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The Federal Board of Revenue (FBR) has introduced revised customs duty drawback rates for Pakistani exporters under SRO 1908(I)/2026, effective October 27, 2026. The new notification replaces the previous framework issued in 2009.

The revised rates cover a wide range of export products, including cotton fabrics, garments, hosiery, polyester textiles, carpets, blankets, sleeping bags, tents and industrial fabrics.

Under the updated policy, exporters can claim refunds of customs duties paid on specified imported raw materials used in manufacturing eligible exported goods. The repayment rates vary according to the product category, raw materials and manufacturing process, and are generally calculated as a percentage of the Free-on-Board (FOB) export value.

Some notable rates include 1.784% for eligible hosiery products, 4.955% for qualifying acrylic blankets containing at least 70% acrylic, 2.136% for specified cotton canvas and tarpaulin products, and 0.352% for eligible hand-knotted silk carpets.

The FBR has also introduced specific conditions for claiming refunds. Exporters must submit their applications within 210 days of export or 180 days from the realisation of foreign exchange, as reflected in the relevant Bank Credit Advice.

Additionally, exporters must declare their intention to claim duty repayment in the relevant Goods Declaration and maintain supporting documentation.

The revised framework is expected to affect Pakistan’s textile, garment and manufacturing export sectors. Exporters should review the updated schedules, verify their product classifications and ensure compliance with the documentation and filing deadlines to benefit from the facility.

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Issued on October 28, 2026, through BPRD Circular No. 03, the handbook covers commercial banks, digital banks, microfinance banks, exchange companies, electronic money institutions, payment service providers and private credit bureaus.

Key Licensing Requirements

The new framework outlines eligibility criteria, capital requirements, application fees and approval procedures. Applicants must demonstrate financial strength, transparent ownership, legitimate funding sources and compliance with regulatory standards.

Application processing fees range from Rs 200,000 to Rs 5 million, depending on the type of institution. Complete applications that meet the prescribed requirements generally receive decisions within six to eight weeks, although processing times may vary.

Locally incorporated commercial banks must maintain minimum paid-up capital of Rs 20 billion. Digital banks face separate capital requirements based on their licence category and operational stage.

The handbook also establishes governance standards and disqualifies certain individuals, including specified public office holders, from obtaining licences or acting as sponsor shareholders.

Impact on Pakistan’s Financial Sector

The consolidated framework provides clearer guidance for businesses seeking to enter Pakistan’s financial services industry. It also reinforces the SBP’s focus on financial stability, transparency, consumer protection and regulatory compliance.

For prospective investors and fintech companies, understanding the updated requirements will be essential before applying for a licence.

Source: State Bank of Pakistan, BPRD Circular No. 03, October 28, 2026.

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Under the new rules, the Faceless Assessment Unit will handle different assessment proceedings, including amendments to tax assessments, provisional assessments and the implementation of appellate decisions. Officers can also issue notices, request supporting evidence and impose applicable penalties under the law.

Taxpayers will be able to submit responses and relevant documents through the FBR’s IRIS portal. The procedures also allow online hearings, technical assistance and physical verification where necessary.

In a separate notification, the FBR introduced Rule 33U through SRO 1904(I)/2026, specifying eligibility conditions and documentation requirements for tax credits under Section 64D of the Income Tax Ordinance, 2001.

With the October 31 deadline approaching and no further extension confirmed in the information provided, taxpayers should ensure timely return submission, maintain accurate records and respond promptly to any official notices.

The new framework represents another step towards digital tax administration in Pakistan, although its effectiveness will depend on implementation and compliance by both taxpayers and tax authorities.

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Pakistan has approved significant changes to its anti-money laundering and counter-terrorism financing framework, increasing the cash transaction reporting threshold from Rs2 million to Rs3 million and extending regulatory oversight to the virtual assets sector. The government has also approved the inclusion of piracy-related offences in the country’s anti-money laundering legislation.

The decisions were taken during the 19th meeting of the National Executive Committee (NEC) on Anti-Money Laundering and Countering the Financing of Terrorism (AML-CFT), chaired by Finance Minister Muhammad Aurangzeb at the Finance Division.

The measures aim to strengthen the country’s financial monitoring system, improve regulatory coordination and address emerging risks associated with digital financial activities and unlawful transactions.

Cash Transaction Reporting Limit Increased by 50%

One of the key decisions is the revision of the Currency Transaction Report (CTR) threshold from Rs2 million to Rs3 million. This represents an increase of Rs1 million, or 50%, in the reporting limit.

Under the revised threshold, banks and other reporting entities will apply the updated limit when reporting qualifying currency transactions to the Financial Monitoring Unit (FMU) under the Anti-Money Laundering Act (AMLA).

The NEC is authorised to establish reporting thresholds for financial institutions and other relevant entities. These limits are formally notified through the official gazette.

The change adjusts the threshold used for currency transaction reporting. However, it should not be confused with the separate requirement to report suspicious financial activity, which remains an important component of the country’s anti-money laundering framework.

PVARA to Receive AML-CFT Regulatory Responsibilities

Another major development is the approval to include the Pakistan Virtual Assets Regulatory Authority (PVARA) in Schedule IV of the AMLA.

This amendment will bring PVARA within the legal framework for overseeing anti-money laundering and counter-terrorism financing requirements in the virtual assets sector.

Virtual assets, including cryptocurrencies and other digitally represented assets, present regulatory challenges because transactions can cross national borders and involve complex financial arrangements. Effective supervision is therefore important for identifying potential financial crimes and improving compliance with applicable regulations.

With PVARA included in the framework, the authority will perform AML-CFT regulatory functions for its sector alongside established institutions such as the State Bank of Pakistan (SBP), the Securities and Exchange Commission of Pakistan (SECP) and the Federal Board of Revenue (FBR).

The move represents a further step towards incorporating virtual asset activities into Pakistan’s broader financial oversight system.

Piracy to Be Included as a Predicate Offence

The NEC has also approved the addition of Section 28 of the Pakistan Maritime Zones Act, 2023, to Schedule I of the AMLA.

This change brings piracy within the list of predicate offences associated with money laundering legislation. A predicate offence is an underlying crime that can generate proceeds subsequently concealed, transferred or otherwise dealt with through money laundering.

Section 28 addresses piracy-related conduct, including unlawful violence, detention or seizure committed for private purposes against ships, aircraft, individuals or property. It also covers knowing participation in or facilitation of such activities.

Including piracy in the relevant schedule expands the legal basis for addressing financial proceeds connected with these offences under the anti-money laundering framework.

The decision also reflects the importance of linking investigations into underlying criminal activities with efforts to trace and address the financial gains derived from them.

Financial Monitoring Unit to Strengthen Its Analytical Capacity

During the meeting, the NEC reviewed progress on decisions made at its previous session and examined the implementation of measures designed to improve Pakistan’s AML-CFT system.

The committee discussed the performance and institutional capacity of the Financial Monitoring Unit, which plays a central role in receiving and analyzing financial intelligence.

The FMU receives Currency Transaction Reports and Suspicious Transaction Reports from reporting entities. It can also request relevant records and information from individuals and institutions, and share its findings confidentially with investigating and prosecuting agencies as well as foreign financial intelligence units.

The committee also explored the potential use of artificial intelligence (AI) and machine learning to improve the analysis of financial transactions.

These technologies could help financial authorities identify unusual transaction patterns, process large volumes of data and strengthen the identification of potentially suspicious activity. Their effectiveness, however, depends on the quality of available data, appropriate safeguards and the capacity of institutions to use analytical tools responsibly.

Finance Minister Calls for Better Coordination

Finance Minister Muhammad Aurangzeb stressed the need to improve the operational and analytical capabilities of the FMU.

He called for a structured implementation plan with clearly defined timelines to ensure that institutional improvements translate into practical results.

The finance minister also emphasised closer cooperation between relevant institutions, regular monitoring and consistent follow-up to support effective enforcement of anti-money laundering rules.

The meeting brought together senior government and regulatory officials, including the federal minister for law and justice, the governor of the State Bank of Pakistan, the finance secretary, the chairman of the SECP, the director general of the AML-CFT Authority and representatives of other relevant institutions.

What These Changes Mean for Pakistan

The latest decisions cover three important areas: financial transaction monitoring, virtual asset regulation and the treatment of proceeds linked to piracy.

For banks and other reporting entities, the revised CTR threshold changes the monetary limit used for currency transaction reporting. Institutions will need to follow the applicable requirements as formally notified and implemented.

For businesses operating in the virtual assets sector, PVARA’s inclusion in the AMLA framework establishes a clearer statutory basis for the authority’s AML-CFT regulatory role. The practical impact will depend on the applicable rules, regulatory instructions and implementation arrangements.

The inclusion of piracy-related offences, meanwhile, broadens the scope of crimes covered by the relevant anti-money laundering provisions.

Taken together, these measures form part of Pakistan’s continuing efforts to strengthen financial transparency, improve institutional coordination and address risks arising from both conventional and emerging financial activities.

Conclusion

Pakistan’s decision to raise the Currency Transaction Report threshold to Rs3 million, incorporate PVARA into the AML-CFT framework and add piracy as a predicate offence marks a series of changes to the country’s financial oversight regime.

The next stage will depend on effective implementation, clear regulatory guidance and cooperation among financial institutions, enforcement agencies and regulators. Strengthening the FMU’s analytical capacity, including through the responsible use of AI and machine learning, will also be important in translating these policy decisions into effective financial monitoring.

As Pakistan’s financial sector evolves, the successful implementation of these measures will be central to maintaining regulatory compliance and addressing money laundering and terrorism financing risks.

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Pakistan’s Federal Board of Revenue has broadened its electronic production monitoring system to cover a wider range of textile fibres, requiring registered spinning mills to install surveillance cameras and integrate real-time production data with the tax authority’s monitoring network.

The Federal Board of Revenue (FBR) has introduced new monitoring requirements for registered textile spinning mills across Pakistan, directing them to install video surveillance cameras on machinery handling various types of fibers by November 15, 2026.

The move aims to strengthen oversight of textile production activities, improve transparency and enable the tax authority to monitor fibre consumption and manufacturing processes more effectively.

The latest directive was issued through Sales Tax General Order No. 30 of 2026 on October 23, 2026. It extends the existing electronic surveillance framework beyond cotton bales to include loose, opened and blended fibers used in textile manufacturing.

New Rules Cover Multiple Fiber Types

Under the revised instructions, the monitoring requirements apply to natural, synthetic and blended fibers, including cotton, polyester, viscose, wool, acrylic and recycled materials.

Previously, the FBR’s electronic production monitoring system focused on cotton bales under an earlier order introduced in 2025. The latest development expands the scope of surveillance to cover additional stages of fiber handling and preparation before spinning.

The new requirements are intended to help the FBR obtain a clearer picture of the materials entering production and improve its ability to verify reported manufacturing activity.

Surveillance Cameras Required at Key Production Stages

Registered textile spinning units must install cameras at designated locations throughout their fiber preparation and blending operations.

These locations include hopper bale openers, feeding equipment and machinery where loose or opened fibers are introduced into the production process. Cameras will also be required at weighing and blending feeders used for processing natural and man-made fibers.

Additional surveillance will cover blow room lines handling polyester, viscose and acrylic, along with waste-opening and recycling sections where leftover materials are returned to production.

Mixing and laydown areas, where fibers are arranged, combined or prepared for subsequent processing, will also fall within the monitoring framework.

By covering these production points, the FBR intends to improve visibility into the movement and processing of raw materials within textile spinning facilities.

Real-Time Data Transmission to the FBR

The new system will involve more than simply installing cameras. The equipment must work with compatible video analytics software capable of identifying and measuring fibers as they enter the manufacturing process.

Under the directive, vendors previously authorised by the FBR to supply electronic production monitoring systems must upgrade their solutions to accommodate the expanded requirements.

The software must be capable of detecting, counting and quantifying loose, opened and other non-bale fibre materials. This will allow production information to be collected digitally and transmitted to the FBR’s Central Control Unit for storage and future reference.

The system must also monitor production activity in real time, identify unexpected interruptions and generate quantitative production analyses.

These capabilities are expected to help the tax authority examine production patterns, identify potential irregularities and use relevant analytical information when considering enforcement action under applicable laws.

Compliance Deadline Set for November 15, 2026

The FBR has instructed registered spinning mills to complete the necessary arrangements for the installation of surveillance equipment by November 15, 2026.

This includes the required cameras, hardware, software and related electronic monitoring infrastructure. The directive took effect immediately upon issuance, making timely preparation important for affected businesses.

Spinning mills may need to assess their existing production lines, identify the locations requiring additional surveillance and coordinate with authorised technology vendors to ensure that their systems meet the updated specifications.

Businesses should also confirm that their monitoring arrangements can communicate with the FBR’s central system and provide the required production information without interruption.

Additional Responsibilities for Monitoring System Vendors

The updated rules also place greater responsibility on technology providers already approved by the FBR.

These vendors must ensure that their video analytics solutions are compatible with the newly installed cameras and can process data from fiber handling operations that were not fully covered under the earlier framework.

The technology must support automated object detection, counting, production measurement and the transmission of information to the designated control unit.

Reliable integration will be essential because the effectiveness of the monitoring system depends on both the quality of video capture and the accuracy of the data generated by the analytics software.

Legal Basis of the New Directive

The FBR issued the order under Section 40C(2) of the Sales Tax Act, 1990, along with relevant provisions of the Sales Tax Rules, 2006.

The new order supplements Sales Tax General Order No. 08 of 2025 rather than replacing it. Consequently, the earlier requirements relating to cotton bale monitoring remain applicable alongside the expanded surveillance obligations.

The notification was issued with the approval of the FBR’s Member Inland Revenue Operations and signed by Second Secretary Khalid Mehmood.

What This Means for Pakistan’s Textile Industry

The expansion of electronic production monitoring represents a further step towards the digital supervision of Pakistan’s textile manufacturing sector.

For spinning mills, the immediate priority will be to meet the installation deadline and ensure that the necessary technology is functioning properly. Businesses may also need to review internal production procedures, staff responsibilities and data management practices to accommodate the additional monitoring requirements.

For the FBR, the expanded system could provide more detailed information about raw material consumption and production activity, potentially improving the identification of discrepancies between recorded and actual operations.

However, implementation will depend on the practical integration of surveillance equipment with different types of machinery, the reliability of fiber counting technology and the ability of businesses and vendors to complete the required upgrades on time.

Conclusion

The FBR’s latest order significantly widens the scope of electronic production surveillance in Pakistan’s textile spinning industry by bringing loose, opened, blended and recycled fibers within the monitoring framework.

With the November 15, 2026 deadline approaching, registered spinning mills and authorised technology vendors need to prepare for the installation and integration of the required systems.

The development reflects the tax authority’s continuing efforts to strengthen production oversight through digital monitoring, automated data collection and real-time reporting while extending the existing framework to cover a broader range of textile manufacturing activities.

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Pakistan is stepping up efforts to strengthen its economy by expanding technology exports, attracting foreign remittances and introducing reforms aimed at reducing its dependence on external financing. The government has set ambitious targets of $5.5 billion in information technology (IT) exports and $44 billion in workers’ remittances for the fiscal year 2026–27, highlighting the growing importance of foreign exchange earnings in the country’s economic strategy.

Federal Finance Minister Muhammad Aurangzeb has stressed that Pakistan must move towards an export-oriented economy that creates jobs, encourages private investment and delivers sustainable improvements in living standards. Addressing a policy dialogue at the Lahore University of Management Sciences (LUMS), he said the country could no longer afford to rely on short-term economic expansion that repeatedly leads to balance-of-payments difficulties.

Government Focuses on Exports to Strengthen the Economy

Pakistan’s dependence on imported goods and energy has historically increased pressure on its foreign exchange reserves whenever domestic demand rises. As imports grow faster than exports, the country faces greater financing requirements, often forcing the government to introduce stabilization measures.

Aurangzeb believes that increasing export earnings and improving productivity are essential to breaking this cycle. Rather than relying on consumption-led growth, Pakistan needs to strengthen industries that can compete internationally and generate a consistent supply of foreign exchange.

The IT sector presents an important opportunity in this regard. Software development, freelancing, digital marketing and other technology-based services can generate export revenue without requiring the same level of physical infrastructure and imported inputs as many traditional industries.

Reaching the $5.5 billion target will require greater investment in digital infrastructure, technical education, reliable internet access and international market development. Supporting technology companies and independent professionals in receiving payments from overseas clients will also be important.

Remittances Remain a Vital Source of Foreign Exchange

Alongside technology exports, the government is targeting $44 billion in workers’ remittances during FY2027. Money sent home by overseas Pakistanis plays a major role in supporting household consumption and strengthening the country’s external financial position.

Remittance inflows provide foreign currency that can help finance imports and meet international payment obligations. They also support millions of families by contributing towards education, healthcare, housing and everyday expenses.

To achieve the target, Pakistan will need to maintain the confidence of its overseas workforce and encourage the use of formal banking and digital payment channels. Efficient transfer services, competitive transaction costs and greater engagement with expatriate communities could help sustain inflows.

However, remittances alone cannot replace the need for a stronger export sector. Long-term economic stability will require Pakistan to increase its own productive capacity and generate more foreign exchange through goods and services.

Improved Reserves Offer Some Economic Relief

The finance minister has highlighted improvements in Pakistan’s foreign exchange reserves, saying they are now sufficient to cover more than three months of imports. This compares with earlier periods when reserves were reportedly enough for only around two weeks of imports.

Aurangzeb also pointed to improvements in the country’s credit rating since April 2025 and renewed efforts to access international financial markets.

Pakistan has pursued different financing options, including a private placement completed in April 2026 and plans to raise funds through Panda bonds. The government has also reported strong demand for its Eurobond offering, with investor orders reaching twice the amount offered.

These developments suggest that international investors are showing renewed interest in Pakistan’s financial prospects. Nevertheless, sustained confidence will depend on the government’s ability to maintain economic discipline, meet its financial obligations and implement reforms consistently.

Structural Reforms Needed Beyond the IMF Programme

Pakistan’s current IMF programme is scheduled to end in October 2027. According to Aurangzeb, continuing economic reforms beyond that point will be critical to preventing another period of financial instability.

The country has repeatedly experienced economic crises when rising imports and financing needs outpace foreign exchange earnings. Stabilization programmes can help address immediate pressures, but they cannot deliver lasting results without improvements in the underlying economic structure.

The government is therefore working to expand the tax base, improve revenue collection and reduce barriers facing exporters. The finance minister also referred to tax-related measures intended to support export-oriented businesses, including the abolition of the super tax as described in his remarks and changes to tax slabs.

Exporters are also being offered financing facilities at an interest rate of 4.5%, according to the minister. Such support could help businesses manage working capital requirements, expand production and explore new international markets.

The effectiveness of these initiatives will depend on their implementation and whether businesses experience a consistent, predictable policy environment.

Lower Electricity Costs Could Help Industries Compete

Energy prices remain a major concern for Pakistani manufacturers. High electricity tariffs and fuel expenses increase production costs, making it difficult for domestic companies to compete with international rivals.

Aurangzeb has emphasized the need to make energy more affordable and mentioned discussions about supplying surplus electricity to industrial consumers at approximately Rs23 per unit.

Lower electricity costs could provide relief to export-oriented industries, particularly manufacturers that rely heavily on power for production. Reduced operating expenses may help companies improve pricing, increase output and create additional employment opportunities.

However, affordable electricity must be supported by reforms that improve the efficiency and financial sustainability of the energy sector. Without addressing underlying costs and operational weaknesses, tariff reductions could create additional pressures elsewhere in the economy.

Targeted Relief Replaces Broad Subsidies

The government is also attempting to make public assistance more efficient by directing subsidies towards specific groups rather than providing generalized relief.

Aurangzeb said fuel assistance had been extended to motorcyclists, three-wheeler users and owners of vehicles with engine capacities below 800cc. He reported that approximately 12 million unique individuals had benefited directly, with the wider number of beneficiaries, including family members, estimated at between 40 million and 50 million.

Targeted subsidies can help protect lower-income households from rising fuel and transportation costs while limiting unnecessary government expenditure.

For a country facing significant financing requirements, directing support towards those most in need can be more sustainable than subsidizing consumption across the entire population. Effective implementation and transparent monitoring will remain essential to ensuring that assistance reaches the intended recipients.

Population Growth Could Put Pressure on Future Development

Pakistan’s economic challenges extend beyond exports and public finances. Rapid population growth is increasing demand for jobs, schools, hospitals, housing and other essential services.

The finance minister cited an annual population growth rate of approximately 2.55% and warned that the population could eventually reach 390 million if the trend continues.

Such growth would require a substantial expansion in economic opportunities and public services. Without corresponding improvements in productivity and employment, the country could face greater pressure on household incomes and government resources.

Aurangzeb referred to Bangladesh, Indonesia and Iran as examples of countries that have reduced their population growth rates to below 1%.

Greater investment in education, public awareness and women’s empowerment could help Pakistan address its demographic challenges. Improving access to education and healthcare, alongside voluntary family-planning services, would also support more informed decisions at the household level.

Increasing Women’s Participation Could Boost Productivity

Women’s participation in the workforce represents another opportunity for Pakistan to strengthen economic growth. Aurangzeb put the female labour force participation rate at approximately 22.7%, highlighting the potential for improvement.

When more women can access education, training and employment, households gain additional earning opportunities and businesses benefit from a broader pool of talent.

Improving women’s participation requires action on several fronts, including safer transport, suitable workplace arrangements, childcare facilities, professional training and equal access to employment opportunities.

A larger and more skilled workforce could help Pakistan improve productivity and support the expansion of technology, manufacturing and service industries.

Energy Security Remains a Priority Amid Global Uncertainty

International conflicts and disruptions to energy markets continue to pose risks for Pakistan, particularly because of its dependence on imported fuels.

Aurangzeb said the country had avoided major fuel shortages despite regional instability and that arrangements were in place to meet energy requirements until November. He also stressed the importance of securing sufficient natural gas and LNG supplies ahead of winter.

Reliable energy supplies are essential for industrial production, household consumption and economic activity. Disruptions can increase costs, affect manufacturing output and add to inflationary pressures.

Pakistan therefore needs careful procurement planning, diversified energy sources and more efficient energy consumption to reduce its exposure to global shocks.

Sustainable Growth Must Improve Living Standards

Aurangzeb has argued that even annual economic growth of 7% to 8% would not be enough if it failed to generate employment, raise incomes and improve people’s quality of life.

This highlights the difference between headline economic growth and meaningful improvements in living standards. Sustainable development requires businesses to expand, workers to become more productive and households to benefit from better employment opportunities.

Private investment will be particularly important in creating jobs and increasing productive capacity. For this to happen, investors need predictable policies, competitive energy costs, access to finance and fewer unnecessary regulatory obstacles.

The government must also balance its growth ambitions with fiscal discipline to avoid creating new financial pressures.

Conclusion

Pakistan’s targets of $5.5 billion in IT exports and $44 billion in remittances for FY2027 reflect an effort to build a more resilient economy based on foreign exchange earnings, private investment and structural reform.

Improvements in reserves and renewed investor interest provide encouraging signs, but sustaining these gains will require more than short-term financing measures. Pakistan must strengthen its export industries, improve energy affordability, broaden its tax base and invest in human capital.

The scheduled end of the IMF programme in October 2027 will be an important milestone, but the real measure of success will be the country’s ability to maintain stability without repeatedly relying on emergency external financing.

Ultimately, Pakistan’s economic future will depend on turning these targets into lasting improvements in productivity, employment and household incomes. Consistent reforms and a competitive business environment will be essential if the country is to achieve sustainable growth and avoid the recurring economic crises of the past.

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Pakistan’s economic outlook is facing renewed uncertainty as the ongoing conflict in the Middle East drives up global energy and food prices, raises inflationary pressures and threatens to weaken the country’s external financial position. In its October 2026 Regional Economic Outlook, the International Monetary Fund (IMF) warned that Pakistan could face growing economic challenges over the medium term, particularly as imports increase, remittance growth slows and international borrowing becomes more expensive.

The Fund’s assessment highlights the difficult choices confronting Pakistan’s policymakers as they attempt to control inflation, manage public debt and maintain economic stability amid an increasingly uncertain global environment.

Rising Inflation Puts Pressure on Households

One of the most immediate concerns is the acceleration in consumer prices. Pakistan’s year-on-year inflation reached 11.1% in August 2026, largely driven by higher food and energy costs. Disruptions to energy supplies and international shipping routes have increased commodity prices, putting additional pressure on businesses and households.

The IMF has also revised its inflation outlook for Pakistan upward by 1.5 percentage points compared with its April projections. Inflation in oil-importing economies is expected to rise further during 2026 before gradually easing from 2027.

The increase in global energy prices has been particularly significant. International oil prices climbed sharply following the escalation of hostilities, while refined petroleum products, including diesel, gasoline and jet fuel, recorded even steeper increases. Higher natural gas and wheat prices have added to the pressure.

For Pakistan, which depends heavily on imported energy, these developments can translate into higher transportation costs, more expensive electricity and production expenses, and rising prices for essential goods. The resulting increase in living costs could also weaken household purchasing power.

External Sector Faces New Challenges

The IMF expects Pakistan’s external position to weaken over the medium term as imports rise and remittance inflows moderate. This presents a potential challenge for the country’s foreign exchange reserves and its ability to meet external financing requirements.

Remittances have provided an important source of foreign exchange for Pakistan, helping support household consumption and the country’s external accounts. Although inflows remained broadly stable during the first half of 2026 despite regional disruptions, a slowdown in the coming years could reduce this support.

At the same time, higher international oil and commodity prices could increase Pakistan’s import bill. If import payments grow faster than export earnings and remittance receipts, pressure on the balance of payments could intensify.

The IMF’s warning does not mean that an immediate external crisis is inevitable. However, it underlines the importance of maintaining adequate foreign exchange reserves, strengthening export performance and reducing excessive dependence on imported energy.

Higher Borrowing Costs Could Complicate Debt Management

Pakistan’s substantial financing requirements remain another major source of concern. The IMF has identified the country as particularly vulnerable to tighter global financial conditions because of its large gross financing needs and concerns surrounding government debt.

If the Middle East conflict continues to push energy prices higher, major central banks may keep interest rates elevated for longer than previously anticipated. This could increase international borrowing costs for countries with significant financing needs and limited fiscal flexibility.

For Pakistan, more expensive borrowing would make it harder to finance government expenditures, refinance existing debt and manage repayment obligations. Higher interest payments could also consume a larger share of public revenue, leaving less room for development projects, healthcare, education and social protection.

The situation could become more difficult if investor confidence weakens. A deterioration in market sentiment may lead to higher sovereign risk premiums, capital outflows and tighter domestic financial conditions.

These risks make prudent debt management, stronger revenue collection and credible economic policies particularly important.

Interest Rate Policy Faces a Difficult Balancing Act

The IMF has stressed that Pakistan’s monetary authorities should remain prepared to tighten policy further if inflationary pressures intensify.

Pakistan was the only economy among the examined MENAP countries with flexible exchange rates that increased interest rates after the conflict began in February 2026. Nevertheless, the Fund considers the country vulnerable to renewed inflation, particularly because its inflation rate remains elevated and forward-looking real interest rates are below estimated neutral levels.

Higher interest rates can help restrain demand and prevent inflation expectations from becoming entrenched. However, tighter monetary policy also makes borrowing more expensive for businesses and consumers, potentially slowing investment and economic activity.

Policymakers therefore face a delicate challenge: controlling inflation without placing unnecessary pressure on economic growth.

The IMF recommends keeping monetary policy focused on price stability while maintaining a cautious fiscal stance. It also advises governments to avoid broad spending programmes that could increase borrowing requirements and undermine the effectiveness of monetary tightening.

Any assistance provided to households affected by rising food and fuel prices should instead be temporary, carefully targeted and designed to avoid adding significantly to the budget deficit.

Rupee Stability and Foreign Exchange Reserves Remain Important

Exchange-rate movements could play a significant role in determining how international price shocks affect Pakistan’s economy.

The IMF supports exchange-rate flexibility in countries such as Pakistan, arguing that it can help economies adjust to external pressures and preserve foreign exchange reserves. However, a weaker rupee can make imported fuel, machinery, raw materials and food more expensive, potentially adding to domestic inflation.

The Fund recommends that foreign exchange intervention be reserved for disorderly market conditions rather than used to prevent every exchange-rate adjustment.

For Pakistan, the priority will be to maintain orderly currency-market conditions while ensuring that reserves remain sufficient to meet external obligations. Stronger exports, stable remittance inflows and improved investor confidence would help reduce pressure on the external account.

Banking Sector Risks Require Careful Monitoring

The IMF has also highlighted the connection between government finances and the banking sector. Pakistani banks hold substantial amounts of government securities, creating a potential channel through which fiscal difficulties could affect financial stability.

If government borrowing costs rise sharply or financial markets experience an abrupt repricing of assets, banks could face additional risks. These pressures might reduce their willingness or capacity to extend credit to private businesses.

A decline in private-sector lending could then weaken investment, production and employment, creating further difficulties for economic growth.

The Fund has urged financial supervisors to monitor liquidity, funding conditions and asset quality, particularly in industries vulnerable to regional disruptions, including transport, tourism and trade-related businesses.

Maintaining a sound banking system will be essential to ensuring that financial-sector pressures do not amplify the wider economic impact of the conflict.

Economic Growth Remains Resilient, but Risks Persist

Despite these challenges, Pakistan’s economic activity remained broadly resilient during the first half of 2026, according to the IMF. Growth projections for the country were largely unchanged from the Fund’s April assessment.

The report noted that remittances, tourism-related activity, supportive financial conditions and policy measures had helped several oil-importing economies withstand the initial impact of the conflict. Pakistan was also among the countries where hotel occupancy rates remained stable or improved compared with the same period in 2025.

However, resilience in economic activity does not eliminate the risks posed by higher inflation, expensive financing and external-sector pressures.

The IMF expects fiscal policy in Pakistan to remain restrictive during 2026 because the government has limited room for additional spending. This means policymakers may struggle to provide extensive relief to households and businesses without worsening public finances.

The challenge will be to protect vulnerable groups while continuing to improve the country’s fiscal position.

Regional Conflict Could Make the Outlook Worse

The IMF’s assessment is based on the assumption that security conditions and trade flows will gradually return towards normal. A prolonged conflict, however, could produce a more damaging outcome.

Further disruptions to oil and gas production, particularly in the Gulf, and continued instability around major shipping routes could push energy prices higher and increase transportation costs worldwide.

In an adverse scenario examined by the Fund, average real GDP among MENAP and Caucasus and Central Asia oil-importing economies would be around 0.5% below the baseline projection in 2027, while consumer inflation would be approximately one percentage point higher.

These estimates apply to the oil-importing economies as a group, not to Pakistan alone. Nevertheless, they illustrate the potential economic consequences of a more prolonged disruption.

For Pakistan, the effects could include a larger import bill, slower economic growth, renewed inflationary pressure and additional strain on public finances.

What Pakistan Needs to Do

The IMF’s findings underline the need for policies that strengthen Pakistan’s ability to withstand external shocks rather than relying solely on short-term measures.

Several priorities stand out:

• Strengthen export competitiveness: Expand export markets, improve productivity and reduce structural barriers that limit foreign exchange earnings.
• Improve energy security: Encourage energy efficiency, diversify energy supplies and reduce excessive dependence on imported fuels.
• Maintain fiscal discipline: Broaden the tax base, improve revenue administration and make public expenditure more efficient.
• Protect vulnerable households: Direct financial assistance towards those most affected by rising food and energy costs instead of relying on costly, untargeted subsidies.
• Preserve monetary credibility: Respond decisively to persistent inflation while communicating policy decisions clearly to markets and the public.
• Strengthen financial oversight: Monitor banks’ exposure to government debt and ensure that emerging liquidity or credit risks are addressed promptly.

These measures would not remove the immediate effects of the Middle East conflict, but they could help reduce Pakistan’s vulnerability to future external shocks.

Conclusion

The IMF’s October 2026 outlook presents a mixed picture for Pakistan. Economic activity has demonstrated resilience, but rising inflation, potentially slower remittance growth, increasing import requirements and expensive borrowing could place renewed pressure on the country’s economy.

The central challenge is to maintain price stability and external financial resilience without undermining growth or placing an excessive burden on households.

Much will depend on the duration of the Middle East conflict, movements in international commodity prices and the strength of Pakistan’s domestic policy response. A prolonged crisis would make the adjustment more difficult, particularly given the country’s substantial financing requirements and limited fiscal space.

Ultimately, Pakistan’s ability to navigate this period will depend not only on short-term monetary and fiscal decisions but also on longer-term reforms that strengthen exports, improve public finances, enhance energy security and support sustainable economic growth.

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Pakistan’s Federal Board of Revenue (FBR) has introduced a new electronic auction system for selling seized and confiscated goods, aiming to establish a more transparent and structured process for disposing of such items. Under the revised framework, bidders must pay a minimum one-time registration fee of Rs25,000, while online bidding will remain open for 72 hours.

The changes have been introduced through SRO 1889(I)/2026, issued on October 22, 2026, amending the Sales Tax Rules, 2006. The notification outlines procedures for registering bidders, determining the value of goods, conducting online auctions, collecting payments and releasing sold items.

Who Can Participate in the Online Auctions?

Under the new rules, individuals possessing a valid Computerized National Identity Card (CNIC) or National Identity Card for Overseas Pakistanis (NICOP) can apply for registration through the FBR’s electronic auction platform.

Applicants must pay a one-time registration fee of at least Rs25,000. Once approved, each participant will receive a unique identification number, with registration confirmation sent through their registered email address or mobile phone number.

The authorized officer may verify the information submitted by applicants and reject an application if valid reasons exist. Any rejection must be supported by written grounds, including non-compliance with applicable procurement requirements.

Which Goods Will Be Sold Through the System?

The electronic auction mechanism will cover confiscated goods and seized items that have been cleared for disposal through an adjudication order.

Officials responsible for holding these goods must upload detailed inventories, photographs and relevant documentation to the online platform. They are also required to ensure the safe custody of the items and arrange inspections for interested bidders.

Before an auction is announced, the authorized officer must confirm that the goods can legally be sold. This includes checking for court-imposed restrictions, pending stay orders, applicable release or redemption options and other legal requirements.

Goods covered by an active judicial stay cannot be auctioned until the relevant restriction is lifted or otherwise ceases to apply.

How Will Reserve Prices Be Determined?

The FBR has established a valuation mechanism to determine the minimum prices at which auction lots can generally be sold.

A valuation committee comprising an additional commissioner, deputy commissioner and assistant commissioner of Inland Revenue will recommend the reserve price for each lot. Technical or valuation experts may also be consulted when necessary.

The committee may consider several factors when assessing the value of goods, including their age, physical condition and remaining shelf life. Depending on the nature of the items, the assessment may rely on sales tax invoice prices from the previous three tax periods, printed retail prices, customs-assessed values or prevailing market quotations.

If goods fail to sell in three consecutive auctions, the committee may reduce the reference reserve price by up to 10% at a time.

Online Bidding to Remain Open for 72 Hours

Auction notices will be published on the electronic platform, providing information about the available goods, reserve prices, inspection procedures, applicable taxes and duties, and the conditions governing delivery.

The online bidding period will run for 72 hours from the receipt of the first bid. During this period, the platform will display the highest valid offer and maintain records of bids, including their timestamps and bidder identification details.

After bidding closes, the authorized officer will process the highest offers and decide whether to accept or reject them. The rules require the highest qualifying offer to be accepted within 72 hours after the bidding period ends, subject to the applicable conditions.

Lower Offers May Be Accepted in Certain Cases

Generally, successful bids must meet or exceed the reserve price established for the relevant goods.

However, the rules provide an exception under which the Commissioner Inland Revenue may approve an offer below the reserve price, provided it is at least 80% of that price. Such approval may be considered after taking into account factors such as the physical condition and remaining shelf life of the goods.

This provision offers some flexibility in cases where the condition or marketability of auctioned items may affect their value.

Successful Bidders Must Pay Within Seven Days

Participants whose bids are accepted must pay the entire accepted amount within seven days of receiving the electronic acceptance notification.

The payment must also cover all applicable taxes, duties, fees and other charges associated with the purchase. Payments will be made through electronically generated challans and designated payment channels.

The FBR has made full payment verification a condition for releasing auctioned goods. Once the amount has been received and verified, an electronic release order will be issued to the custodian, allowing the goods to be handed over to the successful bidder.

Penalties for Failure to Complete Payment

Bidders who fail to pay within the prescribed deadline may face several consequences. Authorities can cancel the sale, confiscate bid security where applicable, offer the goods to the next highest valid bidder or arrange a fresh auction.

The rules also allow defaulting participants to be suspended from future auctions for up to six months after being given an opportunity to present their case. Other suspension periods may apply where specified under the relevant procurement rules.

These provisions are intended to discourage unsuccessful payment commitments and help ensure that auction proceedings are completed efficiently.

FBR Retains Powers to Cancel Auctions and Recover Goods

The revised framework gives the Commissioner Inland Revenue authority to cancel, suspend or recall auction proceedings and disqualify bidders in appropriate circumstances.

Where fraud, misrepresentation or a loss of government revenue is established, authorities may also recover goods even after they have been delivered to a purchaser.

Certain prohibited items, including arms and ammunition, narcotics and counterfeit goods, will generally remain outside the auction process unless the FBR issues specific directions permitting their disposal.

How Will Auction Revenue Be Distributed?

The rules also establish an order for distributing the proceeds generated through the sale of seized and confiscated goods.

First, the proceeds will be used to meet lawful expenses incurred in conducting the sale. Applicable taxes, duties, penalties, surcharges and other government dues will then be settled.

Any remaining amount payable to the original owner will be handled in accordance with section 40F of the Sales Tax Act, 1990.

What the New Rules Mean for Prospective Buyers

The electronic auction system introduces a formal online process for individuals interested in purchasing goods seized or confiscated by the authorities. Participants will have access to auction information through the electronic platform and will be able to submit bids without relying exclusively on conventional auction procedures.

However, prospective buyers should carefully review the terms of each auction, inspect goods where possible, consider the applicable taxes and charges, and ensure that funds are available before bidding. The seven-day payment deadline leaves limited time for arranging the full purchase amount after a bid is accepted.

Overall, the new framework establishes detailed procedures for registering bidders, valuing goods, conducting auctions and completing sales. Its practical impact will depend on how effectively the FBR implements the system and ensures compliance with the prescribed rules.

This article is based on the provisions described in SRO 1889(I)/2026. Readers should consult the official notification for the complete legal text and applicable conditions.

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In its October 2026 Regional Economic Outlook, the IMF reported that Pakistan’s inflation reached 11.1% in August, driven by rising food and energy prices. The Fund also expects imports to increase and remittance growth to moderate, potentially putting additional pressure on the country’s foreign exchange position.

The IMF cautioned that prolonged regional tensions could make oil imports more expensive and force Pakistan to consider further interest rate increases. Higher borrowing costs could also increase the government’s debt burden and limit spending on development.

Despite these challenges, Pakistan’s economic activity remained broadly resilient during the first half of 2026. However, limited fiscal space leaves the government with fewer options to provide widespread financial relief.

The IMF recommends prudent monetary and fiscal policies, improved tax collection and targeted assistance for vulnerable households.

Conclusion Pakistan’s economic outlook remains uncertain as geopolitical tensions threaten price stability and external financing. Strong economic management and structural reforms will be essential to control inflation and strengthen the country’s financial resilience.

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Pakistan’s Federal Board of Revenue (FBR) has introduced a new compliance requirement for the steel industry, directing registered manufacturers to install digital production monitoring systems by December 30, 2026. The initiative aims to strengthen oversight of steel production, improve transparency in product movement and reduce the risk of tax evasion.

The directive, issued under Sales Tax General Order (STGO) No. 29 of 2026, applies to steel manufacturers operating under the Sales Tax Act, 1990, and the Sales Tax Rules, 2006.

Which Steel Businesses Must Comply?

The new requirement covers three major categories of steel manufacturers:

• Steel melters: Businesses producing billets, ingots and other primary steel materials.
• Steel re-rollers: Units processing semi-finished steel into products such as bars, rods and reinforcing steel.
• Composite manufacturing units: Facilities carrying out multiple stages of steel production.

All registered manufacturers falling within the order’s scope must ensure that their production facilities and active manufacturing lines are equipped with the prescribed monitoring technology before the deadline.

How Will the New Monitoring System Work?

Under the FBR’s instructions, manufacturers will be required to use electronic systems that track production and record the movement of finished goods.

The technology will identify products, count output, verify dimensions and measure weight. Dispatches will also be documented through integrated weighbridges, capturing information such as vehicle registration numbers, estimated shipment weights and other relevant dispatch details.

By collecting this information electronically, the FBR will be able to compare reported production with actual shipments and investigate differences that could indicate unreported output or irregularities.

The system is intended to provide tax authorities with a clearer picture of manufacturing activity and the movement of steel products throughout the supply chain.

Installation Through FBR-Approved Vendors

Steel manufacturers must obtain and install the required equipment through vendors authorized by the FBR. The order identifies ISSM Labelling Solutions and Obsidian among the approved providers.

Businesses will also be responsible for keeping the systems operational and ensuring that the collected information is transmitted securely and continuously to the FBR’s Central Control Unit.

Simply installing the equipment will not be sufficient. Manufacturers must maintain its proper functioning and comply with the reporting and data-transmission requirements specified in the order.

Strict Rules for Equipment Failures and Operational Changes

The new framework introduces specific reporting obligations for manufacturers.

Any system breakdown, equipment damage or suspected tampering must be reported to the relevant authorities within one hour. Businesses must also provide 30 days’ advance notice of changes that could affect their production lines or dispatch arrangements.

These provisions are intended to help the FBR maintain uninterrupted monitoring and identify potential gaps in production records.

Steel Dispatches Without Digital Records Prohibited

One of the most significant provisions of the order concerns the movement of steel products. Manufacturers covered by the directive will not be permitted to remove or supply specified goods unless their production and dispatches have been recorded through the approved monitoring system.

Traditional documentation alone will not meet the new requirements. The FBR has clarified that manual registers, privately installed cameras and independent weighbridge records cannot replace the prescribed electronic monitoring arrangements.

This makes digital traceability a central part of the compliance process for affected steel businesses.

FBR to Monitor Implementation Across the Industry

The FBR has instructed Chief Commissioners Inland Revenue to identify operational steel manufacturing facilities, supervise the installation process and ensure that businesses follow the new rules.

Manufacturers that fail to install or operate the required equipment, remove goods without proper electronic records, conceal production facilities or interfere with monitoring devices may face legal action under the applicable sales tax legislation and rules.

The potential consequences make timely preparation essential for businesses that fall within the scope of the order.

What Should Steel Manufacturers Do Before the Deadline?

With December 30, 2026, set as the compliance deadline, affected businesses should begin reviewing their existing production and dispatch procedures.

Manufacturers should confirm whether their facilities fall under the order, contact an authorized vendor, assess the equipment required for each active production line and make arrangements for installation and testing. They should also establish internal procedures for reporting technical failures, notifying authorities about operational changes and maintaining reliable electronic records.

Early preparation can help businesses avoid last-minute installation difficulties and reduce the risk of disruption to their operations.

Conclusion

The FBR’s new production monitoring requirement represents a significant compliance development for Pakistan’s steel industry. By requiring electronic tracking of manufacturing output and dispatches, the tax authority aims to improve reporting accuracy, strengthen enforcement and discourage the movement of unrecorded goods.

For registered steel melters, re-rollers and composite manufacturers covered by the order, December 30, 2026, is the key deadline. Businesses should take the necessary steps to install and operate the approved systems, understand their reporting obligations and ensure that steel production and dispatches are properly recorded.

Compliance will be important not only for meeting the FBR’s requirements but also for maintaining smooth business operations under the updated regulatory framework.

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OpenAI is expanding its advertising operations to Pakistan and 25 additional countries, marking another major step in the company’s efforts to grow its business and diversify its revenue sources. With this latest expansion, ChatGPT advertising is now available across 89 markets worldwide.

The move reflects OpenAI’s growing focus on advertising as a source of income as the company continues to expand its artificial intelligence services and prepares for the possibility of a future initial public offering (IPO).

ChatGPT Ads Arrive in Pakistan

Pakistan is among the newly added markets where advertisers can reach ChatGPT users through the platform’s advertising services. The expansion also includes countries across Latin America, Europe, the Middle East, Africa and Asia.

Several countries joining the rollout include Bangladesh, Cambodia, Nigeria, South Africa, Serbia and Ukraine. In Latin America, new markets include Argentina, Chile, Colombia and Peru, following earlier advertising launches in Mexico and Brazil.

The expansion provides businesses in these countries with another digital channel to promote their products and services to potential customers.

Which ChatGPT Users Will See Ads?

OpenAI has clarified that advertising will be limited to ChatGPT’s Free and Go subscription tiers. Users subscribed to Plus, Pro and Enterprise plans will continue to enjoy an advertising-free experience.

This approach allows OpenAI to introduce an additional revenue stream while maintaining its existing premium subscription offering for customers who prefer not to see advertisements.

For users in Pakistan, the introduction of ads represents a potential change to the experience available on eligible plans. The precise advertising experience may depend on how the company implements its rollout in each market.

OpenAI’s Advertising Business Continues to Grow

The international expansion follows significant growth in OpenAI’s advertising operations. According to the reported figures, the company’s advertising business reached an annualised revenue run rate of $1 billion in August.

OpenAI also reported that more than 100,000 advertisers had run campaigns on ChatGPT since the company began testing advertisements on its Free and Go plans in the United States earlier in the year.

These developments suggest that the company sees advertising as an increasingly important part of its long-term business strategy.

How Can Businesses Advertise on ChatGPT?

Businesses in newly supported markets can access ChatGPT advertising through technology partners or OpenAI’s self-service Ads Manager platform.

The availability of these options could make it easier for advertisers to explore campaigns on the platform, depending on local access and eligibility requirements.

For companies seeking new ways to connect with online audiences, ChatGPT advertising could become another option alongside established digital advertising channels.

Advertising and OpenAI’s Potential IPO

OpenAI’s expansion into more advertising markets comes as the company looks for ways to strengthen its financial position ahead of a potential IPO.

Developing advertising services alongside subscriptions and other commercial offerings could help the company diversify its revenue sources. However, the expansion alone does not confirm that an IPO will take place or establish a timeline for such a move.

OpenAI has also been exploring additional advertising-related capabilities, including AI-powered advertising tools and business-sponsored agents, as part of its broader efforts to develop its commercial platform.

What This Expansion Means for Pakistan

The arrival of ChatGPT advertising creates new opportunities for businesses interested in reaching audiences through AI-powered platforms. It also introduces the possibility that users of the free service will encounter sponsored content while interacting with ChatGPT.

At the same time, users who prefer an ad-free experience can continue to use eligible paid subscription plans, including Plus and Pro.

As the rollout develops, advertisers and users in Pakistan will be watching to see how the new system works, what advertising options become available locally and how the company balances commercial growth with the quality of the ChatGPT experience.

Conclusion

OpenAI’s decision to extend ChatGPT advertising to Pakistan and 25 other countries marks a significant expansion of its advertising business. With 89 markets now included, the company is positioning ChatGPT as not only an AI assistant but also a platform for digital advertising.

The development could create new opportunities for advertisers while changing how some free-tier users experience the service. Its longer-term impact will depend on advertiser adoption, user response and OpenAI’s ability to balance revenue growth with user trust.

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During a high-level consultation chaired by Federal Commerce Minister Jam Kamal Khan at the Ministry of Commerce, exporters called for stronger bilateral trade arrangements to help Pakistani products compete more effectively in global markets. The meeting brought together representatives from different industries, senior government officials and policymakers to discuss the challenges facing the country’s export-oriented businesses.

Trade Agreements Seen as Key to Export Growth

Exporters stressed that India and Bangladesh benefit from preferential trade arrangements in several markets, giving their products a competitive advantage. They urged the government to identify these markets and explore opportunities for negotiating improved trade terms for Pakistani goods.

Better market access could help Pakistani businesses attract international buyers, expand their customer base and strengthen the country’s position in global supply chains. Industry representatives also emphasized the importance of diversifying export destinations and reducing dependence on a limited number of markets.

High Energy Costs Put Pressure on Industries

One of the major concerns raised by exporters was the increasing cost of energy and industrial production. Rising electricity and gas prices, along with the levy on gas supplied to captive power plants and provincial infrastructure charges, are putting additional pressure on manufacturers.

Higher operating expenses make it difficult for Pakistani companies to offer competitive prices in international markets. Exporters therefore called for measures to reduce the cost of doing business and create a more supportive environment for industrial growth.

The government acknowledged these concerns, with the commerce minister recognizing that energy prices, freight charges, taxation and changing international trade conditions were affecting export performance.

Delayed Tax Refunds and Banking Restrictions Remain Challenges

Exporters also highlighted delays in tax refunds, which can restrict cash flow and make it harder for businesses to finance production and fulfil new orders.

Officials from the Federal Board of Revenue discussed initiatives aimed at improving refund processing and expanding digital invoicing. However, business representatives emphasized the need for practical improvements that allow companies to receive their outstanding refunds without unnecessary delays.

Banking regulations and international payment settlement requirements were other important issues discussed during the consultation. Exporters called for greater flexibility in payment timelines, particularly when shipping delays and disruptions in global logistics affect their ability to complete transactions.

Improving these processes could help businesses manage working capital more effectively and maintain stronger relationships with overseas customers.

Shipping Disruptions and Port Efficiency Under Scrutiny

International shipping delays and rising transportation expenses are creating additional difficulties for Pakistani exporters. Delays in the movement of goods can increase costs, disrupt delivery schedules and weaken the confidence of international buyers.

Industry representatives called for better port facilitation and more effective coordination among the relevant authorities. They also stressed that export growth requires reliable logistics infrastructure and regulations that can accommodate disruptions in international trade.

EXIM Bank Financing Offers Encouragement

Exporters welcomed the financing initiative introduced by the Export-Import Bank of Pakistan, describing it as a positive step towards improving access to financial resources.

Affordable and accessible export financing can help businesses purchase raw materials, invest in equipment, increase production and enter new markets. For smaller exporters in particular, suitable financing arrangements can play an important role in supporting expansion.

Nevertheless, industry representatives stressed that financing support must be accompanied by improvements in energy costs, taxation, logistics and market access to deliver stronger results.

Livestock and Meat Exporters Face Market Access Barriers

The livestock and meat industry also raised concerns about difficulties in accessing Gulf markets. Foot-and-mouth disease, international sanitary requirements and border restrictions continue to create obstacles for businesses seeking to increase exports.

Commerce Minister Jam Kamal Khan highlighted the government’s interest in developing the livestock sector through disease control, better breeding practices, investment and the promotion of value-added products.

Plans for a dedicated board led by the private sector were also discussed as part of efforts to support livestock development and improve the sector’s export potential.

Addressing animal health requirements and strengthening compliance with international standards will be essential if Pakistan wants to expand its meat and livestock exports.

Mineral and Surgical Instruments Sectors Seek Modernization

Representatives from the mineral sector highlighted restrictions affecting mining explosives and concerns over withholding taxes. These issues, they argued, can affect production activities and increase the financial burden on businesses.

Meanwhile, representatives of the surgical instruments industry called for greater investment in technology, workforce training and industrial modernization.

Pakistan’s surgical instruments sector has opportunities to strengthen its international position, but maintaining competitiveness requires continuous improvements in product quality, manufacturing processes and compliance with global standards.

Investment in advanced machinery and skilled workers could help local manufacturers move towards higher-value products and meet the changing requirements of international customers.

Government to Prepare Recommendations for the Prime Minister

During the meeting, the commerce minister stressed the need to move beyond general discussions and develop specific, workable solutions for exporters.

Minister of State for Finance and Revenue Bilal Azhar Kayani also encouraged government departments to document industry concerns and provide clear responses. The objective is to turn the issues raised by businesses into actionable recommendations for consideration by Prime Minister Shehbaz Sharif.

The Ministry of Commerce is expected to consolidate sector-specific and broader business concerns before presenting its recommendations. Further consultations were scheduled for October 21 to review unresolved issues and finalize proposals.

What Pakistan Needs to Strengthen Its Export Competitiveness

Pakistan’s ability to compete with India and Bangladesh will depend on more than negotiating better trade agreements. Although improved market access is important, exporters also need a business environment that supports efficient production, timely payments and consistent product quality.

Several measures could help achieve this goal:

• Negotiate better market access: Identify markets where competitors receive preferential treatment and explore mutually beneficial trade arrangements.
• Reduce production costs: Review energy tariffs and other industrial charges that increase the cost of locally manufactured goods.
• Speed up tax refunds: Improve administrative processes so exporters can access their funds more efficiently.
• Improve trade finance: Expand access to suitable financing and streamline banking procedures for international transactions.
• Strengthen logistics: Improve port operations, shipping coordination and payment flexibility during supply chain disruptions.
• Invest in technology and skills: Encourage modern manufacturing, workforce development and higher-value production.
• Meet international standards: Strengthen quality assurance, animal disease control and regulatory compliance to improve access to demanding export markets.
• Expand export destinations: Develop new markets and reduce reliance on a narrow range of products and buyers.

Conclusion

Pakistan’s exporters are calling for a coordinated strategy to address the structural problems that limit their ability to compete internationally. Better trade agreements with key markets could create new opportunities, but their benefits will remain limited unless businesses can also operate with manageable production costs, reliable logistics and efficient financial systems.

The government’s upcoming policy recommendations will be an important opportunity to translate industry concerns into concrete reforms. If trade negotiations are combined with improvements in taxation, energy pricing, financing, technology and regulatory procedures, Pakistan could strengthen its export base and create better opportunities for sustainable industrial growth.

Ultimately, improving export competitiveness requires consistent cooperation between the government and the private sector, with a shared focus on productivity, innovation, market diversification and long-term economic development.

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Pakistan is preparing to take a significant step toward strengthening its position in the global digital landscape, with the country expected to become the first signatory of the Digital and AI Compact at the Global AI and Digital Summit 2026 in South Korea. The development highlights Pakistan’s growing focus on artificial intelligence, digital transformation, and international cooperation in emerging technologies.

Federal Minister for Information Technology and Telecommunication Shaza Fatima Khawaja has travelled to South Korea to represent Pakistan at the international gathering. The summit will bring together representatives and policymakers to discuss the future of artificial intelligence, digital development, and equitable access to technology.

Pakistan to Present Its Vision for AI and Digital Transformation

A key part of Pakistan’s participation will be the presentation of its national roadmap for digital transformation and artificial intelligence. During a dedicated session on the Digital and AI Compact, Minister Shaza Fatima is expected to outline the country’s plans for adopting emerging technologies and expanding digital services.

Pakistan’s participation reflects its efforts to strengthen its digital infrastructure, encourage technological innovation, and improve access to modern digital solutions. Artificial intelligence is increasingly influencing industries, public services, education, healthcare, and economic development, making international collaboration an important part of national technology planning.

By presenting its priorities at the summit, Pakistan will have an opportunity to communicate its ambitions for building a more connected and technologically advanced society.

Meetings with Google and World Bank Officials

Alongside the summit proceedings, the IT minister is scheduled to hold important bilateral meetings with senior representatives of Google and the World Bank.

Her planned meeting with Google’s vice president is expected to focus on areas of mutual interest and potential cooperation. Discussions with the global technology company could provide an opportunity to explore ways to support Pakistan’s digital ecosystem and technological development.

The minister will also meet the World Bank’s vice president to discuss possible collaboration in digital and technology-related sectors. Such engagement could help identify opportunities for supporting digital infrastructure, expanding access to technology, and promoting sustainable digital development.

These meetings demonstrate the importance of partnerships between governments, international financial institutions, and global technology companies in advancing digital transformation.

Digital Inclusion Remains a Key Priority

An important theme of the summit will be ensuring that the benefits of digital technology reach people across different communities. Minister Shaza Fatima is expected to participate in discussions on fair access to the internet and digital services, with particular attention to digital inclusion.

For Pakistan, improving connectivity and widening access to digital opportunities remain important challenges. Affordable internet access, digital literacy, and the availability of reliable online services can help individuals, businesses, students, and communities participate more effectively in the digital economy.

Artificial intelligence also presents opportunities to improve productivity, support innovation, and enhance public service delivery. However, these benefits depend on responsible adoption, appropriate infrastructure, and access to the skills required to use emerging technologies effectively.

Why the Digital and AI Compact Matters for Pakistan

Becoming the first country to sign the Digital and AI Compact, if completed as anticipated, would represent a notable moment in Pakistan’s international digital engagement. It could strengthen the country’s visibility in discussions about the future of AI and digital cooperation.

The broader significance will depend on how Pakistan translates its commitments into practical initiatives. Effective implementation, investment in digital skills, stronger infrastructure, and cooperation with international partners will be essential to achieving meaningful results.

The summit also provides an opportunity for Pakistan to learn from international experiences and contribute to discussions about making artificial intelligence and digital services more accessible.

A Step Toward a More Connected Future

Pakistan’s participation in the Global AI and Digital Summit 2026 reflects its ambition to play a more active role in the evolving global technology landscape. The expected signing of the Digital and AI Compact, together with planned discussions involving Google and the World Bank, places digital transformation and international collaboration at the center of the country’s agenda.

While international commitments can open new doors, long-term progress will depend on turning policy goals into measurable improvements for citizens and businesses. With sustained investment, effective implementation, and a strong focus on digital inclusion, Pakistan has an opportunity to expand its technological capabilities and build a more inclusive digital economy.

The summit could therefore serve as an important platform for advancing Pakistan’s digital ambitions and strengthening its engagement with the global AI community.

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Pakistan’s federal government is considering major changes to the country’s tax administration, including the possibility of establishing a new tax collection agency or further restructuring the Federal Board of Revenue (FBR). The move comes amid concerns over revenue performance and the limited results of previous reform efforts.

Prime Minister Shehbaz Sharif has directed the FBR to prepare a comprehensive reform plan by October 19, covering human resources, institutional restructuring, and administrative improvements. The proposals are expected to help the government determine how Pakistan’s tax collection system can become more effective.

Government Explores Options for Tax Administration Reform

The idea of creating a separate national tax collection agency was discussed during a high-level government meeting held last Saturday. Following the meeting, FBR Chairman Rashid Langrial instructed officials to prepare recommendations for consideration by the prime minister.

However, the government has not yet made a final decision. Discussions are still at an early stage, and officials are examining different approaches to improving the existing system before determining the next course of action.

According to reports published by The Express Tribune, the FBR is working on proposals in line with the prime minister’s instructions. The board has indicated that the current emphasis remains on strengthening existing operations through staffing changes, improved technology, and more efficient administrative procedures.

The FBR has also dismissed speculation that tax collection responsibilities could be handed over to a private company.

What Could a New Tax Agency Mean for the FBR?

One proposal under consideration involves establishing a separate tax collection organisation while allowing the FBR to continue operating alongside it. Under this arrangement, employees who do not move to the new institution could remain in their existing positions until retirement.

Such a change would require significant legal and administrative adjustments. Establishing a new agency with powers currently held by the FBR could involve amendments to the Federal Board of Revenue Act, 2007, as well as changes to other relevant tax laws.

The final structure will depend on the government’s assessment of the available options and the recommendations submitted by the FBR.

Previous Reform Efforts Have Yet to Resolve Key Challenges

Pakistan has attempted to modernize its tax administration several times over the past two decades. These initiatives have included transforming the Central Board of Revenue into the FBR, reorganizing employee service structures, and introducing changes to the institution’s operational framework.

In 2024, the government also launched a transformation programme worth more than Rs55 billion to improve the tax system. An earlier proposal under the caretaker government sought to separate Customs operations from Inland Revenue functions.

Despite these efforts, concerns about revenue collection and the country’s narrow tax base remain central to the government’s economic agenda. The latest discussions reflect another attempt to address longstanding structural challenges within the tax administration.

Pakistan Faces Pressure to Increase Tax Revenue

The proposed reforms come at a time when Pakistan is under pressure to strengthen public finances and improve domestic revenue generation.

The country’s tax-to-GDP ratio stood at 10.3% in the previous fiscal year, while the FBR collected more than Rs1.1 trillion less than its original annual target. These figures highlight the gap between the government’s revenue ambitions and actual collection performance.

For the current fiscal year, the government has set an ambitious tax collection target of Rs15.263 trillion. Achieving this goal would require revenue growth of more than 17%, placing additional pressure on the tax administration to improve compliance and collection efficiency.

Expanding the number of taxpayers, reducing tax evasion, improving documentation of economic activity, and making tax procedures more transparent are among the broader issues facing Pakistan’s revenue system.

Technology and Administrative Changes Could Play a Key Role

Whether the government establishes a new agency or restructures the FBR, the effectiveness of the reforms will depend on their implementation.

Better digital systems could help identify undeclared economic activity, improve monitoring, and reduce opportunities for errors or manipulation. Clearer accountability mechanisms and more efficient internal processes could also support better performance.

At the same time, institutional restructuring alone may not be sufficient to address the country’s revenue challenges. Sustainable improvements will also depend on broader tax policy, compliance, public confidence, and the government’s ability to bring more economic activity into the documented tax system.

October 19 Deadline Could Shape the Next Phase

Prime Minister Shehbaz Sharif is expected to review the FBR’s reform proposals on October 19. The review could help clarify whether the government intends to retain the existing institutional structure with significant changes or move towards creating a separate tax collection agency.

For now, the proposal remains under consideration, and no final policy decision has been announced.

The outcome could have important implications for Pakistan’s tax administration, government revenue, and the way individuals and businesses interact with the tax system. The key question is whether the proposed changes will deliver lasting improvements in tax collection, institutional accountability, and compliance.

Ultimately, the success of the reform process will be measured not simply by the creation of a new organization or changes to the FBR’s structure, but by its ability to produce more consistent revenue growth and a more transparent, efficient tax system.

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Pakistan’s agricultural sector could see significant changes under a new proposal by the Securities and Exchange Commission of Pakistan (SECP) to establish a national agricultural spot market. The proposed initiative aims to create a more organized system for buying and selling agricultural commodities while helping farmers secure better prices, reduce crop wastage and obtain financing through formal channels.

The planned digital marketplace would bring farmers, commodity buyers, warehouse operators and banks onto a common platform. By introducing transparent trading procedures and modern storage arrangements, the initiative seeks to address some of the longstanding problems affecting Pakistan’s agricultural supply chain.

SECP Introduces a New Vision for Agricultural Markets

SECP Chairman Dr Kabir Ahmed Sidhu presented the proposal at the Pakistan Institute of Development Economics’ international conference, “Mission 100 Billion Dollars.”

The proposed system would rely on digital trading, standardized commodity grading and electronic warehouse receipts to improve the efficiency of agricultural transactions. Rather than depending entirely on traditional market arrangements, farmers could access a more transparent mechanism for finding buyers and negotiating prices.

Under the suggested framework, provincial authorities would continue regulating agricultural markets, while the SECP would help develop the technological systems needed to support the initiative.

The proposal reflects an effort to modernize agricultural commerce and establish stronger links between farming, financial services and commodity markets.

Reducing Agricultural Waste Could Deliver Major Economic Benefits

Crop losses after harvesting remain a significant challenge for Pakistan. Inadequate storage, inefficient transportation and limited access to suitable facilities can force farmers to sell produce quickly or allow crops to deteriorate before reaching consumers.

According to figures presented by the SECP chairman, post-harvest losses are estimated at between 20 and 40 per cent. With crop production valued at approximately Rs8.8 trillion, these losses represent a substantial economic burden.

Agriculture accounts for around 23.44 per cent of Pakistan’s gross domestic product, making improvements in this sector important for rural livelihoods and overall economic performance.

Sidhu estimated that reducing crop losses by just one percentage point could preserve approximately Rs88 billion in economic value.

Expanding storage facilities and improving supply chain management could therefore help farmers retain more of their produce, reduce unnecessary waste and increase the availability of agricultural commodities in domestic markets.

Limited Storage Capacity Remains a Major Concern

Pakistan’s existing warehouse infrastructure is considerably smaller than the volume of agricultural commodities produced each year.

The SECP chairman cited approved warehouse capacity of approximately 326,000 metric tonnes, compared with annual production of around 55.7 million metric tonnes of dry agricultural commodities suitable for conventional storage.

This imbalance highlights the need for investment in modern warehouses, temperature-controlled storage and more efficient distribution networks.

Better storage facilities would allow farmers to preserve crop quality for longer periods. They could also help stabilize supplies, reduce seasonal pressure on prices and improve the reliability of agricultural exports.

Encouraging private investment in storage infrastructure could be an important part of addressing this challenge.

Digital Warehouse Receipts Could Open New Financing Opportunities

One of the most important elements of the proposed marketplace is its plan to introduce electronic warehouse receipts.

Under the proposed arrangement, farmers would store their produce in approved warehouses and receive electronic documents confirming the quantity and ownership of their stored commodities. These receipts could then be presented to banks as collateral for loans.

This mechanism could give farmers greater financial flexibility after harvesting. Many producers need immediate cash to repay existing debts, cover household expenses or prepare for the next growing season. As a result, they may have little choice but to sell their crops when market prices are relatively low.

Access to loans against stored produce could reduce this pressure and allow farmers to make selling decisions based on market conditions rather than urgent financial needs.

The system could also help connect agricultural production with formal banking services, although its success would depend on reliable warehouse operations, appropriate lending arrangements and effective protection against fraud.

Wheat, Rice, Maize, Cotton and Sugar in the Initial Phases

The SECP has proposed introducing the digital marketplace in stages, initially focusing on wheat, rice, maize, cotton and sugar.

Standardized grading and quality assessment would help ensure that commodities are evaluated according to consistent requirements. Transparent bidding would allow buyers to compete for available produce, potentially improving price discovery.

Digital records of transactions and commodity inventories could also make it easier to monitor market activity and reduce opportunities for manipulation.

The proposal further calls for the registration of traders and commission agents to improve accountability across the trading process.

However, digital systems will need to be supported by reliable payment arrangements, clear rules for resolving disputes and practical procedures for moving commodities between markets and storage facilities.

Better Price Discovery Could Strengthen Farmers’ Bargaining Power

Farmers often have limited access to information about prevailing prices in different markets. This can weaken their negotiating position, particularly when they depend on intermediaries to sell their produce.

A nationwide digital platform could help address this information gap by making bids and trading activity more transparent.

With access to a broader pool of buyers, farmers could potentially identify more competitive offers and make better-informed selling decisions. Standardized quality assessments could also help buyers distinguish between different grades of produce and pay accordingly.

Nevertheless, better prices would not be guaranteed automatically. The actual benefits would depend on the number of active buyers, the competitiveness of bidding, transportation costs and farmers’ ability to access the platform.

Ensuring that smallholders can participate on fair terms will be essential to achieving the proposal’s intended goals.

Coordination and Infrastructure Will Be Critical

Establishing a national agricultural spot market will require cooperation among provincial governments, financial institutions, warehouse operators, traders and technology providers.

Provincial differences in agricultural market regulations, licensing requirements, fees and commodity transportation procedures could create implementation challenges if they are not addressed effectively.

The country will also need sufficient certified warehouses, dependable quality inspection services and secure electronic recordkeeping systems.

Farmer awareness will be another important consideration. Training and accessible digital services could help rural communities understand how to use the platform, obtain financing and participate in competitive trading.

Without these supporting measures, the marketplace may struggle to deliver its full potential.

SECP Also Targets Broader Financial Market Reforms

In addition to the agricultural initiative, the SECP chairman discussed plans to expand participation in Pakistan’s capital markets.

The regulator aims to increase the stock market investor base to 2.5 million through measures that include financial education campaigns for young people and simpler procedures for opening investment accounts.

The SECP also highlighted the importance of investor protection, dependable financial reporting and stronger supervision of audit firms. An independent legal framework for overseeing audit firms was discussed as a way to improve corporate disclosures and reinforce confidence in the financial system.

These measures form part of a broader effort to encourage financial inclusion and improve transparency across Pakistan’s markets.

Conclusion

The proposed national agricultural spot market offers Pakistan an opportunity to improve agricultural trading through digital technology, better storage and stronger connections with the banking sector.

By enabling farmers to store their crops, access financing and participate in more transparent bidding, the initiative could help reduce post-harvest losses and improve their ability to negotiate competitive prices.

However, achieving these outcomes will require more than a digital platform. Investment in warehouses, effective regulation, reliable payments and inclusive access for small-scale farmers will be equally important.

If implemented successfully, the proposal could contribute to a more efficient agricultural supply chain, stronger rural incomes and a more resilient economy. The key challenge will be ensuring that the planned reforms translate into practical, measurable benefits for farmers throughout Pakistan.

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Pakistan’s economic recovery, fiscal reforms and long-term development priorities came under discussion during a meeting between International Monetary Fund (IMF) Deputy Managing Director Nigel Clarke and Federal Finance Minister Muhammad Aurangzeb on the sidelines of the World Bank Group–IMF Annual Meetings 2026 in Bangkok, Thailand.

During the meeting, Clarke stressed the need for Pakistan to strengthen its revenue collection system and maintain adequate foreign exchange reserves to support sustainable economic growth. He highlighted the importance of investing in human capital, infrastructure, healthcare, education and other essential public services while maintaining fiscal discipline.

IMF Highlights the Need for Stronger Economic Foundations

The IMF official emphasized that a stable economic environment requires consistent policies, effective revenue mobilization and sufficient financial buffers to manage unexpected economic challenges. For Pakistan, these measures are particularly important given its exposure to external financial pressures, climate-related risks and regional uncertainties.

Improved tax collection could help the government generate additional resources for development without relying excessively on borrowing. Similarly, maintaining sufficient foreign exchange reserves can strengthen the country’s ability to meet external payment obligations and manage economic shocks.

The discussions also focused on ensuring that fiscal adjustments do not undermine spending on essential services, particularly health and education, which are important for improving living standards and supporting long-term productivity.

Finance Minister Highlights Progress on Key Economic Indicators

Finance Minister Muhammad Aurangzeb briefed the IMF leadership on Pakistan’s recent economic performance and ongoing reform efforts. He pointed to a fiscal deficit that has fallen to a 22-year low, alongside three consecutive years of primary budget surpluses.

Pakistan’s economy recorded growth of 3.7%, according to the figures cited by the finance minister. He also highlighted improvements in foreign exchange reserves, which he said had reached a historically high level sufficient to cover approximately three months of imports.

These developments, according to Aurangzeb, reflect progress in stabilizing the economy and strengthening its capacity to withstand financial pressures. He also referred to sovereign credit rating upgrades, Pakistan’s September Eurobond issuance and the IMF staff-level agreement reached on October 7 as signs of renewed engagement with international financial markets.

However, sustaining these gains will require continued policy consistency, stronger domestic revenue generation and reforms that encourage private investment and productive economic activity.

Targeted Subsidies to Protect Vulnerable Households

The government also discussed measures to reduce the impact of economic pressures on low-income households. Aurangzeb outlined targeted fuel subsidies designed to provide relief to vulnerable segments of society while preserving social stability.

He emphasized that such support should remain targeted, time-bound and budget-neutral. This approach aims to help households facing financial difficulties without placing additional strain on public finances.

The challenge for policymakers will be to balance immediate relief with longer-term economic priorities. Well-designed assistance programmed can help protect vulnerable communities while allowing the government to maintain fiscal discipline and direct resources towards development.

Regional Cooperation and Economic Resilience

Beyond Pakistan’s domestic economic situation, Aurangzeb highlighted broader regional challenges during the Middle East, North Africa, Afghanistan and Pakistan (MENAP) meeting with the IMF Managing Director.

He called for greater diversification of energy supplies and trade routes to reduce exposure to external disruptions. He also stressed the importance of stronger regional economic integration and increased investment in logistics and food systems.

For Pakistan, improving trade connectivity and strengthening supply chains could create opportunities to expand exports, attract investment and reduce vulnerability to international market fluctuations. Greater cooperation among regional economies may also help improve access to essential goods and support economic resilience.

The finance minister reaffirmed Pakistan’s commitment to multilateral cooperation and expressed the country’s willingness to contribute to regional initiatives aimed at promoting shared economic progress.

The Road Ahead for Pakistan’s Economy

Pakistan’s reported fiscal improvements and economic growth provide a basis for continued stabilization, but maintaining progress will depend on addressing structural weaknesses. Broadening the tax base, improving tax compliance, encouraging exports, strengthening public financial management and creating a more predictable environment for investment remain important priorities.

Equally significant is the need to ensure that economic reforms translate into tangible benefits for ordinary citizens. Sustainable growth requires not only stronger financial indicators but also better employment opportunities, improved public services and greater protection for vulnerable households.

The IMF’s message reinforces the importance of combining financial stability with development spending. Adequate foreign exchange reserves can provide a cushion against external shocks, while stronger domestic revenues can help finance infrastructure, education, healthcare and other essential services.

Conclusion

The meeting between Nigel Clarke and Muhammad Aurangzeb highlighted the connection between economic stability and Pakistan’s long-term development ambitions. While the government has reported progress in reducing the fiscal deficit, maintaining primary surpluses and supporting economic growth, continued reforms will be essential to preserve these gains.

Pakistan’s future economic performance will depend on its ability to mobilize domestic resources, maintain adequate reserves, protect vulnerable communities and create opportunities for sustainable investment. Achieving these objectives could help the country move towards a more resilient economy in which financial stability supports inclusive and lasting development.

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The Securities and Exchange Commission of Pakistan (SECP) has introduced a new guidebook on Targeted Financial Sanctions (TFS) to improve regulatory compliance and strengthen efforts to prevent terrorist financing and other illegal financial activities.

The guidebook provides practical instructions for entities operating under SECP’s regulatory oversight, helping them understand and implement applicable sanctions requirements. The initiative is aimed at reducing the risk of financial services being exploited by individuals or organizations involved in terrorism, proliferation financing, or other illicit activities.

Key Requirements Under the New Guidebook

The guidebook highlights several important responsibilities that regulated entities must fulfil to ensure compliance with Pakistan’s applicable financial sanctions framework.

1. Screening Customers and Beneficial Owners

Regulated entities are expected to screen existing customers, potential clients and beneficial owners against relevant sanctions lists and official notifications. This process helps identify individuals and organizations that may be subject to financial restrictions.

Regular screening and effective monitoring are essential to ensure that potential matches are identified and assessed promptly.

2. Freezing Funds and Assets Without Delay

When a person or entity is identified as designated under the applicable sanctions regime, regulated entities must take the required action to freeze the relevant funds and assets without delay.

These measures are intended to prevent designated individuals and organizations from accessing or moving financial resources in violation of applicable sanctions requirements.

3. Reporting to Relevant Authorities

The guidebook emphasizes the importance of reporting required actions to the appropriate authorities within the prescribed timeframes. Regulated entities should maintain clear procedures for escalating potential sanctions matches, documenting decisions and submitting reports as required by law and regulation.

Timely reporting supports regulatory oversight and strengthens efforts to prevent the misuse of the financial system.

4. Strengthening Internal Compliance Controls

In addition to screening and reporting, the guidebook addresses the need for effective internal compliance arrangements. These include maintaining accurate records, conducting regular sanctions checks, raising employee awareness and establishing monitoring mechanisms to identify potential risks.

Organizations should periodically review their existing controls to identify weaknesses and ensure that their compliance procedures remain effective.

SECP Highlights the Importance of AML/CFT/PF Compliance

The introduction of the guidebook follows awareness sessions organized by SECP in collaboration with the National Counter Terrorism Authority (NACTA).

These sessions were designed to improve understanding of Pakistan’s Anti-Money Laundering, Countering Financing of Terrorism and Proliferation Financing (AML/CFT/PF) framework among entities regulated by SECP.

The initiative reflects the importance of cooperation between regulatory authorities and the financial sector in promoting responsible business practices and preventing financial services from being used for unlawful purposes.

What the Guidebook Means for Regulated Entities

The new resource encourages regulated organizations to assess whether their existing policies, procedures and systems adequately address targeted financial sanctions obligations.

Businesses may need to review their customer screening processes, strengthen internal reporting channels, update compliance documentation and provide appropriate training to employees responsible for identifying and managing sanctions-related risks.

A proactive approach can help organizations reduce regulatory exposure, improve operational controls and respond more effectively to potential sanctions matches.

However, the guidebook is intended to serve as a practical reference rather than a replacement for existing legal requirements. Regulated entities must continue to comply with applicable laws, regulations, directives and official notifications.

Strengthening Pakistan’s Financial Security

Targeted financial sanctions are an important tool for restricting access to financial resources by designated individuals and entities. Effective implementation depends on timely screening, appropriate asset-freezing measures, accurate reporting and strong internal controls.

Through this guidebook, SECP aims to encourage a more consistent approach to sanctions compliance across the sectors under its supervision. The initiative also reinforces the role of regulated entities in protecting the integrity of Pakistan’s financial system and reducing the risks associated with terrorist financing and proliferation financing.

Conclusion

SECP’s new Targeted Financial Sanctions guidebook is a practical step toward improving compliance standards and strengthening financial safeguards in Pakistan. By clarifying key responsibilities related to customer screening, asset freezing, reporting and internal monitoring, the guidebook can help regulated entities better understand their obligations.

Organizations should review their existing compliance frameworks and address any gaps to ensure that their practices remain aligned with applicable regulatory requirements. Strong sanctions compliance not only supports legal and regulatory adherence but also contributes to a more secure, transparent and resilient financial system.

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The State Bank of Pakistan (SBP) has introduced the second edition of its Banking on Equality (BoE) Policy for 2026, reaffirming its commitment to improving women’s access to financial services and promoting gender equality in the banking sector. The policy aims to reduce the gender gap in financial inclusion to 25% by 2028 as part of the National Financial Inclusion Strategy (NFIS).

The updated policy builds on the progress achieved since the launch of the original initiative in 2021. It introduces additional measures to encourage women’s participation in banking, expand digital financial services, support women-led businesses and improve access to financing across different economic sectors.

Progress in Women’s Financial Inclusion

Pakistan has made notable progress in reducing disparities in financial inclusion over the past few years. According to SBP, the gender gap in financial inclusion declined from 39% in 2021 to 29% in 2025.

The earlier Banking on Equality Policy also contributed to greater female representation in the banking workforce. Banks recruited more than 17,500 women during this period, while the proportion of female employees increased from 13% to 17%. Several banks also established dedicated departments and teams to develop financial products and services tailored to women’s needs.

Building on these achievements, the new policy aims to accelerate progress and address the remaining barriers that limit women’s participation in the formal financial system.

More Employment Opportunities for Women in Banking

One of the major priorities of BoE 2026 is to improve women’s representation and career development within financial institutions. The policy establishes targets relating to women’s recruitment, customer outreach and participation in branchless banking networks.

It also encourages banks to introduce workplace facilities, including daycare services for working mothers. In addition, financial institutions are advised to develop clear career progression policies that help women advance into senior management and leadership positions.

These measures are intended to create a more supportive working environment, improve employee retention and expand women’s professional opportunities within the banking industry.

Expanding Digital Banking Access

Digital financial services are another important focus of the updated policy. SBP aims to make banking more accessible to women through targeted digital onboarding campaigns, simplified account-opening procedures and digital payment solutions designed around their financial needs.

The policy also promotes the use of digital payments among women-led businesses. Better access to mobile banking, electronic transactions and other digital services can help women manage their finances more conveniently and participate more actively in economic activities.

By reducing barriers to opening and using accounts, these initiatives could also encourage greater participation among women who have traditionally remained outside the formal banking system.

Improving Financing for Women-Owned Businesses

Access to finance remains a significant challenge for many women entrepreneurs, particularly those operating micro, small and medium-sized enterprises (MSMEs). Limited credit histories, insufficient collateral and complex lending requirements can make it difficult for women to secure loans from traditional financial institutions.

To address these challenges, BoE 2026 encourages banks to increase the participation of women borrowers across key financing segments. It also promotes gender-sensitive credit planning and the development of specialized financing products that better reflect the needs of women-owned and women-led enterprises.

Financial institutions are encouraged to use alternative credit assessment methods, reconsider conventional collateral requirements where appropriate, and collaborate with fintech companies to expand lending opportunities.

These steps could help women entrepreneurs obtain the funding needed to establish businesses, expand operations, create employment and contribute to Pakistan’s economic development.

Strengthening Financial Literacy and Entrepreneurship

Improving access to banking services alone may not be sufficient to achieve meaningful financial inclusion. Women also need the knowledge, confidence and resources to make informed financial decisions.

Recognizing this need, the new policy emphasizes financial literacy, entrepreneurship development and support mechanisms that encourage women to engage with formal financial services.

Through dedicated support hubs and targeted educational initiatives, the policy seeks to improve women’s understanding of savings, borrowing, digital payments and business financing. Greater financial awareness can help women manage their resources effectively and make better use of available banking products.

Stronger Monitoring and Implementation

To ensure that the policy delivers measurable results, SBP plans to introduce a structured monitoring and evaluation framework. Banks will be required to provide quarterly data, while regular mystery shopping exercises will help assess how effectively financial institutions are implementing the policy’s requirements.

The use of gender-disaggregated data will also allow policymakers and banks to identify gaps in service delivery, monitor progress and develop more targeted financial products.

This approach is intended to strengthen accountability and ensure that the policy’s objectives translate into practical improvements for women across Pakistan.

Supporting National and International Financial Inclusion Goals

The Banking on Equality Policy 2026 forms part of SBP’s broader Vision 2028 and supports the country’s efforts to build a more inclusive financial system. It will also contribute to the implementation of the World Bank-led Women Entrepreneurship Finance Code initiative.

The policy was finalized following consultations with local and international stakeholders, reflecting a broader effort to improve women’s access to financial resources and economic opportunities.

SBP’s earlier efforts under the original policy were also recognized by the Alliance for Financial Inclusion (AFI), which presented the central bank with the Policy Achievement Award for Gender Inclusive Finance 2026.

Conclusion

The launch of the Banking on Equality Policy 2026 represents another step towards reducing gender disparities in Pakistan’s financial sector. By focusing on women’s employment, digital banking, business financing and financial education, SBP aims to create a more accessible and supportive financial environment.

Reducing the gender gap in financial inclusion to 25% by 2028 will require sustained cooperation between banks, regulators, technology providers and other stakeholders. Effective implementation and regular monitoring will be essential to achieving this target.

If successfully implemented, the policy could help more women gain access to financial services, establish and grow businesses, pursue professional advancement and participate more fully in Pakistan’s economic development.

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Pakistan is taking new steps towards modernizing its financial sector by exploring digital bonds, asset tokenization and artificial intelligence (AI)-powered financial services in collaboration with the World Bank Group. The development comes as the country works to establish a regulated environment for virtual assets and attract both domestic and international businesses.

According to the Pakistan Virtual Assets Regulatory Authority (PVARA), around 75 local and foreign companies have submitted applications to obtain licenses to operate in Pakistan’s virtual asset market. This growing interest reflects the potential for digital finance to become an important part of the country’s economic and technological development.

Pakistan and the World Bank Discuss Financial Innovation

Bilal bin Saqib, Minister of State and Chairman of PVARA, recently held discussions with Jorge Familiar, Vice President and Treasurer of the World Bank Group, during the IMF-World Bank Annual Meetings in Bangkok.

The meeting focused on possible cooperation in digital financial products, including tokenized assets, digital bonds and AI-based financial operations. Both sides also discussed sharing technical expertise, strengthening institutional capabilities and using modern financial technologies to improve Pakistan’s capital markets.

The proposed collaboration could help Pakistan explore more efficient financial systems, improve access to investment opportunities and strengthen investor protection. Better settlement mechanisms and stronger regulatory safeguards were also among the key areas of interest.

From Restrictions to a Regulated Virtual Asset Market

Pakistan’s approach to virtual assets has been evolving as policymakers seek to move away from restrictions towards a formal regulatory structure.

Bilal bin Saqib stated that significant progress had been made within approximately 15 months. He highlighted the introduction of the Virtual Assets Act 2026, changes to the banking restrictions previously imposed by the State Bank of Pakistan in 2018, and the development of licensing rules.

According to his statement on social media, PVARA has received 75 applications from companies interested in entering the country’s virtual asset industry. These applications include both Pakistani businesses and international firms looking to explore opportunities in the emerging market.

However, receiving applications does not mean that all applicants will receive approval. Licensing and regulatory assessments will remain important steps in determining which companies can legally operate in the sector.

What Is Asset Tokenization, and Why Does It Matter?

Asset tokenization involves representing ownership rights in an asset through digital tokens recorded on a blockchain or another digital ledger. Depending on the legal and technological structure, these tokens may represent interests in assets such as property, gold or financial instruments.

For Pakistan, tokenization could offer new ways to make certain investments more accessible and improve the transfer and settlement of financial assets.

For example, a properly structured property-tokenization project could allow investors to purchase fractional interests in a property rather than having to finance the entire asset themselves. Similarly, digital bonds could potentially simplify the issuance, transfer and administration of certain debt instruments.

Nevertheless, these benefits would depend on clear ownership rights, enforceable contracts, reliable technology and effective investor safeguards. Tokenization does not automatically make an investment safe, liquid or profitable.

Regulatory Sandbox to Test New Financial Products

PVARA has also introduced a regulatory sandbox covering areas such as gold, real estate and remittances. A regulatory sandbox provides a controlled environment in which eligible businesses can test innovative products under regulatory supervision.

This approach may help authorities understand how emerging technologies perform in real-world conditions before considering wider adoption.

For Pakistan, possible applications include digital representations of gold holdings, technology-enabled property investments and improved cross-border remittance services. If implemented effectively, such solutions could help businesses test new models while allowing regulators to identify operational, legal and financial risks at an early stage.

Could AI Transform Pakistan’s Financial Services?

Artificial intelligence is another area being explored as Pakistan looks to strengthen its financial infrastructure. AI-powered tools can potentially support transaction monitoring, fraud detection, compliance checks, customer service and financial risk analysis.

Combining these technologies with a well-regulated digital asset market could help financial institutions improve operational efficiency. However, successful adoption would require strong cybersecurity, responsible data management, transparent decision-making and adequate oversight.

What Does This Mean for Pakistan’s Economy?

The growing interest from virtual asset companies presents a potential opportunity for Pakistan to attract investment, encourage financial innovation and develop new technology-driven businesses.

A well-regulated market could create opportunities for fintech companies, software developers, financial institutions and businesses involved in digital asset services. It could also support the development of new investment products and potentially improve access to capital for businesses.

PVARA has indicated that licensing will be a key priority, while the economic benefits of the sector are expected to become more visible in 2027. These outcomes, however, will depend on the pace of implementation, the quality of regulation, investor confidence and actual market adoption.

The authorities will also need to address risks such as fraud, money laundering, cyberattacks, market manipulation and misleading investment schemes. A strong regulatory framework will be essential to ensure that innovation does not come at the expense of financial stability or consumer protection.

Conclusion

Pakistan’s discussions with the World Bank Group signal a growing interest in digital financial innovation, including asset tokenization, digital bonds and AI-enabled financial operations. At the same time, the 75 reported licensing applications suggest that domestic and international businesses are exploring the country’s virtual asset market.

The next major challenge will be turning these developments into a transparent, secure and commercially sustainable financial ecosystem. With effective regulation, institutional cooperation and responsible adoption of technology, Pakistan could create new opportunities for investment and modernize parts of its financial sector.

While the long-term economic impact remains to be seen, the country’s evolving regulatory approach could mark an important step towards a more digitally enabled financial future.

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