Pakistan

Karachi: Mr. Saquib Fayyaz Magoon, Acting President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has called upon the Government of Pakistan to conduct a comprehensive review of all existing Free Trade Agreements (FTAs) in order to curtail trade deficit – extending benefits of those agreements to Pakistani exporters as well. We need to negotiate and activate the pending FTAs on the same lines to avoid any further disadvantageous positions in future, he added. It is pertinent to note that Rana Tanveer Hussain, Federal Minister for National Food Security & Research, has consulted FPCCI in detail over the recent decline in food exports of Pakistan. The minister informed the apex body that his initiative is based on Prime Minister of Pakistan’s advice to take the business on board. Read More: https://theboardroompk.com/exports-plunge-15-pakistans-jul-nov-trade-deficit-widens-to-15-54-billion/ Rana Tanveer Hussain acknowledged that there are genuine and valid concerns of the business, industry and trade community of Pakistan – which need to be addressed to reverse the decline in exports. He assured FPCCI that the government will seek diligent consultative process with them in taxation, industrial, sectorial and export promotion initiatives. Rana Tanveer Hussain stated that the Ministry of National Food Security & Research and its subsidiary institutions are rigorously and tirelessly working to provide best quality seeds in ample quantities in a timely fashion. He also committed that he will bring federal secretaries of the relevant ministries in his next visit to the FPCCI. Mr. Saquib Fayyaz Magoon, Acting President FPCCI, identified that there are three major areas of concern vis-à-vis declining food and agro-based exports; namely, the need to renegotiate FTAs with major trading partners, provision of top quality seeds for major crops and facilitation to agriculture industry and their exporters in meeting compliance standards of various industries and regions. Mr. Saquib Fayyaz Magoon maintained that a joint meeting of Federal Minister of National Food Security; Federal Minister of Commerce and FPCCI is essential for result-oriented, data-driven and holistic dialogue on the issues pertaining to agricultural production, supply chain and exports issues. Mr. Saquib Fayyaz Magoon underscored that the foundation of a robust export economy lies in the quality of its primary produce. The Federation demanded the immediate implementation of the national seed supply to ensure high-yield varieites through the introduction of climate-resilient varieties along with investment in R&D and increased collaboration between the private sector and research institutes to end dependence on imported seeds. Mr. Aman Paracha, VP FPCCI, speaking during the high-level consultative session, highlighted that Pakistan’s current trade agreements require urgent renegotiation to address growing trade deficits and to provide a more level playing field for local industries and the agricultural sector for economic equity. Aman Paracha emphasized that while FTAs are intended to enhance market access, several existing agreements have resulted in an influx of imports without a reciprocal growth in Pakistani exports. “We need a ‘Trade-First’ diplomacy approach,” stated Aman Paracha. “Existing FTAs must be reviewed to include more value-added agro-based products and to remove non-tariff barriers that currently hinder our penetration into export markets.” Mr. Tariq Jadoon, VP FPCCI, stressed upon the need for an urgent focus on export compliance in lieu of the increasing global requirements for traceability and food safety. Pakistan’s agricultural exports face significant risks, if compliance standards are not modernized, he added. “Compliance is no longer optional; it is a prerequisite for survival in the global value chain,” said Mr. Tariq Jadoon. The Federation urged the government to accelerate the technical support to exporters to meet Sanitary and Phytosanitary (SPS) standards; particularly for the EU, UK, and Gulf markets. FPCCI concluded by recommending the establishment of a joint public-private task force to oversee the standardization of export-oriented crops. By combining better seed technology with rigorous international compliance, Pakistan can potentially double its agro-based exports within the next five years.

Pakistan has received more than $3 billion in foreign assistance during the first five months of fiscal year 2026 (July-November 2025), primarily in the form of loans. This adds to the country’s already substantial external debt stock, estimated at around $130-135 billion as of late 2025. While these inflows provide short-term relief for foreign exchange reserves, the heavy reliance on debt financing raises concerns about future repayment sustainability. Surge in Loans: $2.52 Billion Added to Debt Stock Of the total disbursements exceeding $3 billion, approximately $2.52 billion came as loans—a 46% increase from the same period last year—while grants fell sharply by 43% to just $54 million. Multilateral institutions led with $1.26 billion in loans and grants, including major contributions from the Islamic Development Bank ($383 million), World Bank’s IDA ($343 million), ADB ($242 million), and IBRD ($182 million). Bilateral loans totaled $808 million, notably a $500 million oil facility from Saudi Arabia and support from China. Diaspora investments in Naya Pakistan Certificates contributed nearly $966 million, which are debt-like instruments. These new loans directly increase Pakistan’s external obligations, pushing the debt burden higher amid limited grant support. Future Repayment Pressure: Risk of Debt Trap Looms Pakistan faces significant repayment challenges ahead, with external debt servicing projected to consume a large portion of exports and revenues. For FY26, gross external repayments are estimated at around $20 billion, including rollovers of bilateral deposits. Debt servicing already absorbs nearly half of the federal budget in some years, crowding out spending on development and social sectors. With external debt at over 30% of GDP and ongoing reliance on fresh borrowing to repay old debts, analysts warn of heightened vulnerability to economic shocks, currency devaluation, and potential debt distress if export growth and remittances do not accelerate. Sustained rollovers from allies like China and Saudi Arabia remain critical, but long-term fiscal reforms are essential to ease the repayment burden.

In a landmark auction on December 23, 2025, the Arif Habib consortium emerged victorious in the privatisation of Pakistan International Airlines (PIA), securing the national flag carrier with a final bid of Rs135 billion. The transparent process, live-telecast from Islamabad, marked Pakistan’s largest privatisation transaction in nearly two decades and the second attempt after a failed bid last year. Intense Bidding Rounds Seal Historic Deal Three pre-qualified bidders participated: the Arif Habib consortium, Lucky Cement, and Airblue. Initial sealed bids were Rs115 billion (Arif Habib), Rs101.5 billion (Lucky Cement), and Rs26.5 billion (Airblue). Airblue withdrew early as its offer fell below the Rs100 billion reference price.In the second round, Lucky Cement raised its bid to Rs134 billion, but Arif Habib countered with Rs135 billion, prompting Lucky Cement to concede. The government offered at least 75% stakes, with the winner having 90 days to acquire the remaining 25%. Government Hails Transparent Process and Future Prospects Finance Minister Muhammad Aurangzeb praised the all-Pakistani bidders, stating the sale would “stop the bleeding” of losses and position PIA globally. Privatisation Adviser Muhammad Ali emphasised the need for investment to expand the fleet from 18 aircraft and restore the airline’s former glory.Prime Minister Shehbaz Sharif highlighted the process’s transparency, with sealed envelopes and live streaming. Unsuccessful bidders are barred from future management roles. The deal aims to attract further local and foreign investment, turning PIA from a liability into a competitive carrier.

Islamabad, December 23, 2025 – The Federal Board of Revenue (FBR) has released its long-delayed Biannual Review for the second half of fiscal year 2024-25, revealing a significant 54.7% year-on-year increase in withholding tax (WHT) collection from salaried individuals during January-June 2024-25.Record Rs214.2 Billion Collected Under Section 149 Read More: https://theboardroompk.com/pakistans-wealth-gap-widens-top-10-hold-59-of-total-wealth-report-reveals/ Withholding tax deducted from salaries under Section 149 of the Income Tax Ordinance 2001 soared to Rs214.2 billion in the January-June period of FY2024-25, marking a substantial rise compared to the corresponding period in FY2023-24. This growth highlights the salaried class’s growing contribution to direct tax revenues, amid ongoing economic pressures and persistent high inflation.Broader Withholding Tax Trends Show Robust GrowthThe report also indicates strong performance across other withholding tax categories. Collections from contracts (Section 153) rose 39%, imports (Section 148) increased by 10.9%, telephone users (Section 235) grew 24.1%, and exports (Section 236) climbed 23.5%. These figures underscore the heavy reliance on withholding mechanisms for revenue mobilization, as WHT continues to form a major portion of FBR’s income tax receipts.The delayed release of the biannual data—six months after the period ended—comes as the government pushes for fiscal consolidation under international commitments. While the surge reflects effective deduction at source, it also intensifies the tax burden on formal sector employees, who remain one of the most compliant taxpayer segments in Pakistan.

Islamabad, December 22, 2025 – The Auditor General of Pakistan (AGP) has officially initiated the transition from the current cash-based government accounting system to an accrual-based framework, marking a landmark reform in public financial management. Currently, Pakistan’s government accounts, prepared on a cash basis since 2000, record transactions only when cash is received or paid. In contrast, accrual-based accounting recognizes revenues when they are earned and expenses when they are incurred, regardless of when actual cash changes hands. For instance, if a government department provides services in one fiscal year but receives payment in the next, accrual accounting records the revenue in the year the service was delivered. This method provides a more comprehensive view of financial position, including assets, liabilities, receivables, and payables, leading to greater accuracy in assessing fiscal health. Read More: https://theboardroompk.com/pakistans-circular-debt-crisis-is-stalling-1-billion-gas-field-investment/ Understanding Accrual-Based Accounting Accrual accounting, aligned with International Public Sector Accounting Standards (IPSAS), offers a fuller picture of government finances compared to cash-based systems, which can distort long-term obligations like pensions or debts. It enhances transparency by revealing true economic impacts of policies and improves decision-making through reliable data on commitments and resources. The AGP, exercising authority under Article 170 of the Constitution, is leading the review with technical assistance from the World Bank. The new standards will apply uniformly to federal, provincial, and local governments upon presidential approval. This move underscores the government’s commitment to fiscal discipline, accountability, and better governance. Officials stated that the shift will significantly elevate the quality of financial reporting, aligning Pakistan with global best practices for the first time.