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Climate Change Projects: Green Pakistan Programme Gets Rs2.3b in FY2026-27 Development Budget
Pakistan

Climate Change Projects: Green Pakistan Programme Gets Rs2.3b in FY2026-27 Development Budget

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The federal government has allocated Rs2.48 billion to the Climate Change and Environmental Coordination Division under the Public Sector Development Programme (PSDP) 2026-27, with the revised Green Pakistan Programme receiving the largest share of funds as authorities seek to strengthen climate resilience and promote sustainable development. According to the development programme, the Climate Change and Environmental Coordination Division will oversee four major projects during the upcoming fiscal year, focusing on environmental protection, climate adaptation, urban planning and green entrepreneurship. The total allocation for the division stands at Rs2.477 billion, including both local and foreign funding components. Green Pakistan Programme Receives Largest Allocation The government’s flagship Green Pakistan Programme (Revised) emerged as the biggest project under the ministry, receiving an allocation of Rs2.335 billion for FY2026-27. The overall cost of the programme stands at Rs122.15 billion, while expenditure up to June 2026 is estimated at around Rs34.96 billion. The project still carries a substantial throw-forward liability, reflecting the long-term nature of the initiative. The Green Pakistan Programme aims to promote afforestation, biodiversity conservation and ecosystem restoration across the country. It forms part of broader efforts to address the challenges posed by climate change and environmental degradation. Ministry to Strengthen Technical Capacity Another key project included in the PSDP is the Strengthening Technical Capacities of the Ministry of Climate Change and Environmental Coordination (STC-MoCC&EC). The project has an estimated cost of Rs916 million, while expenditure up to June 2026 is expected to reach approximately Rs58.6 million. The government has allocated Rs40.66 million for the scheme during FY2026-27. The initiative is aimed at improving institutional capacity and enhancing the ministry’s ability to formulate and implement climate-related policies and programmes. Green Entrepreneurship Project Included The PSDP also includes a project titled “Green Skills for Sustainable Development: Promoting Green Entrepreneurship and Innovation in Pakistan.” The project carries a total cost of Rs450 million, and the government has allocated Rs51.6 million for the next fiscal year. The initiative seeks to encourage environmentally friendly businesses and support innovation in green technologies. Authorities believe the project will help create new economic opportunities while promoting sustainable practices. The programme is also expected to contribute to the development of a skilled workforce capable of supporting Pakistan’s transition toward a greener economy. National Urban Strategy to Address Climate Risks In response to increasing concerns over floods, droughts and climate-related disasters, the government has included a project for the Formulation of National Urban Strategy and Guidelines to Reduce Impacts of Urban Flooding, Droughts, Climate Disasters and Spatial Planning Risks in Pakistan. The scheme has an estimated cost of Rs106.4 million. For FY2026-27, authorities have allocated Rs50 million, including support through foreign assistance. The project is designed to help develop comprehensive urban planning guidelines aimed at reducing the impact of climate-related emergencies and improving disaster preparedness. Experts have repeatedly stressed the need for better urban planning as Pakistan continues to experience increasingly frequent extreme weather events, including floods, heatwaves and drought conditions. Climate Change Remains a Key National Priority The government has identified climate resilience and environmental sustainability as important components of its broader development strategy for FY2026-27. The Planning Ministry has stated that projects contributing to environmental protection and sustainable development have been prioritised under the country’s economic roadmap. Besides investments in information technology, energy and infrastructure, the government has also placed emphasis on addressing climate-related challenges and ensuring sustainable growth. The PSDP 2026-27 has been formulated in a resource-constrained environment, prompting authorities to focus on high-impact projects while exercising strict control over the introduction of new schemes. Officials say the development programme seeks to balance economic growth with environmental protection and aims to strengthen Pakistan’s ability to cope with the growing risks posed by climate change.

Budget 2026-27 Expected to Exceed Rs17.5 Trillion, New Taxes and Salary Relief Under Consideration
Pakistan

Budget 2026-27 Expected to Exceed Rs17.5 Trillion, New Taxes and Salary Relief Under Consideration

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The federal government is expected to unveil a budget exceeding Rs17.5 trillion for fiscal year 2026-27, with proposals aimed at increasing revenue, providing relief to salaried individuals and promoting economic growth. According to budget proposals, the government has set a tax revenue target of Rs15.267 trillion and plans to generate around Rs1 trillion in additional revenue measures. New taxes worth Rs220 billion have also been proposed. Relief Expected for Salaried Class The government is expected to approve an increase in salaries and pensions as part of the new budget. Authorities are considering providing up to Rs50 billion in tax relief to salaried individuals. A proposal is also under consideration to increase the number of income tax slabs from six to eight. People earning more than Rs183,000 per month are likely to receive relief under the revised tax structure. The government is also considering reducing the tax rate for one income bracket from 25 percent to 20 percent. Meanwhile, new tax rates of 29 percent and 32 percent have been proposed for monthly incomes ranging between Rs467,000 and Rs583,000. The maximum tax rate of 35 percent is expected to remain unchanged for individuals earning more than Rs583,000 per month. Officials are also considering abolishing the surcharge currently imposed on annual incomes exceeding Rs100 million. New Measures for Electric Vehicles The budget proposals include changes for the automobile sector. Sales tax on imported electric vehicles may increase to 25 percent, while the existing taxation regime for hybrid vehicles is likely to remain unchanged. The government is also considering imposing a carbon levy on conventional vehicles. At the same time, incentives have been proposed to promote local electric vehicle manufacturing. Customs duty and sales tax on motors and batteries may be reduced to 1 percent, while exemptions from other taxes, including the Federal Excise Duty and Capital Value Tax, are also under consideration. Petroleum Levy Target Set at Rs1.7 Trillion The government plans to collect Rs1.727 trillion through the petroleum levy during the next fiscal year. Budget proposals also include imposing a Federal Excise Duty on naphtha and some other petroleum products to increase revenues. Growth Targets and Employment Plans The government has set a GDP growth target of: 3.8 percent for agriculture4 percent for industry4.5 percent for large-scale manufacturing4.2 percent for the services sector Authorities are aiming to create two million jobs during FY2026-27. The target includes: However, the trade deficit is projected to remain above $37 billion. Exports are expected to reach $32.8 billion, while imports are estimated at $70 billion. Development Spending to Reach Rs3.669 Trillion The national development plan is expected to amount to Rs3.669 trillion. The federal Public Sector Development Programme (PSDP) is proposed at Rs1 trillion, while provincial development programmes are expected to total Rs2.218 trillion. Budget proposals indicate reductions in development spending for Punjab, Sindh and Khyber Pakhtunkhwa. The government has also decided to limit new projects, with priority likely to be given to defence and internal security requirements. Debt Servicing and Defence Spending Debt servicing is expected to remain the largest expenditure item in the upcoming budget. The government has allocated approximately Rs7.824 trillion for interest payments on loans. Meanwhile, the defence budget is expected to stand at around Rs3 trillion. Tax Reforms Under Consideration The government is considering bringing cryptocurrency trading into the tax net. Proposals also include imposing capital gains tax ranging from 10 percent to 30 percent. A reduction of 1 to 2 percent in the super tax is also under consideration. Officials are reviewing the possibility of ending tax exemptions available to the former tribal districts. In addition, sales tax on some food items, including ghee, cooking oil and milk, may increase. The government is also planning stricter penalties for businesses that fail to install point-of-sale (POS) systems. Solar Panel Tax Proposal Withdrawn Authorities have decided not to increase taxes on solar panels and stationery items. Officials have also opted against making major changes to taxation on the stock market. The Federal Budget 2026-27 is expected to be formally presented later today.

Budget 2026-27 Set for Presentation as PPP Protests Over Sindh Water Share
Pakistan

Budget 2026-27 Set for Presentation as PPP Protests Over Sindh Water Share

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The federal budget for fiscal year 2026-27 is set to be presented in both houses of parliament today, with Finance Minister Muhammad Aurangzeb expected to unveil the government’s financial plan in the National Assembly. Although the budget speech was scheduled for 3pm, the National Assembly session had yet to begin at the time of reporting. Earlier, the federal cabinet approved the budget proposals during a meeting held at Parliament House, clearing the way for the formal presentation of the budget. PM Shehbaz Says Public Welfare Is Top Priority Ahead of the budget session, Prime Minister Shehbaz Sharif said the government’s financial plan had been prepared with “a lot of hard work and sincerity.” In a message posted on X, the premier said the welfare and prosperity of the people had been given the highest priority while formulating the budget. The prime minister also held a meeting with a delegation of the Muttahida Qaumi Movement-Pakistan (MQM-P), one of the government’s coalition partners, where both sides discussed matters related to the upcoming budget. PM Praises MQM-P’s Role During the meeting, Shehbaz Sharif described the MQM-P as an important ally of the government. He appreciated the party’s positive and constructive role in promoting economic stability, national development and the implementation of the government’s public welfare agenda. The meeting came as the ruling coalition continued consultations with allied parties ahead of the budget presentation. Bilawal to Skip Budget Session Meanwhile, the Pakistan Peoples Party (PPP), a key ally of the Pakistan Muslim League-Nawaz (PML-N)-led government, announced that its chairman Bilawal Bhutto Zardari would not attend the budget session. However, the party clarified that it was not boycotting the proceedings. In a statement posted on X, the PPP said some of its lawmakers would attend the session and that the party would continue to participate in the budget process in the national interest. The clarification came after weeks of consultations between the PPP and the federal government over issues related to the budget. PPP Lawmakers Protest Over Water Shortage Before the budget presentation, PPP lawmakers staged a protest inside the National Assembly over Sindh’s water share. Party members, including Shazia Marri, raised slogans and demanded that the province receive its due share of water. At one point, PPP members surrounded the Speaker’s dais before later returning to their seats. Holding a placard, Shazia Marri highlighted that Sindh was facing a 48 percent water shortage. The protesting lawmakers also chanted slogans calling for adequate water supplies for the province. “Give us water to drink and live,” they shouted during the protest. Budget Comes After Weeks of Coalition Consultations The budget presentation comes after several rounds of talks between the PML-N and the PPP aimed at addressing differences over fiscal matters and development priorities. Both parties eventually reached an understanding on key budget issues, allowing the coalition partners to move forward with the budget process. The Federal Budget 2026-27 is expected to outline the government’s economic priorities and measures aimed at maintaining stability while supporting growth and public welfare.

PPP Denies Budget Session Boycott, Says Bilawal Will Skip Proceedings but Party Will Participate
Pakistan

PPP Denies Budget Session Boycott, Says Bilawal Will Skip Proceedings but Party Will Participate

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The Pakistan Peoples Party (PPP) on Friday dismissed reports that it had decided to boycott the federal budget session, clarifying that while Chairman Bilawal Bhutto Zardari would not attend the proceedings, the party would remain part of the budget process in the national interest. In a statement posted on X, the PPP said the party had not taken any decision to boycott the session. “Chairman Bilawal will not participate in the budget session, but some members will. Under national interest, the PPP will be part of the budget process,” the party said. Rumours of Boycott Surface Speculation about a possible boycott emerged following a meeting of the PPP parliamentary party in Islamabad. Media reports suggested that the party had decided to stay away from the budget proceedings and that Bilawal had left Parliament and returned home. However, the party later rejected the reports and reiterated its commitment to participating in the budget process. Speaking to reporters earlier, Bilawal said that the mandate of the people in the upcoming Gilgit-Baltistan elections would not be allowed to be undermined. Dar Meets Bilawal Amid Speculation Soon after reports of a possible boycott surfaced, Deputy Prime Minister and Foreign Minister Ishaq Dar visited Bilawal at his office in Parliament House. Senator Sherry Rehman and Law Minister Azam Nazeer Tarar also attended the meeting. The development came as the government prepared to present the federal budget for fiscal year 2026-27. Government Set to Present Rs17.5 Trillion Budget The government is expected to unveil a consolidated budget worth Rs17.5 trillion, equivalent to around $61 billion, for the next fiscal year. Finance Minister Muhammad Aurangzeb is scheduled to present the spending plan in the National Assembly. The budget has been prepared under the framework of the International Monetary Fund (IMF) programme and is expected to include measures aimed at increasing revenues, reducing expenditures and maintaining fiscal discipline. At the same time, the government plans to provide relief to low-income groups and approve modest salary increases for public sector employees. The spending plan comes amid economic challenges and rising regional tensions that have continued to affect global markets and fuel prices. PPP Support Remains Crucial for Coalition The National Assembly has 336 seats, although 10 are currently vacant, leaving the strength of the house at 326 members. The ruling coalition currently enjoys the support of 237 lawmakers. The Pakistan Muslim League-Nawaz (PML-N) is the largest party in the alliance with 125 members. It is followed by the Muttahida Qaumi Movement-Pakistan (MQM-P) with 22 members, the Pakistan Muslim League-Quaid (PML-Q) with five, and the Istehkam-e-Pakistan Party (IPP) with four members. The coalition also includes representatives from the Pakistan Muslim League-Zia, Balochistan Awami Party and National Party, along with four independent members. The PPP, with 74 members, remains the second-largest party supporting the government. Its backing has played a key role in enabling the coalition to secure both a simple majority and, when required, a two-thirds majority in parliament. Opposition Holds 89 Seats Meanwhile, the opposition benches comprise 89 members. These include 75 independent lawmakers, 10 members from Jamiat Ulema-e-Islam-Fazl (JUI-F), and one member each from the Sunni Ittehad Council (SIC), Majlis Wahdat-e-Muslimeen (MWM), Balochistan National Party-Mengal (BNP-M) and Pashtunkhwa Milli Awami Party (PkMAP). The budget session is expected to witness extensive debate as lawmakers review the government’s economic priorities for the coming fiscal year.

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Pakistan

TRG Pakistan Legal Battle Deepens as US Court Restrains Zia Chishti from Global Litigation

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The TRG Pakistan legal battle has entered a critical new phase after a United States federal court temporarily barred the company’s founder and former chief executive, Zia Chishti, from pursuing litigation linked to claims that had already been deemed settled. The latest ruling has injected fresh drama into one of Pakistan’s most closely watched corporate disputes, a conflict that has stretched across courtrooms in Pakistan and the United States while reshaping the balance of power within TRG Pakistan. US Court Delivers Major Blow to Zia Chishti According to a notice submitted to the Pakistan Stock Exchange, the United States District Court for the Southern District of New York issued an order on June 10, 2026, restraining Zia Chishti from initiating or continuing legal proceedings anywhere in the world involving claims that had previously been released under a settlement agreement. The temporary order will remain in force until July 1, 2026. During this period, the court will decide whether broader and potentially long-term injunctive relief should be imposed. The ruling represents a significant legal setback for Chishti, who has remained at the center of an increasingly bitter corporate battle despite a sharp decline in his shareholding. Why the TRG Pakistan Legal Battle Matters The dispute goes beyond a disagreement between shareholders. It has evolved into a battle for influence over one of Pakistan’s most prominent listed technology investment companies. The New York court had already ruled on May 12, 2026, that claims involving conduct before January 10, 2022, had been permanently released under an earlier agreement. As a result, those claims could not be litigated in any jurisdiction around the world. TRG Pakistan argued that several lawsuits initiated by Chishti, including a shareholder oppression petition pending before the Sindh High Court, were based on these previously released claims. The court further observed that it had earlier prevented Chishti from raising claims filed in a US arbitration within Pakistani legal proceedings. It stated that the same legal principles justified the latest restraint order. A Corporate War Spanning Two Countries The TRG Pakistan legal battle has become a complex cross-border conflict involving courts on both sides of the globe. Only weeks ago, Pakistan’s Supreme Court dismissed appeals filed by TRG International, Greentree Holdings and associated parties. The decision effectively upheld a Sindh High Court judgment declaring Greentree’s acquisition of nearly 30 percent of TRG Pakistan shares unlawful. At that time, the verdict was widely interpreted as strengthening the position of Chishti and minority shareholders seeking greater influence over the company. However, events quickly took another dramatic turn. How Zia Chishti Lost His Grip on TRG Pakistan Despite apparent legal momentum, Chishti’s influence over TRG Pakistan weakened significantly following the enforcement of pledged shares linked to a financing arrangement. On May 21, JS Bank acquired approximately 81.36 million TRG Pakistan shares through the enforcement of collateral previously pledged by Chishti. The transaction represented nearly 14.92 percent of the company’s total shareholding. Based on the disclosed price of Rs62.92 per share, the acquisition was valued at approximately Rs5.12 billion. The impact on the company’s ownership structure was immediate and substantial. Entities associated with the JS Group increased their combined stake in TRG Pakistan to roughly 29.3 percent. Meanwhile, Chishti’s ownership declined dramatically to approximately 1.2 percent. The shift fundamentally altered the shareholder landscape and significantly reduced the founder’s direct influence over the company’s future direction. What Happens Next in the TRG Pakistan Legal Battle? TRG Pakistan has confirmed that it is reviewing its legal options following the latest US court order. The court’s decision in July could determine whether the temporary restrictions evolve into a broader injunction capable of limiting Chishti’s ability to pursue related claims globally. For investors, the outcome could shape not only the future governance of TRG Pakistan but also set important precedents regarding cross-border shareholder disputes involving Pakistani listed companies. As the courtroom battle intensifies, shareholders and market participants will be closely watching whether this latest development marks the beginning of the end of a prolonged corporate war or merely another chapter in one of Pakistan’s most dramatic boardroom conflicts.

SBP Research Agenda 2026-2029: State Bank Unveils Bold Plan to Reshape Pakistan's Economic Future
Editor pick, Pakistan

SBP Research Agenda 2026-2029: State Bank Unveils Bold Plan to Reshape Pakistan’s Economic Future

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The SBP Research Agenda 2026-2029 is far more than a routine policy document. It is a revealing blueprint that exposes the deep-rooted weaknesses of Pakistan’s economy and lays out how the country’s central bank intends to confront them. At a time when Pakistan continues to grapple with inflation shocks, recurring balance of payments crises, weak productivity, and a narrow financial base, the State Bank of Pakistan has acknowledged that traditional solutions are no longer enough. The newly released three-year roadmap seeks answers to some of the country’s most difficult economic questions while inviting academics, researchers, policymakers, and institutions to help shape future policy decisions. SBP Wants Answers to Why Monetary Policy Often Fails In the foreword to the document, SBP Governor Jameel Ahmad said the objective is to identify factors that weaken the effectiveness of regulations and policy tools so authorities can deliver more timely and informed responses. One of the most striking admissions in the agenda is that monetary policy transmission in Pakistan often works imperfectly. The central bank believes structural problems such as informality, limited financial access, institutional weaknesses, and fragmented markets dilute the impact of policy rate changes. The agenda seeks to understand why some interest rate decisions fail to influence spending, borrowing, and investment as intended. Can Inflation Ever Be Controlled Effectively? A major focus of the SBP Research Agenda 2026-2029 revolves around inflation. Researchers have been tasked with studying whether Pakistan should formally move toward flexible inflation targeting and, if so, how such a framework should be designed. Critical questions include: • What inflation target is realistic for Pakistan?• How wide should the tolerance band be?• How long should policymakers take to achieve targets?• How do supply shocks affect public confidence in the central bank? The document also acknowledges that climate change is emerging as a powerful driver of inflation volatility and can no longer be ignored in economic planning. Digital Currency and Virtual Assets Enter the Conversation In one of the agenda’s most forward-looking sections, SBP raises questions about technologies that until recently remained outside mainstream policy discussions. The central bank plans to examine whether a central bank digital currency could improve monetary policy transmission and what risks expanding digital financial services and virtual asset investments may pose to financial stability. The move suggests Pakistan’s financial authorities are preparing for a future increasingly shaped by technological disruption. Pakistan’s Financial Sector Under the Spotlight The second pillar of the SBP Research Agenda 2026-2029 focuses on financial sector deepening. Despite decades of banking growth, Pakistan continues to face low credit penetration and limited financial inclusion. Banks dominate the financial landscape while capital markets and non-bank institutions remain relatively weak. SBP wants researchers to determine whether these shortcomings stem from temporary economic conditions or deeper structural problems. The agenda seeks evidence on issues such as: • Whether banks are allocating enough credit to the private sector.• How funding structures influence lending decisions.• Whether liquidity management policies discourage deposit growth.• How minimum deposit rates affect economic stability.• How macroprudential tools should complement monetary policy. Islamic Versus Conventional Banks Another notable aspect of the roadmap is its call for a comparative analysis of Islamic and conventional banking models. Researchers will assess their efficiency, pricing mechanisms, credit allocation practices, operational costs, and resilience during financial shocks. The findings could shape future regulatory priorities within Pakistan’s dual banking system. Breaking Pakistan’s Boom and Bust Cycle Perhaps the most consequential section of the document addresses Pakistan’s chronic economic instability. The central bank openly recognizes that the country’s large undocumented economy undermines reliable data collection and weakens policy effectiveness. Research priorities include identifying ways to encourage formalization through: • Tax simplification.• Greater digitalization.• Easier regulatory procedures.• Reduced compliance burdens. The objective is clear. Pakistan cannot sustainably grow while significant portions of economic activity remain outside the formal system. The Big Questions About Remittances and Foreign Investment The SBP Research Agenda 2026-2029 also explores external vulnerabilities that repeatedly trigger economic crises. Researchers have been asked to examine how foreign direct investment, portfolio inflows, and external borrowing affect resilience. One particularly intriguing question stands out: Are workers’ remittances an economic blessing that supports stability, or do they create hidden vulnerabilities over time? The answer could influence future strategies for managing Pakistan’s external accounts. AI, Migration and Climate Transition Shape the Future The agenda extends beyond conventional economics. SBP wants deeper research into export diversification, global value chains, demographic shifts, migration patterns, technological transformation, and artificial intelligence adoption. It also prioritizes understanding the short- and medium-term economic consequences of Pakistan’s transition toward a low-carbon economy. These themes indicate that the central bank is increasingly looking beyond immediate crises and preparing for long-term structural change. A Research Agenda That Reflects Economic Reality The SBP Research Agenda 2026-2029 reveals an institution willing to confront uncomfortable truths about Pakistan’s economic system. By admitting the limitations of existing frameworks and inviting broad collaboration, the State Bank appears determined to replace assumptions with evidence. Whether this ambitious exercise translates into meaningful reforms remains to be seen. However, one message from the agenda is unmistakable: Pakistan’s economic challenges have evolved, and solving them will require fresh thinking, rigorous research, and policies grounded in reality rather than tradition.

NEC Approves Rs3.2t Development Budget as Provinces Agree to Provide Rs920b Grant
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NEC Approves Rs3.2t Development Budget as Provinces Agree to Provide Rs920b Grant

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The National Economic Council (NEC) on Wednesday approved a Rs3.2 trillion national development budget for the next fiscal year after three provinces agreed to freeze their development spending and provide Rs920 billion in grants to the federal government. The decision came amid mounting financial pressures and increased funding requirements for defense and water sector projects. Prime Minister Shehbaz Sharif chaired the NEC meeting, which also approved key macroeconomic targets for fiscal year 2026-27. Development Budget Reduced by 25% The approved development envelope of Rs3.2 trillion is around 25 percent lower than the Rs4.25 trillion initially proposed by the Annual Plan Coordination Committee (APCC) earlier this month. Planning Minister Ahsan Iqbal told reporters after the meeting that provincial governments had agreed to maintain their Annual Development Programmes (ADPs) at the actual spending levels of the current fiscal year. As a result, provincial development budgets have been reduced by Rs920 billion compared with the targets approved by the APCC. The NEC approved provincial development plans worth Rs2.218 trillion and a trimmed Public Sector Development Programme (PSDP) of Rs1 trillion. The revised PSDP is Rs126 billion lower than the amount initially approved. Provinces to Provide Rs920 Billion to Centre According to the new arrangement, provinces will provide a one-time grant of Rs920 billion to help the federal government meet urgent financing needs. The federal government had sought Rs1.2 trillion from the provinces to fund defense expenditures and strategic water projects. Ahsan Iqbal said the Finance Ministry was finalising the mechanism for transferring and accounting for the funds. Prime Minister Shehbaz Sharif thanked the provincial governments for their cooperation and consultations. He said the assistance reflected a collective effort to address national priorities. IMF Chief Briefed on New Fiscal Arrangement Prime Minister Shehbaz Sharif informed the NEC meeting that he had spoken with International Monetary Fund (IMF) Managing Director Kristalina Georgieva regarding the agreement between the Centre and provinces. According to the prime minister, Georgieva appreciated Pakistan’s efforts to create a coordinated fiscal framework. Under the arrangement, the federal government will retain most of the additional revenue generated through the National Finance Commission (NFC) award during the next fiscal year. The arrangement will temporarily reduce the effective share of provinces in the divisible pool, which currently stands at 57.5 percent. Officials said the agreement is contingent upon the Federal Board of Revenue (FBR) achieving its tax collection target. FBR Tax Target Set at Rs15.26 Trillion The FBR has been assigned a tax collection target of Rs15.264 trillion for fiscal year 2026-27. However, the tax authority has missed its targets by a combined Rs2.2 trillion over the last two fiscal years. Government officials said provincial contributions would be treated as grants and would not permanently alter the NFC formula. The provinces have deferred any long-term changes to revenue-sharing arrangements. Punjab Sees Biggest Reduction in Development Spending According to Ahsan Iqbal, Punjab’s development budget has been approved at Rs749 billion, which is Rs701 billion lower than the amount proposed by the APCC. Sindh’s development allocation stands at Rs706 billion, down by Rs110 billion. Khyber-Pakhtunkhwa’s development outlay has been fixed at Rs455 billion, reflecting a reduction of Rs109 billion. Balochistan’s development budget remains unchanged at Rs308 billion. Punjab Chief Minister Maryam Nawaz did not attend the meeting due to recovery from a recent medical procedure. Chief ministers from the remaining provinces participated in the session. Government Emphasises Defense and Counterterrorism Addressing the meeting, Prime Minister Shehbaz Sharif said strengthening national defense remained Pakistan’s top priority. He highlighted the sacrifices made by the armed forces, law enforcement agencies and the people of Khyber-Pakhtunkhwa and Balochistan in the fight against terrorism. The prime minister stressed that cooperation between the federation and provinces had played a key role in maintaining stability and would remain essential in the future. Focus Shifts From Stability to Growth Prime Minister Shehbaz said Pakistan must move beyond macroeconomic stability and focus on economic expansion. He called for policies aimed at increasing exports, boosting manufacturing and generating employment opportunities. Ahsan Iqbal said Pakistan could not continue relying on loans and support from friendly countries. He stressed that the national discourse should now focus on exports, productivity and sustainable economic growth. The planning minister also criticized the federal bureaucracy, describing it as one of the biggest obstacles to development. He said reforms were needed to modernize administrative structures that still operate with a colonial-era mindset. NEC Approves Key Economic Targets The NEC approved a 4 percent GDP growth target for fiscal year 2026-27. Inflation has been targeted at 8.2 percent. The agriculture sector is expected to grow by 3.8 percent, while large-scale manufacturing has been assigned a growth target of 4.5 percent. The industrial sector overall is projected to expand by 4 percent, supported by improvements in manufacturing, mining, construction and energy. Meanwhile, the services sector is expected to grow by 4.2 percent. The NEC approved a savings target equivalent to 14.3 percent of GDP and an investment target of 15 percent of GDP. Current Account Deficit Projected at $3.6 Billion The council approved a current account deficit target of $3.6 billion, or 0.7 percent of GDP, for the next fiscal year. Exports are projected to rise to $32.8 billion, while imports are expected to exceed $70 billion. As a result, the trade deficit is estimated at $37 billion. Remittances are expected to reach $42.3 billion, although officials acknowledged that uncertainties in the Middle East could affect inflows. Quarterly NEC Meetings Planned Ahsan Iqbal said the NEC had largely become a ceremonial body in recent years. He announced that quarterly meetings would now be held to monitor economic targets and development projects more effectively. The NEC also approved 11 reform initiatives aimed at addressing structural weaknesses, increasing exports, improving productivity and strengthening agriculture and human capital development.

Pakistan Fiscal Deficit Falls to 0.7 Percent as Austerity and Revenue Surge Reshape Economy
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Pakistan Fiscal Deficit Falls to 0.7 Percent as Austerity and Revenue Surge Reshape Economy

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Pakistan fiscal deficit has witnessed a dramatic collapse, offering one of the strongest signs yet that the country’s painful economic reforms may finally be paying off. According to the Economic Survey of Pakistan 2025-26, the overall fiscal deficit narrowed sharply to just 0.7 percent of GDP during July 2025 to March 2026. During the same period a year earlier, the deficit stood at 2.6 percent of GDP. For a country long trapped in a cycle of debt accumulation, IMF negotiations, and budgetary crises, this turnaround represents a significant shift in Pakistan’s economic story. The improvement was driven by stronger revenue collection, aggressive austerity measures, lower interest payments, and tighter fiscal discipline at both federal and provincial levels. Pakistan Fiscal Deficit Improvement Signals a Major Shift The latest figures reveal that Pakistan generated a primary surplus of Rs4.09 trillion, equivalent to 3.2 percent of GDP. This exceeded the Rs3.47 trillion primary surplus recorded during the same period of FY2024-25. A primary surplus means the government earned enough revenue to cover all expenditures except debt servicing obligations. Economists often view this indicator as a critical measure of fiscal health. The achievement becomes even more remarkable considering Pakistan’s long-standing reputation for weak tax collection and persistent fiscal slippages. Revenue Boom Changed the Fiscal Equation The government’s success was underpinned by stronger revenue generation. Pakistan’s consolidated revenues climbed to Rs14.79 trillion during the first nine months of FY2025-26, representing a growth of 10.7 percent compared with the previous year. Tax revenues rose by 11.3 percent to Rs10.17 trillion, while non-tax revenues increased by 9.5 percent to Rs4.63 trillion. Federal Board of Revenue collections maintained double-digit growth and crossed the Rs10 trillion mark during the July-April period. However, despite the improvement, the FBR still fell Rs684.4 billion short of the ambitious targets agreed under IMF-supported fiscal reforms. Austerity Measures Delivered Breathing Space The biggest relief came from falling debt servicing costs. Total interest payments dropped by 23.2 percent to Rs4.95 trillion, compared with Rs6.44 trillion during the same period last year. The reduction reflected lower domestic interest rates and improved debt management practices. The federal government also imposed strict spending controls that included: • A ban on the purchase of luxury and non-essential government vehicles.• A freeze on creating new public sector positions.• The abolition of vacant government posts that remained unfilled for more than three years.• Restrictions on publicly funded foreign visits and overseas medical treatments. These decisions helped reduce consolidated expenditures by 4.2 percent despite continued inflationary pressures. Pakistan’s Tax System Undergoes a Structural Transformation Beyond short-term gains, Pakistan’s tax structure is beginning to evolve. Historically, the country relied heavily on indirect taxation, which disproportionately affected ordinary consumers. Now, direct taxes account for 49.3 percent of total FBR revenues, up significantly from 36.5 percent in FY2021. At the same time, indirect taxes declined to 50.7 percent of collections. The provinces also introduced synchronized Agriculture Income Tax legislation, bringing agricultural earnings closer to taxation standards applied to corporations and salaried individuals. This reform has long been considered politically difficult but economically necessary. Provinces Quietly Became Fiscal Heroes One of the less discussed aspects of Pakistan’s fiscal turnaround is the role played by provincial governments. Combined provincial surpluses surged from Rs518.2 billion in FY2024 to Rs921.5 billion in FY2025. Punjab generated the largest surplus at Rs348.5 billion. Sindh more than doubled its reserves to Rs283 billion. Khyber Pakhtunkhwa raised its surplus to Rs176.2 billion. Balochistan maintained stable fiscal discipline with a surplus of Rs113.8 billion. These surpluses strengthened the national balance sheet and supported federal consolidation efforts. Development Spending Was Not Sacrificed Critics often argue that austerity comes at the expense of growth. However, Pakistan attempted to avoid that trap. Development expenditures and net lending expanded by 18.7 percent to Rs1.83 trillion during July-March FY2025-26. Under the Public Sector Development Programme, more than 98 percent of allocations were directed toward completing ongoing projects rather than launching politically motivated initiatives. Infrastructure projects received the largest share of funding, followed by investments in health, education, Special Areas, and the merged districts of Khyber Pakhtunkhwa. Can Pakistan Sustain This Fiscal Discipline? The Pakistan fiscal deficit story is impressive, but the celebration may be premature. The Economic Survey warns that rising geopolitical tensions in the Middle East pose serious threats to these gains. Any sharp increase in oil prices, disruptions to global supply chains, or renewed inflationary pressures could rapidly reverse recent progress. Higher energy costs could force the government back into expensive subsidies, widen debt obligations, and place renewed stress on public finances. Pakistan has demonstrated that fiscal discipline is possible. The real challenge now is sustaining it in an increasingly uncertain global environment. The next few months will determine whether this historic turnaround marks the beginning of lasting economic stability or merely a temporary reprieve in Pakistan’s long struggle against fiscal vulnerability.

GDP expands 3.7%, per capita income rises to $1,901
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GDP expands 3.7%, per capita income rises to $1,901

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ISLAMABAD: Pakistan’s economy expanded to more than $452 billion in the outgoing fiscal year, while growth accelerated to 3.7% — the highest in four years — driven by improvements in manufacturing, services, remittances and fiscal indicators, according to the Pakistan Economic Survey unveiled on Thursday. Presenting the survey ahead of the federal budget, Finance Minister Muhammad Aurangzeb said the economy had demonstrated resilience despite climate-related disruptions, geopolitical tensions in the Middle East and continued uncertainty in the global economy. “We have not only increased the size of the economy but also achieved broad-based recovery,” Aurangzeb said. The survey showed that per capita income increased by 9% to $1,901, reflecting improvements in economic activity and income levels. The services sector emerged as a key driver of growth, expanding by 4.9%, while large-scale manufacturing (LSM) posted a 6.1% increase — its strongest performance in four years. Sixteen out of 22 industrial sectors recorded positive growth during the year. Economic activity also translated into stronger demand indicators, with cement consumption rising by 10%, suggesting a pickup in construction and infrastructure-related activity. One of the strongest contributors to external sector stability remained workers’ remittances, which are projected to exceed $41 billion by the end of the fiscal year. In May alone, Pakistan received remittances worth $4.2 billion, including more than $1 billion from the United Arab Emirates. Aurangzeb acknowledged the support of friendly countries, particularly the UAE, saying the Gulf state had remained a longstanding partner of Pakistan. The finance minister highlighted a marked improvement in Pakistan’s external position, stating that foreign exchange reserves had crossed $17 billion and were expected to exceed $18 billion by the end of June. Total reserves stood at $22.6 billion. The survey further indicated that the agriculture sector grew by 2.89%, supported by a 17% increase in fertiliser sales. Livestock and dairy continued to dominate agricultural output, accounting for around 60% of the sector. Fiscal indicators also showed signs of improvement. The fiscal deficit narrowed to 0.7% of GDP, while the primary balance remained in surplus. Revenue collection by the Federal Board of Revenue (FBR) increased by 10.1%, reflecting efforts to improve tax administration and expand the tax base. According to Aurangzeb, the documented tax base has nearly doubled in recent years, increasing from Rs7 trillion to Rs13 trillion. He added that FBR revenues recorded a 46% increase in June 2026, while overall tax collection rose by 40% over the past two years. Pakistan also posted a current account surplus of $72 million, supported by strong remittance inflows and prudent external sector management. Private sector credit reached $11.57 billion, suggesting improved business confidence and lending activity. On inflation, the minister said recent price pressures were largely linked to higher international oil prices. He noted that while Pakistan’s oil import bill increased by $1 billion in April, the rise was limited to $500 million in May through effective management. The survey showed that Pakistan’s installed electricity generation capacity reached 49,651 megawatts, with thermal sources accounting for nearly half of total capacity, followed by hydropower, renewable energy and nuclear power. Aurangzeb said investor confidence had also strengthened during the year. Around 175,000 new investors entered the stock market, while 11 initial public offerings (IPOs) were completed — the highest number in two decades. Investments under Roshan Digital Accounts reached $12.75 billion. He added that global firms including Aramco, Alibaba, Turkish Petroleum, Veon and Google had expanded their presence in Pakistan, despite some companies exiting the market. Looking ahead, Aurangzeb said economic growth was expected to exceed 4% in the next fiscal year, supported by macroeconomic stability, fiscal discipline and ongoing reforms aimed at broadening the tax base and attracting investment.

BRITISH HIGH COMMISSIONER JANE MARRIOTT VISITS RECKITT PAKISTAN OFFICE TO DISCUSS PUBLIC HEALTH PRIORITIES AND SOCIAL IMPACT
Pakistan

British High Commissioner Jane Marriott Visits Reckitt Pakistan Office To Discuss Public Health Priorities And Social Impact

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Karachi, Pakistan – British High Commissioner Jane Marriott visited Reckitt Pakistan’s Head Office in Karachi, where she engaged with the company’s leadership team and employees on Pakistan’s evolving public health landscape, the importance of health and hygiene access, and the role businesses can play in creating sustainable impact. The visit highlighted Reckitt’s more than 70-year legacy in Pakistan and its continued commitment to improving health and hygiene outcomes through trusted brands, strategic partnerships and purpose-led initiatives that reach communities across the country. Discussions focused on some of Pakistan’s most pressing public health challenges and the opportunities to improve health outcomes through greater awareness, access and innovation. Reckitt also shared its growing social impact agenda, which aims to expand access to health and hygiene solutions and drive meaningful impact at scale. A key area of discussion was the importance of trusted health and hygiene solutions in supporting everyday well-being. For generations, products such as Dettol Antiseptic Liquid have been a trusted part of Pakistani households, reflecting the important role quality and accessible hygiene solutions continue to play in helping families protect themselves and maintain healthier lives. Speaking on the occasion, Asif Hashmi, General Manager, Reckitt Pakistan, said:“For over 70 years, Reckitt has been part of the fabric of everyday life in Pakistan. Guided by our ambition to put Better Health in More Hands, Every Day, we continue to improve lives through trusted brands, purpose-led initiatives and partnerships that create meaningful impact across communities” Commenting on the visit, Jane Marriott, British High Commissioner to Pakistan, said:“What Reckitt Pakistan is doing through its school hygiene programme shows how practical action can deliver real results for children and communities. Better health and hygiene mean more children in classrooms, stronger futures and greater opportunity. Partnerships like this matter because they turn commitment into impact where it is needed most” The visit reinforced the importance of collaboration, long-term commitment and shared ambition in advancing healthier communities and addressing Pakistan’s evolving public health needs.

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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