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$10 Billion US Facility Is Not a Loan, Says Finance Minister Aurangzeb
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$10 Billion US Facility Is Not a Loan, Says Finance Minister Aurangzeb

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Pakistan’s Finance Minister Muhammad Aurangzeb has clarified that the proposed $10 billion facility from the United States is not a loan or conventional credit line. According to the minister, the facility is being pursued primarily as a signal of currency and exchange-rate stability. Such a signal could help improve market confidence and enable Pakistan to raise longer-term financing from international capital markets on more favourable terms. The proposed arrangement is being discussed with the US Treasury’s Exchange Stabilisation Fund, with Pakistan expecting a response by the end of September. US Facility Aims to Strengthen Market Confidence Aurangzeb said the proposed facility should not be viewed as additional borrowing for Pakistan. Instead, its purpose is to provide a confidence signal that could support the rupee and foreign-exchange market while helping Pakistan regain stronger access to international debt markets. The government hopes that greater confidence in Pakistan’s currency stability will allow the country to raise financing directly from global investors rather than relying heavily on short-term bilateral arrangements. This would represent a shift in Pakistan’s external financing strategy. Pakistan Seeks to Replace Short-Term Bilateral Loans Pakistan currently has around $12.3 billion in short-term debt owed to Saudi Arabia, China and Kuwait. These arrangements require regular rollovers, creating recurring refinancing pressure for the country. Aurangzeb acknowledged the importance of bilateral partners that have supported Pakistan over the past decade but said the government does not want to continue increasing its dependence on short-term bilateral external debt. Moving toward longer-maturity, market-based financing could give Pakistan greater flexibility in managing its external obligations. It could also reduce the frequency with which the country needs to seek extensions or rollovers from bilateral lenders. Talks Under Way With US Financial Institutions Pakistan is also holding discussions with the US Export-Import Bank and the Development Finance Corporation. These talks form part of a broader effort to strengthen Pakistan-US financial and economic cooperation. The government appears to be pursuing several channels simultaneously rather than relying exclusively on the proposed Exchange Stabilisation Fund facility. If successful, these arrangements could support investment and financing opportunities while strengthening confidence among international investors. Pakistan Plans Eurobonds and Other Long-Term Debt The government has already appointed three consortiums to work on potential international debt offerings, including Eurobonds, sukuk and dollar-settled rupee bonds. Pakistan is considering bonds with maturities of five, seven and 10 years, depending on market conditions. The strategy reflects the government’s intention to move toward longer-term market financing and away from repeated short-term borrowing. However, Pakistan’s ability to raise funds at competitive rates will ultimately depend on investor confidence, global interest rates, domestic economic stability and the country’s creditworthiness. Credit Rating Still Below Investment Grade Pakistan recently received an upgrade to a B credit rating, but the country remains below investment-grade status. This means international borrowing is likely to remain relatively expensive compared with financing available to higher-rated sovereign borrowers. The government will therefore need to demonstrate sustained improvements in fiscal management, external balances, reserves and economic stability if it wants to secure cheaper long-term financing. Pakistan also raised a $250 million Panda bond during the previous fiscal year with guarantees from the Asian Development Bank and Asian Infrastructure Investment Bank. The transaction provided an example of how external guarantees can help Pakistan access international capital markets despite its below-investment-grade rating. Why the US Facility Matters for Pakistan Although the proposed $10 billion facility is not being described as a loan, its potential importance for Pakistan’s economy could still be substantial. A credible stability signal from the United States could help improve investor confidence and support Pakistan’s efforts to return more consistently to international capital markets. For a country facing recurring external financing requirements, access to longer-term market debt could reduce the pressure created by frequent short-term loan rollovers. It could also provide the government with greater flexibility in managing its external liabilities. However, the facility itself would not solve Pakistan’s underlying financing challenges. Long-term improvement will still depend on stronger exports, sustainable foreign-exchange earnings, fiscal discipline and a reduction in the country’s recurring external financing needs. Government Launches Simplified Tax Scheme for Small Traders Aurangzeb made the remarks after launching a simplified tax scheme for small traders. Under the new arrangement, eligible traders will pay 1% tax on annual sales or a minimum of Rs25,000, depending on the applicable calculation. The scheme also provides exemptions from audits and from being classified as withholding agents. The government is presenting the simplified framework as an effort to bring more small businesses into the formal tax system while reducing compliance burdens. Pakistan’s Financing Strategy Is Changing The proposed US facility is part of a broader shift in Pakistan’s approach to external financing. Rather than continuously depending on short-term bilateral loans, the government wants to establish greater access to long-term market-based financing. That transition could improve debt-management flexibility, but it also comes with greater exposure to international market conditions. Investors will closely monitor whether Pakistan can maintain macroeconomic stability and improve its credit profile enough to borrow at sustainable rates. The proposed US facility, therefore, should be viewed less as a direct injection of $10 billion and more as an attempt to create the conditions required for Pakistan to access significantly larger pools of international capital. The Real Test Will Be Market Access Finance Minister Aurangzeb’s clarification removes the impression that Pakistan is seeking another $10 billion conventional loan from Washington. The government instead wants the proposed facility to signal currency and exchange-rate stability, strengthen investor confidence and help unlock longer-term borrowing from global markets. The strategy could reduce Pakistan’s reliance on frequently rolled-over bilateral debt and provide a more sustainable financing structure. But the success of the plan will ultimately depend on whether international investors believe Pakistan can maintain economic stability without repeatedly turning to emergency financing. For Pakistan, the real objective is therefore not simply securing a US-backed stability signal. It is using that confidence to build lasting access to international capital markets on sustainable terms.

Govt Abolishes Personal Baggage Scheme For Used Vehicle Imports
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Govt Abolishes Personal Baggage Scheme For Used Vehicle Imports

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The government has abolished the Personal Baggage Scheme for used vehicle imports after approval from the Economic Coordination Committee (ECC) and the federal cabinet, Commerce Minister Jam Kamal Khan told the National Assembly on Wednesday. The government has retained the Gift and Transfer of Residence schemes but introduced stricter conditions to prevent their use for commercial purposes. The changes were announced during the National Assembly’s Question Hour in response to questions from MNA Dr Shazia Sobia, who sought details about the decision to abolish the Personal Baggage Scheme and changes made to Pakistan’s used vehicle import policy. Stricter Rules For Gift, Transfer Schemes According to a written response from the Ministry of Commerce, vehicles imported under the remaining Gift and Transfer of Residence schemes must now comply with minimum safety, environmental and regulatory standards applicable to commercial imports of used vehicles. The government has also increased the interval for importing vehicles under these schemes from two years to three years. In addition, vehicles imported through the schemes will remain non-transferable for one year. The changes are aimed at ensuring that vehicle import schemes are used by genuine beneficiaries rather than for commercial trading. The ministry said the revised policy was developed following consultations with relevant stakeholders, including the Ministry of Overseas Pakistanis and Human Resource Development. Overseas Pakistanis Face New Stay Requirements The government has also increased the minimum stay-abroad requirement for beneficiaries of the schemes. Under the revised rules, applicants must have stayed abroad for at least three years, with a minimum of 850 cumulative days of stay. The requirement is applicable across the retained vehicle import schemes. Another condition has also been modified regarding the country from which a vehicle can be imported. The requirement that a vehicle must be imported from the same country where the sender resides will now apply only to the Transfer of Residence Scheme. The government has introduced these conditions to prevent individuals from using vehicle import schemes for purposes other than genuine personal use. Govt Targets Commercial Misuse The Commerce Ministry said the vehicle import schemes were originally introduced to facilitate overseas Pakistanis who wanted to bring vehicles into Pakistan for their personal use. However, authorities identified widespread misuse, particularly under the Personal Baggage Scheme. The scheme was allegedly being used for commercial purposes rather than genuine personal vehicle imports. The government subsequently amended the vehicle import policy through SRO 61(I)/2026 dated January 15, 2026. The abolition of the Personal Baggage Scheme represents the latest step in the government’s efforts to restrict the commercial exploitation of vehicle import concessions. The ministry said the revised framework was intended to ensure that the benefits of the schemes reached only bona fide beneficiaries. Vehicle Imports Could Decline The Ministry of Commerce said it was too early to determine the full impact of the revised policy on Pakistan’s overall vehicle imports. However, it acknowledged that vehicle imports could decline following the abolition of the Personal Baggage Scheme and the introduction of stricter requirements for the Gift and Transfer of Residence schemes. The impact will depend on how overseas Pakistanis respond to the revised requirements and how many potential importers continue to qualify under the remaining schemes. The changes could also affect the used vehicle market by reducing the number of vehicles entering Pakistan through personal import channels. No Duty-Free Vehicle Imports In Pakistan Separately, Finance Minister Muhammad Aurangzeb clarified that there is no provision allowing duty- and tax-free imports of cars or other vehicles anywhere in Pakistan. The finance minister provided the clarification in a written response to a question submitted by MNA Moin Aamer Pirzada. The question sought to establish whether any region of Pakistan allowed the import of vehicles without payment of applicable duties and taxes. Aurangzeb said there was no such provision, reinforcing the government’s position that vehicle imports remain subject to the applicable duties and taxes. The clarification is significant because discussions around special concessions and vehicle import schemes have often raised questions about whether certain regions or categories of importers receive exemptions from normal taxation. Policy Focuses On Genuine Personal Use The latest changes mark a significant tightening of Pakistan’s used vehicle import framework. By removing the Personal Baggage Scheme and imposing additional requirements on the remaining schemes, the government is seeking to distinguish genuine personal imports from commercial activity. For overseas Pakistanis, the new three-year interval, 850-day stay requirement and one-year non-transferability condition could make the import process more restrictive. At the same time, the government says the retained schemes will continue to facilitate overseas Pakistanis who meet the requirements and genuinely want to import vehicles for personal use. The policy could also reduce opportunities for businesses or individuals that previously relied on personal import schemes to bring used vehicles into Pakistan for resale.

Trump Threatens ‘Tremendous’ Economic Consequences For Countries Supporting Iran
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Trump Threatens ‘Tremendous’ Economic Consequences For Countries Supporting Iran

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US President Donald Trump on Wednesday announced a major new economic campaign against Iran, threatening “tremendous” consequences for countries, businesses and financial institutions that continue to provide economic support or services to Tehran. Trump said the campaign would amount to an unprecedented level of economic warfare and isolation as the US-Iran conflict approaches its sixth month, with the Strait of Hormuz still facing severe disruption and diplomatic efforts showing little sign of producing an immediate settlement. “Today, I am announcing the MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY!” Trump wrote on his Truth Social platform, describing the campaign as “Economic Warfare and Isolation on an unprecedented scale”. He warned that any country allowing its financial institutions, companies, airports or government bodies to provide what he called a “lifeline” to Iran would face severe economic consequences. Trump did not specify what measures Washington would impose on countries that violate the new policy and did not identify any country other than Iran. Trump Targets Iran’s Financial And Oil Networks Trump listed several activities that he said must stop, including oil smuggling, swap lines, cash transfers, exchange houses, ship registries and front companies. The announcement suggests that Washington intends to expand its efforts beyond sanctions directly targeting Iranian entities and increase pressure on international businesses and governments that facilitate Iran’s trade and financial transactions. The US Treasury has already been pursuing a sanctions campaign known as Operation Economic Fury, aimed at restricting Iran’s access to revenue and financial networks. Trump’s latest announcement could broaden that campaign by targeting third-country institutions and businesses that maintain economic links with Tehran. The move comes as the administration faces increasing pressure over the economic and military costs of the conflict. With the November elections approaching, the impact of the war on US consumers, energy markets and military resources could become an increasingly important domestic political issue. US Threatens Wider Economic Isolation US Treasury Secretary Scott Bessent said last week that Washington was preparing to intensify efforts to isolate Iran economically. Bessent described the strategy as part of a broader two-pronged campaign involving economic isolation and a US naval blockade. The US administration has argued that cutting Iran’s access to international revenue and trade would increase pressure on Tehran and weaken its ability to sustain the conflict. However, Iran has rejected the strategy and accused Washington of using economic pressure after failing to achieve its military objectives. Iranian Foreign Minister Abbas Araghchi said the US economic campaign was a diversion from America’s own economic problems. He warned that increasing pressure would not force Iran to surrender and argued that continuing what he called failed policies would deepen hostility toward the United States. Iran Rejects US Economic Pressure Iran has maintained a defiant position despite months of military and economic pressure. The conflict began on February 28, when US and Israeli forces launched attacks against Iran. Tehran responded with missile and drone strikes targeting locations across the region. The fighting has disrupted regional trade and significantly reduced shipping activity through the Strait of Hormuz, one of the world’s most important energy routes. Iran’s ability to threaten shipping through the strategic waterway has become a major source of leverage during the conflict. The Strait of Hormuz normally carries a significant portion of global oil shipments, making prolonged disruption a major concern for energy-importing countries. Strait Of Hormuz Remains Choked The latest economic escalation comes as the Strait of Hormuz remains significantly restricted. A framework for a US-Iran agreement aimed at reopening the waterway collapsed, while both sides have continued exchanging conflicting messages over possible negotiations. Trump said earlier on Wednesday that US military efforts were helping ships navigate through the strait and claimed that “a lot of boats are coming through”. According to reports, US forces have been facilitating the movement of around 15 to 20 ships each night, although the traffic represents only about half the daily oil shipment volume seen before the war. The reduced flow through the waterway has continued to raise concerns about global energy supplies and shipping costs. Trump Calls For Allies To Isolate Iran Trump has called on US allies to support Washington’s strategy. “We need all of our Allies to stand with the United States of America to isolate, and defeat, the Iran threat,” he said. The statement comes after the United Arab Emirates announced that it was suspending economic dealings with Iran following an incident involving ballistic missiles. The UAE has historically maintained significant economic and cultural ties with Iran and has been an important trading partner for the country despite longstanding US sanctions. A broader campaign against countries conducting business with Iran could therefore have consequences well beyond Tehran. Companies involved in shipping, banking, energy trading and other international commercial activities could face increased compliance risks if Washington expands secondary sanctions or other economic penalties. Economic Pressure Could Affect Global Markets The intensified US campaign could also increase uncertainty across global energy and financial markets. Any further restrictions on Iranian oil exports could tighten global crude supplies, particularly if the Strait of Hormuz remains partially blocked. Higher oil prices could increase transportation and manufacturing costs in countries that rely heavily on imported energy. For Pakistan and other energy-importing economies, prolonged disruption in the Gulf could also raise fuel import bills and increase pressure on foreign exchange reserves. The conflict has already forced several countries to reconsider their energy supply routes and dependence on Gulf shipping corridors. Trump’s latest announcement indicates that Washington is preparing to widen the economic dimension of the conflict rather than relying solely on military pressure. Iran, meanwhile, has shown no indication that it intends to accept the US demands. With military operations continuing, shipping through the Strait of Hormuz constrained and diplomatic channels uncertain, the new US economic campaign could further escalate tensions and increase the international economic consequences of the conflict.

Nishat Mills Exits Turkish Dairy JV at Rs5 Per Share Amid Industry Strain
Pakistan

Nishat Mills Exits Turkish Dairy JV at Rs5 Per Share Amid Industry Strain

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Nishat Mills Limited has decided to exit its dairy joint venture with Turkish partner Sütaş, citing difficult market conditions and regulatory challenges that have placed significant pressure on the business. The company’s Board of Directors, in an emergent meeting held in Lahore, approved the complete divestment of its 49.10% stake in Nishat Sutas Dairy Limited to its Turkish partner. The proposed transaction will allow Sütaş to take full ownership of the dairy venture, subject to the required shareholder approval and completion of other formalities. Why Is Nishat Mills Exiting the Dairy Business? Nishat Mills has pointed to the challenging operating environment facing Pakistan’s dairy industry as a key reason behind the decision. Rising input and energy costs, regulatory hurdles and weak returns have made it increasingly difficult for dairy businesses to maintain profitability. These pressures have also affected the financial position of Nishat Sutas Dairy. Rather than committing additional capital to an underperforming investment, Nishat Mills appears to be opting for an exit and redirecting resources toward areas with stronger strategic potential. The decision reflects a broader challenge for businesses operating in Pakistan’s food and agriculture sectors, where changing costs, pricing pressures and regulatory uncertainty can significantly affect investment returns. Nishat Sutas Dairy Stake to Be Sold at Rs5 Per Share One of the most notable aspects of the transaction is the proposed Rs5-per-share sale price. Nishat Mills plans to sell its entire 49.10% holding in Nishat Sutas Dairy to Sütaş at this price. The low valuation is likely to attract considerable attention from shareholders, particularly given the investment made in establishing and developing the joint venture. The proposed price raises an important question: does it represent fair value for an underperforming business, or does it reflect a distressed exit following prolonged financial pressure? The answer will depend on the dairy company’s financial position, accumulated losses, assets, future prospects and other commercial terms associated with the transaction. Turkish Partner Sütaş to Take Full Control Following the proposed divestment, Sütaş will become the sole owner of the dairy operation in Pakistan. The Turkish dairy company has agreed to acquire Nishat Mills’ stake and continue operating the plant. For Sütaş, acquiring the remaining stake provides an opportunity to take complete control of the business and determine its future strategy without the constraints of a joint-venture ownership structure. The continuation of the plant also suggests that the Turkish partner remains interested in maintaining a presence in Pakistan’s dairy market despite the sector’s current difficulties. However, the transaction also means that a venture originally established with a major Pakistani corporate group will move toward full Turkish ownership. Shareholders Still Need to Approve the Deal The proposed transaction is not yet final. Nishat Mills has scheduled an Extraordinary General Meeting (EOGM) for September 23, 2026, in Lahore, where shareholders will consider the proposed divestment. The company’s share books will remain closed from September 17 to September 23, 2026, for the purpose of determining shareholder eligibility for the meeting. The official disclosure states that the proposed transaction is in the best interest of Nishat Mills and its shareholders. The final outcome will therefore depend on shareholder approval as well as completion of the applicable regulatory and corporate requirements. What Does the Exit Mean for Nishat Mills? From Nishat Mills’ perspective, the divestment could be viewed as an exercise in capital discipline. Large diversified groups regularly reassess investments that fail to generate adequate returns. Exiting a non-core business can prevent further capital from being tied up in an underperforming asset. If the dairy venture has limited prospects of delivering attractive returns without substantial additional investment, selling the stake could allow Nishat Mills to concentrate on its stronger business areas. However, the Rs5-per-share sale price means investors will naturally examine whether the company has been able to recover a reasonable value from its investment. The transaction may therefore be interpreted in two different ways. Supporters could view the move as prudent capital allocation and an opportunity to stop further losses. Critics could argue that selling the stake at such a low price indicates that the joint venture failed to generate the returns originally expected. Pakistan’s Dairy Industry Under Pressure The Nishat Sutas development also highlights the wider difficulties facing Pakistan’s dairy industry. The sector has long faced challenges related to milk procurement costs, energy prices, inflation, processing expenses, consumer affordability and regulatory uncertainty. Dairy businesses must balance rising production costs with consumers’ limited ability to absorb higher prices. Energy costs are particularly important for large-scale dairy operations because refrigeration, processing, packaging and transportation all require significant power and fuel. When these costs rise faster than selling prices, profit margins can quickly come under pressure. The regulatory environment also remains an important consideration for investors. Changes in taxation, food standards, pricing policies and other regulations can influence the viability of long-term investments. A Warning Signal for Corporate Investment? Nishat Mills’ decision could also serve as a broader signal for investors considering Pakistan’s food-processing and agriculture-related industries. Pakistan has significant potential in dairy production because of its large livestock base and sizeable domestic consumer market. Yet transforming that potential into profitable large-scale businesses requires efficient supply chains, modern processing facilities, reliable energy supplies, competitive input costs and predictable regulations. The experience of Nishat Sutas Dairy demonstrates that strong market potential alone does not guarantee attractive investment returns. For corporate investors, the ability to manage operating costs and navigate regulatory conditions is becoming increasingly important. What Happens Next? The immediate next step is the shareholder vote scheduled for September 23, 2026. If shareholders approve the transaction and the remaining requirements are completed, Sütaş will acquire Nishat Mills’ entire 49.10% stake and take full control of Nishat Sutas Dairy. For Nishat Mills, the transaction could mark the end of its involvement in a difficult non-core investment. For Sütaş, it represents an opportunity to operate the Pakistani dairy business independently and determine whether restructuring or additional investment can improve its performance. Ultimately, the success of the exit should be judged not simply

Customs to Cut Physical Cargo Checks as Karachi Terminals Get More Scanners
Pakistan

Customs to Cut Physical Cargo Checks as Karachi Terminals Get More Scanners

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Karachi: Pakistan Customs is planning to rely more heavily on newly installed scanning facilities to reduce physical examination of cargo and speed up clearance at Karachi’s terminals. Chief Collector Customs Appraisement Wajid Ali, speaking at an interactive meeting with the Karachi Chamber of Commerce & Industry (KCCI), said scanners were specifically installed to minimise unnecessary physical inspections. Customs is coordinating with the Federal Board of Revenue (FBR) to ensure cargo is not subjected to repeated examinations where scanning facilities are available. Focus on Faster Cargo Clearance Wajid Ali said Customs would strengthen risk-management mechanisms to prevent cargo backlogs, particularly at the Karachi International Container Terminal (KICT). He stressed that closer coordination between Customs, terminal operators and the business community would be essential to improve cargo movement and reduce clearance delays. According to the Chief Collector, regular engagement with businesses helps authorities identify practical problems that may not become apparent through internal meetings or official directives. He added that resolving genuine operational issues quickly would benefit businesses while also improving clearance times, revenue collection and overall trade facilitation. Customs Considers Defined Processing Timelines The meeting also discussed the need for clearly defined timelines and measurable performance benchmarks for Customs procedures. Wajid Ali acknowledged that businesses are generally required to meet statutory deadlines, while corresponding timelines are not always established for processes where companies are waiting for action from Customs. He agreed that introducing clearer timelines should be considered at the policy level and could provide businesses with greater predictability. ADR Mechanism to Be Strengthened On the Alternative Dispute Resolution Committee (ADRC), Wajid Ali said amendments had been made to the relevant law and that a broader committee had been constituted under the leadership of a retired judge. The committee includes representatives from both Customs and the business community. He emphasised the need to make the mechanism fully operational so that disputes can be resolved more quickly and businesses can avoid lengthy litigation. Business Community Calls for More Automation Former KCCI President Zubair Motiwala welcomed the Customs leadership’s responsiveness but stressed that greater automation and clearly defined timelines were necessary to remove remaining bottlenecks. He particularly called for modernising the duty-calculation process, arguing that routine calculations should be handled through automated systems instead of requiring repeated approvals and unnecessary human intervention. According to Motiwala, greater automation could reduce processing times, minimise human errors and give businesses more certainty. He also welcomed the Green Channel mechanism and urged Customs to further expand technology-based facilitation for compliant businesses. KCCI Seeks More Customs Officers KCCI President Rehan Hanif also called for an increase in the number of Additional Collectors of Customs (ADCs). He said the shortage of ADCs was increasing the workload on existing officers and sometimes required businesses to approach senior officials for matters that could otherwise be handled at the ADC level. Hanif also suggested that examination assignments should be completed without unnecessary disruption when Customs officers are transferred or rotated. He proposed that once an examination is assigned, it should preferably be completed by the same officer or formally handed over to another officer to maintain continuity. More Transparency in Classification Decisions KCCI also urged Customs to upload Classification Committee decisions online on a timely basis. Making these decisions readily available could improve transparency and provide businesses with greater certainty when determining the appropriate classification of imported goods. The chamber also called for the ADRC to become fully operational with suitable representation from Customs and the business community. Calls to Restore Small-Vessel Export Operations Rehan Hanif further requested reconsideration of the discontinuation of small-vessel and launch operations for exports. He argued that such vessels could provide an alternative logistics channel during potential regional disruptions affecting conventional maritime operations. The discussions reflect a broader push by Pakistan’s business community for greater automation, faster customs clearance, predictable procedures and technology-driven trade facilitation at Karachi’s major terminals.

RLNG Power Generation Cost Surges 242% To Rs47.4 Per Unit In July
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RLNG Power Generation Cost Surges 242% To Rs47.4 Per Unit In July

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The RLNG power generation cost in Pakistan surged by a record 242% to Rs47.4 per unit in July, rising sharply from less than Rs14 per unit in April as the government relied on expensive spot-market LNG cargoes after Qatar’s supplies were disrupted amid the US-Iran conflict. The sharp increase in RLNG-based generation costs has prompted power companies to seek an additional Rs2.52 per unit fuel cost adjustment (FCA) from consumers in September electricity bills. The proposed adjustment could impose an additional burden of around Rs36.5 billion on electricity consumers across the country. The National Electric Power Regulatory Authority (Nepra) has scheduled a public hearing for August 27 to determine whether the additional demand from power companies is justified. Expensive LNG Cargoes Push Up Power Costs The increase in RLNG costs was mainly driven by the government’s purchase of five expensive LNG cargoes from the spot market in July. Pakistan normally relies heavily on LNG supplies from Qatar, but shipments were suspended amid disruptions caused by the US-Iran conflict. This forced authorities to turn to the spot market, where LNG prices were considerably higher. RLNG accounted for around 11% of Pakistan’s total electricity generation in July. Despite this relatively limited contribution, the sharp increase in the cost of LNG-based generation had a significant impact on the overall fuel cost of electricity. The situation is expected to worsen in the coming months because RLNG prices increased by almost one-third again in August. Higher August RLNG costs could therefore translate into another increase in electricity bills, potentially affecting consumers through the October billing cycle. RLNG Price Jumps 32% In August The Oil and Gas Regulatory Authority (Ogra) notified a record 32% increase in RLNG prices for August. The regulator fixed the August RLNG price at $25.83 per million British thermal units (mmBtu) for Sui Northern Gas Pipelines Ltd (SNGPL) and $25.09 per mmBtu for Sui Southern Gas Company Ltd (SSGC). The imported LNG price translated into a retail RLNG price of around Rs7,204 per mmBtu, compared with approximately Rs5,450 per mmBtu in July. The August price was based on five LNG cargoes purchased from the international spot market after Pakistan was unable to secure shipments from Qatar. This represented the highest monthly increase in RLNG prices since the commodity was introduced into Pakistan’s energy mix around a decade ago. RLNG prices had already increased by around 15% in July compared with June. Compared with the February rate of $10.45 per mmBtu, equivalent to around Rs2,916, the August price represents an increase of approximately 148%. Power Companies Seek Rs36.5bn From Consumers The Central Power Purchasing Agency (CPPA) has filed a petition seeking a higher FCA for electricity consumed during July. According to the petition, electricity consumption increased by around 6% year-on-year during the month. Power consumption stood at approximately 14,501 GWh in July, compared with 13,666 GWh during the same month last year. The reference fuel cost for July was set at Rs7.093 per unit, but the actual fuel cost reached around Rs9.61 per unit. The difference has resulted in the proposed Rs2.52 per unit FCA. If approved by Nepra, the adjustment would be recovered from consumers of ex-Wapda distribution companies as well as K-Electric through September electricity bills. The total additional amount is estimated at approximately Rs36.55 billion. Cheaper Sources Dominate Power Generation The higher FCA demand has raised questions about the impact of expensive LNG generation because a significant portion of Pakistan’s electricity came from relatively cheap or zero-fuel-cost sources during July. Around 40% of total electricity generation came from hydropower, which carries no direct fuel cost. Local coal accounted for about 11%, while local gas contributed approximately 6.5%. Nuclear power provided around 10.1% of the electricity supply, although its contribution was lower than the previous month. Wind projects contributed around 4.5%, while solar accounted for approximately 0.7% and bagasse-based generation contributed around 0.3%. This means that roughly 73% of electricity generation came from cheaper domestic or zero-fuel-cost sources, yet the sharp rise in LNG costs significantly increased the overall fuel cost. Imported RLNG Far More Expensive Than Local Fuels The cost difference between RLNG and other fuels further highlights the pressure created by expensive spot-market LNG. Local coal-based power generation cost around Rs10.42 per unit, compared with Rs16.34 per unit for imported coal. Local gas generation cost approximately Rs13.80 per unit, while RLNG-based generation cost surged to Rs47.38 per unit. Nuclear generation remained among the cheaper sources, with a fuel cost of around Rs3 per unit in July, compared with Rs2.85 per unit in June. High-speed diesel and furnace oil also contributed to the increase in fuel costs, but their combined share of total generation was only around 1.63%. Generation from these expensive fuels cost approximately Rs55 per unit for diesel and Rs50 per unit for furnace oil. Consumers Face More Electricity Cost Pressure The latest developments indicate that Pakistan’s electricity consumers could face continued pressure from higher fuel costs in coming months. Nepra has already approved an additional Rs9.8 billion burden on consumers by allowing a 75-paisa-per-unit increase in fuel costs for August billing. The proposed July FCA would add another substantial amount if approved. More importantly, the August increase in RLNG prices could create another round of higher generation costs. Pakistan’s dependence on imported LNG exposes the power sector to international prices, shipping disruptions and geopolitical developments. The suspension of Qatar supplies has demonstrated how quickly disruptions to LNG shipments can affect electricity generation costs. As Nepra prepares to examine the latest FCA request, consumers face the possibility of another increase in electricity bills at a time when higher energy costs are already putting pressure on households and businesses.

Prime Minister Muhammad Shehbaz Sharif's Message on World Humanitarian Day 19 August 2026
Business

Prime Minister Muhammad Shehbaz Sharif’s Message on World Humanitarian Day 19 August 2026

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On World Humanitarian Day, Pakistan joins the international community in reaffirming its commitment to the noble values of humanitarian service, compassion, human dignity and solidarity.Pakistan also pays tribute to all humanitarian workers, institutions and organizations that dedicate their lives to the higher cause of serving humanity and advancing human welfare. World Humanitarian Day is observed every year in memory of the 22 humanitarian workers who lost their lives in the bombing of the United Nations compound in Baghdad, Iraq, in 2003. The day honours the sacrifices,the courage and selflessness of humanitarian workers serving in the areas affected by crises and disasters. It is a matter of great pride for us that Pakistan is among those countries that have consistently demonstrated compassion for humanity at the international level and translated this commitment into meaningful action. Pakistan’s contribution to United Nations peacekeeping missions has always been significant and commendable. Pakistan has a long and proud tradition of standing in solidarity with and extending support to those in need within the international community. Our nation has demonstrated generosity, steadfastness and compassion through decades of hosting millions of Afghan refugees and providing assistance during humanitarian crises at the regional and global levels. This enduring spirit of humanity, hospitality and mutual support is a true reflection of our national character.At the domestic level, our constitutional values and national traditions likewise embody our humanitarian ethos. The protection of the rights and dignity of vulnerable and marginalized segments of society remains among the foremost priorities of the Government of Pakistan. Through effective measures, the Government is striving to build an inclusive, equitable and empowered society providing individual with equal access to opportunities without discrimination on the basis of colour or race. Over the past year, the Ministry of Human Rights has translated policy commitments into meaningful actions through a network of welfare centres, training institutions and protection facilities. In this regard, the Ministry of Human Rights is undertaking measures to promote social inclusion of Special persons as well as to ensure their access to essential civic services and facilities.The Government is also taking special measures to promote women’s participation in the social and economic spheres, enabling the full potential of humanity to be harnessed without discrimination on the basis of gender. At the grassroots level, the protection of vulnerable and marginalized segments of society, promotion of gender equality, protection of children and empowerment of young people are essential steps for advancing human rights, social justice and social welfare. On this World Humanitarian Day, Pakistan reaffirms its national commitment to remain guided by its constitutional values and to stand firmly for the highest ideals of humanity in times of peace as well as in times of crisis. We will continue to strive to ensure that vulnerable segments of society receive the protection and support they deserve and have opportunities to live with dignity.

ADB Technical Assistance for Pakistan Exposes Governance Failures Blocking Investment
Pakistan

ADB Technical Assistance for Pakistan Exposes Governance Failures Blocking Investment

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The Asian Development Bank has proposed ADB technical assistance for Pakistan worth $750,000 US Dollars to address governance weaknesses, poor public financial management and institutional capacity gaps that continue to restrict investment and economic competitiveness. The proposal is significant because it identifies problems that Pakistan has struggled with for years despite repeated reform programmes, budget measures and institutional restructuring. The ADB says weak governance, regulatory uncertainty, fragmented oversight and limited institutional capacity are creating serious obstacles for both the public and private sectors. The proposed Supporting Public Sector Reform and Institutional Capacity in Pakistan facility will provide technical support for policy diagnostics, institutional assessments, project preparation and capacity building at federal and provincial levels. However, the relatively small financial size of the programme should not distract from the larger issue. Pakistan does not primarily suffer from a shortage of reform recommendations. It suffers from weak implementation, inconsistent enforcement and limited institutional accountability. Weak Public Financial Management Remains a Major Risk The ADB has highlighted Pakistan’s narrow tax base, rigid government expenditures and weak budget controls as major weaknesses in public financial management. These problems directly affect the government’s ability to collect revenue and spend public money efficiently. A narrow tax base forces the government to depend heavily on a limited number of taxpayers and indirect taxes, while rigid expenditures leave less room for productive development spending. The proposed ADB technical assistance for Pakistan will support diagnostic assessments and policy recommendations aimed at strengthening public financial management. The programme will also support institutional capacity building through training and engagement with key stakeholders. But technical advice alone will not solve Pakistan’s fiscal problems. The real test will be whether government institutions actually implement the recommendations and whether reforms survive political and administrative changes. Regulatory Uncertainty Continues to Frighten Private Investors The ADB has also identified complex regulations, weak enforcement, fragmented oversight and limited transparency as barriers to private investment. For businesses, unpredictable regulation can be almost as damaging as high taxes. Investors need to know that rules will remain stable, approvals will be transparent and contracts will be enforceable. Judicial delays add another layer of uncertainty. The ADB says delays in the legal system are weakening business confidence and increasing the cost of doing business. This criticism deserves serious attention. Pakistan frequently announces investment incentives while leaving investors to navigate complicated regulatory procedures, overlapping authorities and lengthy dispute resolution processes. Without institutional reform, investment promotion campaigns risk producing headlines rather than sustainable capital inflows. Balochistan Faces a More Serious Institutional Challenge The ADB has specifically highlighted Balochistan, where outdated systems and limited institutional capacity are undermining public financial management. The proposed programme will support efforts to improve PFM systems in the province while also strengthening federal financial management. The focus on Balochistan is important because weak provincial institutions can prevent development spending from producing meaningful economic results. Better systems for budgeting, procurement, monitoring and accountability could improve the effectiveness of public investment. Can ADB Assistance Deliver Real Reform The ADB technical assistance for Pakistan offers a useful opportunity to diagnose institutional weaknesses and prepare practical reforms. It will also support the development of the Trade and Logistics for Private Sector Competitiveness Project and strengthen the readiness of future ADB financed initiatives. Yet Pakistan should not confuse technical assistance with economic reform itself. The central challenge is implementation. Pakistan has produced countless policy reports and reform plans. What remains missing is consistent execution, institutional accountability and political commitment. If the proposed ADB support leads to measurable improvements in budgeting, taxation, regulation, procurement and institutional performance, its impact could extend far beyond the $750,000 dollar assistance package. If recommendations remain trapped in government files, however, the programme will become another example of Pakistan identifying problems it already knows how to describe but struggles to solve.

Despite Govt's Big Claims, FDI Inflows Fall 20% to $178.6 Million in July FY27
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Despite Govt’s Big Claims, FDI Inflows Fall 20% to $178.6 Million in July FY27

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Pakistan’s net Foreign Direct Investment (FDI) fell 20.1% year-on-year to $178.6 million in July FY27, highlighting continued challenges in attracting long-term foreign capital despite the government’s efforts to promote investment. According to State Bank of Pakistan data, net FDI stood at $223.5 million in July FY26. The latest decline reflects weaker gross inflows alongside higher capital outflows. Gross FDI Inflows Decline Gross FDI inflows dropped 8.8% to $304 million in July FY27, compared with $333.5 million during the same month last year. At the same time, capital outflows increased 13.9% to $125.4 million, up from $110.1 million in July FY26. The combination of lower inflows and higher outflows resulted in the significant decline in net FDI. Portfolio Investment Provides Some Support While direct investment weakened, Pakistan saw improvement in portfolio investment. Foreign private investment increased 3.8% to $197 million, supported largely by a strong recovery in portfolio equity securities. Portfolio equity investment recorded a net inflow of $18.4 million, compared with a net outflow of $33.8 million in July FY26. This represents a 154.4% year-on-year improvement. The recovery suggests that foreign investors showed greater interest in Pakistan’s financial markets, even as long-term direct investment remained under pressure. Foreign Public Investment Turns Positive Foreign public investment also recorded a positive trend. The sector registered a net inflow of $7.5 million in July FY27, compared with a net outflow of $10.8 million during the same period last year. This represents a 169.4% year-on-year improvement. Supported by stronger portfolio and public investment flows, total foreign investment in Pakistan increased 14.3% to $204.5 million, compared with $178.9 million in July FY26. FY26 FDI Remains Under Pressure The broader trend remains challenging. Pakistan’s net FDI during FY26 stood at $1.672 billion, down 32.5% from $2.477 billion in FY25. The latest annual figure was also below the $2.347 billion recorded in FY24, indicating that Pakistan has yet to regain the stronger levels of direct investment seen previously. Long-Term Investment Remains the Key Challenge The July figures present a mixed picture for Pakistan’s external investment position. While portfolio investment and foreign public investment improved, the 20.1% decline in FDI points to continued difficulties in attracting stable, long-term capital. For policymakers, the challenge is not simply increasing headline investment numbers but creating conditions that encourage foreign companies to establish and expand long-term operations in Pakistan. Improved policy consistency, regulatory certainty, infrastructure, energy availability and investor confidence will remain important factors in determining whether FDI can recover in the coming months.

SBP Housing Finance Regulations Expand Home Loans With 30 Year Tenor
Pakistan

SBP Housing Finance Regulations Expand Home Loans With 30 Year Tenor

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The State Bank of Pakistan has overhauled its housing finance framework, introducing revised SBP housing finance regulations that could significantly change how banks and development finance institutions provide home loans. The new rules take immediate effect and replace several regulatory instructions issued between 2019 and 2021. The move comes as Pakistan continues to struggle with a major housing shortage, high construction costs and limited access to affordable formal financing. Under the revised framework, banks and DFIs can finance the purchase of houses and apartments, construction on an owned plot, purchase of a plot followed by construction, home extensions, expansion and renovation. Financing is also permitted for renewable energy solutions installed in residential properties. The broader scope is a positive development. However, the real test will be whether banks actually become more willing to lend to ordinary households rather than simply having a more modern regulatory framework on paper. 30 Year Housing Finance and 90 Percent LTV Limit One of the most significant changes under the SBP housing finance regulations is the maximum financing tenor of 30 years. Renewable energy financing for housing units can have a maximum tenor of 10 years. The maximum loan to value ratio has been set at 90 percent. In practical terms, eligible borrowers may be able to obtain financing covering up to 90 percent of the property value, subject to the banks assessment and other applicable conditions. This could reduce the upfront financial burden for homebuyers. Yet affordability remains a serious concern. A higher financing ratio does not automatically make housing affordable when property prices, construction costs and household incomes remain under pressure. Monthly Debt Payments Capped at 65 Percent of Income The revised rules state that total monthly amortization payments for the proposed housing loan and all other outstanding consumer financing obligations cannot exceed 65 percent of the borrowers net disposable income. This requirement is intended to prevent excessive household borrowing and reduce credit risk for banks. However, the 65 percent threshold deserves scrutiny. For lower and middle income families, allocating such a large share of disposable income toward debt repayment could leave limited room for food, education, healthcare, utilities and other essential expenses. The regulation may therefore protect financial institutions more effectively than it protects financially stretched households unless banks apply prudent affordability assessments. New Rules Target Informal Income Borrowers A major feature of the revised framework is its recognition of informal income. Banks and DFIs have been directed to use informal income estimation models circulated by the Pakistan Banks Association when assessing borrowers whose earnings are not supported by conventional salary documentation. This could be particularly important in Pakistan, where a large section of economic activity operates outside formal payroll structures. The success of this measure will depend heavily on how accurately banks assess informal earnings. If lenders remain excessively conservative, millions of potential borrowers could continue to remain outside the formal housing finance market despite the regulatory change. Property Valuation and Insurance Requirements Tightened For housing finance of up to Rs5 million, banks and DFIs may extend loans by placing a lien on the property. This can include properties supported by a Green Property Certificate issued by the Punjab Land Records Authority or an equivalent certificate from another provincial authority. For financing exceeding Rs10 million, property valuation by a Pakistan Banks Association panel valuator is mandatory. Banks and DFIs must also obtain comprehensive insurance or takaful coverage for financed housing units. Standardized financing documents issued by the Pakistan Banks Association are required, while digital signatures must be authenticated through one time passwords or other two factor authentication methods. These measures should improve documentation and reduce fraud risks, although additional compliance requirements could also increase transaction costs and processing times. Stricter Classification for Troubled Housing Loans The revised SBP housing finance regulations introduce a four tier asset classification framework consisting of OAEM, Substandard, Doubtful and Loss. Loans become subject to different classifications after overdue periods of 90 days, 180 days, one year and two years respectively. Provisioning will be determined using IFRS 9 Expected Credit Loss requirements or Forced Sale Value based calculations, whichever results in the higher provision. The Forced Sale Value benefit will expire five years after classification. The framework also limits rescheduling or restructuring of housing finance to once during any two year period. Any extension of tenure is capped at five years and remains subject to the overall 30 year maximum. Simplified Applications Could Help Unlock Housing Finance Banks and DFIs are also required to introduce simplified and standardized loan application forms for formal salaried individuals, formal businesses and informal income borrowers. These forms must be available in both physical and digital formats and in Urdu and English. This is arguably one of the most practical elements of the new framework. Complicated documentation has long discouraged potential borrowers from entering the formal housing finance system. The bigger question is implementation. Pakistan has repeatedly introduced financial inclusion reforms, but the gap between regulation and actual bank behavior remains significant. What the New SBP Housing Finance Regulations Really Mean The revised framework represents a substantial regulatory reset for housing finance. Longer repayment periods, a 90 percent LTV ceiling, recognition of informal income and financing for renewable energy could widen access to formal housing credit. But regulations alone will not solve Pakistan’s housing crisis. Banks must become more responsive to genuine borrowers, property records must become increasingly digitized and transparent, and lending assessments must balance risk management with realistic household affordability. The SBP housing finance regulations create an opportunity to expand mortgage finance, but their success will ultimately be measured not by the number of rules issued, but by whether more Pakistani families can actually secure affordable financing to buy, build or improve their homes.

The Boardroom PK delivers trusted business news, analysis, and insights from Pakistan and beyond, keeping readers informed, inspired, and ahead in the evolving world of business and leadership.

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