The IMF review will cover Pakistan’s progress under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF). A successful review would strengthen confidence in Pakistan’s economic reforms and reduce the risk of delays in future programmed support.

Fiscal Challenges Remain

Despite progress on IMF targets, Pakistan faces growing fiscal pressure in FY27. AHL expects the fiscal deficit to increase to 3.9% of GDP, compared with 2.6% in FY26.

Interest payments are expected to rise sharply to around Rs8.5 trillion, up 22% from the previous year. Higher borrowing costs and increased government spending could make fiscal management more difficult.

Tax collection is another concern. The Federal Board of Revenue missed its FY26 target by around Rs1.1 trillion, raising questions about whether revenue targets for FY27 can be achieved.

Inflation and External Pressures

Inflation is projected to average 8.22% in FY27, with the annual rate potentially reaching nearly 9.5% early in the year before easing later.

Pakistan’s current-account deficit is also expected to widen to 0.78% of GDP, mainly because imports are projected to grow faster than exports. However, record workers’ remittances remain an important source of support, reaching $41.6 billion in FY26.

Oil prices will be particularly important. Higher global energy prices could increase inflation and put additional pressure on Pakistan’s external account.

Growth and Investor Confidence

AHL forecasts Pakistan’s GDP growth at 3.84% in FY27, slightly above the 3.70% recorded in FY26. Growth is expected to be led by industry, while agriculture could face challenges from weaker-than-targeted wheat production.

Pakistan has also received a boost from international rating agencies. S&P and Moody’s recently upgraded the country’s credit ratings, while Fitch maintained its existing rating. The successful launch of Pakistan’s first Panda Bond also signals improving access to international capital markets.

The Road Ahead

The September IMF review is likely to focus more on Pakistan’s consistency in implementing reforms than on introducing new commitments. While the country appears well placed to clear the review, FY27 will be a tougher test.

Pakistan now needs to control inflation, improve tax collection, manage rising interest costs and protect its external reserves while maintaining economic growth.

The immediate IMF outlook is encouraging, but the real challenge will be turning recent economic stability into sustainable long-term growth.

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The central bank reported a net profit of Rs1.99 trillion for FY26, down from Rs2.499 trillion a year earlier. The decline of roughly Rs506 billion represents a year-on-year drop of about 20%.

Financial Asset Income Takes a Hit

The main factor behind the weaker result was a sharp reduction in income generated from the SBP’s financial assets.

Income earned through discount, interest, mark-up and profit on financial assets fell to Rs2.037 trillion in FY26. In FY25, the corresponding figure was significantly higher at Rs2.801 trillion.

The difference of around Rs764 billion reflects the changing interest-rate environment in Pakistan.

The country has moved from a period of tight monetary policy toward lower interest rates. The policy rate, which previously stood at a record-high 22%, has gradually been brought down to 11.5%. Lower rates can reduce the returns earned by the central bank on certain financial assets.

Government Receives Nearly Rs2 Trillion

Despite the fall in profitability, the SBP continued to make a sizeable contribution to the federal government’s finances.

Following the required statutory and accounting adjustments, the central bank transferred Rs1.932 trillion from its surplus profit to the federal government.

These transfers are an important component of Pakistan’s non-tax revenue. They provide the government with additional funds and can help reduce its dependence on fresh borrowing from the domestic market.

Over the past several years, the SBP has transferred large amounts of its surplus earnings to the government, providing support at a time when fiscal pressures have remained high.

Changing Pattern of Domestic Borrowing

SBP-generated liquidity has also played a role in the government’s debt management operations.

Some short-term domestic liabilities have been retired, while borrowing has increasingly shifted toward longer-term instruments, particularly Pakistan Investment Bonds (PIBs).

Meanwhile, the government’s exposure to short-term Market Treasury Bills has decreased.

This change in borrowing composition can help spread repayment obligations over a longer period, although the overall size of domestic debt remains a major fiscal concern.

Printing Expenses Increase

Another notable development in the SBP’s FY26 financial results was the increase in expenditure on printing banknotes and prize bonds.

Printing-related charges climbed to Rs29.1 billion, compared with Rs24.667 billion in FY25. The increase amounted to approximately Rs4.433 billion, equivalent to about 18%.

The cost of printing banknotes is paid to Pakistan Security Printing Corporation (Private) Limited, which operates as a wholly owned subsidiary of the central bank.

Pakistan’s Domestic Debt Reaches Rs59.94 Trillion

The SBP’s lower profit also comes as Pakistan’s domestic debt continues to expand.

By the end of FY26, domestic debt had reached approximately Rs59.94 trillion, registering an increase of nearly Rs4.969 trillion, or around 9%, over the course of the year.

The figures demonstrate the continuing financing burden faced by the government and the importance of maintaining control over borrowing costs and debt accumulation.

Lower Profit, But Still a Major Revenue Source

The decline in SBP earnings does not diminish the central bank’s importance to the government’s finances. A profit of almost Rs2 trillion remains substantial, and the Rs1.932 trillion transfer provides considerable support to the federal budget.

However, the sharp fall in income from financial assets illustrates the impact of lower interest rates on the SBP’s profitability.

Going forward, the central bank’s earnings will continue to be influenced by interest rates, returns on its financial assets and broader monetary conditions. At the same time, the government will need to balance its reliance on SBP surplus transfers with efforts to strengthen tax revenues and manage the country’s growing debt burden.

The SBP’s financial statements for FY26, along with the auditors’ report, were submitted to the federal government and Parliament as required under the State Bank of Pakistan Act, 1956.

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The initiative is aimed at removing unnecessary paperwork, reducing repeated verification procedures and making it significantly quicker for individuals to start investing.

Under the new framework, investors applying for Sehl/Sahulat accounts can expect their applications to be processed within one working day, while applications for Normal Accounts are targeted for completion within two working days.

A More Convenient Way to Start Investing

The new system, introduced through Circular No. 19 of 2026, establishes common onboarding requirements for a range of regulated financial institutions, including securities brokers, asset management companies, insurers and other market participants.

Previously, investors could face repeated documentation and verification requirements when dealing with different financial institutions. The new framework seeks to address this issue by allowing eligible institutions and notified third parties to rely on verification that has already been completed.

This means customers may no longer need to repeatedly provide the same information or go through identical verification procedures when accessing different regulated financial services.

Digital Processing at the Centre

Technology is at the heart of the new onboarding framework. The SECP is encouraging regulated entities to use API-based systems and straight-through processing to make applications faster and more efficient.

The framework also supports completely digital onboarding, reducing the need for physical paperwork and manual processing.

Among the features being introduced are the ability to issue Unique Identification Numbers (UINs) instantly and facilitate the opening of CDC sub-accounts through digital processes.

For investors, this could translate into a smoother experience from application to market participation.

Greater Transparency for Applicants

The new framework is also designed to make the application process more transparent.

Applicants will receive a tracking ID that allows their onboarding process to be monitored. If an application contains deficiencies, the applicant must be informed within the prescribed timeframe.

Similarly, where an application is rejected, the reasons for the rejection must be communicated in writing. This provides investors with greater clarity about the status of their applications and what may need to be corrected.

SECP Targets 2.5 Million Investors

The digital onboarding initiative is part of a wider effort by the SECP to expand retail participation in Pakistan’s capital markets.

The regulator has set an ambitious goal of increasing the country’s investor base to 2.5 million people. Younger Pakistanis and first-time investors are expected to be an important focus of this expansion.

SECP Chairman Kabir Ahmed Sidhu said the objective is to use technology to remove barriers that have traditionally discouraged people from entering the investment market.

The broader vision is to create an investment environment that is easier to access, particularly for a younger generation that is increasingly accustomed to digital financial services.

What the New Framework Could Mean for Investors

For ordinary Pakistanis, the changes could make the process of entering the stock and investment markets considerably less complicated.

A faster onboarding process means new investors may be able to move from application to investment more quickly. At the same time, reduced duplication in verification could make it easier for customers who already use regulated financial services to access additional investment products.

The initiative could also help financial institutions reduce administrative work and shift more of their onboarding operations toward automated digital systems.

A Step Toward a More Inclusive Capital Market

Pakistan has significant potential to expand retail participation in its capital markets, but complicated procedures and lengthy onboarding have historically been among the obstacles facing new investors.

By introducing common digital standards and reducing unnecessary repetition, the SECP is attempting to make the market more accessible to a much larger segment of the population.

If successfully implemented across regulated institutions, the framework could represent an important shift toward a faster, more digital and investor-friendly financial ecosystem.

The ultimate test, however, will be how consistently financial institutions implement the new standards and whether the simplified process encourages more Pakistanis—particularly younger and first-time investors—to participate in the country’s capital markets.

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The issue came under discussion during a meeting of the Senate Standing Committee on Finance and Revenue, where officials from the State Bank of Pakistan (SBP) explained how the change in government funding is affecting banks involved in facilitating remittances.

Government Support for Remittances Reduced

The Pakistan Remittance Initiative was introduced to make it easier and more attractive for overseas Pakistanis to send money through formal banking channels. Under the scheme, banks previously received government subsidies to help cover the costs associated with processing these transfers.

According to the briefing given to the Senate committee, the government had allocated around Rs120 billion in subsidies over the course of the initiative. However, financial constraints have made it difficult for the government to maintain the same level of support.

As a result, the subsidy was scaled back during the previous year and has not been continued under the current budget.

Despite the reduction in government assistance, banks have decided to continue supporting the remittance system by absorbing the related expenses from their own resources. This decision is intended to prevent disruption to services used by millions of Pakistanis receiving funds from family members working abroad.

Senate to Examine Banks’ Role

The Senate committee welcomed the decision of banks to continue facilitating remittances despite the loss of government support. Members also decided to invite selected banks to a future meeting.

The banks will be expected to explain their performance, contribution to the remittance sector and the costs they are now carrying themselves.

Such a briefing could provide a clearer picture of whether the withdrawal of subsidies is creating additional financial pressure on banks and whether it could eventually affect the cost or efficiency of remittance services.

Questions Over Foreign Investors’ Funds

The committee also discussed the protection of money belonging to foreign investors in Pakistan under F.E. Circular 1999.

SBP Deputy Governor Dr Inayat Hussain told lawmakers that instructions had been issued to banks to protect the funds of foreign investors. According to SBP records, there were no pending cases of this nature before the central bank.

Committee members, however, expressed concern over reports suggesting that some disputes involving foreign investors may still be unresolved.

They therefore requested a comprehensive report identifying such cases, explaining their current status and outlining the reasons for any delays. The move reflects concerns about investor confidence and the need for financial institutions to respond promptly when foreign investors face difficulties accessing or protecting their funds.

Senate Raises Alarm Over Possible Corporate Fraud

Another important issue raised during the meeting involved companies that report financial losses but may allegedly continue operations while giving investors and shareholders a misleading impression of their financial health.

Senator Talha Mehmood cautioned that companies engaging in such practices could eventually face serious financial problems or even shut down. Such failures could leave shareholders and members of the public bearing significant losses.

He called for government departments and regulatory bodies to monitor potentially problematic companies more closely and take action against fraudulent practices before they become larger financial scandals.

What These Developments Mean

The Senate meeting brought together several issues that are closely connected to Pakistan’s financial stability and investor confidence.

For remittances, the immediate challenge is whether banks can continue absorbing the costs previously supported through government subsidies. Remittances remain an important source of foreign exchange for Pakistan, making the smooth functioning of formal remittance channels particularly important.

At the same time, the committee’s questions about foreign investors and corporate practices highlight the importance of transparency and regulatory oversight. Protecting investors’ money and ensuring companies provide accurate financial information are essential for maintaining confidence in Pakistan’s financial system.

The committee’s decision to seek additional information from banks and relevant authorities suggests that lawmakers intend to examine these issues further rather than treating them as isolated concerns.

Looking Ahead

The upcoming briefings from banks could shed more light on the financial impact of the reduced PRI subsidy and the steps banks are taking to maintain remittance services.

Meanwhile, the requested information on foreign-investment cases and potentially fraudulent companies could help lawmakers determine whether regulatory gaps or administrative delays need to be addressed.

For Pakistan, maintaining strong remittance flows, protecting investors and improving corporate accountability are all important parts of building a more stable and credible financial environment.

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The initiative is aimed at addressing one of the major challenges faced by Pakistani startups: limited access to investment capital. The proposed framework is expected to create a more straightforward regulatory environment and encourage both local and international investors to put money into emerging businesses.

Creating a startup-friendly investment environment

Pakistan has a growing technology and innovation ecosystem, but many young companies struggle to secure the funding required to expand.

Traditional bank financing is often difficult for early-stage businesses because startups may not have significant assets, established revenues or a long financial history.

Venture capital can provide an alternative source of funding by allowing investors to take equity positions in promising businesses.

The proposed legislation is intended to make this type of investment easier to conduct within Pakistan.

Simplified rules for venture capital

The draft Bill proposes a dedicated regulatory structure for venture capital funds and their managers.

Rather than applying overly complicated requirements, the proposed framework would introduce relatively flexible licensing and registration procedures that reflect the risk-oriented nature of venture capital.

The legislation is also expected to establish clearer requirements for fund management, governance and reporting.

The aim is to create enough oversight to protect investors while avoiding unnecessary restrictions that could discourage investment.

Bringing more investment into Pakistan

A significant amount of startup investment involving Pakistani businesses has historically been structured through offshore arrangements or outside the country’s formal regulatory system.

The proposed framework could provide investors with a clearer domestic route for investing in Pakistani startups.

A stronger local venture capital market could also reduce the dependence of emerging businesses on foreign structures and make it easier for domestic investors to participate in the country’s startup economy.

Potential benefits for the economy

The government expects a stronger venture capital ecosystem to have benefits beyond individual startups.

Greater availability of risk capital could help innovative companies increase their operations, develop new technologies and enter new markets.

Successful startups can also generate employment and create demand for professional services, technology and other supporting industries.

In the longer term, increased startup investment could contribute to innovation and economic growth.

SECP seeks balance between flexibility and protection

SECP Chairman Dr Kabir Ahmed Sidhu has emphasized the need for a regulatory approach that recognizes the unique characteristics of venture capital.

Venture capital investments involve significant risk because investors often provide funding to businesses that are still developing their products, markets or revenue models.

The proposed framework therefore aims to reduce regulatory barriers while maintaining appropriate governance standards and investor safeguards.

Finding the right balance will be critical to the success of the new system.

Consultation with industry stakeholders

The draft legislation will now be discussed with key stakeholders before it moves toward the formal legislative process.

The consultation process is expected to include startups, venture capital managers, legal and financial experts, the State Bank of Pakistan, Pakistan Stock Exchange and industry associations.

Their feedback could help identify practical issues and improve the proposed regulatory framework before it is finalized.

What could change for startups?

If the proposed law is approved, Pakistani startups could gain access to a more organized domestic venture capital market.

A clear legal structure may encourage more investors to consider early-stage Pakistani businesses, particularly in technology and other innovation-focused sectors.

For fund managers, clearly defined rules could also make it easier to establish and operate venture capital funds within Pakistan.

The road ahead

The Venture Capital Bill remains a proposal and will need to pass through consultation and the legislative process before becoming law.

Its success will ultimately depend on more than legislation. Investors will also consider factors such as economic stability, market opportunities, currency risks and the overall business environment.

Nevertheless, the proposed framework represents a significant move toward formalizing venture capital activity in Pakistan.

If implemented effectively, it could help connect Pakistani startups with much-needed risk capital, encourage investment in innovation and create a stronger foundation for the country’s emerging entrepreneurial ecosystem.

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Market analysts believe rising food and transportation costs will be the biggest contributors to the expected increase. AKD Research has estimated August inflation at around 11.4% year-on-year, while Topline Securities expects inflation to remain in the range of 10.75% to 11.25%.

The forecasts compare with July’s inflation rate of 9.21%, indicating a significant monthly and annual acceleration in price pressures.

Food prices emerge as a major concern

Food inflation is expected to remain one of the strongest drivers of the overall increase in consumer prices.

AKD Research expects food prices to be approximately 14.8% higher than a year earlier. Disruptions caused by monsoon weather and transportation problems are expected to put additional pressure on food supplies.

Several important food items are likely to see sharp monthly increases. Onion prices, in particular, are estimated to rise by almost 60% during August under AKD’s forecast.

Eggs and gram pulse are also expected to become more expensive, while wheat and wheat flour prices are projected to increase as well.

Topline Securities has reached a similar conclusion, forecasting higher prices for onions, eggs, gram pulse and wheat.

However, some products could move in the opposite direction. AKD expects tomato and moong pulse prices to decline during the month.

Transport costs add to inflation

Transportation is another major source of inflationary pressure.

AKD expects the transport index to increase by approximately 2.9% month-on-month, largely because of higher fuel prices. Motor spirit is estimated to become around 3.6% more expensive, while high-speed diesel could see a much larger increase of approximately 15.3%.

Topline Securities also expects transportation costs to rise, citing higher international oil prices and changes in dealer margins.

The increase in fuel prices could affect more than just motorists. Higher transportation costs can gradually raise the prices of food and other goods because of increased distribution and delivery expenses.

Utilities remain uncertain

There is some disagreement between the two brokerage houses regarding the outlook for housing and utility costs.

AKD expects the housing index to fall further in August, primarily because of lower electricity charges. The brokerage expects the Fuel Charges Adjustment to ease compared with the previous month.

Topline, however, expects the housing, water, electricity and gas category to increase slightly. It forecasts higher electricity charges, although a decline in LPG prices could provide some relief.

These differences demonstrate how electricity tariff adjustments and energy prices could influence the overall inflation reading.

Monthly inflation also expected to rise

The increase in prices is expected to be visible not only in the year-on-year inflation rate but also on a monthly basis.

AKD forecasts a 1.3% month-on-month increase in overall inflation, which would represent the strongest monthly rise in four months.

Topline has estimated a somewhat lower increase of around 1.06%.

Food prices are expected to account for a significant portion of this monthly increase, while transportation costs are also likely to contribute.

Impact on real interest rates

The expected rise in inflation could have implications for Pakistan’s interest-rate environment.

Topline estimates that if inflation remains between 10.75% and 11.25%, real interest rates could fall to approximately 25 to 75 basis points.

This would be considerably below Pakistan’s historical average of around 200 to 300 basis points.

A significant decline in real interest rates could become an important consideration for monetary policymakers as they assess the balance between supporting economic activity and controlling inflation.

What should consumers expect?

The latest projections suggest that the improvement seen in inflation during July may not continue smoothly.

Food supply disruptions, higher fuel costs, international oil prices and changes in electricity tariffs could all influence household expenses in the coming months.

For ordinary consumers, the most immediate pressure is likely to come from essential items such as food and transportation. If these increases persist, they could also affect the prices of other goods and services.

Outlook for Pakistan’s inflation

Pakistan’s return to potentially double-digit inflation in August highlights how quickly price pressures can change.

Although inflation has declined substantially from the extremely high levels witnessed during earlier periods, the latest forecasts show that the economy remains vulnerable to food shortages, energy-price movements and external commodity shocks.

The August CPI figure will therefore be closely watched by businesses, consumers, investors and policymakers. Whether the increase proves temporary or develops into a longer-lasting trend will depend heavily on food supply conditions, fuel prices, electricity adjustments and broader economic developments.

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The restructuring involves Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO), and Islamabad Electric Supply Company (IESCO). The Cabinet Committee on Privatization (CCoP) has approved the proposed structure, which is designed to make the companies more financially attractive to prospective investors.

Buyers to receive substantial net equity

Under the proposed arrangement, assets worth around Rs911 billion will be transferred to the new buyers, along with liabilities estimated at Rs648 billion.

The difference of approximately Rs263 billion represents the net equity that buyers would receive through the restructuring.

The government, meanwhile, plans to retain assets worth roughly Rs257 billion, most of which consist of land. It will also keep liabilities of around Rs11 billion.

Officials have stated that the assets have been assessed at market value, while ownership of the land currently held by the three DISCOs will remain with the government.

IMF condition becomes a key issue

One of the most important questions surrounding the proposal is how the government intends to deal with outstanding receivables and payables between government entities.

The restructuring plan reportedly involves offsetting certain inter-governmental amounts against each other. The government considers this approach fiscally neutral and believes it can help improve the overall value and viability of the transactions.

However, Pakistan’s IMF commitments reportedly require cross-arrears to be independently audited before they can be netted against each other.

This has prompted concerns about whether the proposed arrangement could conflict with the IMF programmed.

Government officials have indicated that the condition can be addressed by having independent external auditors examine the relevant receivables and payables before the amounts are adjusted.

FESCO: Rs64 billion in net equity

Under the proposed FESCO structure, approximately Rs290.5 billion in assets will be transferred along with Rs226.5 billion in liabilities.

The resulting difference gives prospective buyers around Rs64 billion in net equity.

The government will continue to own FESCO’s land, estimated at around Rs73 billion.

FESCO has also reported relatively low distribution losses. Its losses were approximately 8%, or around Rs1 billion, during the last financial year.

The government has additionally approved an increase in FESCO’s authorized share capital to Rs100 billion.

GEPCO deal includes Rs87 billion equity

For GEPCO, the proposed transfer includes assets valued at approximately Rs252 billion, while liabilities of around Rs169 billion would be transferred to the buyers.

This leaves approximately Rs87 billion in net equity for the prospective investors.

The state will retain GEPCO land valued at approximately Rs69 billion.

GEPCO’s distribution losses were reported at approximately 10%, translating into around Rs6 billion during the previous fiscal year.

IESCO offers the largest equity position

IESCO will have assets worth around Rs368 billion transferred to prospective buyers, against liabilities of approximately Rs256 billion.

The resulting net equity stands at approximately Rs112 billion.

The government will retain land belonging to IESCO valued at around Rs70 billion.

IESCO’s distribution losses were approximately 7.9%, or around Rs2 billion, during the last financial year.

The Finance Ministry has also assured the privatisation committee that outstanding IESCO liabilities linked to pending payments from Azad Jammu and Kashmir will be settled.

Government to keep ownership of land

One of the central elements of the proposed model is the decision to keep DISCO land under government ownership.

Instead of transferring the land to private buyers, the government intends to lease it to the new operators at existing rates.

The privatization adviser has argued that this arrangement will prevent new land-related expenses from being added to electricity tariffs, thereby limiting the potential impact on consumers.

Separate arrangement for pensions

The restructuring plan also addresses the pension obligations of retired employees.

The government has decided to establish a separate company to manage the pension liabilities of employees who have already retired. The cost of these obligations is expected to be recovered through electricity tariffs paid by consumers.

Pension responsibilities for employees who are currently working, however, will remain with the respective DISCOs.

What lies ahead?

The government believes the restructuring will improve the financial position and marketability of FESCO, GEPCO and IESCO before their eventual sale to private investors.

The proposed model gives buyers operating assets and liabilities while allowing the state to retain valuable land and certain other responsibilities.

Nevertheless, the treatment of inter-governmental arrears remains an important issue. Independent auditing of the relevant amounts could be essential to ensure that the restructuring remains consistent with Pakistan’s IMF commitments.

For consumers, the key question will be whether the restructuring ultimately results in better electricity distribution and service quality without placing additional financial pressure on electricity bills.

The government has stated that service continuity will remain a priority and that consumers, employees, businesses and local communities will all be considered during the reform process. The success of the initiative will depend on transparent implementation, investor confidence and compliance with the country’s financial commitments.

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The clarification was issued through Sales Tax General Order No. 19 of 2026, with the aim of removing uncertainty and ensuring that the relevant sales tax provisions are applied consistently.

How will sales tax be calculated?

Under the revised mechanism, different valuation rules will apply depending on whether the goods are supplied locally or imported.

For locally manufactured goods, sales tax will be calculated on the value of supply as defined under Section 2(46) of the Sales Tax Act.

For imported goods, the calculation is different. The taxable value will be taken at 130% of the value determined under Section 25 of the Customs Act, 1969. This customs-based value will also include applicable customs duties and Federal Excise Duty.

For example, if the relevant customs value, including applicable duties and FED, comes to Rs. 1 million, the sales-tax value under this mechanism would be Rs. 1.3 million. The applicable sales tax rate would then be applied to that amount.

Who will be covered?

The revised framework applies to several categories of manufacturers, importers and retailers.

These include footwear manufacturers selling through their own FBR digitally integrated and POS-compliant retail outlets. It also covers importers supplying registered manufacturers or digitally integrated and POS-compliant retailers.

Retailers that directly import covered goods for sale to final consumers are also included within the revised framework.

In addition, the provisions apply when digitally integrated manufacturers or registered importers supply goods to corporate organizations, government departments, autonomous bodies and statutory bodies purchasing those goods for their own use.

Manufacturers that exclusively supply their products to FBR digitally integrated and POS-compliant retailers are also covered.

Why has FBR issued the clarification?

According to the FBR, the corrigendum has been issued to eliminate ambiguity surrounding the valuation and collection of sales tax under Serial No. 65.

The tax authority has also replaced the previous Annexure-A attached to the earlier general order with a revised annexure. The new annexure will serve as the basis for determining the levy, assessment and collection of sales tax on the relevant supplies.

Effective from July 1, 2026

One of the key aspects of the notification is its effective date. The revised provisions will apply retrospectively from July 1, 2026.

However, the FBR has clarified that all other provisions of the earlier Sales Tax General Order will continue to remain in force.

What does this mean for businesses?

The clarification is particularly important for businesses involved in the manufacturing, importing and retailing of goods falling under Serial No. 65.

Importers will need to pay particular attention to the revised valuation mechanism because the taxable value for imports is now linked to 130% of the customs-determined value after accounting for applicable duties and FED.

Manufacturers and retailers covered by the order should also review their invoicing, tax calculations and POS integration arrangements to ensure compliance with the revised requirements.

Overall, the FBR’s latest clarification is intended to establish a more consistent sales-tax mechanism and remove uncertainty over how covered transactions should be valued and taxed.

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The proposed arrangement comes as Pakistan looks to diversify its sources and routes for importing petroleum products. Concerns over regional instability and the importance of the Strait of Hormuz have encouraged Pakistan to explore alternative options for securing petrol and diesel supplies.

Increasing Fuel Imports from Oman

Pakistan and Oman have already begun increasing their energy cooperation. Discussions between PSO and Oman Trading International started in March 2026 with the objective of bringing additional petroleum cargoes to Pakistan.

During that period, Pakistan received three petrol shipments and one diesel shipment from Omani ports. Further petrol cargoes are also expected, demonstrating growing commercial cooperation between the two countries.

Pakistan Seeks Preferential Fuel Cargoes

Federal Minister for Petroleum Ali Pervaiz Malik recently met Oman’s Ambassador to Pakistan, Fahad Bin Sulaiman Bin Khalaf Alkharusi, to discuss regional energy developments and opportunities for stronger bilateral cooperation.

The petroleum minister emphasized Pakistan’s intention to diversify its energy imports and reduce its exposure to disruptions along traditional supply routes. He also requested that Oman consider providing Pakistan with preferential energy cargoes.

The Omani ambassador welcomed Pakistan’s efforts and indicated that Oman’s authorities would give the request favorable consideration.

Why Oman Is Important for Pakistan

For Pakistan, developing stronger energy links with Oman could provide another option for importing petroleum products. Diversifying suppliers can help improve the country’s ability to maintain fuel availability during periods of international market volatility or disruptions to important shipping routes.

The discussions are also not limited to petroleum imports. Pakistan and Oman are exploring opportunities in the upstream oil and gas sector, including exploration and production activities. Greater cooperation in these areas could potentially strengthen the long-term energy relationship between the two countries.

ECC to Consider Other Financial Proposals

The ECC meeting is also expected to examine several other government proposals. These include the distribution of PASSCO’s wheat stocks, funding related to PIA liabilities, and matters concerning the Roosevelt Hotel.

The committee is also scheduled to consider a proposed Rs43.849 billion National Bank of Pakistan term facility, as well as supplementary grants for the Karachi K-IV water project and security arrangements for the Reko Diq project.

Another proposal concerns the reallocation of funds under the FY2026-27 Public Sector Development Programmed (PSDP) for the automation of Pakistan Post.

Looking Ahead

The proposed PSO-OQ Trading agreement represents another step in Pakistan’s efforts to build a more diversified and resilient energy supply chain. Closer cooperation with Oman could give Pakistan an additional source of petroleum products while opening doors for broader investment in the energy sector.

However, the final outcome will depend on the ECC’s consideration and approval of the proposed arrangements. If approved and implemented effectively, the agreement could become an important component of Pakistan’s strategy to strengthen fuel security and expand its energy partnership with Oman.

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One of the most notable changes is the extension of the maximum housing-finance repayment period to 30 years. The longer repayment period could make home financing more manageable for borrowers by reducing their monthly instalments, although a longer loan generally results in higher total financing costs over time.

Financing Available for More Housing Needs

Under the updated framework, banks and DFIs can provide financing for several housing-related purposes. These include purchasing a house, apartment or plot, constructing a home on an already-owned plot, and extending, renovating or expanding an existing residential property.

The rules also specifically allow financing for renewable-energy solutions installed in residential properties. This could make it easier for homeowners to invest in solar panels and other energy-related systems through formal financing.

Renewable-energy financing can have a maximum repayment period of 10 years.

Up to 90% Loan-to-Value Ratio

The revised regulations set the maximum Loan-to-Value (LTV) ratio at 90:10. In simple terms, eligible borrowers may potentially obtain financing of up to 90% of the relevant property value, while contributing the remaining portion themselves.

The actual amount approved, however, will continue to depend on the lender’s assessment of the borrower, the property and repayment capacity.

Monthly Payments Limited to 65% of Income

To control borrowers’ repayment burden, banks and DFIs must ensure that total monthly amortization payments do not exceed 65% of the borrower’s net disposable income.

This calculation includes the proposed housing-finance payment as well as payments on other consumer loans. For borrowers earning informal income, lenders may also use proxy models approved by the Pakistan Banks’ Association (PBA) when assessing income and repayment capacity.

Stronger Credit and Property Checks

The revised rules require lenders to obtain the latest credit report of each prospective borrower from the SBP’s Electronic Credit Information Bureau (e-CIB) or a licensed private Credit Information Bureau.

Banks and DFIs must also collect relevant ownership and title documents and provide borrowers with a signed acknowledgement confirming the documents received.

As a general requirement, the financed house, apartment or plot must be mortgaged in favor of the financing institution. For housing finance of up to PKR 5 million, a lien may be accepted in certain cases where the property has a Green Property Certificate or an equivalent document issued by the relevant authority.

New Valuation Requirements

The revised framework also sets specific requirements for property valuation.

For housing finance exceeding PKR 10 million, lenders must obtain a valuation from at least one valuator included on the PBA-approved panel. For financing of PKR 10 million or less, banks and DFIs may use an internal valuation process.

The regulations also provide flexibility for similar residential units located within the same housing society or colony. Where properties have the same category, layout and size, a single valuation may be used.

Security for Renewable-Energy Financing

The new framework recognizes renewable-energy equipment as potential security for financing. Solar panels, inverters and batteries installed at a housing unit may be hypothecated, alongside other forms of security acceptable to the lender.

This provision could support greater access to financing for households seeking to reduce their dependence on conventional electricity sources.

Insurance and Takaful Requirements

Banks and DFIs must ensure that financed housing units have comprehensive insurance or Takaful coverage equal to the outstanding amount of housing finance.

Borrowers must also receive clear information about the type of coverage, applicable premium rate and other related charges.

What the New Rules Mean for Homebuyers

The revised regulations could make housing finance more accessible by combining a longer repayment period with a higher maximum LTV ratio. For eligible borrowers, a 30-year tenor may help bring monthly payments within their affordability range, while the 90% LTV limit could reduce the upfront amount required for a property purchase.

At the same time, borrowers should carefully consider the overall cost of long-term financing. A lower monthly payment does not necessarily mean a lower total cost, as financing charges accumulate over a longer period.

The new framework therefore represents a significant update to Pakistan’s housing-finance landscape. By expanding eligible financing purposes, supporting renewable-energy investments and providing greater flexibility in repayment and property financing, the SBP’s revised rules could create new opportunities for households seeking to purchase, build or improve their homes.

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The proposal comes as Islamabad works to meet commitments under its programmed with the International Monetary Fund (IMF), which has repeatedly called for stronger tax collection from the agriculture sector.

September Deadline for Provinces

The federal government is expected to assess provincial progress after September 30, the deadline for meeting agricultural tax collection and return-filing targets.

Officials will reportedly use the results to determine whether the existing system is delivering sufficient revenue. If provinces fall significantly short, discussions on an alternative fixed-tax mechanism could start in October.

Such a move would potentially introduce a simpler method of collecting agricultural taxes by linking the liability to the size of farmland rather than relying entirely on declared agricultural income.

Agriculture’s Low Contribution to Tax Revenue

The issue has gained importance because of the huge difference between agriculture’s economic importance and its contribution to government revenue.

Agriculture accounts for roughly 24.5% of Pakistan’s economy, making it one of the country’s largest sectors. Yet its share of total tax revenue is estimated at only about 0.3%.

This imbalance has made agricultural taxation a recurring issue in discussions between Pakistan and the IMF. Increasing revenue from the sector could help the government broaden its tax base and improve its fiscal position.

How the Proposed Tax Could Work

Under the idea currently being considered, agricultural land could be subject to a fixed charge of up to Rs5,000 for every acre.

A per-acre system would make the tax calculation relatively straightforward. Instead of determining the exact income earned from different crops and farming activities, authorities could calculate the liability according to the area of land owned or cultivated.

However, a uniform rate could also create challenges. Farms differ considerably in terms of productivity, crops, irrigation facilities, location and profitability. A fixed amount could therefore affect farmers differently depending on their circumstances.

IMF Commitments Driving the Debate

The proposed measure reflects the government’s efforts to demonstrate progress on agricultural taxation to the IMF.

For years, Pakistan has struggled with a narrow tax base, while large parts of the economy have generated comparatively little direct tax revenue. Bringing agriculture more effectively into the tax system is therefore seen as one way to increase government receipts without relying entirely on the sectors that already pay significant amounts of tax.

The government is reportedly continuing discussions with provinces in an attempt to meet the IMF’s expectations without immediately imposing a new nationwide fixed-tax arrangement.

October Could Bring a Key Decision

The coming weeks could determine whether the fixed agricultural tax becomes a serious policy option.

If provinces succeed in meeting their revenue and compliance targets by the September deadline, the proposed Rs5,000-per-acre system may not be required. If performance remains below expectations, consultations could begin in October on a new taxation framework.

For Pakistan, the challenge will be to increase agricultural tax revenues while keeping the system practical and equitable for farmers. The final policy could have significant implications for landowners, provincial finances and the country’s broader efforts to expand its tax base.

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In July 2025, freelancers generated around $120.6 million in export receipts. The latest figures therefore represent an increase of nearly $54.9 million in foreign exchange earnings within a single month.

IT Freelancing Continues to Drive Growth

Information technology remains a major contributor to Pakistan’s freelance exports. IT-related freelance receipts climbed to approximately $106.8 million in July 2026, compared with $89.9 million during July 2025.

The continued expansion of IT freelancing highlights the growing demand for Pakistani professionals providing services such as software development, programming, web development, data-related work and other digital services to international clients.

However, the most striking growth came from the non-IT segment.

Non-IT Freelance Earnings More Than Double

Non-IT freelance earnings reached $68.7 million in July 2026, compared with just $30.7 million a year earlier. This represents growth of more than 120% over the same period.

The increase indicates that Pakistan’s freelance industry is becoming more diverse. Freelancers are increasingly earning internationally through fields beyond conventional IT, including digital marketing, graphic design, content creation, virtual assistance, writing and other professional online services.

This diversification could provide opportunities for a much larger section of Pakistan’s young workforce.

Skills Remain Critical for International Success

Industry representatives believe the momentum is encouraging, but maintaining such rapid growth will require continued investment in skills and professional development.

Pakistan Freelancers Association chairperson Ibrahim Amin has stressed that freelancers need more than technical expertise to succeed in international markets. Skills such as communication, business development, negotiation and client management can play an equally important role in building long-term relationships with overseas customers.

For students and young professionals in particular, freelancing offers a way to participate in the global digital economy without necessarily needing to relocate abroad.

Pakistan’s Broader IT Exports Also Rise

The positive freelance figures come alongside wider growth in Pakistan’s technology exports. The country recorded approximately $417 million in IT exports during July 2026, up 18% from $354 million in July 2025.

Monthly performance remained almost unchanged from June, when IT export receipts stood at around $416 million. This suggests that the technology sector entered the new fiscal year with relatively stable export momentum.

More Support Could Unlock Greater Potential

Government and private-sector initiatives aimed at developing digital skills could help Pakistan expand its pool of internationally competitive freelancers. Recognition programs and freelancer awards introduced by industry bodies are also intended to highlight the contribution of online professionals and encourage more people to enter the sector.

Nevertheless, sustaining the current pace will be the bigger challenge. A single month of strong growth does not guarantee the same performance throughout the year. Pakistan will need continued investment in training, digital infrastructure, international payment systems and market access if it wants freelance exports to become a significantly larger source of foreign exchange.

With millions of young people entering the workforce, freelancing could become an increasingly important component of Pakistan’s digital economy. The July 2026 figures provide an encouraging start, but sustaining and broadening this growth will determine how significant the sector becomes over the longer term.

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According to a report by The Express Tribune, the federal government has allocated Rs30 billion during the current fiscal year to cover interest payments on Rs268.5 billion of PIA’s legacy debt. This allocation is part of a larger Rs73 billion contingency provision linked to privatization-related expenses and the restructuring or closure of certain public-sector entities.

PIA’s Old Debt Remains With the Government

Before the airline was privatized, its substantial commercial liabilities were transferred to the government-owned PIA Holding Company. This effectively separated the airline’s operations from much of its historical debt.

The move was intended to make PIA more attractive to potential investors. However, it also meant that the responsibility for servicing the old debt remained with the public sector.

The debt was reportedly restructured for a period of 10 years at an interest rate of 12%. Based on this arrangement, the total amount paid to banks could reach approximately Rs573 billion, including more than Rs300 billion in interest, if the full repayment schedule is followed.

That makes the legacy debt one of the major continuing costs associated with PIA, even after the airline’s ownership has changed.

A Large Interest Bill Compared With Immediate Sale Proceeds

One of the most striking aspects of the arrangement is the contrast between the government’s annual interest burden and the cash it received from the privatization.

The successful bidder offered Rs135 billion for a 75% stake in PIA. However, the government received only Rs10 billion in immediate cash, while the remaining amount is reportedly being reinvested into the airline.

The government is also expected to sell the remaining 25% stake to the same investor for Rs45 billion in cash.

Against this backdrop, the Rs30 billion annual interest bill is significant. It is roughly three times the Rs10 billion in immediate cash received by the government from the initial 75% stake transaction.

Who Will Pay the Interest?

PIA Holding Company does not have a major independent source of recurring income with which to service the debt. As a result, the Finance Ministry is reportedly providing funds to cover the interest in the form of a loan.

The holding company is expected to repay these amounts using proceeds from the sale of assets, particularly its hotel properties.

This arrangement means that although PIA’s operational management has moved into private hands, the financial consequences of its past losses and borrowing continue to involve the government.

The Rs73 Billion Privatization Contingency

The Rs30 billion allocation is included within a broader Rs73 billion contingency provision.

According to government officials, this fund is designed to deal with unexpected financial requirements arising from privatization transactions, the restructuring of public-sector organizations and the winding down of entities that are no longer considered necessary.

Other planned transactions could also generate legacy liabilities. The government has specifically indicated that entities such as the Pakistan Agriculture Storage and Services Corporation (PASSCO) may require funding as part of the restructuring or winding-down process.

The Privatization Commission, however, has clarified that the Rs73 billion provision does not belong specifically to the commission or the Privatization Division.

Privatization Does Not Automatically Remove Public Debt

The PIA case highlights an important issue surrounding the privatization of loss-making state enterprises.

Selling a state-owned company does not necessarily mean that all of its historical financial obligations disappear. Governments often have to separate old debts and liabilities from the assets being sold to make an enterprise attractive to investors.

From the buyer’s perspective, this can make the company easier to operate and invest in. From the taxpayer’s perspective, however, it can mean that the state continues paying for problems accumulated before privatization.

PIA is therefore entering a new ownership structure while its legacy financial burden remains largely within the public sector.

What This Means for Pakistan

The success of the PIA transaction should ultimately be judged on more than the headline sale price. The government will need to manage billions of rupees in retained liabilities while ensuring that the privatized airline becomes financially sustainable.

If the sale of PIA’s remaining stake and government-owned hotel assets generates sufficient funds, some of the financial pressure could eventually be reduced. But until those liabilities are settled, taxpayers remain exposed to the cost of PIA’s past borrowing.

The episode also raises a broader question about Pakistan’s privatization strategy: does transferring operational control to private investors actually reduce the government’s financial burden, or does it simply move old losses and debt onto the public balance sheet?

PIA’s future performance will provide an important test of whether this model of privatization can deliver long-term savings for the government while giving the airline a genuine opportunity to recover and grow.

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The latest figures represent a 43.13% increase from June, when textile exports stood at $1.27 billion. Compared with July 2025, exports were also higher by 8.07%, highlighting continued growth in the country’s largest export-oriented sector.

In rupee terms, textile exports amounted to approximately Rs504.34 billion during the month.

Garments and Knitwear Remain Major Export Drivers

Knitwear continued to account for the largest share of Pakistan’s textile exports. Exports of knitwear climbed 46.60% month-on-month to $533.84 million, while recording a more modest 4.06% year-on-year increase.

Readymade garments also delivered a strong performance. Their export value rose 45.87% from the previous month to $459.99 million and was 15% higher than a year earlier. The double-digit annual increase makes garments one of the stronger-performing segments of the textile sector.

Bedwear exports followed a similar trend, reaching $308.50 million, up 47.13% compared with June and 4.16% year-on-year.

Towels and Made-Up Articles Show Strong Momentum

Among the major textile categories, towels recorded the most significant monthly growth. Exports increased 60.35% month-on-month to $106.36 million and were 13.37% higher than in July 2025.

Made-up articles, excluding towels and bedwear, also posted substantial gains. Exports rose 58.51% from June to $77.21 million, representing a 10.56% annual increase.

Meanwhile, cotton cloth exports grew 26.27% month-on-month to $141.59 million. However, they remained almost unchanged on an annual basis, declining slightly by 0.10%.

Cotton yarn exports showed more moderate monthly growth, increasing 3.91% to $66.53 million. On a year-on-year basis, however, cotton yarn exports were up a healthy 18.69%.

Textile Imports Also Increase

The improvement in exports was accompanied by higher textile imports. Pakistan imported $682.21 million worth of textile products in July, compared with $647.43 million in June.

This represents a 5.37% monthly increase and a 14.82% year-on-year rise. In rupee terms, textile imports stood at approximately Rs189.93 billion.

Raw cotton remained one of the largest import categories at $186.34 million. Although raw cotton imports declined 15.37% from June, they were 30.01% higher than a year earlier.

Imports of synthetic and artificial silk yarn recorded particularly strong monthly growth, rising 43% to $125.84 million. They were also 18.42% higher year-on-year.

Worn clothing imports increased to $62.36 million, up 6.30% from June and an impressive 41.44% compared with July 2025.

Synthetic fiber imports reached $72.42 million, representing a 4.34% monthly increase. However, they were 4.02% lower on an annual basis.

A Positive Start for Pakistan’s Textile Sector

July’s figures provide an encouraging start for Pakistan’s textile industry. The strongest growth came from value-added products such as garments, knitwear, towels and made-up articles, rather than being driven solely by raw or semi-processed textile products.

The 8.07% annual increase in total textile exports is particularly important because it indicates that the sector is performing better than it did at the same time last year. Stronger garment and towel exports could also help support foreign-exchange earnings and industrial activity.

However, rising textile imports show that manufacturers are also increasing their purchases of cotton, yarn and other inputs. Whether this translates into sustained export growth will depend on international demand, production costs, energy prices, exchange-rate conditions and the competitiveness of Pakistani manufacturers.

For now, July’s $1.81 billion export figure signals renewed momentum for one of Pakistan’s most important economic sectors. If the pace of demand for value-added textile products continues, the industry could play an even greater role in boosting the country’s exports during the months ahead.

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The demonstration was conducted during an online consultation with the Karachi Tax Bar Association (KTBA). The session was part of the FBR’s continuing efforts to gather feedback from tax practitioners and improve the digital tax-filing experience.

Easier Reporting of Property and Capital

During the meeting, the FBR’s Domain Team demonstrated how taxpayers can enter information about investments in immovable property in their tax returns. The system also allows users to record more than one business capital holding and declare tax under the relevant provisions of tax law.

Another feature demonstrated during the session enables taxpayers to include inherited property in their records. FBR officials also explained that some fields in the system are optional. The vehicle chassis number, for example, does not have to be entered where the field is not mandatory.

According to the FBR team, the existing return system is operating without major technical issues or significant software defects. Questions raised by KTBA members were addressed during the demonstration, with officials providing practical explanations of how different features work.

Tax Bar Appreciates FBR’s Approach

KTBA President Mehmood Bikiya welcomed the FBR’s willingness to listen to concerns raised by tax professionals. He appreciated the authority’s efforts to make the return system more responsive and easier for taxpayers and practitioners to use.

KTBA Vice President Saud ul Hasan also praised the FBR for maintaining direct communication with the business community. Such consultations can help the tax authority identify difficulties faced by users and make practical improvements to the online filing process.

Suggestions for Future Improvements

The tax bar also presented several recommendations that could further simplify the filing process in future versions of the return system.

One major suggestion was to introduce an Excel upload option. Such a facility could make it easier for taxpayers and tax practitioners to enter large volumes of financial information without manually filling in every field.

The association also requested a review of the requirement to provide certain financial information again in the following year’s return. In addition, KTBA proposed that the system should generate a PDF containing an explanation of the relevant legal provisions concerning tax residence status.

Refunds and Assessment Matters

The discussion was not limited to technical features. KTBA representatives also raised concerns regarding the timing of refund applications, deemed assessment orders and revision of tax returns.

FBR officials explained that some of these matters are linked to existing policy and legal provisions. They specifically referred to the 15-day deemed assessment rule and said the concerns raised by the association had been sent to the FBR’s Policy Wing for review.

A More Digital and User-Friendly Tax System

The consultation demonstrates the FBR’s continued focus on improving Pakistan’s digital tax-filing infrastructure through direct feedback from practitioners.

Features for reporting property, business capital and inherited assets could make the return process more structured, while proposed additions such as Excel uploads could reduce the burden of manual data entry.

As consultations with tax professionals continue, further changes may be introduced to address practical filing issues. The broader objective is to develop a tax return system that is simpler, clearer and more convenient for taxpayers, while also improving transparency and compliance across the tax system.

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According to a notice submitted to the Pakistan Stock Exchange (PSX), the board of directors has recommended investing approximately Rs180 million in MPIL following the completion of due diligence.

Under the proposal, LSE SPAC-II will subscribe to 269,000 ordinary shares of M.P. Industries at a price of Rs669.14 per share. Once the new shares are issued, the investment is expected to give LSE SPAC-II an ownership stake of around 15% in MPIL’s post-issue paid-up capital.

The proposed investment represents an important step for LSE SPAC-II as it seeks to deploy its funds into a new business opportunity. However, the transaction is not yet final, as it requires approval from the company’s shareholders through a special resolution and must also go through the required corporate and regulatory procedures applicable to SPACs.

Shareholders to Decide on Investment

To obtain the necessary approval, LSE SPAC-II has scheduled its Annual General Meeting for Saturday, September 19, 2026, at 9:30 am. The meeting will be held at the company’s registered office in Lahore.

Shareholders will be asked to consider and approve the proposed investment in MPIL, along with other related matters.

The company said the AGM notice, Statement of Material Facts and Information Circular required under Section 12(g) of the Public Offering Regulations, 2017, will be distributed to shareholders in due course.

Why the Investment Matters

The proposed transaction gives LSE SPAC-II an opportunity to obtain a meaningful stake in M.P. Industries without acquiring the entire company. A 15% holding could potentially allow SPAC-II to benefit from MPIL’s future growth and financial performance, although the ultimate return will depend on the company’s business prospects and valuation.

For investors, the key consideration will be whether the agreed price of Rs669.14 per share provides sufficient value relative to MPIL’s earnings, assets and future growth potential.

The transaction also highlights the role of SPACs in identifying and investing in businesses after their initial capital-raising phase. If approved by shareholders and completed successfully, the MPIL investment will become a significant portfolio transaction for LSE SPAC-II.

What Happens Next?

The immediate milestone is the September 19 AGM, where shareholders will decide whether to approve the proposed investment. If the resolution receives the required approval, LSE SPAC-II can proceed with the subscription of MPIL shares, subject to completion of the remaining regulatory and corporate requirements.

Until those steps are completed, the Rs180 million investment remains a proposal rather than a finalized transaction. Investors will therefore be watching the AGM outcome and subsequent disclosures closely for further details on the deal and its potential impact on LSE SPAC-II.

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The development follows amendments to the government’s Brownfield Refineries Upgradation Policy, which has introduced a tighter timeline for refineries to move from plans to formal implementation agreements. Under the revised policy, companies have 45 days to sign their agreements with the government.

Parco Leads With Green Fuel Investment

Pak-Arab Refinery Company (Parco), one of Pakistan’s largest refining companies, has committed to a $600 million green fuel project after assessing different options for modernizing its operations.

Rather than pursuing a standalone bottom-of-the-barrel project, Parco selected a green fuel-focused approach. The company has already reduced its furnace oil production from roughly 20% to around 14% through operational improvements. Its new project is expected to bring that figure down to approximately 10–11% during the first phase, with a longer-term objective of eliminating furnace oil production altogether.

The upgrade will also move Parco completely from Euro-III to Euro-V fuel standards. Gasoline production is expected to increase from approximately 3,678 tonnes per day to more than 4,000 tonnes per day, while diesel production is also projected to rise.

PRL Plans to Double Refining Capacity

Pakistan Refinery Limited (PRL) is preparing one of the largest investment projects under the programmed, with an estimated cost of $1.8 billion to $2 billion.

The company’s proposed bottom-of-the-barrel project is designed to eliminate furnace oil production while improving the refinery’s overall product mix. More significantly, PRL plans to increase its crude processing capacity from 50,000 barrels per day to 100,000 barrels per day.

Such an expansion could significantly strengthen PRL’s ability to supply petroleum products to the domestic market while reducing the need for imports.

Attock Refinery Targets Cleaner, Higher-Value Products

Attock Refinery Limited (ARL) is also moving forward with its previously announced modernization programmed, estimated at around $600 million.

The project includes a Continuous Catalytic Reformer, improvements to its diesel hydrodesulphurization unit, a kerosene hydrotreating facility, additional storage and utility infrastructure, as well as a biofuel facility required under the revised policy.

Once completed, the upgrade is expected to enable ARL to produce Euro-V quality fuels and increase motor gasoline output by approximately 25%.

Cnergyico Eyes $1.2 Billion Expansion

Cnergyico Pakistan Limited, the country’s largest private refinery, has outlined an investment programmed of approximately $1.2 billion.

The company’s strategy involves several stages. The first focuses on producing Euro-V and Euro-VI compliant petroleum products. The second involves a bottom-of-the-barrel project, for which technical studies are being conducted. The final phase is expected to increase refining capacity and develop a new Single Point Mooring facility to support the import and export of crude oil and finished petroleum products.

Cnergyico currently has refining capacity of around 156,000 BPD and aims to increase this to approximately 200,000 BPD.

The company also expects its upgraded facilities to significantly increase gasoline and diesel production while reducing the amount of furnace oil generated during the refining process.

NRL Considering a Hybrid Upgrade

National Refinery Limited (NRL) is considering a more flexible approach through a proposed $300 million to $800 million hybrid project combining green fuel and bottom-of-the-barrel technologies.

NRL has already achieved Euro-V production for high-speed diesel, while further work is underway to determine the best configuration for motor gasoline and other products.

The proposed investment would substantially reduce furnace oil production. NRL is also considering increasing its crude refining capacity from 50,000 BPD to 70,000 BPD, although the final scope of the project has yet to be determined.

A Potential Turning Point for Pakistan’s Oil Industry

Taken together, the five projects could bring up to $5 billion in investment into Pakistan’s refining sector. The programmed represents a shift away from older refining configurations toward facilities capable of producing cleaner and more commercially valuable petroleum products.

A major objective is to reduce furnace oil production. As demand for furnace oil has declined, producing large quantities of it has become less attractive for domestic refineries. Converting more of the crude barrel into gasoline, diesel and other higher-value products could therefore improve refinery economics.

The move toward Euro-V and Euro-VI standards is another important element. Cleaner fuel production would improve the quality of petroleum products available in Pakistan and bring domestic refining operations closer to international standards.

However, the proposed investment figures should not yet be viewed as completed investments. The immediate test will be whether the refineries sign their implementation agreements within the government’s new 45-day deadline and subsequently secure financing and execute the projects.

If the plans move ahead as intended, Pakistan could see a significant expansion and modernization of its refining capacity, improved fuel quality and a more efficient domestic petroleum supply chain. The coming months will therefore be crucial in determining whether the proposed $4.5–5 billion refinery transformation becomes a reality.

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The reform agenda was discussed during a high-level meeting chaired by Federal Minister for Economic Affairs and Establishment Division Ahad Cheema. Government officials, representatives of the Public Procurement Regulatory Authority (PPRA), and members of the Construction Association of Pakistan (CAP) participated in the discussions.

A New Body for the Construction Sector

The proposed CIDB is expected to play both a developmental and regulatory role. Rather than focusing solely on oversight, the board would work with government and industry stakeholders to promote growth, introduce better standards, and encourage modern construction practices.

According to the proposal, the board would include representatives from both the public and private sectors. This structure could provide the industry with a central platform for addressing regulatory problems while improving the quality and efficiency of construction projects across Pakistan.

The government and CAP have reportedly reached a broad understanding on the need for such an institution, with the proposed framework expected to be presented to the prime minister for approval.

Longer Liability Period for Public Projects

One of the most important proposed changes concerns the Defect Liability Period (DLP) for government-funded construction projects.

Currently, the standard liability period is generally one year. The government is considering extending it to three years, with a possible future increase to five years.

The purpose is straightforward: contractors should remain responsible for the quality of their work for a meaningful period after a project is completed. A longer liability period could discourage shortcuts and poor-quality construction because contractors would remain exposed to the cost of repairing defects that emerge after completion.

For taxpayers, the measure could also help reduce the recurring problem of infrastructure requiring repairs soon after being handed over.

Consultants Could Face Greater Accountability

The proposed reforms also address an area that has received comparatively less attention in the past: the responsibility of consultants.

Under the existing framework, contractors can be penalized for failing to meet contractual requirements or delivering substandard work. However, consultants involved in project design and technical supervision may not face the same level of direct accountability.

The proposed CIDB framework could change that by bringing consultants under stronger regulatory supervision. They could potentially face legal and financial consequences when poor designs, technical errors, or professional negligence contribute to project failures.

CAP has supported the idea, arguing that greater accountability among consultants would help protect public funds and improve the accuracy of project designs.

Dedicated Bank for Construction Companies

Financing is another major concern for Pakistan’s construction sector. Industry representatives have highlighted difficulties in obtaining bank guarantees and performance guarantees, which can create obstacles for contractors bidding for and executing major projects.

In response, the government is exploring the creation of a Construction Development Bank specifically designed to meet the industry’s financial needs.

Federal authorities have asked the relevant finance officials to engage with the State Bank of Pakistan and the Pakistan Banks Association to assess whether such an institution would be practical and financially viable.

The proposal is still under consideration, meaning the creation of the bank will depend on the outcome of these consultations and a detailed feasibility assessment.

Tax and Trade Measures Also Under Consideration

The reform package goes beyond institutional changes. Authorities are also examining targeted tax measures and adjustments to import and export policies.

These changes are intended to reduce some of the financial and regulatory pressures affecting construction companies. Better access to modern machinery, technology, and imported materials could help domestic firms improve productivity and compete more effectively.

At the same time, carefully designed tax incentives could encourage investment and support the industry’s expansion.

Potential Impact on Pakistan’s Construction Industry

Pakistan’s construction sector plays an important role in employment, infrastructure development, housing, and economic activity. However, the industry has long faced challenges including inconsistent standards, financing constraints, regulatory complexity, and concerns over project quality.

The proposed reforms could address several of these issues simultaneously.

A strong CIDB could provide a dedicated institution for developing industry standards and resolving regulatory problems. Longer defect liability periods could improve construction quality, while consultant accountability could strengthen professional responsibility. Meanwhile, a specialized financial institution could potentially make it easier for construction firms to obtain the guarantees and financing required for major projects.

However, the success of the reforms will ultimately depend on how they are implemented. A new regulatory body will need clear powers, transparent procedures, and effective coordination with existing institutions. Similarly, any specialised construction bank would need a sustainable financial model and strong governance.

A Potential Turning Point

Pakistan’s proposed construction-sector reforms represent an attempt to move beyond individual project regulations and create a more organized framework for the industry.

If approved and implemented effectively, the CIDB could become a central institution for improving construction standards, encouraging innovation, and holding both contractors and consultants accountable. The proposed Construction Development Bank, meanwhile, could help address one of the industry’s most persistent challenges: access to suitable financial support.

The combination of stronger regulation, longer liability periods, professional accountability, financing reforms, and targeted tax and trade measures could significantly reshape Pakistan’s construction landscape.

The proposals are still moving through the approval and consultation process, but they signal the government’s intention to make the construction sector more accountable, competitive, technologically capable, and aligned with international standards.

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The changes are aimed at encouraging traders to complete customs procedures on time and prevent imported or export goods from remaining at customs stations for unnecessarily long periods.

Higher Fines for Late Declarations

Under the new schedule, importers and other relevant parties will face penalties when a goods declaration for home consumption, warehousing or transshipment is not submitted within 20 days after the arrival of the goods at a customs station.

Once the initial period has passed, a fine of Rs25,000 per day will apply for the next five days. If the delay continues, the penalty will increase to Rs50,000 for every additional day, with the total fine limited to Rs1 million.

Delays After Assessment and Payment

The FBR has also introduced penalties for goods that remain uncleared even after customs assessment has been completed and applicable duties and taxes have been paid.

Where a declaration was submitted before the vessel’s arrival, goods must be removed within five days after assessment and berthing. Failure to do so will result in a Rs15,000 daily penalty for the next five days, followed by a Rs20,000 daily fine for each subsequent day.

The maximum penalty under this provision is also Rs1 million.

Another category applies when the declaration is filed after the vessel has already berthed. If the goods are not removed within five days after clearance of the declaration, the penalty will begin at Rs10,000 per day for five days and then increase to Rs20,000 per day.

Exporters Also Face Time-Based Penalties

The revised rules extend to export consignments as well. Goods entering a port for export must be loaded onto the relevant conveyance within 15 days.

If they remain unshipped, the exporter will face a fine of Rs5,000 per day for the next five days. Continued delays will attract a higher penalty of Rs15,000 per day, with the maximum liability capped at Rs1 million per case.

New Notification Replaces Previous Rules

The revised penalty structure was notified through S.R.O. 1346(I)/2026, issued by the Revenue Division on August 13, 2026. It has been issued under Section 82(1) of the Customs Act, 1969, and replaces the earlier notification S.R.O. 1387(I)/2025 dated July 31, 2025.

According to the notification, penalties will be dealt with through the prescribed adjudication process or by voluntary payment in accordance with the relevant rules.

Impact on the Trading Community

The new system could have a significant financial impact on businesses that fail to meet customs deadlines. Because the penalties increase as delays continue, traders will have a stronger incentive to submit declarations promptly, complete assessment requirements and remove goods without unnecessary delays.

Importers and exporters may therefore need to strengthen their documentation, compliance and logistics procedures to avoid accumulating daily fines.

Conclusion

The FBR’s latest notification signals a tougher approach toward delays in customs clearance and export procedures. With penalties reaching as much as Rs1 million per case, businesses will need to closely monitor statutory deadlines once the new regime becomes effective on October 1, 2026.

The measure is ultimately intended to promote faster customs processing, reduce congestion at customs stations and encourage greater compliance among Pakistan’s trading community.

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The arrangement provides a formal framework for both sides to assist each other in customs-related matters. It includes the exchange of information, mutual administrative assistance and cooperation in identifying suspicious consignments and individuals. The two authorities will also work together to support the enforcement of their respective customs laws.

The agreement was formalized during a virtual ceremony held at the Federal Board of Revenue (FBR) headquarters. Member Customs Operations Shakeel Shah co-chaired the ceremony, while copies of the agreement were subsequently exchanged between Hong Kong Customs and Pakistan’s Consul General in Hong Kong.

A stronger intelligence-sharing mechanism

One of the most significant features of the new arrangement is the improved flow of customs intelligence between Pakistan and Hong Kong. Timely access to information can help authorities identify potentially problematic shipments and take appropriate action before illegal or fraudulent trade causes further harm.

Cooperation between customs administrations is particularly important in today’s interconnected global trading system, where goods can pass through several countries and territories before reaching their final destination. Sharing intelligence can therefore help authorities detect suspicious patterns that may otherwise be difficult to identify.

Focus on enforcement and trade security

The agreement also strengthens cooperation in enforcing customs regulations. By working more closely, the two sides can improve their ability to address activities that undermine legitimate commerce and government revenues.

Officials have emphasized that the cooperation follows standards promoted by the World Customs Organization (WCO). This gives the arrangement an international framework and reflects the two sides’ commitment to modern customs practices.

The objective is not only to prevent illegal activities but also to enhance the security of international supply chains. A more effective customs system can help protect legitimate businesses and traders from unfair competition caused by smuggling, fraud and other illicit practices.

Potential benefits for Pakistan

For Pakistan, closer customs cooperation with Hong Kong could provide useful support in improving revenue collection and combating customs violations. Better access to trade-related intelligence may enable authorities to investigate suspicious transactions and consignments more effectively.

At the same time, stronger coordination could contribute to smoother legitimate trade. When customs authorities have better information and risk-assessment capabilities, they can focus enforcement efforts on high-risk shipments while allowing compliant businesses to move goods more efficiently.

Building a long-term partnership

Shakeel Shah described the agreement as an opportunity to establish a lasting institutional relationship between the customs administrations of Pakistan and Hong Kong. He also stressed Pakistan Customs’ willingness to continue supporting its Hong Kong counterpart in the areas covered by the agreement.

The pact therefore represents more than a routine exchange of commitments. It creates a structured platform through which both sides can cooperate on emerging customs challenges and respond more effectively to changing patterns of international trade.

Conclusion

The Pakistan-Hong Kong customs agreement marks a significant development in bilateral customs cooperation. Through greater intelligence sharing, mutual assistance and coordinated enforcement, the two sides aim to make international trade more secure while facilitating legitimate commercial activity.

As global supply chains become increasingly complex, cooperation between customs authorities is becoming essential. The new framework could help Pakistan and Hong Kong strengthen enforcement, protect government revenues and create a safer and more efficient environment for legitimate trade.

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