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.

This was a mandate built on exclusion, fear, and the systematic declaration that 200 million Indian Muslims do not belong in the political life of their own country.

Consider the numbers. Across the four states that went to the polls — Assam, West Bengal, Kerala, and Tamil Nadu — a total of 104 Muslim MLAs were elected to various assemblies. That is 14.36 per cent of the 723 legislators. In a country where Muslims make up nearly 14 per cent of the population, this figure appears almost proportional.

But here is the damning detail that the Indian media will not highlight: not a single one of those 104 Muslim MLAs belongs to the BJP.

Zero. Not one. Not a single Muslim in the entire country was deemed worthy of a BJP ticket in these elections.

In Assam, where Muslims constitute approximately 34 per cent of the population, the BJP won 82 seats out of 126. Yet the party fielded no Muslim candidates in the entire state. In West Bengal, where Muslims make up 27 per cent of the population, the BJP won 207 seats out of 294. Again, no Muslim candidates.

This is not an electoral strategy. This is a declaration of war, a war waged not with bullets but with ballots. And the BJP is winning.

‘Victory for Hindutva’ — the mask is gone

The BJP’s prospective chief minister of West Bengal, Suvendu Adhikari, did not bother with the usual platitudes about serving all communities. He openly celebrated the result as “a victory for Hindutva” — the Hindu supremacist ideology that envisions India as a nation for Hindus alone.

The mask is now gone. The BJP no longer pretends to be a party of development or good governance. It is a religious movement that has captured the Indian state, and it is using that state to systematically marginalise, humiliate, and terrorise Muslims.

Union Home Minister Amit Shah campaigned on a platform of driving out “infiltrators”,  a coded slur for Muslims, particularly Bengali-speaking Muslims in Assam. Chief Minister Himanta Biswa Sarma has openly admitted that his government’s 2023 delimitation exercise — which reduced Muslim-majority seats in Assam from 35 to 22 — was designed to “marginalise the influence of the anti-BJP religious group”. Opposition leaders have correctly called it “legalised rigging”.

This is the face of Indian democracy in 2026. A ruling party that openly admits to rigging electoral boundaries to reduce Muslim representation, and then celebrates the results as a victory for Hindu supremacy.

The daily hell of being Muslim in Modi’s India

The 2026 election results did not occur in a vacuum. They are the electoral culmination of a decade of rising violence, state-sanctioned hate speech, and the systematic dehumanisation of India’s Muslim minority.

According to a January 2026 report by the India Hate Lab, India recorded 1,318 hate speech events in 2025 — an average of more than three per day. This represents a 97 per cent increase since 2023.

Of these, 1,289 events contained hateful, violent references to Muslims. The report found that 88 per cent of hate speech events took place in states governed by the BJP or its allies. Among the top 10 individuals responsible for the most hate speech, five are affiliated with the BJP — including Amit Shah, the country’s home minister, who is tasked with protecting all citizens regardless of faith.

The conspiracy theories deployed are not random. They are carefully manufactured: “land jihad” (Muslims plotting to capture Hindu land), “population jihad” (Muslims scheming to outnumber Hindus), “love jihad” (Muslim men conspiring to convert Hindu women through marriage). These narratives are designed not just to win votes but to justify violence.

Union Minister for Minority Affairs Kiren Rijiju — whose job is literally to protect religious minorities — has instead accused the Congress party of becoming the “Muslim League Party,” a slur invoking the party that campaigned for Pakistan’s creation. The BJP’s IT cell chief, Amit Malviya, has echoed this language.

The message is unmistakable: to be Muslim in India today is to be an enemy of the state. To advocate for Muslim political rights is to be a traitor.

Beyond Muslims: The circle of hate expands

The BJP’s majoritarian project does not stop at Muslims. Christians, who make up only 2.3 per cent of India’s population, have become an increasingly visible target.

On Christmas Eve 2025, Hindu hardline groups announced a shutdown in the city of Raipur, claiming “forced conversions” by Christians — a charge repeatedly made despite an absolute lack of evidence. That same day, armed men stormed a shopping mall, vandalising Christmas decorations and disrupting worshipers. Police arrested only six people. They were released on bail within days and greeted with garlands and celebratory processions.

Prime Minister Modi visited a Catholic church in New Delhi on Christmas morning. He did not condemn the violence. He did not mention the arrest. He offered prayers and posed for photographs while his party’s foot soldiers terrorised Christians across the country.

Hate speech targeting Christians rose from 115 events in 2024 to 162 in 2025 — a 41 per cent increase. The “forced conversion” narrative now paints every act of Christian charity, education, or healthcare as a deceptive tool for converting Hindus.

Human Rights Watch: State-sanctioned targeting

In February 2026, Human Rights Watch released its annual World Report, documenting a grim reality that the Indian government has tried to hide from the international community. The report found that India’s BJP-led government “vilified religious minorities” and continued to carry out “unlawful demolitions of homes and properties of Muslims” under the guise of addressing illegal construction.

“Hate speech often linked to Hindu nationalist groups and attacks against Muslims increased,” the report stated. The authorities also cracked down on critics of the government and pressured the media to self-censor.

Elaine Pearson, Asia director at Human Rights Watch, said: “The Indian government has normalised violence against religious minorities, marginalised groups, and critics through discriminatory policies, hate speech, and politically motivated prosecutions.”

This is not a fringe opinion. This is the finding of one of the world’s most respected human rights organisations. And the 2026 election results are India’s answer: we do not care.

The trap of reverse polarisation — and why Muslims cannot win

Muslim voters have responded to this onslaught not with indifference but with desperate fear.

In Assam, the All India United Democratic Front — a regional party that historically drew Muslim support — collapsed from 16 seats to just two. Muslim voters have abandoned their own community-based representatives to rally behind the Congress party.

In Assam, 18 of the 19 Congress MLAs elected are Muslims.

In West Bengal, the Congress and its allies have become the primary vehicles for Muslim political expression.

But this is a trap. Every Muslim vote that consolidates behind the Congress is a weapon the BJP uses to accuse the opposition of “minority appeasement.”

The more Muslims appear to vote as a bloc, the more the BJP can claim that Hindus must do the same to defend themselves against the “Muslim threat.”

It is a perfect machine. The BJP creates fear. It exploits the fear. Then it uses the consequences of that fear to justify more fear. And the Muslim community is caught in the middle — crushed between a party that hates them and a party that is too weak and too scared to defend them.

The BJP’s endgame: A Hindu nation

What does the BJP actually want? The answer is no longer hidden. It wants a “Hindu rashtra”, a Hindu nation where other faiths are tolerated as guests but never treated as equals.

The 2026 state elections have brought that vision terrifyingly close to reality. Across five major states, the BJP won historic victories while refusing to field a single Muslim candidate. Its leaders celebrated in the name of Hindutva. Its campaign was built on conspiracy theories about “infiltrators” and “jihad.” Its state governments have redrawn electoral maps to dilute Muslim political power.

And the world watches in silence. Western leaders shake Modi’s hand. Western corporations invest in his economy. Western universities honour him with degrees. All while 200 million Indian Muslims are being systematically erased from the political life of their own country.

The overturning of India

India’s Constitution promises a secular, socialist, democratic republic. The 2026 state elections have confirmed that this promise is being systematically dismantled, not through a coup, not through a revolution, but through the ballot box. Democratically. Legally. And with the enthusiastic support of a Hindu majority that has been trained to see Muslims as enemies rather than neighbours.

The BJP won the 2026 state elections. But the real losers are not the Congress party or the regional outfits. The real losers are the millions of Muslim families who went to sleep on election night knowing, perhaps for the first time, that India is no longer their home.

For 200 million Indian Muslims, the message of 2026 is clear: you may live here. You may pay taxes here. You may send your children to school here. But you will never rule here. You will never be represented here. You will never be equal here.

That is not democracy. That is apartheid by another name.

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

This gap has widened over time and has become more visible in everyday life, where decisions made by the leaders often seem disconnected from the realities faced by ordinary citizens.

As a result, many people feel unheard and underrepresented, creating the sense that governance is something done to them rather than for them.

It has also produced a repeated cycle of hope and disappointment, where new figures emerge promising change, only to face the same structural limits that have restricted reform for years.

In such an environment, public attention is easily captured, but political trust is far harder to earn.

Visibility, especially in a media-driven age, can create a strong sense of credibility.

Yet in politics, credibility is not built through recognition alone. It is built through consistent performance, strong organisation, and the ability to deliver results within complex systems.

Iqrar-ul-Hassan enters this political space with significant public recognition, largely due to his journalistic career.

His work in exposing corruption and highlighting governance failures has earned him a reputation as a bold and visible media figure.

However, this reputation also raises an important question of whether influence gained through journalism can truly be converted into political authority.

Journalism and politics operate on different principles.

A journalist’s role is to investigate, question, and expose.

A politician’s responsibility is to govern, negotiate, and compromise.

One works from the outside looking in; the other must operate from within the system, often making difficult decisions that involve tradeoffs rather than clear moral positions.

This difference is key when judging whether media credibility can become political capability.

Critics argue that public figures who move from journalism into politics often carry an image of authority that has not yet been tested in governance.

While they may be effective in identifying problems, they are rarely tested in resolving them.

This creates a gap between perception and performance, where public confidence is shaped more by past visibility than by present competence.

Iqrar-ul-Hassan’s political initiative through Awam Raj Tehreek presents itself as a response to longstanding frustrations with traditional politics.

It claims to create space for ordinary citizens and challenge established structures.

This message clearly connects with a public that has repeatedly expressed dissatisfaction with the mainstream parties.

However, the main concern remains whether such a vision can move beyond words into practical political action.

This pattern is not unique to Pakistan.

In India, the Aam Aadmi Party emerged with a similar promise to represent ordinary citizens and challenge traditional political elites.

It gained strong public support and achieved electoral success, especially in New Delhi.

Yet over time, it has also faced criticism, internal tensions, and questions about governance.

Its journey shows that early popularity does not remove the deeper challenges of sustaining credibility and delivering results.

A similar story can be seen in Italy with the Five Star Movement.

It began as a powerful anti-establishment force, attracting voters frustrated with mainstream politics.

However, once in power, it struggled with internal divisions and the realities of governance, which tested its original promises.

These examples show that movements built on public frustration often face their toughest test after gaining attention or power.

Pakistan’s political system is shaped not only by personalities but by deeply rooted structures of power.

Electoral success depends on local influence, financial resources, and established voter networks.

In this environment, movements built mainly on media visibility face clear limits.

Recognition may create momentum, but it does not automatically build electoral machinery or grassroots strength.

This is where questions about leadership credibility become more serious.

A political movement needs more than a well-known figure as its leader.

It requires discipline, clear decision-making systems, and the ability to manage internal disagreements.

Without these, even popular movements risk breaking apart when they face real political pressure.

There is also the issue of consistency. Public trust depends on whether a leader’s actions match their words over time.

For media personalities entering politics, this scrutiny is often stronger.

Any gap between past criticism of the system and present political compromises can quickly raise doubts about sincerity.

Supporters argue that Pakistan needs new voices outside traditional political families, and this reflects real public frustration.

However, critics point out that being outside the system does not automatically make a leader more capable.

In fact, the lack of experience within political institutions can become a disadvantage when dealing with lawmaking, party organisation, and policy delivery.

Iqrar-ul-Hassan’s strength lies in communication and his ability to highlight important issues.

Yet communication is not the same as governance. Politics requires long-term engagement with institutions that are often slow, complex, and resistant to change.

It demands patience and practical decision-making, not just public messaging.

Another concern is the nature of public expectations.

Movements led by well-known figures often generate strong emotional support at the start.

However, this support can be fragile if it is not supported by clear policies and strong organisation.

When expectations are based more on personality than structure, disappointment can follow quickly.

It is also important to consider the wider political environment.

Established parties in Pakistan, despite criticism, have organisational depth and electoral experience that new movements lack.

This creates an uneven field where new entrants must do far more than simply present themselves as alternatives.

The challenge for Iqrar-ul-Hassan, therefore, is not just gaining attention but proving political capability.

The shift from commentator to decision-maker is difficult.

It requires moving from criticism to responsibility, from observation to action, and from clear statements to complex compromises.

Many figures around the world who have made this shift have found it far more demanding than expected.

Internal stability is also important. Political movements often begin with energy, but disagreements over leadership and strategy can quickly appear.

Without strong internal systems, such disagreements can weaken the movement before it fully develops.

Sustainability is another key issue. Media-driven movements can rise quickly, but maintaining momentum requires deep grassroots support, policy planning, and long-term commitment.

Without these, movements risk becoming highly visible but politically weak.

There is also the question of accountability.

In journalism, influence comes from questioning others.

In politics, that same scrutiny is directed back at the individual. Every decision, alliance, and outcome becomes open to public judgment, often at a much higher level.

This does not mean such movements have no value.

They can challenge established narratives and push mainstream parties to respond more seriously to public concerns.

They can also bring new energy into political debate.

However, influence should not be confused with the readiness to govern.

Ultimately, the main question around Iqrar-ul-Hassan’s entry into politics is not whether he is popular, but whether his credibility as a journalist can withstand the demands of political leadership.

This is a test of ability, not intention.

While Pakistan clearly needs reform and fresh ideas, credibility in politics is earned through consistent action, not reputation alone.

The move from media influence to political authority remains uncertain, and at present, it raises more questions than answers.

The most sensible approach is careful observation, where leadership is judged not by promises or popularity, but by performance over time.

The real test now is whether Iqrar-ul-Hassan can prove himself in politics, rather than becoming just another short-lived entrant in the existing political system.

His success will depend on whether he can turn promises into real change and maintain credibility in a field where many new political efforts fail to succeed.

The writer is a seasoned journalist and a communications professional.

He can be reached at tariqkik@gmail.com

It already is.

Two months into a war with Iran that was meant to be swift and decisive, the United States finds itself in a very different contest — one measured not just in military terms, but in time, prices, and political patience.

The Strait of Hormuz is effectively constricted. Tanker traffic is disrupted. Oil markets are rattled. And the president who promised relief at the pump is watching costs climb steadily higher.

This is no longer just a military standoff. It is a test of endurance. And the uncomfortable reality is this: while Washington is trying to force a quick outcome, Tehran is playing for time.

The disruption that reshaped the battlefield

The turning point came early. Following the initial wave of US and Israeli strikes, Iran responded by targeting the artery it has long threatened but rarely choked at scale — the Strait of Hormuz.

Roughly 20 million barrels of oil pass through that narrow corridor each day, about a fifth of global consumption. Even partial disruption sends shockwaves through energy markets.

Washington’s response was forceful. A naval blockade aimed at Iranian-linked exports has intercepted dozens of vessels, costing Tehran billions in lost revenue. On paper, it signals dominance.

But pressure cuts both ways.

Brent crude has surged past $120 a barrel, briefly touching levels not seen in years. Analysts warn that prolonged disruption could keep prices elevated — or push them higher still.

In the United States, gasoline prices are now hovering around $4.40 a gallon. In some regions, increases have come sharply and suddenly.

Voters have noticed.

The political math is unforgiving

Fuel prices are not abstract indicators. They are lived experiences — felt in daily commutes, delivery costs, and grocery bills.

With mid-term elections approaching, the timing could hardly be worse. Narrow congressional margins leave little room for economic discontent.

Even if the conflict de-escalates soon, the effects will linger. Energy-driven inflation does not recede overnight. There is a delay between falling oil prices and relief at the pump — a delay measured in months, sometimes longer.

That lag is politically dangerous.

The administration faces a difficult balance: sustain pressure abroad while containing the economic fallout at home. The risk is that success in one arena may come at the expense of the other.

Tehran’s advantage: patience

Iran’s position is far from comfortable. Its exports are constrained, its economy strained. By conventional measures, it is under significant pressure.

But it is not trying to win quickly.

Iran’s system has spent decades absorbing sanctions and shocks. It is structured for endurance in ways democratic systems often are not. Where Washington faces electoral deadlines, Tehran operates on a longer horizon.

Every week of disruption shifts pressure outward — into global markets, into fuel prices, into American political life.

Iran does not need a decisive victory. It needs time to do its work.

Why time is not on Trump’s side

The White House appears to be betting that Iran will eventually yield under sustained pressure. That assumption has logic. But it collides with a more immediate reality: political time moves faster than strategic time.

Even a rapid resolution would not instantly reverse the damage. Prices would take time to fall. Voter sentiment would take time to recover.

And time is precisely what the political calendar does not offer.

The administration may argue that short-term economic pain is the cost of a longer-term strategic gain. That case is not without merit. But it is also one that voters, facing rising daily expenses, may be unwilling to accept.

Foreign policy victories rarely outweigh domestic discomfort — especially when it is felt at the pump.

A contest of endurance

At its core, this is a clash of timelines.

Washington is trying to accelerate events — force a breakthrough, restore stability, bring prices down before political consequences set in.

Tehran is doing the opposite — stretching the moment, allowing pressure to accumulate where it matters most: in the economies and electorates of its adversaries.

Both sides are betting on time. But they are betting in opposite directions.

The reckoning at the pump

Back at that Georgia gas station, the calculation is already underway. The contractor who once supported Trump says he can absorb the costs — for now.

But only to a point.

No one knows exactly where that point lies. What is clear is this: every day the Strait remains disrupted, every day oil flows are constrained, every day prices stay elevated, the pressure builds.

Each increase leaves an impression. Each visit to the pump becomes a quiet political moment.

The president faces limited options. Escalation risks widening the conflict. Retreat risks projecting weakness. Waiting risks something else entirely.

Because waiting is not neutral. It favours the side that can endure it longer.

And right now, that may not be the United States.

For Donald Trump, time is no longer just a strategic variable. It is a political liability.

And it is working against him.

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

In Pakistan’s case, however, this “necessity” sits uneasily beside a history of recurring balance of payments crises, chronic fiscal deficits, and a currency that has rarely known stability.

To introduce a volatile asset class into such a system is not modernisation alone; it borders on recklessness.

The visible advantages are real. Bringing unregulated transactions into a legal framework offers the state greater visibility over previously opaque financial flows.

It may improve compliance, widen the tax base, and provide individuals outside the formal banking system with alternative channels for savings and transfers.

In a country where financial exclusion remains significant, this is no small consideration.

There is also the promise of remittance efficiency.

For Pakistan, where remittances are a critical source of external support, blockchain-based channels could reduce costs and delays, allowing more value to reach households.

At a time when every dollar of inflow matters, such gains carry undeniable appeal.

Legalisation also signals openness. It suggests a willingness to engage with emerging financial systems to attract speculative capital and to project regulatory adaptability.

For a government under constant pressure to demonstrate reform, this symbolism is politically convenient.

Yet these advantages are incremental and fragile.

They depend on confidence, discipline, and above all, stability, qualities that Pakistan’s economic history has struggled to sustain.

Against them stands a single factor whose impact is neither limited nor manageable: volatility.

Digital assets derive their value not from productive capacity or sovereign backing but from market sentiment and global liquidity cycles.

Their movements are dictated by forces far removed from Pakistan’s domestic realities.

In stronger economies, such volatility may be absorbed. In Pakistan, it risks becoming an accelerant to existing instability.

The danger is not theoretical.

Pakistan’s foreign exchange reserves have repeatedly hovered at precarious levels, often sufficient for only weeks of imports.

In such a context, even a modest shift of capital into speculative digital assets can have disproportionate consequences.

A sudden loss of confidence, whether triggered domestically or abroad, could prompt rapid liquidation and capital flight, placing immediate pressure on the rupee and the already strained reserve position.

What is presented as an avenue for inflow can just as easily become a channel for outflow.

The asymmetry is stark. Inflows are gradual, conditional, and confidence-driven.

Outflows, in moments of panic, are swift and indiscriminate.

For an economy living from one external support programme to the next, this is not a marginal risk; it is a structural threat.

Proponents argue that regulation will mitigate these dangers.

That is an optimistic assumption in a system where regulatory enforcement is uneven and institutional capacity is limited.

Legalisation without robust oversight does not reduce risk; it formalises exposure.

More troubling is the potential entanglement with external commercial and political interests.

Pakistan’s economic policymaking has long been influenced by external dependencies, whether through multilateral lenders or bilateral arrangements.

To add a new layer of dependence, tied to volatile and externally driven financial ecosystems, is to compound vulnerability, not reduce it.

The question, therefore, is not whether digital assets have utility; they do.

The question is whether Pakistan, in its present condition, can afford the risks they carry.

Economic sovereignty is not lost in a single decision; it erodes through cumulative exposure to forces beyond domestic control.

The promise of efficiency and inclusion operates within a narrow band of stability.

Pakistan, by contrast, operates at the edge of it.

To embed volatility into such a system is not reform in any meaningful sense. It is a wager taken from a position of weakness.

For a country with little margin for error, this is not merely experimentation.

It is an invitation to amplify instability. In Pakistan’s case, this is not a leap into the future; it is a gamble with a past that has already warned against such risks.

Copyright Business Recorder, 2026

The article first appeared in the daily Business Recorder on April 22, 2026

A word of caution is not remiss at this juncture: data integrity continues to be challenged not only by independent economists but also by the International Monetary Fund (IMF) which noted the following in its 10 October 2024 documents titled Pakistan: 2024 Article IV Consultation and Request for an Extended Arrangement under the Extended Fund Facility: “Important shortcomings remain in the source data available for sectors accounting for around a third of Gross Domestic Product, while there are issues with the granularity and reliability of the Government Finance Statistics (GFS). The authorities are prioritising addressing these weaknesses, supported by Fund Technical Assistance (TA) on the GFS and a new Producer Price Index (PPI) index.”

A source in the PBS informed Business Recorder that the IMF expressed reservations on the new PPI and the Pakistan Bureau of Statistics (PBS) is currently engaged in its revision delaying the scheduled end June TA completion to October.

The March Outlook noted the obvious: “Oil markets remain on tenterhooks, multiple supply outages have heightened crude markets, while geopolitical tensions between Iran and the US have intensified, as a result oil markets remain volatile.”

The ceasefire agreed this week past came under severe strain in less than 24 hours as the protagonists’ interpretation of the terms of the talks on 11 April in Islamabad became mired in disagreement.

Be that as it may on 30 March the IMF uploaded an article on its website titled How the War in the Middle East is affecting energy, trade, and finance and pointed out that the impact of the war is uneven across regions and countries adding that “in Europe and many emerging markets, higher yields and wider credit spreads raise debt service burdens and complicate refinancing for governments and firms alike. In the Middle East and South Asia, already meagre reserves and limited market access make external shocks to financing conditions more dangerous – especially as higher import bills for fuel, fertiliser, and food widen trade deficits and put pressure on currencies.”

This observation is particularly relevant to Pakistan given that reserves as on 19 March 2026 were 16.4 billion dollars – an amount that is a massive improvement from the under 3 billion dollars (2916.7 million dollars) reserves on 3 February 2023, yet they constitute over 12 billion-dollar annual roll-overs by three friendly countries with the rest borrowed from other multilaterals/bilaterals and maturing debt equity from issuance of Eurobonds/Sukuk.

This month alone, the United Arab Emirates requested a 3.45 billion dollar loan recall from Pakistan (there was reportedly no request to cut the 800 million dollars owed by Etisalat to Pakistan since the privatisation of PTCL decades ago) and an additional 1.4 billion dollars was repaid on maturing Eurobonds this week past.

Pakistan’s access to foreign commercial markets has remained compromised for the past three to four years due to a fragile economy that accounts for a non-investment grade rating by the three international rating agencies.

In spite of the much-touted rating improvement last year, sourced to the country being on an active IMF programme, Pakistan’s rating remains in the highly speculative category defined as at material default risk with a limited margin of safety with financial commitments being met though capacity for continued payment is vulnerable to deterioration in the business and economic environment.

The Middle East conflict has certainly deteriorated Pakistan’s business and economic environment further, as it has globally.

The March update further notes that the “composite leading indicator for Pakistan’s major export destinations shows economic activity hovering near its long-term potential, signalling broadly supportive external demand prospects.”

Trade data released by the PBS for March indicates that prior to the start of hostilities in the Middle East exports had already declined by 1,987 million dollars — from 24,718 million dollars (July-March 2025) to 22,731 million dollars in the same period this year — while imports rose from 47,388 million dollars last year (July-March) to 50,536 million dollars or a rise of 3,148 million dollars, indicative of a worsening trade balance.

Remittances rose by 17 per cent in March, as per the State Bank of Pakistan data upload, a positive development however, it is concerning that while remittances increased month on month, yet they declined year-on-year as July-March 2024-25 inflows were 4 billion dollars against 3.8 billion dollars in the same period this year.

The Update projected inflation “to remain within the range of 7.5 to 8.5 per cent for March 2026.”

However, the PBS estimated Consumer Price Index at 7.3 per cent for March a day later raising questions about the Finance Division’s proactive approach to present as up-to-date data as possible to make more informed projections.

The CPI rose by 0.3 per cent in March over February with the largest increase in housing, water, electricity, gas, and fuels of 2.44 per cent followed by non-perishable food items at 1.59 per cent and perishable food items at 1.28 per cent (items with significant transport costs).

Core inflation (non-food and non-energy) rose by 0.7 per cent month on month for urban and 0.8 per cent for rural, perhaps paving the way for a rise in the policy rate in the next scheduled meeting on 27 April.

Pakistan’s tax revenue shortfall was at 610 billion rupees (July-March) with petroleum levy, a major source of Other Taxes, at 80 rupees per litre on petrol (hastily halved after public outcry at 160 rupees per litre levy announced on 3 April).

There is no levy on high-speed diesel. The shrinking resource base, no doubt partly if not mainly, attributable to the supply disruptions and price increases due to the Middle East conflict, prompted the IMF to advise the government to limit and target fuel subsidies to the poor and vulnerable.

Benazir Income Support Programme (BISP) with scientifically identified beneficiaries would be the best way to extend these subsidies; however, the government is considering fuel cards for motorcycle owners with a monthly litre limit – cards that have yet to be printed leave alone distributed.

Discussions with the Fund are reportedly ongoing with respect to the budget 2026-27 formulation.

One would hope that the Pakistani economic team leaders are considering a massive cut in current as opposed to development expenditure — by at least 2 trillion rupees — and not rely on lower policy rates to keep the current expenditure in check as it did in the ongoing budget.

This can be achieved by freezing all non-operational costs for a period of two years that would reduce the pressure on raising taxes which, in turn, would increase output and lower government borrow – domestic and external.

The IMF’s website notes: We are supporting our members — especially the most vulnerable — with policy advice, capacity development and, where needed and in coordination with the international community, financial assistance.

Managing Director Kristalina Georgieva stated that “in an uncertain world, more countries are needing more of our support. We are there for them.”

One can only hope that the Fund puts its money where its mouth is but for that to happen the onus is not only on the Fund staff but also on the skills of our economic team leaders.

Copyright Business Recorder, 2026

This article first appeared in the daily Business Recorder on April 13, 2026

Hosting direct rounds of US-Iran engagement in Islamabad was not a small diplomatic achievement. But there is no point pretending that access is the same as resolution.

The talks may have created room for de-escalation, yet they did not produce a breakthrough.

That was always the more realistic outcome. A conflict shaped by four decades of mistrust, strategic rivalry, sanctions, nuclear anxieties, and regional proxy politics was never going to be settled in a few intense meetings.

Even so, Pakistan’s foreign policy handling has been better than expected.

It has stayed relevant without becoming reckless, visible without becoming partisan, and engaged without fully surrendering its room for manoeuvre.

In a polarised region, that is not nothing. Pakistan is getting global attention for the right reasons, and it is managing, as far as possible, to preserve a degree of neutrality.

But diplomacy should not be romanticised. It can create openings. It cannot, by itself, dissolve contradictions that have been hardening for decades.

The ceasefire, therefore remains fragile. That is the real point. The world economy cannot indefinitely function with the Strait of Hormuz hanging over it as a live geopolitical choke point.

Even if shipping is not fully halted, the threat alone is enough to keep energy markets nervous, freight costs elevated, and inflation expectations unsettled.

Pakistan may have helped lower the immediate temperature, but it cannot impose a settlement on powers whose core red lines still clash.

This limited diplomatic success has nevertheless given the government some badly needed public oxygen after years of political fatigue.

That is precisely why this is the moment for sobriety, not exuberance. Foreign policy gains can improve optics. They do not fix macroeconomic fragility.

As the regional conflict lingers, Pakistan’s economic exposure is becoming more pronounced.

Oil prices are likely to remain elevated, second-round inflationary effects are bound to build, and the external account remains vulnerable at a time when large repayments and rollover dependencies are still part of the story.

This is not the moment for premature populist relief on petroleum prices, especially without fixing the refinery pricing formula.

Artificially suppressing prices may buy temporary applause, but it worsens fiscal strain, delays adjustment, and deepens distortions.

When the state is already under pressure, cosmetic relief becomes an expensive indulgence. Belts need to be tightened, not loosened for the sake of a few easy headlines.

Foreign policy also takes time to pay economic dividends. Domestic vulnerabilities, by contrast, demand immediate attention.

Pakistan’s relations with the UAE may be diplomatically sound, but that does not reduce economic dependence.

The country is repaying around $3.5 billion to the UAE while also managing other large external obligations, including the Eurobond repayment.

That creates a real financing gap. Reports that Saudi support may help fill part of that space are certainly reassuring at face value, but replacement financing is not the same thing as stronger fundamentals.

If one deposit is merely replaced by another, or if support comes in the familiar form of safe deposits and deferred oil facilities, then the structure of vulnerability remains intact.

The hole may be plugged, but the balance sheet does not become healthier.

The real gain would come only if fresh support arrives in a form that improves the quality of external financing, whether through longer-duration flows, actual investment, or inflows that reduce dependence on short-term political goodwill.

Even then, another problem emerges: concentration risk. Pakistan is already too dependent on a narrow set of friendly capitals for external comfort.

More reliance may feel stabilising in the short run, but it also makes the economy more hostage to external relationships over which it has limited control.

The remittance channel is another source of concern. The UAE accounts for a large share of Pakistan’s remittance inflows, and any disruption in labour market access there would quickly become a balance-of-payments issue here.

There are already anecdotal concerns around visa restrictions and labour market tightening.

Even if the picture is still unclear, the risk should not be dismissed.

More than a million Pakistanis work in the UAE. If a meaningful number return home, or if new worker outflows slow sharply, Pakistan would have to absorb that pressure in an economy already struggling with weak job creation, low private-sector dynamism, and limited room for self-employment.

The economic impact would be significant. The social impact would be worse.

That is the broader lesson. Better foreign policy can bring Pakistan into the limelight for the right reasons, but visibility is not strength.

Diplomatic traction does not substitute for fiscal consolidation, structural reform, or internal economic coherence.

Without those, the problems of 240 million people will not ease in any durable way. The government appears to have regained some public support.

It would be foolish to waste it on self-congratulation. This is the time to use that space to restore internal cohesion, impose fiscal discipline, and push a reform agenda while the opening still exists.

Copyright Business Recorder, 2026

This article first appeared in the daily Business Recorder on April 13, 2026

The shortfall in revenues has come after an outstanding performance by the FBR in 2024-25.

Total tax revenues reached Rs 11,745 billion, with an extraordinary growth rate of over 26 per cent. Consequently, the tax-to-GDP ratio at the federal level went up from 8.8 per cent of the GDP to 10.2 per cent of the GDP in one year.

The performance in the first three quarters of 2025-26 has fallen significantly short of the target.

The target was Rs 9,917 billion, whereas the actual collection has been Rs 9,307 billion.

This implies a shortfall already of Rs 610 billion, equivalent to 4.4 per cent of the revised downwards annual target of Rs 13,979 billion.

The original target for 2025-26 of FBR revenues was Rs 14,131 billion.

The required growth rate of revenues in 2025-26 to meet the lower revised target is still high at 19 per cent.

This requires a rise in the tax-to-GDP ratio in 2025-26 of 0.9 per cent of the GDP, from 10.2 per cent of the GDP in 2024-25.

As such, the target for 2025-26 remains ambitious.

What is the performance of individual taxes in the first three quarters? We look first at the income tax.

The target for 2025-26 is Rs 6,967 billion, with a required growth rate of 20.3 per cent.

The level of revenues in the first three quarters of 2025-26 is Rs 4,636 billion, with a shortfall of Rs 235 billion. The growth rate achieved is 12 per cent only.

Sales tax revenues are targeted at Rs 4,580 billion in 2025-26, with a growth rate of 17.4 per cent.

During the first three quarters, the tax collection has been Rs 3,104 billion, with a growth rate of 9 per cent. Consequently, the shortfall already is of Rs 313 billion.

The two smaller indirect tax revenues, the customs duty and the excise duty, have not shown much divergence from their targets.

The shortfall in the first three quarters is only Rs 30 billion in the case of customs duty.

Revenues from the excise duty have exceeded the nine-month target by Rs 5 billion.

Both taxes have shown relatively high growth rates in revenues of above 12 per cent.

There is a need to determine the extent to which the overall shortfall of Rs 610 billion in FBR is due to a divergence from the projected growth rates in the tax bases of different taxes.

The IMF Programme projected growth in the real GDP in 2025-26 is 3.2 per cent.

This growth rate has, in fact, been exceeded in the first two quarters, with the actual growth rate at 3.7 per cent.

The rate of inflation has been somewhat lower at 5.7 per cent, as compared to the projected growth rate of 6.3 per cent.

The tax base of imports has also shown lower growth, with the USD value increasing by 8.0 per cent, as compared to the target growth rate of 8.5 per cent.

There is a major deviation in the projection of one key determinant of the size of the tax base of the customs duty and the sales tax on imports.

The IMF projection for 2025-26 is that the value of the rupee will fall by over 12 per cent by the end of June 2026. However, in the first nine months, there has been no decline.

Adjustment for the lack of depreciation in the value of the rupee implies that the large shortfall of Rs 313 billion in sales tax revenues is largely due to the lower rupee value of imports.

This has probably also contributed to lower revenues from some withholding taxes in the income tax.

There is a need to assess the likely outcome in the fourth quarter of 2025-26 of FBR revenues.

The commencement of the Middle East war prior to the start of this quarter has resulted in a big rise in the level of uncertainty about the global and national economy.

There could be shortages of imports if the stoppage of traffic continues in the Strait of Hormuz.

However, import prices are significantly higher for oil and other imports.

As such, it is not clear what the level of revenues from the sales tax on imports and customs duty will be in the fourth quarter of 2025-26.

The good news is that the highest-yielding tax base of large-scale manufacturing has been performing well.

It has shown a growth rate of 10.5 per cent in January 2026 and 5.8 per cent in the first seven months.

If this high growth persists, then it could also facilitate faster growth in revenues from income tax and sales tax on domestic production.

Finally, the preparations for the federal budget of 2026-27 will start shortly.

The IMF projection is only for a marginal increase in the federal tax-to-GDP ratio of 0.1 per cent of the GDP in relation to the target level in 2025-26.

However, with the likely shortfall of over Rs 900 billion in 2025-26, a bigger increase will be required.

An appropriate FBR revenue target for 2026-27 is close to Rs 14,500 billion, implying a target growth rate of over 12 per cent in a relatively uncertain environment.

The IMF Programme also envisages a significant increase in the provincial tax-to-GDP ratio from 0.9 per cent of the GDP in 2025-26 to 1.3 per cent of the GDP in 2026-27.

Clearly, the taxation measures in the forthcoming provincial budgets will be of greater importance.

Efforts will have to be made by the provincial governments to develop the agricultural income tax, property-related taxes and the sales tax on services.

Copyright Business Recorder, 2026

This article first appeared in the daily Business Recorder on April 7, 2026

“I sometimes wonder whether the Western media’s attempt to black out some words or give a twist to a report that does not quite capture the spirit of an event….why are you laughing?”

“Because Western media these days is not only not capturing the spirit of any event but also the letter – the coverage of the Gaza genocide…”

“Fair enough, but I am baffled. Europe has one of the highest literacy rates in the world, and yet they blocked Russian Television four years ago because, perhaps, they thought that their literate populations are unable to distinguish between truth and…”

“Propaganda wars are ongoing concurrently with real wars so perhaps they reckon that…”

“Gotcha, but today all those engaged in actual wars are also engaged in propaganda wars – see wars have not changed dramatically in terms of ammunition used – drones and missiles as opposed to air power – I hope we have adjusted…”

“Back off – anyway, there are some countries that are more equal than others in terms of launching wars – actual, propaganda wars, and the use of expletives is a new weapon that President Trump…”

“Speaking of some countries being more equal than others, let me quote Mark Twain to you – he said under certain circumstances, profanity provides a relief denied even to prayer.”

“That makes sense because I heard there is a regular prayer meet at the White House.”

“Hmmm, let me quote Kurt Vonnegut, an American author who wrote that profanity and obscenity entitle people who don’t want unpleasant information to close their ears and eyes to you.”

“So the Iranians…”

“Make of that what you will, the language of diplomacy, however, militates against the use of profanity or obscenity.”

“But the head of government is normally not a diplomat, right…”

“Neither is a titular head of Defence.”

“Titular like The Khwaja who has used expletives or the actual as in…in…”

“The Chairman of the Pakistan Cricket Board?”

“Yep, though the two US diplomats shuttling from one conflict zone to another are kinda…”

“Have never uttered an expletive publicly.”

“True anyway, I have not missed a single Mel Brooks movie, who said I have been accused of vulgarity, I say that’s bull sh…”

“Shush.”

Copyright Business Recorder, 2026

The article first appeared in the daily Business Recorder on April 7, 2026

International accounting firms, financial analysts and media will never look at this side of the picture as that contradicts and conflicts with their economic interests. However, after working in different spheres of finance and politics the author is almost sure that whatever is happening and whatever is expected to happen in future irrespective of the result of the war which the USA started on February 28, 2026.

Even the remote possibility of the complete devastation of Iran and a change of regime will not change the ‘course of events’.

The following four (4) arguments are relevant to the conclusion made in the end:

a. Oil-rich Middle Eastern countries — primarily Saudi Arabia, the UAE, Qatar, and Kuwait — have invested roughly USD3.7 trillion to over USD5 trillion in foreign assets through their sovereign wealth funds (SWFs).

These funds invest globally in tech, sports, banking, and infrastructure to diversify revenue away from oil. Sovereign wealth funds from Gulf countries manage about one-third of global state fund assets, often acting as “white knights” for companies in the West.

Investments are heavily focused on Western companies (e.g., Uber, Boeing, Nintendo) and large-scale projects.

Key players, which include the Saudi Public Investment Fund (PIF), Qatar Investment Authority (QIA), and Abu Dhabi Investment Authority (ADIA), which are actively expanding their global portfolios.

b. Qatar holds extensive ownership of luxury London hotels, primarily through state-backed entities like the Qatar Investment Authority (QIA) and Katara Hospitality, holding over £100 billion in British assets.

Top holdings include The Ritz (£800m), Savoy, Connaught, Grosvenor House, and the upcoming Chancery Rosewood, plus iconic assets like Harrods.

The details and value are: The Ritz London: sold to a Qatari investor for approximately £800 million in 2020.

The Chancery Rosewood: part of a huge redevelopment of the former US Embassy in Mayfair, acquired by Qatari Diar for ~£500m in 2009.

c. Following the start of the conflict on February 28, 2026, the UAE faced significant financial pressure, with Dubai and Abu Dhabi stock markets losing a combined USD120 billion in value within the first month.

While there were reports of increased wealth movement toward Switzerland — with cash held by UAE-based individuals in Swiss banks rising by 40 per cent — and some investors moving assets to Singapore/Hong Kong, specific figures for capital transferred from Dubai to London are not explicitly quantified in the provided search results.

Key financial impacts and capital movements identified following February 28, 2026, include:

i. The Dubai Financial Market General Index dropped by about 16 per cent in the month following the war’s start.

ii. Wealthy individuals began re-evaluating their positions in the Gulf, shifting focus to safe-haven jurisdictions, with a noted 40 per cent increase in funds linked to UAE-based individuals moving to Swiss banks.

iii. While some investors were re-evaluating risks, some analysts indicated this was a “recalibration of risk” rather than a massive, immediate capital flight.

iv. Banks in the Gulf faced a potential USD307 billion deposit flight risk if the conflict continued to worsen, according to S&P reports from mid-March 2026.

v. In response to the economic disruption, Dubai announced a USD270 million relief package on March 30, 2026, to support businesses and residents.

d. BlackRock announced that it was restricting withdrawals from its flagship $26 billion HPS Corporate Lending Fund (HLEND) on March 6, 2026. Investors sought to withdraw 9.3 per cent of their holdings (roughly USD1.2 billion) in the first quarter of 2026, which exceeded the fund’s 5 per cent quarterly limit.

BlackRock enforced the 5 per cent cap, paying out approximately USD620 million but locking the remaining withdrawal requests.

This was done to protect the fund from having to sell illiquid, long-term private credit loans at a loss during a period of market volatility.

The concept the author intends to present would be easier to describe with reference to cases (a) and (b) above. Qatar owns a USD 1 billion Hotel in London by the name of The Ritz.

(To be continued tomorrow)

Copyright Business Recorder, 2026

This article first appeared in the daily Business Recorder on April 5, 2026