

The tragedy in Pakistan is that when the broader system fails, research institutions become the easiest scapegoats.

The farmer faces financial distress, the industry demands raw materials, and the government grapples with import burdens—yet holding the scientist solely accountable for every crisis lacks intellectual integrity.

Despite severe resource constraints, Pakistani agricultural scientists continue to sustain cotton cultivation amid climate change, emerging viral strains, whitefly attacks, water scarcity, and inconsistent policies.

If these institutions face total paralysis, Pakistan risks losing even the prospect of self-sufficiency in cotton production.

Critique is necessary, and accountability is essential—but both must be governed by fairness. If we aspire to match the standards of China, the United States, India, and Brazil, we must replicate their level of capital investment, policy continuity, farmer-centric environments, market stability, and institutional patronage.

We cite Brazil, China, and India, yet provide resources and facilities comparable to those of Cambodia.

An agricultural revolution cannot be achieved by invoking developed nations rhetorically while operating with developing-world facilitation in practice.

Today, in the backdrop of the plan to build a gymkhana on the research land of the CCRI Multan, certain circles raise questions regarding the performance and utility of the Central Cotton Research Institute (CCRI) Multan.

Such questions are often posed without due regard to historical contributions and the sustained research role that has anchored Pakistan’s cotton economy for decades.

This very institution played a decisive role in delivering the country’s historic bumper cotton crops.

For decades, CCRI Multan remained central to Pakistan’s cotton production and research system.

It has developed more than 40 cotton varieties, most of which consistently secured top positions in national trials.

For a long period, CCRI-developed varieties occupied 60–70 percent of the country’s total cotton cultivated area, forming the backbone of several major bumper harvests.

Even today, the institute continues its work. Last year, Cyto-547 achieved widespread cultivation across Punjab on hundreds of thousands of acres, and its adoption has further increased in the 2026 season.

Alongside this, research on new varieties continues, and within the next two to three years, advanced, high-yielding, and climate-resilient varieties are expected to reach farmers.

The performance of any institution must be evaluated strictly in relation to its available resources, manpower, and financial capacity.

While CCRI Multan holds a strong reputation, its operational funding is extremely limited. On one side, private seed companies generate billions of rupees in business within a single cotton season, while on the other hand, CCRI Multan operates on an estimated annual budget of approximately 250 million rupees.

Meanwhile, around 32 public and private institutions across Pakistan are engaged in cotton research and development, yet accountability is disproportionately concentrated on this single institute.

The operational environment has become so strained that employees and pensioners have faced delays in salaries and pensions for nearly ten months.

Long-standing arrears are being cleared little by little, i.e., drop by drop rather than in lump sums.

Outstanding liabilities exceed 2 billion rupees.

Despite this, scientists and staff continue their work with dignity and restraint, often without publicising their hardships.

Despite these adversities, the Cyto-547 variety has seen extensive cultivation in Punjab, with its area expanding further in 2026—demonstrating that the institute’s research continues to earn the trust of farmers even under severe financial constraints.

CCRI Multan maintains Pakistan’s largest cotton gene bank, comprising more than 6,000 germplasm accessions from 41 countries.

This genetic resource forms the foundation for developing future varieties resistant to heat, drought, viral diseases, whitefly, and other emerging climatic challenges.

Safeguarding such a national asset requires continuous funding, modern infrastructure, and strong scientific oversight—yet the institution continues to face acute financial distress while performing this critical responsibility.

It is rarely acknowledged that CCRI Multan does not receive stable, structured funding from the national exchequer.

Despite this, a public misconception persists that its employees enjoy excessive salaries and facilities.

A closer observation of field and laboratory conditions reveals scientists working under extreme heat with minimal infrastructure and limited resources.

To date, the institute has delivered over 40 cotton varieties to farmers, with nearly 90 percent consistently ranking among the top three in National Cotton Variety Trials (NCVT).

In the 2023 NCVT, Cyto-547 secured first position across Punjab against more than 80 public and private sector varieties.

When capital is constrained, manpower is limited, salaries are delayed, and basic facilities are inadequate, institutional performance must be evaluated with context and fairness.

Despite these constraints, research on multiple new strains alongside Cyto-547 continues, aiming to deliver climate-adaptive, high-yielding varieties within the next two to three years.

Even during prolonged periods of financial hardship, CCRI employees continued working for nearly three years while receiving only 30–40 percent of their salaries.

It is easy to criticise institutions; however, sustained scientific work under severe constraints can only be fully understood by those who live it.

There is an urgent need to address the structural challenges facing CCRI Multan.

A supportive institutional environment must be created, and relevant authorities must allocate adequate resources to sustain cotton research, protect the gene bank, stabilise the institution, and secure Pakistan’s agricultural future.

Weakening the research system will not affect a single institution alone—it will have far-reaching consequences for the entire agricultural and economic ecosystem of the country.

Success in fiscal stabilisation

There has been visible progress in the stabilisation of public finances in the country.

The bottom line in terms of the size of the consolidated budget deficit of the federal and provincial governments is a big containment of this deficit.

It was as high as 7.7 per cent of the GDP in 2021-22. It remained, more or less, unchanged in 2022-23.

The big fall came in 2024-25 when it came down sharply to 5.4 per cent of the GDP, and to the very low level of only 3.0 per cent of the GDP this year, in 2025-26. This is one of the lowest-ever levels of deficit.

The fall in the deficit was due to a marked improvement in revenue generation at the federal level.

The tax-to-GDP ratio jumped up by as much as 1.2 per cent of the GDP, and the non-tax revenue to GDP ratio by 1.4 per cent of the GDP in 2024-25.

The entire reduction of 2.4 per cent of the GDP in the budget deficit was due to this unprecedented jump in revenues.

Simultaneously, the net budget deficit, excluding the debt servicing, was 1.1 per cent of the GDP in 2023-24.

This was converted into a large primary surplus of 2.2 per cent of the GDP in 2024-25.

The further large decline in the budget deficit from 5.4 per cent of the GDP in 2024-25 to the likely level of only 3 per cent of the GDP this fiscal year is apparently due to the expected decline in debt servicing from 7.6 per cent of the GDP in 2024-25 to 5.5 per cent of the GDP in 2025-26.

However, it is not clear as to how this has happened as there has been no marked reduction in interest rates in 2025-26.

Turning to the targets for 2026-27, the expectation is that the consolidated budget deficit will rise somewhat to 3.6 per cent of the GDP from 3 per cent in 2025-26.

This is close to the projection of public finances of Pakistan made by the IMF Staff in the Third Review Report of the ongoing programme.

The projections for 2026-27 are, first, that the net revenues of the federal government will remain unchanged at 8.2 per cent of the GDP.

Total federal expenditure is expected to rise by 0.9 per cent of the GDP.

This will be partly compensated for by 0.3 per cent of the GDP increase in the cash surplus of the provincial governments, leading thereby to an overall increase in the deficit by 0.6 per cent of the GDP.

This brings us to an unprecedented development, as follows:

Provincial grants to the federal government

The federal budget documents reveal that for the first time, the federal non-tax revenues will be augmented by grants/receipts under Article 164 of the Constitution of Pakistan.

This reverse transfer is expected to compensate for the decline in the transfer of SBP profits of Rs 993 billion.

The magnitude of the proposed provincial grants to the federal government is large at Rs 1,035 billion.

Article 164 states that a Province may make grants for any purpose, notwithstanding that the purpose is not one with respect to which a Provincial Assembly may make laws.

The ‘squeezing’ of provincial governments

The new regime of reverse grants from the provincial governments to the federal government has been accompanied by the assumption in the federal budget that the provincial governments will still continue to generate large cash surpluses to restrict the size of the consolidated budget deficit.

The four provincial governments combined are expected to generate a large cash surplus of Rs 1,794 billion in 2026-27. This is 30 per cent more than the likely level this year.

The federal budget documents also reveal that the consequential impact of the generation of large cash surpluses and grants to the federal government will be a big cut in development spending by the four provincial governments combined of over Rs 600 billion, equivalent to a fall of 22.5 per cent.

There is a need to wait for the announcement of the provincial budgets of 2026-27 to see if there is adherence to the targets set by the federal government.

There is the strong likelihood of lower cash surpluses in the presence of large reverse grants to the federal government.

However, this may motivate the provincial governments to mobilise more of their own revenues.

In fact, the IMF Programme includes a ‘resource mobilisation’ effort of Rs 400 billion from own-sources in 2026-27, especially the agricultural income tax.

This implies that if the provincial governments are to get out of the ‘squeeze’ on their revenues, they will have to generate additional revenues of 54 per cent over the previous year’s level.

The Finance Minister, in his budget speech, should have clearly described the big change in inter-governmental fiscal relations by resorting to Article 164 of the Constitution.

Ambitious FBR revenue target

The performance of FBR in 2025-26 has been disappointing.

Tax revenues at the federal level are likely to show a growth rate of only 10.5 per cent, implying a big shortfall of Rs 1,148 billion in relation to the target for the year.

An ambitious target has been set for FBR revenues in 2026-27 of Rs 15,264 billion. This represents a big increase of Rs 2,281 billion over last year’s level, equivalent to a growth rate of 17.6 per cent.

The national tax base is projected to increase in nominal terms by 12 per cent, with a real GDP growth rate of 4 per cent and an inflation rate of close to 8 per cent.

Therefore, FBR revenues will need to show an additional growth of 5.5 per cent.

The surprising aspect of the individual revenue targets is that the growth rates of direct and indirect taxes are, more or less, the same.

The federal budget does not propose any major reforms to raise significant additional revenues.

There are more proposals for several small tax reliefs, which, when combined, would imply a significant loss of revenues.

Overall, the federal budget for 2026-27 has come with several surprises.

These include, first, a new process of transfers of over Rs 1 trillion of provincial grants to the federal government.

Second, an ambitious revenue growth rate of 17.6 per cent has been set for FBR revenues, without any major taxation proposals for generating more revenues and with reliance on unlikely improvements in tax administration.

Third, the provincial governments are being squeezed due to grants to the federal government, leading to a projected fall of over 22 per cent in development spending.

This will be happening at a time when basic services like education, health, water supply and sanitation, etc., need to be greatly expanded.

This is likely to retard the process of human development in Pakistan.

The next article will undertake a more disaggregated analysis of various parts of the Federal budget 2026-27.

On June 14, Prime Minister Shehbaz Sharif posted a simple message on X: “We can confirm that a final, agreed upon text of the peace deal has been reached. Peace has never been as close as it is now.”

Within hours, the world erupted. #NobelPeacePrizeForAsimMunir, #PakistanNobelPeacePrize, #FieldMarshalAsimMunir and #CDFDidItAgain began trending globally. Google Trends reported a sharp surge in searches like “Asim Munir Trump” and “Pakistan Munir” from the United States, Israel, China, and the United Kingdom.

For the first time in months, the common man dared to hope that his monthly budget might stop bleeding.

The economic lifeline

Why does a peace deal in the Middle East matter to a family in London, Lagos, or Lahore? The answer is 25% — the share of the world’s seaborne oil that passes through the Strait of Hormuz. Since the war erupted on February 28, the strait has been effectively closed.

The consequences were brutal. Brent crude surged from around $72 per barrel before the strikes to approximately $96 by late May. US inflation hit 4.2%. Energy prices soared, supply chains snapped, and families everywhere felt the squeeze.

But when the peace deal was announced, oil prices dropped sharply — US crude futures fell approximately 1.6%.

The financial markets have already started responding positively, spurring hopes that lower energy prices would cool down inflation and have a knock-on effect on the overall life of common citizens.

British Prime Minister Keir Starmer put it plainly: freedom of navigation in the Strait must be restored “to begin easing the severe economic impacts that have been felt for several months — on families here in the UK and around the world”.

The world reacts

The applause from global capitals has been thunderous — and remarkably bipartisan.

UN Secretary-General António Guterres expressed “deep appreciation” for Pakistan’s constructive role, calling the deal “a critical step towards the peaceful settlement of the conflict”.

Turkish President Recep Tayyip Erdogan went further, declaring: “I thank Pakistan for its exceptional mediation efforts”.

German Chancellor Friedrich Merz said the deal “can pave the way towards a reinvigorated global economy and a more secure Middle East”.

French President Emmanuel Macron acknowledged the agreement was “the result of a diplomatic effort to which several partners have contributed”.

Japanese Prime Minister Sanae Takaichi “highly commended the efforts of the relevant countries that have played a mediating role”.

Australian Prime Minister Anthony Albanese and Foreign Minister Penny Wong, in a joint statement, “commended the efforts to date of Pakistan, Qatar, Saudi Arabia, Türkiye and other mediating countries”.

Italian Prime Minister Giorgia Meloni posted: “A heartfelt thanks goes to all the mediators, and in particular to Qatar and Pakistan, who have made this agreement possible”.

The Field Marshal’s masterclass

At the heart of this success is Field Marshal Syed Asim Munir, Chief of Army Forces and Chief of Defence Forces. His high-stakes visit to Tehran proved to be the decisive turning point.

The talks had collapsed at least three times prior to his intervention. Mediation efforts by the European Union and the United Nations had failed to break the deadlock. But Field Marshal Munir did something his predecessors could not. According to diplomatic sources cited by Anadolu Ajansı, Pakistan worked silently to find a “new formula” to break the stalemate. The breakthrough came in the form of a phased approach that neither Washington nor Tehran had previously accepted.

Specifically, Pakistan reportedly proposed a phased approach — Iran would reopen the Strait of Hormuz immediately in exchange for the US lifting oil sanctions and releasing frozen assets, while the thornier issue of Iran’s nuclear programme would be deferred to a 60-day technical window. This “strait first, nuclear later” sequencing broke the psychological barrier that had paralysed diplomacy for nearly two years.

In a statement that sent ripples through diplomatic circles, US President Donald Trump openly lauded the Pakistani military leadership. According to reports, the American president acknowledged the “highly instrumental role” played by Pakistan in bridging the political gulf between the two nations, praising the “exceptional efforts” that brought the deal across the finish line.

The intensive two-week mission in Tehran involved consecutive meetings with Iranian President Masoud Pezeshkian, Foreign Minister Abbas Araghchi, and Parliament Speaker Mohammad Bagher Ghalibaf. By the time it concluded, a finalised diplomatic draft had been transmitted to both authorities.

A historic legacy

International media have drawn direct parallels to 1971, when Pakistan facilitated Henry Kissinger’s secret trip to Beijing that reshaped the Cold War. More than five decades later, Pakistan has effectively replicated its own historic legacy — proving that its geopolitical value as a global stabiliser remains undiminished.

Former US intelligence and diplomatic officials reportedly acknowledged that without Pakistan’s intervention, the region could already have witnessed a devastating confrontation involving multiple countries.

A fragile but lasting peace

Is the danger over? Capital Economics, a London-based leading independent macroeconomic research consultancy, and market analysts like Ole Hansen of Saxo Bank urge caution. Hansen noted that “after more than 30 similar announcements over the past couple of months, investors have become increasingly cautious”. The deal reportedly includes a 14-point draft agreement: Iran pledges to reopen the Strait of Hormuz within 30 days, the US would lift oil sanctions and unfreeze Iranian funds, and the US and allies would present reconstruction plans for Iran.

The official signing ceremony is scheduled for June 19 in Geneva, Switzerland.

The bottom line

A nation once dismissed as unstable has proven to be the world’s most effective peacemaker. Pakistan didn’t fire a bullet. It fired a solution.

Tonight, the world breathes easier. And for the common man, the monthly budget may finally stop stretching to its breaking point.

Thank you, Pakistan.

The writer is a seasoned journalist covering the economy and international affairs.

This is not a pro-growth budget, nor an expansionary one. Overall development spending, federal and provincial combined, is set to decline. The fiscal space that has been created is being redirected largely toward a narrow elite whose consumption patterns will not meaningfully move the growth needle. At the federal level, this is a relief budget, and one that is, on paper, being financed by cutting provincial development spending.

The government is attempting to address a structural flaw in fiscal federalism, but through unconventional means. The IMF noted, as far back as its 2017 special report that Pakistan’s fiscal system is “somewhat unique compared to other countries”, a uniqueness rooted in the substantial asymmetry produced by the 7th NFC Award, where the provincial share in revenue far exceeded their share in resource mobilisation.

For years, the federal government has done the heavy lifting on revenue generation while provinces have spent lavishly. The provincial surpluses generated in recent years have largely remained parked with the provinces, eventually financing federal fiscal gaps by flowing into T-bills. These accumulated surpluses are dry powder, held in reserve to be deployed once the IMF programme ends.

The FY27 budget attempts, on paper, to correct this by transferring just over Rs1 trillion to the federal government. This creates room for Islamabad to lower taxes without cutting expenditure, while maintaining the targeted fiscal balance. There are, however, technical complications. Provinces receive their full revenue share until FBR collections reach Rs13.35 trillion, beyond which the incremental share is transferred as a grant to the federal government. If the FBR misses its target, provinces retain full revenue exposure rather than the standard 43 per cent. The arrangement also rests on voluntary provincial cooperation, which is not a structural fix.

The federal government has used this space to provide relief to segments of the formal, affluent, and middle-income population, including salaried individuals whose tax burden was raised sharply and disproportionately in recent years. They are paying less than before, though still more than they were in 2022. Exporters will see better earnings on paper. But there is little in this budget to drive investment in productive capacity. No one appears keen to commit to new projects.

The affluent will spend more, likely on imported goods and services. Salaried households will have marginally more disposable income. But neither creates the kind of demand multiplier that shifts growth trajectories. And for the poor and the informal lower- and middle-income classes, there is essentially nothing. Whatever benefit trickles down will barely offset the direct and indirect costs of higher petroleum levies already in the pipeline.

The FBR’s targets are ambitious to the point of implausibility. Direct tax collection is projected to grow by 18.3 per cent against nominal GDP expansion of 13.2 per cent, and this while offering

reliefs. Customs duty is expected to increase by 20 per cent even as the SBP continues to discourage non-essential imports and trade tariffs trend downward. The arithmetic does not hold together comfortably.

When the gaps materialise, and they likely will, the pressure will fall back on the FBR to perform. That means squeezing the formal sector further: demanding advance payments, applying coercive collection measures, and revisiting the same taxpayers who are currently celebrating. The jubilation of the affluent may prove short-lived.

Meanwhile, the government has significant room to increase petroleum levies without passing through the full impact to consumers, particularly if a prospective Iran-US deal keeps oil prices contained. Other forms of indirect taxation remain available. These instruments, when deployed, land hardest on those least able to absorb them.

This budget has been received as a turning point by a small group of people looking only at the relief side of the ledger. They are not accounting for the other side. The relief is real, but it rests on paper targets.

When those targets are missed, as they have been in prior cycles, the IMF will push for enforcement, and the government will reach back into the same pockets it has just partially emptied, while leaning on indirect taxes that compress the living standards of ordinary Pakistanis.

Caution is warranted. Some inflationary consequences are likely. The central bank would be wise to maintain its hawkish stance.

These expectations were reaffirmed a couple of hours before the budget was presented to parliament by Prime Minister Shehbaz Sharif during his televised address after formal cabinet approval of the budget as he praised his brother, the leader of his party, his niece, the Chief Minister Punjab, the leadership of the Pakistan Peoples’ Party as well as the Balochistan and last, but perhaps not least, the Khyber Pakhtukhwa governments for cooperating with the Centre in agreeing to key budgetary proposals. The declaration by Finance Minister Muhammad Aurangzeb that this measure has been postponed till next year raises questions about whether he will be able to deliver on this pledge when he clearly failed to get a consensus on other aspects of this year’s budget that required the intervention of the hybrid government as well as a 30- to 40-minute-long chat between the Prime Minister with the Managing Director of the International Monetary Fund (IMF).

Nonetheless, the budget does envisage generating about a trillion rupees more from the provinces in the current year – a rise that from an economic point of view cannot be supported: a rise in provincial surplus from 1379 billion rupees (revised estimates of 2025-26) to 1794 billion rupees in 2026-27 that would generate an additional 415 billion rupees for the Centre. And a reduction in the provincial budgeted allocation for development from 2.869 trillion rupees in the budget last year to 2.224 trillion next year, or an additional 649 billion rupees that would accrue to the Centre.

Two observations are relevant. First, this accrual will be spent by the Centre on current non-development expenditure, accounting for 93 per cent of the total budget 2026-27, like last year, which is anti-growth and inflationary to boot as it is not backed by a rise in output. And second, it will further slow down any move towards devolution, a policy that seeks to meet the needs/requirements of local communities. Instead, the Centre will take over project decision-making from the next tier of government, i.e., the provinces, though one may assume that the more politically well-placed a party maybe the more the Centre will heed their demand for specific projects.

The question is: is there anything different about the budget from previous ones? There are five takeaways that show that little has changed in the budget.

First, the reliance on external borrowing is to rise to 23.3 billion dollars next year (at 290 rupees to the dollar parity) against the 19.9 billion dollars budgeted for the outgoing year, but at last count, only 11.068 billion dollars had been received in 2025-26 – an inflow that surely must be a source of concern to the government. This perhaps explains why the Finance Minister was at great pains during the unveiling of the Economic Survey a day before the budget presentation to emphasise the enhanced access to commercial borrowing, Panda ponds (only 250 million dollars equivalent have been issued) and issuance of other debt equity instruments like Sukuk and Eurobonds. Total debt, including domestic debt and mark-up, is budgeted to rise next year by 16 per cent – from the revised estimates of 6.9 trillion rupees to next year’s 8.05 trillion rupees.

Not included in the debt figures noted above, but a debt nonetheless, is the estimated closing guaranteed debt position for the issuance of contingent liabilities on 30 June 2025, estimated at 3.950 trillion rupees in last year’s budget, understated by 372 billion rupees as per the 2026-27 budget documents. The envisaged rise till 30 June 2027 is 5.005 trillion rupees or a rise of 16 percent.

Second, all components of current expenditure were raised and reflected the inability of the elite to show a reduction through either: (i) implementing reforms, pensions budgeted to receive 1.16 trillion rupees next year as opposed to 1.05 trillion rupees in the outgoing year, though

facetiously the documents note a 10 billion rupee pension fund though it is not clear whether this fund is set up at the taxpayers’ expense or whether this is the outcome of the policy announced last year that envisages employee contribution effective for only new entrants. Defence was also upgraded by 412 billion rupees, though the bulk of this was for operational expenses due to the uptick in terror attacks (and one would assume the 7 per cent pay raise for all state employees).

Third, the budgeted development outlay is contained at one trillion rupees in 2026-27, the same amount as budgeted in 2025-26. However, actual disbursement by the Finance Ministry (as opposed to the authorisations by the Planning Ministry) in the outgoing year has to-date been less than 50 percent. The allocations are indicative of a long-standing PML-N philosophy, notably big infrastructure projects will promote development as well as the party’s popularity. Sadly, here too the focus remained on roads rather than on water reservoirs, given that the country is now defined as severely water stressed.

Fourth, Federal Board of Revenue tax collections are budgeted to rise by 17.5 percent to 15.26 trillion rupees – the 2025-26 budgeted FBR collection was 14 trillion rupees that was revised downward to 12.9 trillion rupees (though FBR sources have revealed that the shortfall may still be in excess of 800 billion rupees). This indicates that the tax target, in yet another budget, is unrealistic.

In addition, the bulk of the government revenue is to be from sales tax whose incidence on the poor is greater than on the rich. It includes 4.9 trillion rupees under the head of sales tax, and another 5.3 trillion rupees from withholding taxes levied in the sales tax mode but credited under income tax (a practice that FBR does not desist from in spite of exhortation by the Auditor General of Pakistan). And kept outside the purview of the FBR (to ensure that it is not part of the divisible pool and therefore to be shared with the provinces) is the petroleum levy budgeted to generate 1.67 trillion rupees next fiscal year. In effect, the burden on the public through these three sales tax sources will be 11.8 trillion rupees next year – a fact that undermines the adequacy of the 838 billion rupees budgeted for the Benazir Income Support Programme, especially given poverty rate of 44 percent, if measured as per the calorific value.

And finally, the 4 percent growth next year may have to be revised downward given the severely contractionary monetary and fiscal policies in place due to the IMF’s harsh and upfront conditions and in the words of the Annual Budget Statement 2026-27 “a one percentage point decline in real GDP growth could lower government revenues through reduced tax collections, while also increasing expenditure pressures, particularly on social safety nets.”

Well, it is yet another year of stabilisation. Nothing else. As someone aptly put it, the economy is being kept in an induced coma without the needed operation.

That is the art of economic management of the current team.

They say the glass is half full. However, almost every other stakeholder sees it as half empty — evident from investment-to-GDP hovering at a low rate of 13-15 percent. FDI is at a record low.

Unemployment is creeping up, and inflation is on the rise again after coming down to SBP’s medium-term range of 5-7 percent.

Call it stabilisation or stagflation — the bottom line is that the misery of the common man is nowhere close to over enough to appreciate the encouraging picture presented by the government.

The finance minister wants investment to be in the high teens and desires local investment to take the lead, with foreign investment to follow.

He knows the solution lies in lower taxation, energy, and financing costs.

He is looking at the finer points of doing away with regulatory hurdles and has emphasised policy consistency.

The only consistency about him is repeating all the pep talks, but without delivery.

Taxation on formal corporates and individuals — including all super taxes and surcharges — has only moved up in this regime and is currently at the highest-ever level in history.

Financing cost has come down over the last year, but there is not much liquidity left in the system to lend to the private sector, as the government borrows it all.

Now, the private sector and free-market champions are talking about boosting concessionary finance as the way to go.

Well, not many years ago, they bashed the subsidy model presented by the previous regime — perhaps the next may say the same for the incumbents.

They talk about the decline in the debt-to-GDP ratio.

However, they have little to say about the problem of the propensity to service debt.

They do not talk much about growing domestic debt beyond the banking sector’s capability, as SBP’s OMO injections have quadrupled in the last three years to over Rs15 trillion.

They blame external factors for worsening macro indicators lately.

They are right. Indeed, the situation has changed after the Iran-US war.

However, they have a role to play, as overreliance on the petroleum levy in days of skyrocketing international oil prices has contributed to jacking up inflation, which pushed the SBP to increase the policy rate and, in turn, increased the government’s debt-servicing bill.

That leaves less room for fiscal accommodation.

There is nothing to talk about on tax reforms. When the question was posed to the FBR chairman, he used his intelligence to outsmart the reporter by framing the answer in absolute numbers.

They explain numbers in dollars in days when the currency is overvalued, which may change in a jerk when there is a jerk in the currency.

However, he had no concrete response to the tax shortfall of Rs2.2 trillion in the last two years.

The finance team has no answer to its inability to expand the tax base and bring traders and others into the tax net.

The story is the same. Live day by day. Comply with IMF targets by taxing the same base and ask for more time before we can think of growth, as next year’s growth is likely to be below 4 percent too.

Having said that, one may appreciate that the government is not making silly mistakes, as a few previous regimes did.

But the question is for how long, as the patience of the powers that be is said to be wearing thin and stabilisation fatigue is seeping in. And the only thing that can change this is tax reform.

Let’s see what the government has in its kitty today to positively surprise us in the budget speech.

Let’s hope against hope.

The delay has increased public interest across the country, especially among salaried individuals, pensioners, businesses and low-income households who are expecting significant relief.

For ordinary citizens, the federal budget is a document that directly affects daily life. It determines how much tax people will pay, what subsidies they may receive, and how much will be spent on basic services such as health, education, transport and development. Every year, the public waits for the budget because its decisions influence household expenses, food prices, electricity bills, job opportunities and the overall economic stability. This year, expectations are particularly high as families continue to deal with the financial pressure, despite some signs of economic recovery.

According to the National Economic Council (NEC) approved macroeconomic framework for the Federal Budget 2026-27, the government has set a total budget outlay of around Rs17.1 trillion. This reflects the overall size of federal spending, including debt servicing, defence, development programmes and administrative costs. Within this broader framework, development planning has also been structured to support medium-term growth and stability.

The NEC has also approved a GDP growth target of 4% for the upcoming fiscal year. This indicates a cautious but positive expectation of economic recovery. The target suggests that the government is aiming for gradual expansion in industrial output, agriculture performance and services sector growth. However, achieving this target will depend on the global economic conditions, domestic stability and the success of policy measures introduced in the budget.

Inflation remains a key concern for the policymakers and citizens alike. The NEC framework sets an inflation target of around 8.2%, reflecting an attempt to keep price increases within a manageable single-digit range. While this represents an improvement, compared with the high inflation levels seen in previous years, it still means that the prices of essential goods and services are expected to rise, albeit at a slower pace. For ordinary households, even moderate inflation continues to put pressure on monthly budgets.

The fiscal position remains tight. The approved framework indicates a fiscal deficit target of around 5% to 5.5% of GDP. This means that the government is still expected to spend more than its total revenue, relying on borrowing and other financing sources to bridge the gap. While this level of deficit is seen as relatively controlled under the current conditions, it still reflects the challenges of balancing development needs with fiscal discipline.

For salaried individuals, the most important question is whether this budget will bring real financial relief. Over the past few years, inflation has significantly reduced the purchasing power, making it increasingly difficult for the middle-income families to manage expenses. Many salaried people are expecting revisions in income tax slabs, an increase in the minimum taxable income threshold, or reductions in tax rates for the middle-income groups. If such measures are introduced, they could allow households to retain more of their income, improving consumption and overall economic activity.

Government employees and pensioners are also closely watching the budget. Fixed incomes have been heavily affected by rising prices of food, transport and utilities. There is widespread expectation that the salaries and pensions may be adjusted to reflect inflation trends. Even a moderate increase would provide relief to millions of families struggling to meet basic needs such as healthcare, education and daily household expenses. However, the government must carefully balance such adjustments with its limited fiscal space.

The low-income households remain the most vulnerable segment of society. For many families, basic items such as flour, cooking oil, electricity and rent consume the majority of their income. In this context, expectations are high for expanded social protection programmes.

Strengthening cash transfer schemes, food subsidies and targeted welfare initiatives could help reduce poverty and provide support to those most affected by the economic hardships. These programmes are particularly important in rural areas and densely populated urban settlements where unemployment and informal work are widespread.

Investors and entrepreneurs have long argued that Pakistan needs a more stable and predictable tax environment to encourage growth. Businesses are hoping for reduced tax burdens, simplified regulations and stronger incentives for investment.

If the government introduces supportive measures for industry, exports and small and medium enterprises, it could lead to job creation and increased economic activity. This would not only benefit investors but also improve employment opportunities for the young people entering the workforce.

Another important area of focus is public sector development and service delivery. Citizens continue to express concerns about the quality of healthcare facilities, overcrowded schools and inadequate infrastructure. Increased allocations for education, health and development projects could help address these longstanding issues. Better schools would improve literacy and skills development, while improved healthcare systems would ensure wider access to medical services. Investments in roads, water supply systems and urban infrastructure would also improve daily life and support economic growth.

Agriculture remains the backbone of Pakistan’s economy, employing a large portion of the workforce. Farmers are currently facing rising input costs, climate-related challenges and unstable market prices. The budget is expected to include measures such as fertiliser subsidies, improved irrigation systems and better access to agricultural credit. Strengthening the agriculture sector would not only increase rural incomes but also help stabilise food prices across the country, benefiting consumers in both urban and rural areas.

The information technology sector is another area with strong growth potential. Pakistan’s IT industry has expanded rapidly in recent years, driven by freelancers, software developers and export-oriented companies. There is growing expectation that the budget will introduce incentives for IT startups, digital infrastructure and technology exports. Supporting this sector could generate high-skilled employment, increase foreign exchange earnings and reduce reliance on traditional industries.

There are also concerns about possible challenges in the budget. The government is under pressure to meet revenue targets, while also managing heavy debt repayments. This may lead to the introduction of new taxes or the expansion of existing ones. While direct taxes generally affect higher-income groups, indirect taxes can impact all the consumers by increasing the prices of goods and services. This remains a major concern for households already struggling with the rising living costs.

Energy prices are another sensitive issue. Electricity, gas and fuel costs continue to be a major burden for both households and businesses. There is a possibility that subsidies may be reduced further to improve fiscal stability and meet financial targets. While such measures may strengthen the economy in the long-term, they can increase short-term financial pressure on citizens. Higher energy costs also affect transportation and production, which can lead to increased prices of everyday goods.

Many citizens are hoping for significant relief through tax cuts, salary increases and expanded welfare programmes. However, given the fiscal deficit target of 5% to 5.5% of GDP and the overall budget constraints, the government may not be able to meet all the expectations.

If the final measures fall short of public hopes, disappointment may follow, even if some improvements are delivered.

Inflation, although lower than previous peaks, remains a key concern. The target of 8.2% indicates moderation, but prices are still expected to rise. If government spending increases without careful control, there is always a risk of renewed inflationary pressure. For ordinary citizens, price stability is often more important than headline economic figures. Even small increases in food or utility costs can significantly affect the household budgets.

Small and medium enterprises also face serious challenges. These businesses are important for employment generation and economic activity but often struggle with taxation, compliance costs and access to finance. Without targeted support, many SMEs may find it difficult to expand or even sustain operations. Supporting this sector is necessary for inclusive growth and long-term economic stability.

The government, therefore, faces a difficult balancing act. On the one hand, it must provide relief to the citizens who have endured years of financial hardships, and on the other, it must maintain fiscal discipline goals.

The success of the Federal Budget 2026-27 will depend not only on its numerical targets but on its real impact on ordinary citizens. If it succeeds in reducing financial pressure, improving public services and supporting job creation, it will be seen as a positive step forward. However, if rising costs continue to outweigh the benefits of policy measures, public frustration may persist.

The writer is a seasoned journalist and a communications professional.

Diplomatic relationships have been strained. International organisations have warned that higher energy and transport costs could worsen food insecurity across vulnerable regions. Yet another question is now beginning to emerge in financial markets. Could this conflict also be interfering with the very interest-rate cycle that helped fuel the artificial-intelligence boom?

At first glance, the connection appears tenuous. One concerns geopolitics and energy markets.

The other concerns technology, venture capital and equity valuations. Yet financial markets rarely separate developments as neatly as investors do.

Energy prices remain highly sensitive to developments around the Strait of Hormuz.

Although crude has retreated from its peaks whenever reports of diplomatic progress emerge, traders continue reacting sharply to headlines from the region.

Around a fifth of globally traded oil normally passes through the waterway, and even temporary disruptions can reverberate through inflation expectations, bond markets and central-bank thinking.

That matters because oil has a habit of leaking into every other price in the economy.

Higher fuel costs eventually influence freight, manufacturing, fertiliser, aviation and food.

Central banks can often look through short-term volatility. Sustained energy shocks are considerably harder to ignore.

Before the conflict, investors broadly anticipated a significantly easier monetary-policy path.

The debate centred largely on the pace of future rate cuts. Inflation appeared to be moderating. Financial conditions remained supportive.

The assumption underpinning much of the optimism in financial markets was that the era of aggressive monetary tightening was drawing to a close.

The Iran war complicated that outlook.

Bond yields have moved higher as markets reassess inflation risks and the possibility that central banks may need to remain restrictive for longer than previously expected. Rate-cut expectations have become less certain.

The discussion is no longer focused solely on how quickly policymakers can ease.

Investors are again debating how persistent inflationary pressures may prove to be if energy markets remain vulnerable to geopolitical shocks.

And that shift may ultimately matter more for technology valuations than any single earnings report.

The AI boom has depended on extraordinary optimism about future growth. Investors have been willing to value companies on earnings projections stretching many years into the future.

That process becomes more difficult when the cost of money rises. Higher interest rates reduce the present value of future cash flows.

They also increase the hurdle rate for the enormous sums now being committed to AI infrastructure.

The scale involved is remarkable. Major technology companies continue committing hundreds of billions of dollars to data centres, chips, energy infrastructure and AI development.

Analysts have projected trillions of dollars of cumulative AI-related investment over the coming decade.

At the same time, some of the most anticipated technology listings in the world are expected to command valuations measured in the trillions.

None of this proves that a bubble exists. Artificial intelligence may ultimately justify every dollar being invested in it. Productivity gains could exceed expectations.

Entire industries may be reshaped. Revenue growth may eventually validate today’s aggressive forecasts.

Yet has the market perhaps become accustomed to asking only one side of the question?

For years, economists, traders and academics have debated whether the AI boom contains elements of speculative excess. The disagreement was rarely about the technology itself.

The real argument concerned valuation, expectations and timing. If enthusiasm eventually outran reality, what would expose it? What event could force investors to revisit assumptions that had become deeply embedded in market pricing?

Few would have pointed to a conflict in the Middle East.

Yet an energy shock that alters the interest-rate outlook can eventually reshape the pricing of assets that appear entirely unrelated to oil.

A disruption in one corner of the global economy often exposes vulnerabilities elsewhere.

Markets that were comfortable with pricing years of future growth under one set of monetary assumptions may suddenly find themselves operating under another.

Recent market behaviour suggests investors are at least beginning to grapple with that possibility.

Technology shares have become noticeably more sensitive to interest-rate expectations. Bond-market moves increasingly command as much attention as corporate earnings announcements.

Strong economic data that might once have been welcomed now sometimes triggers concern because it reduces the likelihood of near-term monetary easing.

Could that be the signal worth watching?

Perhaps the AI rally resumes its ascent, and this latest scare fades into memory. Perhaps diplomacy succeeds, oil prices stabilise, and inflation pressures ease.

Perhaps central banks regain the flexibility investors expected at the start of the year.

But if the Iran war has already exposed vulnerabilities in supply chains, energy markets, diplomatic relationships and inflation expectations, is it unreasonable to ask whether it may also have disturbed the foundations supporting the market’s most crowded trade?

That may ultimately be the most ironic consequence of all. A war launched for geopolitical reasons could end up influencing the financial conditions that helped sustain one of the greatest investment booms of the modern era.

The question is whether markets are witnessing a temporary interruption to the AI story, or the beginning of a broader reassessment of the assumptions that made the story possible in the first place.

When the United States and Israel launched their joint strikes on Iran on February 28, the prevailing assumption in Washington and Tel Aviv was straightforward: a swift, decisive campaign to dismantle Iran’s nuclear programme, degrade its military capacity, and restore the old order in the Middle East — one in which Iran knew its place. One hundred days later, that assumption lies in ruins. Iran has not been broken. It has, paradoxically, been elevated.

The Islamic Republic that was once regarded as a declining, sanctioned, internally fractured state has emerged from this war as the most consequential power in the region — not despite the American and Israeli assault, but partly because of it.

A reluctant superpower

A year ago, the idea of Iran directly and repeatedly striking Israeli territory would have seemed far-fetched. The calculus was simple: Iran’s deterrence rested on proxies — Hezbollah, the Houthis, various Iraqi militias. Direct confrontation with Israel, let alone a nuclear-armed one backed by the United States, was considered suicidal.

That calculus has been shattered.

Iran launched ballistic missiles at central and southern Israel this week, triggering Israeli air defences, after Israel renewed strikes on southern Lebanon in what Tehran said was a violation of the ceasefire. Israel retaliated by targeting a petrochemical plant inside Iran. The two countries are now trading strikes with a regularity that would have been unimaginable twelve months ago — and Iran is doing so without existential panic. It is calibrating, warning, and withdrawing on its own terms.

This is not the behaviour of a defeated state. This is the behaviour of a regional power that has learned, under fire, that it can absorb punishment and survive.

Trump’s uncomfortable position

Perhaps the most telling indicator of Iran’s new leverage is the posture of Donald Trump himself.

Trump called on Israel and Iran to “immediately stop shooting” on Monday, posting on Truth Social: “Both sides, Israel and Iran, are looking to do an immediate ceasefire!” The language is telling. This is not a commander dictating terms to an adversary. This is a president pleading for restraint — from both sides equally, including from his own closest regional ally.

Trump told Axios that Iran had contacted him directly, saying they would stop shooting if Israel backed off. “They called us and said that they are not doing any more attacks and asked us to tell Israel not to do any more attacks,” Trump said. Think about what that means. Iran is now giving Washington instructions on how to manage Israel.

This is a remarkable inversion of the regional order. The US, which launched this war, is now acting more as a mediator than a belligerent. And Iran is exploiting every inch of that space.

The art of the stall

Iran has also proved itself a shrewd negotiator — or, more precisely, a masterful procrastinator.

According to Axios, US and Iranian negotiators reached an agreement on the terms of a deal in Doha, but Trump did not immediately sign off.

“The president relayed to the mediators that he wants a couple of days to think about it,” a US official said.

Meanwhile, a senior Arab official involved in the mediation told NBC News the delays were “frustrating,” describing the situation as “everyone playing a game of chicken and egg.”

Tehran has good reason to drag its feet. Every week that passes without a deal is a week in which Iran consolidates its new status.

Every Israeli strike on Lebanon that Iran responds to is a demonstration that it can project power and defend its allies. And every time Trump publicly frets about the pace of talks, Iran’s hand strengthens.

Trump has sent decidedly mixed messages. On Monday, he said he “couldn’t care less” if negotiations collapsed, only to post on Truth Social hours later that talks were “continuing, at a rapid pace.” The vacillation has not gone unnoticed in Tehran.

The midterm clock

Iran understands something that its adversaries are reluctant to admit publicly: Donald Trump is fighting on two fronts. One is in the Middle East. The other is domestic.

The 2026 midterm elections loom, and a war with no end in sight is politically toxic. Trump staked his reputation on being the president who ends wars, not the one who starts them. The Iran conflict, now at 100 days, is already longer than he anticipated. As one Washington Post opinion piece noted, Trump “desperately needs” a peace deal, and his short attention span “constantly bungles his political aspirations.”

Iran, by contrast, is not running for anything. The supreme leader does not face a midterm election. Tehran can afford patience in ways that Washington simply cannot.

The limits of air power

There is a deeper lesson here that the architects of this campaign should reckon with honestly. Air power can destroy infrastructure. It can kill military commanders. It can set back a nuclear programme by months or years. What it cannot do — as Iraq, Afghanistan, Libya, and Syria have all demonstrated at enormous cost — is reshape a country’s political identity or eliminate its will to resist.

Iran in 2026 is proof of this once again. The strikes have not produced a compliant Tehran. They have produced a more confident one.

A new Middle East

The region that emerges from this war, whatever the final diplomatic settlement, will not resemble the one that existed before February 28. Iran has demonstrated that it can absorb a US-Israeli military campaign, maintain its alliances, strike its enemies directly, and negotiate from a position of strength.

That is the definition of a regional power. Not the Iran of a year ago — sanctioned, isolated, and quietly declining. But an Iran that the Middle East and Washington will have to accommodate for years to come.

The war meant to cut Iran down to size may well have done the opposite.

The writer is a seasoned journalist covering the economy and international affairs.

The budget, expected to be announced this Friday, will, therefore, have few surprises for two reasons: (i) the third review of the Extended Fund Facility (EFF) and the second review of the Resilience and Sustainability Facility (RSF) documents were uploaded on the Fund website on 15 May – two days after the arrival of the mission to review the budget – detailing time-bound conditions and structural benchmarks agreed with the authorities till the next mandatory quarterly review scheduled for 15 September. The envisaged disbursement, subject to reaching a staff level agreement, is 760 million SDRs under the EFF and 76.9 million SDRs under the RSF; and (ii) budget formulators typically disclaim responsibility for almost 75 to 80 per cent of the budgeted allocations on the grounds that they are taken by the elite/influentials and, when the country is on a Fund programme, by the IMF.

The annual raise in total budgeted outlay is premised on a very optimistic projection of the Gross Domestic Product (GDP) growth rate. Post-Covid 19, with the exception of 2021-22, the growth rate has been well below projections, given that the country has been on a rigid upfront IMF programme since 2019, this has implied slashing the Public Sector Development Programme (PSDP) to meet the deficit targets agreed with the Fund. Sadly, this has been the practice during nearly all the Fund programmes. Pakistan is currently on the twenty-fourth programme, yet, over time, as was to be expected, the PSDP actual disbursement has been shrinking in terms of the percentage budgeted allocation – the July-April 2026 rate is at a low of 51 per cent.

The misalignment between the PSDP authorisations (by the Planning Ministry) and the actual disbursement (by the Finance Ministry) may indicate: (i) the Planning Ministry distancing itself from the lower disbursements than budgeted (though it is the Ministry’s responsibility to present more realistic allocations, given the shrinking fiscal space); and/or (ii) it may be an attempt to showcase the failure of the Finance Ministry to fund development and instead to continue to prioritise the outlay for current expenditure.

The focus has remained on ensuring that the current expenditure requirements are met.

The major component of this is the mark-up on loans budgeted at a little over 50 per cent of the total current expenditure in 2025-26 – an outlay which, if not released, would have serious economic consequences. This is lower than what was realised in 2024-25 – at 54.5 per cent – though it was budgeted at 56.8 per cent of total current expenditure, with the difference in total terms being 813 billion rupees.

The lower outlay for mark-up this year was not due to lower envisaged borrowing but lower borrowing costs – rescheduling past loans, which lengthened the period but lowered the actual interest payment and the anticipation of a lower policy rate by December last year (a rate that had to be raised due to the Middle East conflict – so much for its effects remaining contained).

In this context, it is relevant to note that the 1.25 trillion rupees borrowed from the 16 commercial banks to retire the circular debt was, after IMF approval, not included in the mark-up and defined as a one-off.

In total terms, the budgeted mark-up in 2024-25 was higher by 829,666 billion rupees than what was realised at the end of the year due to a lower policy rate over the year as well as rescheduling.

The budget documents for the next fiscal year, 2026-27, would indicate by how much this expenditure item exceeded the budgeted amount.

Defence as a percentage of current expenditure was 15.62 per cent of total current expenditure 2025-26, while last year it was at 13.3 per cent (with the budgeted amount under this head lower by 2.3 per cent).

The rise may well be due to higher operational costs due to ongoing terror attacks; however, it is relevant to restate that the actual current expenditure as per budget documents for last year declined by 813 billion rupees.

Running civilian government rose to 5.9 per cent of total current expenditure in the current year’s budget against 5.4 per cent in last year’s revised estimates due to massive pay rises at the taxpayers’ expense.

Pensions rose from 1.014 trillion rupees in the revised estimates of last year to 1.055 trillion rupees this year, money dedicated for public sector pensioners and does not include the 93 per cent of those who are engaged in the private sector.

While the government has made employee contributions mandatory since last year, greater clarity is required as to whether this amount is being set up in an escrow account or a pension fund, or whether the money is being fungible, the government is using it for meeting its expenses, which may have some consequences down the line.

Benazir Income Support Programme (BISP) received less than 5 per cent of the current outlay as per the Fund’s insistence, though the beneficiaries that have been identified through a scientific method of selection do not constitute the rising number of unemployed as a consequence of the Fund’s severely contractionary monetary and fiscal policies, nor take cognisance of the rising poverty levels through the calorific method.

Revenue is to be generated from (i) raising indirect taxes (sales tax in particular) with the rationale that the GST C-efficiency ratio (actual revenue collection from goods and services to potential) has declined from 27.4 per cent to 22.8 per cent over the past ten years.

The Fund proposes taxing a broad set of basic goods that remain exempt or are concessionally taxed, historical zero-rating in export sectors has narrowed the base, and post-devolution fragmentation of GST on services has added compliance and administrative complexity through four separate provincial regimes; however, these are indirect taxes whose incidence on the poor is greater than on the rich, (ii) constitutional court ruled in favour of super tax; however, there is a concern that capital flight may be further fuelled; and (iii) increasing provincial taxes and most particularly agricultural income tax that must be taxed at the same rate as on the salaried. If implemented, this will have political ramifications.

An out-of-the-box solution would be for the government to implement reforms in pensions (through employee contributions that would then be channelled into existing pensioners), a wage freeze for the next three years, budgeting only critical operational expenses, and realistic targets for the mark-up while focusing on creating honest taxpayers through implementing a tax structure that is fair, equitable and non-anomalous.

For years, markets tolerated massive deficits, ultra-cheap money and endless promises that debt no longer mattered. Now the old enforcers of fiscal discipline appear to be returning.

The bond vigilantes are riding again.

The term emerged in the 1980s to describe investors who punished governments they viewed as fiscally reckless by demanding sharply higher yields to hold sovereign debt. It sounds theatrical, almost like a phrase from an old financial Western, yet the mechanism is brutally simple. If investors lose confidence in a government’s ability to control spending or inflation, borrowing costs rise. And when borrowing costs rise long enough, political problems eventually follow.

Britain already knows how ugly that process can become. Liz Truss lasted just weeks after bond markets revolted against unfunded tax cuts in 2022. Now gilt investors are once again flexing their muscles as political uncertainty around Keir Starmer collides with renewed inflation fears triggered by the US-Israeli war on Iran. Bond traders are no longer merely reacting to economic data. They are openly evaluating which politicians appear “market-friendly” and which ones threaten even larger deficits.

One almost wonders whether elections are slowly becoming secondary to bond-market approval ratings.

The timing is hardly accidental. Governments across the developed world are trapped between rising spending obligations and weakening fiscal flexibility. Defence budgets are climbing, ageing populations are becoming more expensive to support, and debt burdens remain historically high after the pandemic years. Then came another energy shock. Oil prices surged after the conflict around Iran disrupted flows through the Strait of Hormuz, reviving precisely the kind of inflation anxiety central banks hoped they had left behind in 2022.

That is where the story becomes more dangerous. Bond markets were already uneasy before the war. The oil shock merely accelerated existing cracks. Higher energy prices push up inflation expectations, which in turn force investors to demand higher yields as compensation for holding long-term debt. The result is a vicious cycle for governments already drowning in borrowing requirements. Debt servicing costs rise just as policymakers face pressure to spend even more.

And perhaps that raises the more uncomfortable question. Has Donald Trump’s war on Iran triggered yet another fault line in a global financial system that was already struggling to absorb higher rates and larger deficits? The energy shock itself may eventually fade, but bond markets appear increasingly focused on the longer-term consequences: structurally higher borrowing costs in economies addicted to debt-financed stability.

The reaction is visible well beyond Britain. Japanese bond markets are again under pressure as investors worry about borrowing-led spending plans, and the yen weakens under the strain of higher energy imports. In the United States, Treasury yields remain materially above pre-war levels even as equity markets repeatedly attempt to price in optimism around diplomacy and eventual rate cuts. France continues battling political instability while facing investor concerns over deficits. Even parts of Asia are feeling the squeeze as currencies weaken and central banks intervene to defend exchange rates against rising energy-import costs.

For years, central banks acted as shock absorbers by suppressing yields through massive bond-buying programmes. Investors knew there was always a buyer standing behind the market. That era is fading. Central banks are retreating from extraordinary stimulus while inflation risks remain stubbornly alive. Bond investors, therefore, carry far greater influence than they did during the years of cheap money. Markets that once depended on central-bank protection are now rediscovering the price of fiscal credibility.

There is another layer to this story that should worry policymakers. Financial risk has not disappeared during the era of low rates; it has simply migrated. A growing share of government-bond trading now flows through hedge funds and leveraged financial structures rather than traditional banks. Private credit markets have exploded in size. Regulators spent years strengthening banks after the 2008 crisis, only for leverage to reappear elsewhere in the system. That means sudden moves in yields now carry the potential to trigger stress across a far wider range of institutions.

Markets have already offered glimpses of that danger. Hedge funds suffered sharp losses during the initial oil shock following the Iran conflict as yields surged and rate expectations rapidly repriced. So far, the system has absorbed the stress reasonably well. There has been no broad liquidation panic, no repeat of the violent bond dislocations seen during earlier crises. Yet the question remains hanging over markets like an unwanted shadow. What happens if the next round of stress hits equities, credit markets and sovereign bonds simultaneously?

For countries like Pakistan, the implications extend well beyond financial theory. Higher US Treasury yields tighten financial conditions globally, strengthen the dollar and increase pressure on emerging-market borrowing costs. Oil shocks simultaneously worsen import bills and inflation pressures. Countries already balancing fragile external accounts quickly discover how little room remains for policy mistakes once bond markets turn hostile. The world’s largest economies may still possess buffers that smaller states do not.

That may ultimately be the real significance of the bond vigilantes’ return. Investors are no longer reacting only to inflation data or central-bank speeches. They are beginning to question whether governments themselves have become structurally dependent on debt, cheap refinancing and endless fiscal expansion. Wars, energy shocks and political instability merely accelerate the moment when those doubts become impossible to ignore.

Bond markets, in the end, have a habit of forcing reality back into systems built on optimistic assumptions. The question now is whether governments are facing a temporary period of market anxiety, or the early stages of a much harsher repricing of fiscal risk in a world already strained by war, debt and inflation fatigue.

“I disagree — he is following the US policy to snip all anti-Semitism in the bud even though it lost him the Muslim vote.”

“But that’s silly. The British public is angered at Israeli genocide of Gaza now into its third year, its support for the settlers ransacking and killing Palestinians in the West Bank, its attacks on Lebanon, its ceasefire violations that number more than a 1000 I reckon….”

“That fellow Mehmud Abbas….”

“Hey should at least have the courage to admit the flaw in his policy of engagement with Israel.”

“Bush’s legacy is truly gone – from referring to those opposed to Israeli hegemonistic designs in the region as the axis of evil, to now being referred to as the axis of resistance.”

“Hamm but what should or could Starmer learn from us?”

“Let me give you a hint, our Prime Minister has reportedly ordered the Board of Investment (BOI) to merge with the Special Investment Facilitation Council (SIFC) and…..why are you frowning?”

“Foreign direct investment has fallen dramatically – from 1.5 billion dollars July-March last year, no great shakes in any case if we consider that India attracted more than 50 billion dollars last year, to 410.7 million dollars in the same period this year….”

“The merger….”

“SIFC was established in June 2023 and BOI dates back to God knows how many decades!”

“OH, so you want the BOI to be dissolved, I guess. But what about the man who heads it – Aleem Khan.

First, you took away his control over the Ministry of Privatisation, remember the PIA privatisation fiasco, which he said he was not involved in, that he still heads by the way, and now BoI.”

“He still has Communications, though I am not sure what that entails other than a flagged car and protocol. But I tell you this shows that dumping of The Man Who Must Remain Nameless, Faceless and Voiceless is no longer…”

“Shut up. Anyway, Wes Streeting is, or perhaps more accurately, may make a run for his boss’s job. Now if Starmer were the Pakistani Prime Minister, he would have merged the Secretary of State for Health and Social Care, Streeting’s portfolio, with that of the Prime Minister, and so the guy would be without a job.”

“I heard that the Prime Minister has some differences with the Minister for Interior? Can he merge…”

“Stop right there.”

“OK, but I am not sure if there is a tradition of wearing multiple hats in the UK?”

“Starmer is trying to change tradition: you gotta give him that! So why not in this too?”

“I can’t argue with that.”

The challenges are rising because of the current commodity price shock, mainly energy.

Regional currencies, including India’s, have been adjusting to changing realities. However, Pakistani authorities, as always, remain sensitive about exchange rate adjustment. It appears there are no lessons from the past.

PKR has appreciated by a few percentage points against the USD over the past three years. The rupee depreciation was sharp in the year before that, and the adjustment was higher than what inflation and interest rate differentials suggested, which was evident from the Real Effective Exchange Rate (REER) value of 85-87 in the first half of 2023.

The next two years were a catching-up period. SBP kept real interest rates positive, and inflation cooled amid declining international commodity prices after the supercycle. However, lately, with a recent inflation surge due to the global oil price shock, the exchange rate again appears overvalued. REER moved up to 105.2 in March 2026, the highest level since September 2018.

It needs gradual adjustment. Otherwise, within a few months or quarters, the currency could depreciate with a sharp jerk. That is not healthy and could create panic. It is better to make timely adjustments, which would help restore competitiveness. Some may argue that exports do not grow merely because of currency depreciation. That is partially correct, but an overvalued currency reduces the existing export base and makes imports cheaper, thereby putting pressure on the trade deficit.

Over the last three years, on a 12-month rolling basis, inward remittances have increased by $13 billion, or almost 50 per cent, to reach $40 billion. That has helped contain the current account deficit, even as the trade balance worsened by $12 billion during the same period.

Now, a dent in remittances is expected due to a slowdown in GCC economies in the aftermath of the US-Iran war, from where Pakistan receives 50 per cent of its inward flows. This, coupled with upward pressure on imports due to higher prices, would strain the current account balance. That, in turn, would limit SBP’s ability to build forex reserves.

To curb imported demand, SBP has increased the policy rate by 1 per cent and may announce another hike in June, as inflation is expected to remain around 13-15 per cent in May and June. It is advisable to use the exchange rate as a line of defence, which would also help exports remain steady. Remittances are not very currency-sensitive, but exports are.

Pakistan’s textile exports have two segments. One is low-value-added yarn and fabric, whose share is falling and being replaced by the growing high-value-added segment of garments and apparel. That is positive, but the growing segment is losing competitiveness. According to leading textile exporter Musadaq Zulqarnain, 20-25 per cent of costs consist of wages, which have increased by over 30 per cent in dollar terms over the last three years, as minimum wages in PKR terms have risen by 25 per cent in two years. This has resulted in a 5-6 per cent reduction in margins in an industry where margins are already thin.

The increase in wages was necessary to counter inflation, but at the same time, PKR should be adjusted to keep exporters’ margins intact. A similar situation exists for IT exporters, where labour accounts for 70-80 per cent of costs. They are facing pressure as well. One player argues that there should be a defined exchange rate policy linked to a certain REER level.

Treasury officers in leading banks also believe that PKR needs adjustment, but according to one banker, SBP is too touchy about changing currency parity. Well, SBP, or authorities in the twin cities, should not get married to a particular level.

The SBP governor recently said that the central bank bought $27 billion from the interbank market over the last three and a half years. He perhaps implied that had SBP not bought these dollars, the currency could have appreciated further. That may not be entirely true. The current account has cumulatively shown a mere $0.3 billion surplus since January 2023, while SBP reserves, net of external debt and liabilities, have risen by only $3.3 billion. (SBP forex reserves increased by $13.3 billion, while total external debt and liabilities rose by $10 billion during the same period.) If we also add the $3 billion reduction in forward liabilities, overall net reserves, adjusted for forward liabilities, increased by $6.3 billion.

This means that around $20 billion out of SBP’s $27 billion purchases was effectively used to finance the current account, as SBP pays interest on government debt, which forms part of the current account. Moreover, SBP has an unstated rule requiring banks not to buy dollars from one another and instead to finance outflows through their own inflows. Any surplus dollars are then absorbed by SBP.

That strategy may not work going forward, as the current account could slip into deficit in FY27, halting reserve accumulation. It is best to act before panic hits in the coming months or quarters.

The doctor’s prescription is a gradual depreciation of 3-5 per cent, implemented in a well-communicated manner to avoid panic, restore competitiveness, and prevent a far more disruptive adjustment later.

The objective was to derive the tax reform agenda from the viewpoint of raising the level of revenues, improving equity in the tax system and enhancing the efficiency in tax collection.

The coverage of taxes is taken to include the petroleum levy, a large source of revenue. This is not the case with the Federal Ministry of Finance, which treats it as non-tax revenue. However, it was taken out of the sales tax on POL products. The IMF also categorises the petroleum levy as a tax.

The principal problem continues to be very low revenue mobilisation by the provinces. Consequently, the national tax-to-GDP ratio remains relatively low at close to 12 percent of the GDP.

Other Asian countries have ratios ranging from 14 percent to 18 percent of the GDP.

Regarding tax rates, the evidence is that these rates are relatively high in Pakistan, and the focus of tax reforms should be on expanding the tax bases and bringing down rates, especially on the corporate sector, large-scale manufacturing and salary incomes.

The scope of widening the tax base exists in several sectors, including retail trade, real estate and agricultural incomes.

Based on the above description of the required type of tax reforms at the federal and provincial levels, some proposals are presented below.

The first important step is the rationalisation of the petroleum levy. Following the shift from sales tax to the levy, the effective rate has gone up substantially, from 18 percent to between 30 percent and 35 percent.

The incidence of petroleum taxes is regressive because they increase the transport cost of all products, including food items.

The rise in petrol prices after the commencement of the Middle East war has led to a quantum jump in the rate of inflation from 5 percent to 11 percent.

Therefore, there should be a reduction by at least one-third initially in the petroleum levy, which is currently Rs 117.4 per litre on petrol and Rs 42.6 on HSD. This major step in the federal budget will constitute a big source of relief.

The government has apparently decided to impose a small fixed 1 percent tax on small retailers. There is also a need for more revenue from large retailers and outlets in supermarkets.

As such, the withholding of income tax on commercial consumers on their electricity bills should be made more progressive.

Given the gross under-taxation of property today, in the presence of six taxes on property at the federal and provincial levels, there is a need to focus on real estate.

Today, investment is being diverted in a big way from industry to real estate.

The first proposal is the levy of a capital value tax on property at the federal level as a substitute for the wealth tax. This will also increase the progressivity of the tax system.

The exemption limit may be Rs 10 million. Beyond this, there could be four slabs with rates ranging from 0.25 percent to 1 percent.

There is also a case for the enhancement of withholding taxes on commercial importers, given the extremely low incidence of taxes on the wholesale and retail trade sector. The current rates should be enhanced by 0.5 to 1 percentage points.

Turning to the personal income tax, there is a strong case for raising the exemption limit from Rs 600,000 to Rs 1,200,000. Also, the size of the slabs needs to be increased, especially on salary income.

There is need also for rationalisation of the super tax on profits of corporate entities. Currently, it is linked on a progressive basis to the absolute size of profits.

This penalises corporate entities which are large in size but have low rates of return on equity.

The structure could start with a tax rate of profits of 25 percent if the return on equity is less than 12 percent. Thereafter, there could be three more slabs.

The highest slab should have a tax rate on profits of 35 percent when the pre-tax return on equity exceeds 25 percent.

There is a dire need for the development of the provincial tax system in Pakistan.

This has also been highlighted by the IMF. Consequently, the IMF has asked for additional revenue mobilisation of Rs 400 billion by the four provincial governments combined in 2026-27.

There are a number of potential sources of additional tax revenues at the provincial level.

The first large tax base is the agricultural income tax. If collected at the same rate as other personal income, it has the potential to yield Rs 800 billion in revenues.

The IMF has pushed for reform of the agricultural income tax law. This has been done by the provincial governments.

However, this has not translated into additional revenues. For example, the Punjab government has targeted only Rs 10.5 billion from this tax in 2025-26.

The agricultural income tax will also contribute to increased progressivity of the tax system. The top 1 percent of the farmers own over 24 percent of the farm area in Pakistan, according to the Agricultural Census.

However, the rural elite has a dominant role in the provincial power structure and has prevented a move towards normal taxation of agricultural income like other incomes.

The solution lies in the introduction of a simple, presumptive tax system with the tax rate linked to the size of the land holding.

The exemption limit could be 12.5 acres equivalent irrigated area. Therefore, there could be several slabs starting with a tax rate of Rs 1000 per acre, going up on landholdings above 150 acres to Rs 10,000 per acre.

The tax audit system of FBR needs to be improved.

First, the percentage of returns audited should exceed 10 percent. Second, a risk-based audit policy should be developed based on the characteristics of the taxpayer. Third, a new taxpayer may be exempted from audit for the first three years. Fourth, a taxpayer may not be subject to audit if the income disclosed increases by more than 25 percent.

There is also a need to introduce some fiscal incentives for promoting savings and investment, which have fallen to exceptionally low levels in Pakistan in recent years.

First, the investment allowance for investment in particular types of savings instruments may be reintroduced in the personal income tax. Second, the enhancement of the tax credit for balancing and modernization and replacement (BMR) is to be raised from 10 percent to 20 percent. Third, a tax holiday may be given for new investment in industry anywhere in Pakistan for five years.

Finally, there is an urgent need to focus on the process of integrating the provincial sales tax on services with the federal sales tax on goods. The first step should be the replacement of the federal excise duty on services by the provincial sales tax. Second, harmonisation of tax rates should take place to facilitate the move to a proper VAT.

This implies an increase in the provincial tax rates. Third, move towards administration and harmonisation with the same tax return, a common IT system and common rules. The powers of audit to be shared by the federal and provincial governments.

Overall, the federal budget should focus on the reduction of the rate of the petroleum levy.

This can be made up at the national level by the above-mentioned reforms in federal and provincial taxes.

The year 2026-27 should focus more on the mobilisation of additional revenues from provincial taxes.

Copyright Business Recorder, 2026

The consequence? An economy unable to fund its investment needs has to rely on foreign savings, resulting in a balance of payments crisis each time. This is not a tale of saving money or living frugally.

This is one of the most important, but also the least discussed, macroeconomic disasters of our time. It needs attention in the upcoming budget debate for FY2026-27.

The country cannot finance sustainable growth by taxing more and borrowing more; it needs to rebuild its domestic savings base for sustainable growth.

The current performance of country savings looks very dismal when compared with the regional peers. Pakistan has been saving on average about 11 percent of its GDP for the past 35 years.

In the same period, Bangladesh averaged 21 percent, India by over 28 percent, and Vietnam by almost 30 percent.

The gap cannot be explained by income level alone; these countries managed to create an environment where savings were safe and well-rewarded. Those savings ultimately translated into jobs and growth.

Conversely, the savings base eroded in Pakistan. Because savings don’t make sense for the average Pakistani. Around 94 percent of all income generated in the economy is consumed on necessities, such as food, rent, power, commuting, healthcare, and education.

Whatever little money is left over gets eaten up by rising inflation, which in recent years has always risen faster than the interest offered by banks.

When returns on deposits or savings products do not compensate for rising prices, households see little reason to keep money in formal financial instruments.

This creates an inflation/consumption trap. Households spend the lion’s share on necessities, and what little is left ends up stashed in cash, committees, and jewellery in the cupboard.

These may provide security at the household level, but they do not create an efficient pool of resources for productive investment.

The situation is further worsened by the lack of financial literacy and sludge.

Millions of Pakistanis, particularly women and rural inhabitants, are unable to access financial instruments due to long distances, extensive documentation, lack of trust, and existing products that are not compatible with their needs and beliefs.

Then comes the role of the state, persistent fiscal deficits reduced national savings due to persistent fiscal deficits.

Over the years, the country has been spending more than it generates and relies heavily on borrowing, including from domestic banks, leaving almost nothing for the private sector.

Banks prefer such lending due to associated lower risks and higher profits, which triggers the crowding out of private investors from the economy.

However, all is not lost, and this issue is still resolvable. The upcoming Finance Bill is the natural place to begin with, through the provision of incentives to motivate citizens and nudging them to save.

Building on the Policy Viewpoint, “Mobilising Domestic Savings: A Finance Bill and Institutional Reform Agenda for Pakistan,” by Dr S. M. Naeem Nawaz (Professor of Economics) and Wajid Islam (Research Economist) at PIDE, the policy response should begin with a targeted National Savings Mobilisation Package through the FY2026–27 Finance Bill.

The principle should be simple. Ensure that systematic saving is more rewarding and secure than stashing away one’s wealth in the form of cash or gold. Specifically, it requires the revival of a targeted tax relief scheme for approved long-term investment instruments.

Previously, such instruments were offered under Section 62 of the Income Tax Ordinance until withdrawn in 2022.

It implies the promotion of pension schemes, especially those aimed at younger individuals, women, and self-employed citizens, to encourage saving from an early age.

It is pertinent to note that the incentives have to be tailored to serve as a reward for authentic, small, and long-term savers.

Caps on the amount of the incentive, minimum investment duration, and clawback provisions for early withdrawals can help keep the fiscal burden at bay.

A savings-friendly budget needs to refrain from punishing citizens whenever their money flows into the formal economy.

The transaction taxes on bank-based financial transactions have done significant harm by pushing citizens away from banks.

Along with incentives, a conducive environment is a prerequisite to enable easy access to financial markets.

The country doesn’t need to work from scratch as several options are already available, such as national savings institutions, a broad network of banking outlets, digital payment mechanisms, and Islamic finance institutions.

What is needed is a channel that links them in a manner that allows citizens to gain access to these services through digital accounts, easy verifications, and diversity of Shariah-compliant instruments.

However, nothing will stick unless the government balances out its books as well.

Restraining wasteful expenditure, reducing losses in state-owned enterprises, and using borrowed funds for investments instead of expenditures must become integral parts of any policy for savings.

Pakistan has spent too long trying to finance growth without building the savings base needed to sustain it. The choice is not between austerity and growth.

The real choice is whether Pakistan will continue relying on foreign savings or begin rebuilding the domestic pool on which durable growth depends.

The Finance Bill FY2026-27 should be the starting point.

Reward formal long-term saving, protect small savers, reduce public-sector dissaving, and ensure that domestic resources finance productive investment.

Copyright Business Recorder, 2026

Little is known about the varieties of mangoes worldwide and you will be surprised to know that there are over 2,000 varieties of mangoes that are cultivated globally like Alphonso of India, Tommy Atkins in the USA; Brazil and Mexico considered to be the most common commercial variety globally; and our own Chaunsa and Sindhri.

The list does not stop here; there is also Ataulfo, also known as honey mango from Mexico, and then there is Kent grown in the USA, Peru and Ecuador. These are grown in another part of the world while there is still South East Asia and Australia, which is covered with a golden yellow mango called Nam Dok Mai and then there is Carabao in the Philippines.

The list does not stop here as there is still Kensington pride covering Australia. There is also the most expensive and rare mango in the world, Miyazaki from Japan, also known as “Egg of the sun”. The peak mango season is May through August but because there are so many varieties available in different parts of the world some variety or other of mangoes is available throughout the year.

In Pakistan, the most favoured time when maximum its usage is observed is when the mango season and the holy month of Ramazan fall together, giving the fasting public a chance to taste their favourite fruit during the opening of their fast.

Otherwise, too, when the mangoes are in season they are not only eaten as a fruit but across the globe also form part of daily meals in different ways just as they are popular in sweet and savoury dishes like mango sticky rice in Thailand and mango lassi in Pakistan and Mangonada in Mexico.

In Pakistan, during the mango season, a very popular dish with the Bohra community is ‘Aamrass’, which is part of specially the evening meal in most households. This includes the juice of mangoes, which form the core of this much favoured dish.

The mango is a fruit with a history and references in folklore like the presentation of a mango grove to Buddha himself that he might find rest and shelter in its shade.

So how did this fruit get its name ‘mango’, especially in English- and Spanish-speaking countries? It is presumed that it got this name from Malayam Manna, which the Portuguese adopted as manga when they came to Kerala around 1498 for the business of spices. It is presumed that they were introduced late in the western hemisphere because of difficulty in transporting their seeds, which resulted in their introduction as late as the 1700 when the first seeds were planted in Brazil and they reached West Indies around 1740.

Most of this information is available in Encyclopaedia Britannica and has been recently updated, which also demonstrates the importance of mangoes on a worldwide scale.

The mango is a fruit with a long and documented history that has been carefully preserved just as its taste has been carefully cultivated over the years and through centuries of careful nourishing by dedicated souls who have groomed this fruit, made improvements and whose hard work and dedication have resulted in what is now sold in our streets on pushcarts and in high-end fruit shops for all of us to enjoy.

Why so much focus on this fruit when the market is full of other fruits as well? Ask yourself. Will you replace the mango with any other fruit given the choice?

Copyright Business Recorder, 2026

The problem is that Pakistan’s cigarette market is no longer neat. A growing share of consumption now sits outside the documented economy, beyond tax stamps, lawful pricing, and serious retail discipline.

Another tax hike on legal cigarettes is therefore not a fiscal strategy.

It is a wager that consumers will stop buying rather than shift to cheaper, illegal brands. Pakistan’s recent experience suggests the opposite.

The turning point came in February 2023, when the government raised Federal Excise Duty on cigarettes through the emergency mini-budget. Public summaries show that the upper-tier FED rose to Rs. 16,500 per 1,000 sticks, while the two-tier structure remained in place.

The Finance Act 2024 then left the main rates unchanged, while adjusting the lower-tier threshold. The debate stayed focused on the legal, taxed industry while illegal cigarettes moved deeper into retail markets.

If the tax-hike theory worked cleanly, the state should have seen a stable or rising legal tax base after such a major increase.

Instead, business reporting based on FBR data has shown stress in cigarette FED collection and a shrinking contribution from cigarettes within total FED. The message is blunt: when legal prices rise, and illegal packs remain available at lower prices, the market does not disappear. It migrates.

This is the point many local NGOs avoid. Their statements speak about “the tobacco industry” as if Pakistan has one unified market. It does not.

The legal cigarette market pays excise and sales taxes, follows packaging rules, and operates under Track and Trace.

The illegal market pays little or nothing, ignores legal warnings and price floors, and uses the price gap as its business model.

Treating both as one industry produces bad policy because it punishes the side that the state can already tax.

Industry and enforcement-linked estimates place Pakistan’s cigarette market at slightly above 80 billion sticks annually.

Several assessments suggest more than half may now be outside the tax net. If nearly 43 billion sticks escape proper duty, the annual tax loss crosses USD 1 billion.

The scale of that illegal trade is likely much larger, as unpaid duties support transporters, wholesalers, retailers, financiers, and protection networks. This is not a technical wrinkle. It is the main event.

The strongest counterargument from tax activists is that Pakistan must follow global best practices and meet international public-health commitments.

That argument deserves attention, but it cannot be applied blindly. The United States signed the WHO Framework Convention on Tobacco Control but did not ratify it.

Switzerland, where the WHO is headquartered, also signed but has not ratified it.

Pakistan should ask why donor-backed networks and local advocacy groups press it yearly to reshape fiscal policy around a treaty architecture that some powerful countries have not accepted.

That does not mean Pakistan should ignore health concerns. It means Pakistan should not outsource fiscal policy to campaign templates written for markets that do not resemble Pakistan.

Where enforcement remains uneven, raising taxes on legal cigarettes before crushing the illegal supply can weaken both revenue and health objectives.

It can push smokers toward cheaper products that the state neither taxes nor regulates.

Australia offers a warning. It has some of the world’s highest tobacco taxes and a far stronger enforcement state than Pakistan.

Yet official and criminal-intelligence reporting shows illegal tobacco has become a major revenue and crime problem.

The Guardian reported that Australia’s illegal tobacco trade cost the federal government about AUSD 3.3 billion in lost revenue in 2023-24.

High legal prices helped create a massive gap between legal and illegal packs. Even a high-capacity state is discovering that criminals can capture price gaps.

Canada’s history also matters. In the early 1990s, tobacco smuggling became so serious that the federal government announced dramatic excise reductions in 1994 to combat contraband trade.

That episode does not prove that low taxes are desirable. It proves something more practical: when tax policy outruns enforcement reality, illegal networks can force policy reversal.

The government’s first job is not to raise legal cigarette taxes again. Its first job is to make the illegal cigarette business risky, unstable, and unprofitable.

That requires full Track and Trace enforcement, retail inspections, action against non-tax-paid brands, prosecution of illegal manufacturers, control over raw material leakages, and tighter border and wholesale monitoring.

Customs, Inland Revenue, provincial administrations, and police must work as one system.

Only after the state restores control over the market can it discuss tax changes with credibility. Until then, higher FED will widen the price gap that illegal operators exploit.

It will squeeze legal companies, reduce documented sales, and make the government dependent on a shrinking compliant base.

Pakistan needs more revenue, not more slogans. It needs fewer illegal cigarettes, not only costlier legal ones. The easy line is that higher taxes mean higher income.

In Pakistan’s cigarette market, that line is becoming a bad joke. More taxes will not mean more income if the income walks out through the back door of the illegal market.

As is customary, the budget speech will be wrapped in polished language and a labyrinth of figures, percentages, projections, and economic terminology.

It will be watched anxiously across the length and breadth of Pakistan by business chambers, investors, and ordinary citizens alike—the latter holding their breath in the faint hope that it may bring some relief rather than descend like a fresh bombshell of inflation and economic hardship.

For years, the people have endured an unending cycle of mini-budgets in the form of abrupt increases in petroleum prices, electricity and gas tariffs, and fertiliser costs.

These mini budgets trigger a wave of inflation, causing a chain reaction that sends the prices of essential commodities soaring, while rarely, if ever, bringing them back down.

Each increase adds another burden to the shoulders of millions already struggling to survive, tightening the noose around households battling shrinking incomes and rising costs of living.

As one walks through bazaars and markets, one finds little evidence of the much-trumpeted economic recovery.

Under blistering temperatures approaching 50°C and amid frequent, prolonged power outages, people desperately haggle over prices they can scarcely afford.

The reality on the ground tells a different story from the optimistic narratives often heard in official circles.

One encounters village women in bazaars and markets in worn-out clothes carrying malnourished children in their laps, with barefoot youngsters trailing behind.

They move from stall to stall, gazing at vegetables, flour, and other necessities, only to return to their huts empty-handed. This heartbreaking scene is not confined to one locality.

It is the bitter reality visible across cities, towns, and villages throughout Pakistan.

“Does this budget have anything for us?” ask the multitudes struggling merely to survive.

Their question deserves an honest answer.

A large portion of government revenues is consumed by debt servicing, defence expenditures, administrative costs, salaries, and pensions.

What remains for education, health, development, infrastructure, and social welfare is often little more than crumbs.

Even these scarce resources frequently disappear under the insidious shadow of corruption, leaving little to improve the lives of ordinary citizens.

Can a nation claim economic stability when nearly half its population struggles below or near the poverty line? Can recovery be celebrated when millions face hunger and deprivation? Pakistan continues to grapple with one of the region’s lowest literacy rates.

More than 25 million children remain out of school. Healthcare services are deteriorating.

Parents are withdrawing children from classrooms because they can no longer afford educational expenses.

Despair is driving many young people into depression, addiction, crime, and even suicide.

Millions face acute food insecurity. Unemployment remains alarmingly high, while vast numbers of young people enter an already saturated job market every year.

Thousands seek opportunities abroad in desperation, while countless others remain trapped in hopelessness at home. Does this reflect genuine recovery, or merely statistical recovery disconnected from lived reality?

This august House must reflect upon these painful realities. Parliament is not merely a forum where budget figures are recited and financial statements approved.

It is the supreme representative institution of the sovereign people. It must safeguard the people’s right to live with dignity, to earn a livelihood, to educate their children, and to hope for a better future.

The roots of our economic difficulties are well known: a narrow tax base, elite tax evasion, low exports, excessive imports, chronic trade imbalances, dependence on foreign borrowing, and recurring IMF conditionalities.

Yet the burden of adjustment repeatedly falls upon those least able to bear it—the ordinary citizens already gasping for economic breath.

This budget, therefore, demands sacrifice from the top, the elite and the privileged class rather than further extraction from the bottom.

Real reform requires reducing the size of government, curtailing excessive perks and privileges, eliminating redundant ministries and departments, abolishing unnecessary SAPMs and advisors, discontinuing the pensionary benefits to former Presidents, PMs and Speakers forthwith, rationalising expenditures, and ensuring that public office remains a responsibility rather than a source of privilege.

The nation cannot continue asking the poor to tighten their belts while the corridors of power remain insulated from sacrifice.

Parliament, which often demonstrates remarkable unity when protecting its own privileges, must now display the same unity in protecting the interests of the people and reclaiming Pakistan’s economic sovereignty.

An indebted nation is not a free nation. Excessive dependence on external lenders gradually erodes national autonomy and limits independent policymaking.

The path forward lies in domestic resource mobilisation, expansion of the tax net, export-led growth, agricultural revival, industrial development, investment in human capital, and uncompromising accountability.

Only through such measures can Pakistan reduce its dependence on debt and move towards genuine financial self-reliance and economic autarky.

Above all, this budget must be a budget for the people.

As lawmakers deliberate beneath the high ceilings of Parliament today, they should think beyond spreadsheets and statistics.

They should think of the barefoot children wandering through bazaars, of mothers bargaining desperately for necessities, of farmers crushed by rising costs, and of young people losing hope on street corners.

Let this Parliament rise above partisan divisions and prove worthy of the trust placed in it by the sovereign people.

Let it deliver a budget that alleviates poverty, creates employment, strengthens education and healthcare, restores human dignity, and places public welfare at the centre of national priorities.

Only then will the budget be remembered not as an annual ritual of accounting, but as a genuine instrument of justice, compassion, and national renewal.

Copyright Business Recorder, 2026

According to Outlook India, he said from the bench: “There are youngsters like cockroaches, who don’t get any employment and don’t have any place in the profession. Some of them become media, some of them become social media, some of them become RTI activists, some of them become other activists, and they start attacking everyone.”

The Chief Justice clarified the following day that his remarks were directed specifically at individuals who had entered professions using fake and bogus degrees, not at India’s youth in general.

He called young Indians “pillars of a developed India.”

India TV News reported that he subsequently told lawyers not to take his remarks “so sentimentally.”

For millions of young Indians, however, the clarification arrived too late. The wound was already open.

Within days, the Cockroach Janta Party was born.

A joke that became a mirror

Abhijeet Dipke, a 30-year-old political communications strategist, founded the Cockroach Janta Party (CJP) on May 16, a day after the Chief Justice’s remarks.

The name was a deliberate, satirical jab at the ruling Bharatiya Janata Party (BJP), and its logo, a cockroach on a mobile phone, wore the insult as a badge of honour.

Its self-declared mission is to be the “Voice of the Lazy and Unemployed.”

What happened next stunned even its founder.

In less than a week, the CJP amassed over 22 million Instagram followers, more than double the BJP’s own Instagram audience, which sits below nine million despite the party claiming to be the world’s largest political organisation.

Over 350,000 people signed up formally.

Volunteers took to the streets dressed in cockroach costumes for protests and clean-up drives.

A joke had become a phenomenon.

The CJP’s manifesto pulled no punches.

It called for cancelling the broadcast licences of media houses owned by Mukesh Ambani and Gautam Adani, two of India’s wealthiest industrialists widely perceived as being in the government’s corner, to, as the manifesto put it, “make way for a truly independent media.”

It was the language of satire, yes, but also the language of a generation that has stopped pretending everything is fine.

The world’s largest democracy and its smallest dreams

To understand why millions rallied behind a cockroach, you need to understand what daily life looks like for India’s Gen Z.

Urban youth unemployment in India stands at 14 per cent, nearly three times the national average of around 5 per cent.

For a country that produces millions of graduates every year and has long promised its young people that education is the ladder to prosperity, this is not a statistic. It is a broken contract.

The wounds go deeper. A survey by polling agency CVoter found that more than 60 per cent of Indians aged 18 to 24 feel anxious about their future.

Six in ten respondents said the CJP reflected real frustrations, over unemployment, over inflation, over the leaking of exam papers, including a national medical entrance test that directly affected some 2.3 million candidates.

Young people who had studied for years, who had sacrificed and scraped, found their futures compromised by corruption and incompetence at the highest levels.

This is the India that Modi’s economic narrative — of a rising Vishwaguru, a global power, a $5 trillion economy in the making — has left behind.

The skyline gets shinier; the ground floor gets harder. And when its own Chief Justice looks down at the unemployed youth scrambling on that ground floor and calls them cockroaches, something snaps.

Why the BJP felt the sting

The BJP did not invent India’s problems.

Unemployment, inequality and institutional decay have deep roots that predate Modi.

But after more than a decade in power nationally, and fresh off electoral victories in key states, the party cannot escape ownership of the present.

Power comes with accountability, and accountability is precisely what the CJP was demanding — loudly, irreverently and, crucially, in a language young people actually speak.

The BJP’s discomfort was visceral and telling.

Union Minister Sukanta Majumdar claimed, without credible evidence, that 49% of CJP followers were from Pakistan and only 9 per cent from India, a claim Dipke demolished by posting his own Instagram demographic data showing over 94 per cent of followers were Indian.

Senior BJP leader Kiren Rijiju dismissed the movement by pitying those who “seek social media followers from outside the country,” stopping just short of calling Indian youth anti-national.

Dipke responded sharply: “Why is a union minister labelling Indian youth as Pakistani?”

It is a familiar playbook. When the BJP cannot answer a question, it questions the questioner’s patriotism.

When citizens organise, they become foreign agents. When young Indians express frustration, they are told they are being manipulated by Pakistan, by the opposition, by shadowy foreign hands.

It is a tactic that has worked before. Whether it works on a generation raised online, fluent in irony and deeply suspicious of official narratives, is another matter.

The crackdown and what it reveals

Then came the harder edge of the state.

The CJP’s website was taken down. Its X account was withheld in India following what appears to have been a legal order.

Its Instagram account was compromised. Dipke said his family received threats.

The government has not confirmed any action.

But the Digital Freedom Foundation condemned the X account’s blocking as an arbitrary suppression of free speech.

And the sequence of events — rapid growth, viral manifesto, state shutdown — is a pattern Indians have seen before.

What makes this crackdown particularly indefensible is not just what was silenced, but how.

The CJP was not organising violence. It was not spreading disinformation. It was wielding satire, the oldest and most legitimate tool of political dissent, to hold a mirror up to power.

That the mirror made the government uncomfortable is not a reason to smash it. It is a reason to look harder.

A government confident in its record does not need to shut down satirical Instagram accounts.

A ruling party secure in the love of its people does not need to call those people Pakistani.

The BJP’s reaction to the CJP was not the response of a party wrongly accused.

It was the response of a party that recognised, in 22 million cockroaches, a reflection it could not afford to let others see.

The deeper rot

The BJP has long built its identity on cultural nationalism, Hindu pride and the promise of a strong, decisive leader who would restore India’s greatness.

For many, particularly in the early Modi years, that promise felt real. It generated genuine enthusiasm, genuine hope.

But ideology is not a substitute for governance. Cultural pride does not pay rent. National greatness does not employ graduates.

And when a government uses nationalism as a shield against accountability — when it brands every critic a traitor, every satirist a foreign agent, every unemployed young person a cockroach — it is not practising ideology. It is practising deflection.

The CJP’s manifesto, for all its satirical packaging, identified real targets: a captured media, a compromised judiciary, a political culture that treats the poor as props and the young as inconveniences.

These are not fringe concerns. They are structural. And no amount of Hindutva pageantry changes the fact that a 22-year-old with a degree and no job is not going to feel the glory of a rising civilisation.

Cockroaches survive

The CJP’s founder himself warned that the movement must move beyond social media to survive, that digital followings are fragile, and that real change requires ground-level organisation.

He is right. Viral moments are not revolutions. Twenty-two million Instagram followers do not automatically translate into votes, policy change or accountability.

But what the CJP has done, even if it fades tomorrow, is significant.

It has shown that India’s young people are not apathetic. They are not disengaged. They are not satisfied. They took an insult thrown at them by one of the country’s most powerful judges and turned it into a symbol of defiance that outpaced the ruling party’s own digital presence within a week.

There is a reason the cockroach has survived 300 million years.

It is not because it is loved. It is because it is resilient, adaptable and impossible to fully exterminate, no matter how many boots come down.

India’s Gen Z has chosen its symbol well.

The writer is a seasoned journalist covering the economy and international affairs.

It has produced legendary cricketers such as Hanif Mohammad, Zaheer Abbas, Javed Miandad, Wasim Akram and Waqar Younis, and in recent years, players like Babar Azam, Muhammad Amir, Shaheen Shah Afridi and a few others have carried the nation’s hopes. Yet cricket in Pakistan has never been only about runs, wickets and victories. Politics, favouritism and the lack of merit have often played a major role in shaping the game, influencing how it is run, how players are selected, and how it is seen both at home and abroad.

Since Pakistan’s inception in 1947, cricket has become one of the country’s most important sports. The Pakistan Cricket Board (PCB), originally known as the Board of Control for Cricket in Pakistan, was created to organise and manage the game.

In principle, cricket administration was meant to function independently, focusing on the development of the sport and the management of national and domestic cricket. In reality, however, cricket in Pakistan has often been deeply connected with political power and personal influence. At times, favouritism in appointments and selection has been a concern, with critics arguing that merit has not always been the main factor in decision-making.

Governments, military rulers and elected leaders have all taken a keen interest in cricket, not simply because of its popularity, but because it became a matter of national pride and prestige.

The game has often been seen as a symbol of the nation itself. Victories on the cricket field, especially against major rivals, have carried emotional and political significance far beyond sport. For many Pakistanis, a cricket win has represented national strength, resilience and pride. This emotional connection has meant that the governments have rarely treated cricket as just another sport. Political leaders have often associated themselves with cricketing success, celebrating victories publicly and using such moments to build goodwill among the public. In this way, cricket gradually became tied to state power, political symbolism, and at times selective favouritism.

One of the most persistent criticisms of Pakistan cricket has been political interference in administration. The appointment of top officials in the PCB has often been influenced by the governments rather than determined through fully independent sporting processes. Changes in political leadership frequently led to changes in cricket administration. When a new government came to power, cricket officials often changed as well, creating a cycle of instability.

Critics have also argued that favouritism has affected player selection and coaching decisions. At times, players have been picked based on personal connections, regional influence, or reputation rather than consistent performance. This has led to frustration among fans and players who believe that merit should always come first.

This pattern of political appointments and perceived favouritism has had a lasting impact on Pakistan cricket. Cricket boards require long-term planning, institutional stability and continuity to develop players, improve domestic structures and build sustainable policies.

In Pakistan, however, administrations have often changed abruptly. New officials sometimes reversed the decisions of their predecessors, introduced new domestic structures, replaced coaches or captains and altered policies according to their own vision. This lack of continuity created uncertainty and often prevented long-term development. Fans and analysts repeatedly complained that Pakistan cricket was being run according to politics and influence rather than sporting logic and merit.

Pakistan’s political history, marked by both military rule and civilian governments, also shaped cricket in different ways. During military regimes, cricket victories were often presented as symbols of national unity and strength. Sporting success helped improve Pakistan’s image internationally and became part of state symbolism.

Under elected civilian governments, cricket remained politically significant, though in different ways. Political leaders often used cricketing success to connect with the public, appearing with the players and publicly celebrating victories.

In both cases, cricket became more than a sport; it became a national instrument that carried political meaning.

Another area where politics and favouritism have often entered Pakistan cricket is team selection and domestic cricket administration. Pakistan is a country with strong provincial identities, and cricket has sometimes reflected these regional tensions. Fans and commentators have often accused selectors of favouring players from particular regions or major cricket centres, even when other players had better performance records.

This perception of unfair selection and the lack of merit has created controversy for many years. Cricket selection, ideally based purely on performance and fitness, has been influenced by personal relationships, pressure groups, or regional bias.

Domestic cricket in Pakistan has also faced similar issues. Regional associations, provincial interests and local political influences have often shaped debates about cricket administration. Provincial pride and regional competition sometimes turned cricket matters into political disputes.

The relationship between Pakistan and India offers perhaps the clearest example of cricket’s political role. Cricket matches between the two countries have never been ordinary sporting contests. Because of political tensions and history, these matches have carried enormous diplomatic and emotional significance. Cricket between the two nations has often been described as “cricket diplomacy”.

At times, leaders from both countries attended matches together in the hope that sport could improve relations. However, political tensions repeatedly disrupted cricketing ties. Bilateral series were cancelled or suspended because of diplomatic crises, security concerns or worsening relations.

For Pakistan cricket, this had serious consequences. Matches against India generate huge revenue and global attention, so the absence of regular bilateral cricket affected Pakistan financially as well as emotionally.

Pakistan cricket also faced one of its darkest chapters in 2009, when the Sri Lankan team bus was attacked in Lahore. The attack shocked the cricketing world and had devastating consequences. International teams refused to tour Pakistan for years, forcing the national side to play home matches in the United Arab Emirates.

This isolation damaged domestic cricket badly. Local players lost the chance to play international cricket at home, fans were deprived of live matches, and development slowed down.

This long period of isolation is one of the major reasons for the decline of cricket standards in Pakistan. Without regular international exposure at home, young players had fewer opportunities to develop. Domestic cricket also suffered from a lack of investment and attention.

Another reason for the decline has been frequent changes in domestic structure. Over the years, Pakistan has repeatedly changed its domestic cricket system. Departments, regional teams and tournament formats have been introduced and removed. Each new administration brought a different idea, but the lack of continuity created confusion.

Administrative instability has also played a major role. Frequent changes in PCB leadership meant that the long-term planning was rarely followed. Coaches were replaced often, captains were changed frequently, and selection policies kept shifting. This instability affected team performance.

Similarly, the decline has also been linked to problems in player development. While Pakistan continues to produce talented cricketers, the system for nurturing that talent has often been weak. At times, players have been promoted too quickly due to favouritism or reputation, while others with better domestic records were overlooked. Many players rely on natural ability rather than structured coaching and training.

The media environment has also added pressure. Constant public criticism, television debates and social media discussions often create a stressful atmosphere for the players. A few poor performances can lead to strong public backlash, which affects confidence and long-term development.

Despite all these challenges, Pakistan cricket has continued to produce world-class players and unforgettable moments. The passion of Pakistani fans remains strong, and cricket continues to inspire millions across the country.

The future of Pakistan cricket may depend on building stronger institutions, reducing political interference, ending favouritism, and creating a system that is based on merit and long-term planning. Cricket will always carry emotional and national importance in Pakistan, but its revival depends on allowing fair selection and professional standards to guide the game.

The writer is a seasoned journalist and a communications professional.

This is according to estimates by the Pakistani tanners’ association. Eid-ul-Azha is undoubtedly the one religious festival that is eagerly awaited by all ages for different reasons, and also plays an important role in the economy of the country.

According to estimates, a total of 50 million animals are sacrificed globally during the three days of Eid al-Adha.

So what are the interests of different age groups in Pakistan in these three days of religious festivities? For the children, and especially the teenage children who in ordinary life have no interaction with animals except for those who have dogs or cats as pets, it is quite an adventure to have goats, cows, and even camels in their backyards, lawns, and other available spaces.

Coming home from school is an altogether different experience now as they know there are animals around to play with, feed, pat and otherwise engage with to their heart’s content.

In most cases, the favourite interaction is feeding, as somehow the children believe that the animal just needs to be fed 24/7 and has no other desire. In the evenings, the more daring take the animals out for a walk, and that is the time that proud comparisons are made and everyone tries to prove that their animal is somehow superior to the others.

In some areas, even races are held in which animals willingly or unwillingly race against other animals, but some, much to the disappointment of their owners, refuse to budge and thus embarrass their owners.

Another important party in this scene, and really the most important party, is the housewife whose main concern is that the animals do not mess up the courtyard or any other place where it is temporarily housed.

Actually, her main interest is not in the days leading up to Eid al-Adha, but after the sacrifice is made.

Already, while the animal was around, she had been planning which part of the animal would suit which dish and for that to be exact, what instructions to give to the butcher so perfect pieces are delivered for planned dishes.

In many households, females actually supervise the sacrifice and ensure that meat is cut properly and in line with their Eid dinner menu and plans to freeze and preserve it for the future.

By the way, the housewife is not the only one interested in a proper sacrifice where meat is cut properly.

In one year, according to data by the Pakistan Tanners Association, the value of hides was estimated at Rs. 8.4 billion, but nearly 40 per cent of the hides were wasted due to hot weather and improper handling.

Those carrying out this sacrifice are advised to look at the broader picture, as their duty does not end with the sacrifice, but they should ensure that all parts of the animal are put to good use and no part is wasted.

Hides from sacrificial animals play a pivotal role in the leather industry of Pakistan, so while sacrifice is a religious obligation, it also sustains an industry that provides jobs to many, and the effects of this Eid carry on throughout the year.

The most important character on Eid-ul-Azha is, of course, mostly the head of the household, whose contribution starts with selecting and buying the animal, which in many cases is in itself an arduous task: transporting the animal back and ensuring it is well looked after and of course finding a proper butcher on Eid day.

I say ‘proper butcher’ because on Eid day, people from other professions also turn out, pretending to be butchers but really messing up your sacrifice.

It is pitiful to watch them struggle with even the sacrifice of a goat and messing up while trying to remove the hide or extract important parts. One way to spot such an imposter is to look closely at his instruments.

If they are shiny and new, you can immediately guess that they have been bought just for this Eid, and he has other preoccupations which necessarily have nothing to do with sacrifice at Eid-ul-Azha.

Eid-ul-Azha is just around the corner, and soon the city will be ringing with the bleating of animals.

This year, those thinking of sacrifice can also go the digital way, as now this facility is available, and you can practically buy an animal online.

But 2026 has been a brutal season of reckoning. Since returning to the Oval Office, Trump has not simply faced political headwinds — he has been dismantled by his own courts, outmanoeuvred by foreign adversaries, and humbled by the very metrics he swore to own. Nowhere is that gap between promise and reality more visible than in the burning waters of the Persian Gulf.

Iran: A war without a finish line

On February 28, 2026, the United States and Israel launched a series of strikes against Iran, targeting its nuclear programme, ballistic missile infrastructure, and senior government leadership — including the assassination of Supreme Leader Ali Khamenei. Trump promised swift, decisive victory. The world held its breath.

After more than five weeks of fighting, a ceasefire was brokered on April 7-8. It has held only partially and precariously ever since.

The Strait of Hormuz, through which roughly a fifth of the world’s oil and liquefied natural gas once flowed freely, remains effectively closed. The US has imposed a counter-blockade on ships seeking to use Iranian ports, producing a dual blockade that has sent fuel prices surging and rattled global energy markets. At least 17 merchant ships have been damaged in the crisis, two captured, and 12 seafarers killed or missing. Iran’s leadership, far from being removed, has reconstituted itself under Khamenei’s appointed successor.

The administration’s stated objectives, regime change, destruction of Iran’s missile programme, and control of the Strait of Hormuz, remain unfulfilled. The conflict has shifted to a grinding game of brinkmanship, with no clear exit in sight. France and the United Kingdom have proposed an international defensive mission for the Strait, but only once a sustainable ceasefire is agreed. That agreement has not come.

Trump wanted to be remembered as the president who reshaped the Middle East through strength. He risks being remembered instead as the president who started a war without a defined endpoint, shook the global energy order, and handed Iran the role of aggrieved party on the world stage.

Ukraine: The 24-hour promise that became an open wound

Before he had even returned to the Oval Office, Trump promised to end the Russia-Ukraine war in 24 hours. He said it with the confidence of a man who had never been seriously contradicted. That was then.

The reality in 2026 is more complicated, and in its own way, more damning, than simple failure. Negotiations have lurched forward and backwards across months and continents, from Miami to Paris to Geneva to Abu Dhabi. A 28-point US peace framework proposed that Ukraine cede territory it had not yet lost. A European counter-proposal pushed back. Ceasefires were announced and then immediately violated, with both sides blaming the other.

As recently as May 9, Trump announced a three-day ceasefire agreed to by both Russia and Ukraine for the Victory Day period, calling it potentially the “beginning of the end” of the war. But on the very same day, Secretary of State Marco Rubio told reporters that US mediation efforts had not led to a “fruitful outcome” and had “stagnated” — a candid admission that cut directly across his president’s optimism.

Analysts have noted that Vladimir Putin has been deliberately stalling negotiations, calculating that he can consolidate territorial gains through either a negotiated settlement or continued battlefield pressure. The 24-hour promise is now in its second year. The war grinds on. And the credibility of the United States as an honest broker has been eroded by the very erratic nature of the diplomacy meant to restore it.

The tariff king with no legal throne

Trump opened his second term with characteristic aggression on the economic front as well. Sweeping tariffs on China, the European Union, India, Canada, and Brazil, the so-called “Liberation Day” tariffs, were imposed under the International Emergency Economic Powers Act (IEEPA), a legal manoeuvre his administration presented as both bold and bulletproof.

It was neither.

On February 20, 2026, the Supreme Court ruled in a landmark 6-3 decision that IEEPA does not authorise the President to impose tariffs, effectively declaring Trump’s entire trade war architecture unconstitutional. The Court was unambiguous: the power to tax imports is a congressional prerogative under Article I of the Constitution, not a presidential one. More than $160 billion in tariffs had been illegally collected, with potential refunds now owed to importers across the country.

The administration responded by announcing replacement tariffs under Section 122 of the Trade Act of 1974 and launching a series of Section 301 investigations to lay the groundwork for further measures. It was a legal retreat dressed as a tactical pivot, and the world noticed the difference. For a president who built his political identity around dominance and deal-making, this was not a strategic retreat. It was a constitutional rebuke.

The prize he could not buy

And then there is the matter of the Nobel Peace Prize, a pursuit that, more than any policy failure, lays bare the psychology driving all the others.

Trump has coveted the prize openly and repeatedly, appearing to believe that enough pressure on Oslo might eventually yield the result he craved. It did not. The Norwegian Nobel Committee awarded its 2025 prize to Venezuelan opposition leader María Corina Machado, who gifted her medal to Trump when the pair met in Washington. The gesture did little to soothe his grievance. Days later, Trump sent an extraordinary text message to Norway’s Prime Minister Jonas Gahr Store, making clear the snub still stung.

In the message, which he circulated widely among world leaders, Trump declared that he no longer feels bound “to think purely of Peace” because the Nobel Committee had not honoured him. He linked this grievance directly to his escalating campaign to seize Greenland, asserting that “the world is not secure unless we have Complete and Total Control of Greenland” — a demand directed at a fellow NATO ally.

The message was met with condemnation across Europe. Norwegian experts noted that Trump was fundamentally mistaken in his belief that the Norwegian government controls the prize, which is awarded by an entirely independent committee. But the factual error mattered less than what the message revealed: a sitting president openly conditioning his commitment to global stability on the receipt of a personal honour, then using its absence to justify territorial aggression against an ally.

It reframes everything. The Iran war was launched without an exit strategy. The Ukraine peace plan was built on shifting sand. The tariffs were imposed without a legal foundation. Each begins to look less like a policy failure and more like the inevitable output of a leader who has always valued the appearance of winning over the substance of governing.

The reckoning

There is a pattern running through each of these episodes: a preference for performance over preparation, and for the announcement over the outcome. Tariffs imposed without legal grounding. Peace initiatives launched without a diplomatic architecture. A war started without a defined endpoint. A Nobel campaign waged as though prestige could be demanded rather than earned.

The portrait that emerges is not of a grand strategist, but of a tactician whose greatest skill has always been the projection of certainty, and whose second term has been a sustained encounter with the limits of that projection. The courts have ruled against him. The peace he promised Ukraine remains elusive. The war he started carries no finish line. And his own words have confirmed what critics long suspected: that for this president, global stability has always been, at least in part, a means to personal validation.

The deals he promised have not closed. The wins he guaranteed have not materialised. And the world, watching carefully, has begun to draw its own conclusions.

The writer is a seasoned journalist covering the economy and international affairs.