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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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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.

SEO Title: FBR Announces Faceless Tax Assessment Rules for 2026

Meta Description: FBR introduces automated tax assessments, online hearings and digital document submission ahead of Pakistan’s October 31, 2026, tax filing deadline.

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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 may attract fresh Chinese investment as Shengtang Group has expressed interest in signing a $10 million memorandum of understanding (MoU) to explore business opportunities in seven important sectors of the country. The proposed investment could support industrial growth, infrastructure development, energy projects, and other areas linked to Pakistan’s economic progress.

According to a statement from Pakistan’s Ministry of Industries and Production, representatives of the Chinese company discussed potential investment opportunities during a meeting with Haroon Akhtar Khan, Adviser to the Prime Minister on Industries and Production.

Seven Sectors Under Consideration

Shengtang Group has shown interest in exploring opportunities across a range of industries that could contribute to Pakistan’s economic development. The sectors under consideration include:

• Industrial development: Expanding industrial activities and supporting local manufacturing.
• Infrastructure: Exploring projects that could improve facilities and support economic connectivity.
• Tourism: Identifying opportunities to develop tourism-related businesses and services.
• Electric vehicles (EVs): Exploring investment in the growing electric mobility sector.
• Railways: Considering opportunities to support railway development and transportation infrastructure.
• Energy: Looking into projects that could contribute to the country’s energy sector.
• Urban development: Exploring initiatives related to urban infrastructure and city development.

Investment across these sectors could create opportunities for collaboration between Pakistani businesses and Chinese investors. However, the projects, funding arrangements, and implementation timelines have yet to be confirmed.

Pakistan Highlights Reforms to Attract Chinese Investors

During the meeting, Haroon Akhtar Khan highlighted the government’s efforts to improve the business environment and make investment procedures more convenient for foreign companies.

He said the government was introducing business-friendly regulatory changes and had issued instructions to relevant authorities to facilitate Chinese investors. The measures are intended to improve the ease of doing business and encourage greater participation from international companies.

The adviser also discussed the land-lease model, which offers a potential mechanism for investors seeking land for industrial and commercial development. Such arrangements could help businesses explore opportunities without necessarily purchasing land outright, depending on the applicable terms and conditions.

Stronger Economic Cooperation Between Pakistan and China

Pakistan and China have maintained close economic ties, with cooperation extending across infrastructure, industrial development, energy, and other areas. The proposed interest from Shengtang Group represents another potential opportunity to expand commercial engagement between the two countries.

Khan emphasized the government’s intention to translate Prime Minister Shehbaz Sharif’s vision for stronger relations with China into practical economic outcomes.

He also stated that around 40% of joint ventures and memorandums of understanding signed between Pakistan and China had moved into the implementation stage. This figure was cited by the adviser during the meeting and points to the government’s stated focus on advancing bilateral initiatives beyond the agreement stage.

Potential Benefits for Pakistan’s Economy

If the proposed investment progresses into concrete projects, it could offer several potential benefits for Pakistan.

Employment opportunities: Industrial and infrastructure projects may generate jobs during construction, operations, and supporting business activities.

Technology transfer: Cooperation with Chinese companies could create opportunities for Pakistani businesses to gain access to new technologies, technical expertise, and industrial processes.

Industrial expansion: New investment could help strengthen manufacturing capacity, encourage local production, and support related supply chains.

Development of emerging industries: Interest in electric vehicles could open further opportunities in vehicle assembly, charging infrastructure, and associated services, depending on the projects eventually pursued.

Greater foreign investment: Progress on the proposed MoU could encourage other international investors to examine opportunities in Pakistan.

These outcomes will depend on the scale of the projects, the financing arrangements, regulatory approvals, and the extent to which the proposed initiatives move forward.

What Happens Next?

Although Shengtang Group has expressed interest in a $10 million MoU, the proposal should not yet be treated as a completed investment. Further details about the agreement, the allocation of funds across the seven sectors, and the schedule for implementation would be needed to assess its likely economic impact.

The next important step will be to determine whether the parties formalize the proposed agreement and develop specific projects from the discussions.

For Pakistan, converting investment interest into operational businesses and completed projects remains essential to achieving lasting economic benefits. Effective implementation, a predictable regulatory environment, and coordination between investors and government institutions will be important factors in this process.

Conclusion

Shengtang Group’s interest in a proposed $10 million MoU signals a potential new avenue for economic cooperation between Pakistan and China. With opportunities spanning industry, infrastructure, tourism, electric vehicles, railways, energy, and urban development, the discussions cover several areas relevant to Pakistan’s development priorities.

While the proposal is still at the expression-of-interest stage, successful negotiations and project implementation could create opportunities for employment, technology transfer, industrial growth, and stronger commercial ties. The actual benefits will become clearer as further details emerge and the proposed investment moves, if it does, toward implementation.

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Pakistan is aiming for economic growth of more than 4% in the current fiscal year as the government steps up efforts to attract private investment, sell state-owned entities and strengthen the country’s financial position. Finance Minister Muhammad Aurangzeb has also confirmed that discussions with the United States are continuing over a proposed $10 billion exchange stabilization facility.

The government’s plans come at a time when Pakistan faces economic challenges linked to rising international oil prices, regional tensions and its dependence on external financing. Despite these pressures, the finance minister remains optimistic about the country’s economic outlook.

Pakistan Remains Optimistic About Economic Growth

According to Aurangzeb, Pakistan’s economy is expected to expand by more than 4% during the current fiscal year. He pointed to the performance of key sectors, particularly agriculture, and the country’s ability to maintain sufficient fuel supplies despite uncertainty in international energy markets.

However, higher oil prices remain a concern because Pakistan relies heavily on imported energy. An extended conflict in the Middle East could increase import costs, push inflation higher and create additional pressure on the country’s foreign exchange reserves.

The government is therefore keeping a close watch on commodity prices and their potential impact on the wider economy.

Government Plans to Raise More Than $1 Billion Through Privatization

Privatization is expected to play an important role in Pakistan’s economic reform strategy. The finance minister said the government intends to complete the privatization of five or six entities during the current fiscal year, potentially generating more than $1 billion.

Around a dozen entities are reportedly in the pipeline, including state-owned electricity distribution companies and plans to outsource airport operations.

The initiative follows the privatization of Pakistan International Airlines, which marked a significant step in the government’s efforts to reduce the state’s involvement in commercial activities.

The government believes that greater private-sector participation could improve operational efficiency, attract investment and reduce the financial burden associated with underperforming public enterprises.

Privatization is also an important part of Pakistan’s commitments under its International Monetary Fund (IMF) programmed. Progress on these reforms will be closely watched by international lenders and investors.

Pakistan Continues Talks With the United States

Alongside its privatization plans, Pakistan is pursuing additional financial support through negotiations with the United States over a proposed $10 billion exchange stabilization facility.

Aurangzeb said discussions were ongoing but did not provide a timeline for a possible agreement. He also indicated that the proposed arrangement would complement other engagements with US financial institutions, including the Export-Import Bank of the United States and the US International Development Finance Corporation.

If finalized, the facility could provide another potential source of financial support for Pakistan. However, the proposal remains under discussion and should not be considered secured funding.

The finance minister also stressed that Pakistan would continue to seek access to international markets even if the proposed facility does not materialize.

IMF Support Remains Important for Economic Stability

Pakistan’s economic recovery has been supported by a $7 billion IMF programmed approved in 2024. The programmed includes economic reforms aimed at improving tax collection, strengthening public finances and addressing structural weaknesses.

More recently, Pakistan reached a staff-level agreement with the IMF that could unlock approximately $1.21 billion in additional financing under its existing programmed and a climate-related funding arrangement, subject to the required approvals.

Continued IMF support is significant for Pakistan because the country needs foreign currency to meet external debt obligations, maintain adequate reserves and manage its balance of payments.

At the same time, the reforms associated with international lending can create difficulties for businesses and households, particularly when higher taxes and rising prices affect purchasing power.

Inflation and Oil Prices Remain Key Concerns

While the government expects economic growth to exceed 4%, inflation remains a major risk. Pakistan’s reliance on imported energy means that increases in global oil prices can raise transportation expenses, production costs and the cost of delivering goods to consumers.

These pressures could affect household budgets and businesses across several sectors.

The government will need to balance its growth ambitions with measures that maintain price stability and protect economic recovery. Stronger agricultural output and reliable fuel availability could help, but the broader outlook will also depend on international market conditions.

Private Investment Could Shape Pakistan’s Economic Future

The government’s push to privatize public-sector enterprises reflects its intention to give private businesses a greater role in economic activity.

Successful transactions could generate revenue, reduce financial risks for the government and encourage investment in sectors that require operational improvements. However, the final impact will depend on whether the planned transactions are completed successfully and whether new owners can improve efficiency and service delivery.

Investors will also be watching Pakistan’s progress on economic reforms, fiscal management and external financing.

Conclusion

Pakistan is entering the current fiscal year with a growth target above 4%, plans to generate more than $1 billion through privatization and ongoing discussions over a proposed $10 billion financial facility with the United States.

These initiatives highlight the government’s efforts to strengthen economic stability and attract greater private-sector participation. Nevertheless, high energy costs, inflation risks and dependence on external financing remain significant challenges.

The country’s economic performance will ultimately depend on its ability to implement reforms, maintain financial stability and translate announced targets into measurable results. Progress on privatization, continued engagement with international lenders and effective management of inflation will be important factors in determining whether Pakistan can sustain its recovery.

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The World Bank has proposed $200 million in financing to help Khyber Pakhtunkhwa (KP) strengthen its revenue collection system, improve public services and manage its finances more effectively. The initiative aims to nearly double the province’s own-source tax revenue in real terms, increasing it from Rs64 billion to Rs122 billion by June 2031.

The proposed initiative, titled the Pakistan Public Resources for Inclusive Development Multiphase Programmatic Approach for KP, carries a total estimated cost of $650 million. Of this amount, $200 million would come from the World Bank, while the provincial government would contribute the remaining $450 million.

According to the programmed document, the initiative is expected to cover FY2027 to FY2032, with approval scheduled for October 29, 2026.

Expanding KP’s Tax Base

A major objective of the proposed programmed is to reduce KP’s reliance on financial transfers from the federal government by increasing revenue generated within the province.

The province’s own tax receipts currently account for a relatively small and declining portion of its expenditure. At the same time, growing salary and pension obligations, inflation and additional spending requirements in the merged districts have placed considerable pressure on public finances.

To address these challenges, the proposed reforms will focus on expanding the tax base, simplifying tax procedures and improving the efficiency of revenue collection. Digital systems are also planned for the KP Revenue Authority, the Excise, Taxation and Narcotics Control Department, and the Board of Revenue.

The World Bank has identified weaknesses in property taxation, agricultural income taxation and the taxation of certain services as areas requiring attention. Fragmented administrative arrangements and limited information sharing between government departments have also restricted the province’s ability to collect revenue effectively.

Improving Healthcare and Education

Alongside tax reforms, the programmed seeks to improve how public funds are allocated and spent, particularly in the health and education sectors.

The proposed measures include better budgeting, more efficient procurement procedures and stronger financial management systems. These changes are intended to ensure that government resources are used more effectively and that essential services reach the people who need them.

By June 2031, the initiative aims to bring 60% of primary schools that currently fail to meet minimum functional standards into compliance.

It also seeks to introduce electronic verification and payment systems for 60% of contractual payments. In addition, the programmed targets a 15% reduction in procurement cycle times in healthcare and primary education.

If implemented effectively, these measures could improve transparency, reduce administrative delays and help public institutions deliver services more efficiently.

Addressing Major Social Challenges

The proposed reforms come at a time when KP continues to face significant challenges related to poverty, education and public health.

According to the World Bank figures cited in the programmed document, 35.3% of the province’s population lived below the national poverty line in FY2025. Approximately 40% of children under the age of five were affected by stunting, highlighting persistent nutritional and healthcare concerns.

Education indicators also remain troubling. Around 36% of school-age children were out of school, while only 58% of children were fully immunized.

These figures underline the importance of strengthening public institutions and directing government spending towards essential services. Although higher tax revenue alone will not resolve these problems, improved fiscal management could provide the provincial government with greater capacity to finance development priorities.

A New Digital Hub for Better Planning

Another important component of the initiative is the establishment of a KP Development Data Hub.

The proposed platform would help consolidate economic information, connect administrative records and improve access to reliable government data. Better information could enable policymakers to identify service delivery gaps, monitor public spending and make decisions based on evidence rather than incomplete records.

Digital reforms, however, will need to be accompanied by appropriate safeguards. The World Bank has classified the programmer’s environmental and social risks as moderate, identifying concerns that include digital exclusion, data privacy and the potential distributional effects of agricultural income tax reforms.

Ensuring that digital services remain accessible and that tax changes are implemented fairly will therefore be important aspects of the programmed.

Financing Structure and Implementation Timeline

The proposed $200 million World Bank contribution would consist of a $100 million International Development Association (IDA) credit and a further $100 million IDA loan. The provincial government would provide an estimated $450 million towards the overall programmed cost.

The initiative is expected to run from FY2027 through FY2032, while the central tax revenue target is set for June 2031. World Bank approval is scheduled for October 29, 2026, meaning the financing remains proposed as of October 12, 2026.

The programmer’s effectiveness will ultimately depend on the implementation of its planned reforms, the strength of institutional coordination and the provincial government’s ability to maintain consistent progress towards its targets.

Conclusion

The World Bank’s proposed financing represents a significant opportunity for Khyber Pakhtunkhwa to strengthen its fiscal position and improve the delivery of essential public services.

Raising own-source tax revenue from Rs64 billion to Rs122 billion in real terms would give the province greater capacity to finance its priorities and reduce its dependence on federal transfers. At the same time, improvements in education, healthcare, procurement and digital governance could help ensure that public resources are used more productively.

However, achieving these objectives will require more than changes to tax administration. Transparent implementation, effective oversight, fair taxation and a clear focus on public service outcomes will be essential to turning the proposed investment into lasting benefits for the people of KP.

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Pakistan’s efforts to attract and retain foreign investment face another administrative challenge as overseas investors raise concerns over delays in obtaining tax exemption certificates from the Federal Board of Revenue (FBR). The delays are creating obstacles for the registration of foreign-held shares with the State Bank of Pakistan (SBP), even in cases where the relevant share transactions have already been completed.

Investors are calling for a more efficient certification mechanism, clearer tax guidelines, and a defined timeline for processing applications. They have also urged the authorities to clarify whether Rule 19H of the Income Tax Rules applies to share transfers completed before the rule was introduced.

Tax Certification Requirements Create Uncertainty

Recent changes relating to Section 37 of the Income Tax Ordinance have raised concerns among stakeholders involved in cross-border share transactions. The requirements have introduced additional compliance considerations, particularly when shares in Pakistani companies are transferred between two non-resident parties.

Under the applicable framework, a non-resident buyer purchasing shares from another non-resident may be required to deduct tax from the transaction. However, where the seller is entitled to an exemption or a reduced tax rate under Pakistani law or an applicable double taxation agreement, the relevant tax certificate may be necessary to establish that entitlement.

Obtaining the certificate from the Commissioner Inland Revenue has reportedly become a lengthy process in some cases. As a result, investors face uncertainty about when their applications will be approved and whether they can complete the remaining regulatory formalities within a reasonable period.

Disputes Over the Application of Tax Provisions

Another concern relates to the interpretation of Section 101A of the Income Tax Ordinance. According to stakeholders, certain tax authorities have treated transactions between non-resident parties under this provision, contributing to difficulties in issuing exemption certificates.

Such interpretations can complicate transactions where investors believe that an exemption or a preferential tax treatment should apply. Without timely clarification from the relevant authorities, parties may struggle to determine their tax obligations and satisfy the documentation requirements associated with share transfers.

Investors believe that consistent interpretation of the relevant provisions is essential to reduce compliance risks and prevent administrative uncertainty from affecting legitimate commercial transactions.

SBP Registration Delays Affect Foreign Shareholders

The consequences extend beyond the tax certification process. Foreign investors must also complete the applicable registration formalities with the State Bank of Pakistan, and compliance with Rule 19H has reportedly become an important consideration in certain cases.

When an investor has acquired shares but cannot obtain the required tax documentation, the remaining registration process may be delayed. This creates a gap between the completion of a commercial transaction and the completion of the associated regulatory procedures.

Such delays can complicate investment records, create uncertainty over the recognition of shareholdings, and make it more difficult for investors to plan subsequent transactions. They may also increase the time and cost involved in maintaining investments in Pakistani companies.

Investors Seek Clarity on Retrospective Application

A major demand from foreign investors concerns the possible retrospective application of Rule 19H. Stakeholders want the authorities to clarify that transactions completed before the rule’s introduction should not be subjected to new requirements merely because their SBP registration remains outstanding.

The distinction is important because the underlying share transfer and its subsequent regulatory registration may occur at different times. Investors argue that a transaction completed under the rules applicable at the time should be assessed accordingly, rather than being delayed by uncertainty over later procedural requirements.

Clear transitional guidelines would help distinguish historical transactions from new acquisitions and reduce disagreements between investors and regulatory authorities.

Time-Bound Certificates Could Improve the Process

To address these concerns, investors are seeking practical reforms that would make the certification process more predictable. Key proposals include:

• Defined processing timelines: The FBR should establish clear deadlines for deciding applications for tax exemption or reduced-rate certificates.
• Consistent interpretation of tax laws: Detailed guidance should explain how Sections 37 and 101A apply to share transfers between non-residents.
• Clear transitional arrangements: The authorities should clarify the treatment of transactions completed before the introduction of Rule 19H.
• Improved coordination between regulators: The FBR and SBP should align their documentation requirements to minimize unnecessary delays.
• Transparent application procedures: Investors should have access to clear eligibility criteria, documentation checklists, and information about the status of pending applications.

These measures could help reduce uncertainty without compromising the government’s responsibility to ensure compliance with tax laws.

Implications for Pakistan’s Investment Climate

A predictable regulatory environment is an important consideration for international investors deciding where to allocate capital. While taxation and regulatory oversight are necessary, lengthy administrative procedures can undermine investor confidence when they prevent the completion of otherwise finalized transactions.

For Pakistan, resolving these concerns could help improve the ease of doing business and demonstrate a commitment to transparent investment procedures. Delays in tax certification and share registration may also influence how foreign investors assess the risks associated with future investments and corporate transactions.

A coordinated response from the FBR and SBP would therefore serve a broader purpose than resolving individual applications. It could establish a more consistent framework for cross-border share transfers and reduce uncertainty for investors operating in Pakistan.

Conclusion

The concerns raised by foreign investors highlight the need for greater clarity and efficiency in Pakistan’s tax certification and investment registration procedures. Delays in obtaining exemption certificates, uncertainty over the interpretation of relevant tax provisions, and questions about the retrospective application of Rule 19H are creating difficulties for investors seeking to complete SBP registration.

Introducing time-bound decisions, issuing clear legal guidance, and improving coordination between the FBR and SBP could help address these challenges. A transparent and predictable system would support regulatory compliance while strengthening investor confidence in Pakistan’s financial and corporate environment.

Ultimately, efficient tax administration and clear investment rules are essential to ensuring that regulatory procedures facilitate legitimate business activity rather than become an obstacle to it.

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The possibility of aircraft leasing, engine arrangements and export credit assistance was discussed as Pakistan and Britain looked for ways to address PIA’s immediate fleet requirements while keeping longer-term procurement plans in view.

The issue was raised during a meeting between Federal Minister for Commerce Jam Kamal Khan and British High Commissioner Jane Marriott at the Ministry of Commerce.

Airbus and Rolls-Royce in Focus

Aviation cooperation was among the most important subjects discussed during the meeting. British representatives shared details about engagement with Airbus and Rolls-Royce and outlined potential options that could help PIA improve its fleet.

Export credit support was also considered as a possible mechanism for facilitating aircraft-related transactions.

For PIA, leasing could provide a faster way to add aircraft to its fleet without having to wait for lengthy procurement processes. This approach could help the airline meet its immediate operational needs while it develops a broader and more sustainable fleet strategy.

The commerce minister stressed that PIA’s direct international routes provide the airline with a significant commercial advantage. However, he also emphasized that the carrier needs better reliability, modern aircraft and improved service quality to regain the confidence of passengers.

UK and Pakistan Seek Wider Economic Cooperation

The discussions were not limited to the aviation industry. Pakistan and the UK also examined ways to increase bilateral trade and attract investment in several sectors.

Healthcare, life sciences, IT, agriculture, livestock, financial services and minerals-related businesses were among the areas identified for greater cooperation.

Both countries are also looking to achieve tangible results through the next bilateral Trade Dialogue rather than limiting cooperation to policy discussions.

Britain proposed the possibility of developing a long-term investment partnership that would be non-legally binding but supported at the ministerial level. The proposed framework could cover areas such as investment, regulatory improvements, trade facilitation, workforce development and investment financing.

Livestock Sector Could Attract British Investment

Pakistan’s livestock industry was identified as an area with considerable potential for cooperation.

Jam Kamal Khan highlighted the government’s interest in increasing animal productivity, improving production methods and expanding processed and value-added meat exports.

British technology, technical expertise and investment could help Pakistan modernize its livestock industry and establish stronger links with international markets.

The British High Commissioner pointed out that improvements in food safety and regulatory compliance would also be essential. Meeting international standards would allow Pakistani livestock and food producers to access the UK and other overseas markets more effectively.

Focus on Building Pakistani Brands

Another important topic was the international marketing of Pakistani products.

The commerce minister called for greater efforts to build internationally recognized Pakistani brands instead of relying primarily on foreign companies to market locally produced goods.

Products such as pink salt, olive oil, textiles, food items and surgical instruments were identified as areas where Pakistan could potentially generate greater value through branding, quality improvement and product development.

The discussions also covered opportunities for Pakistani food companies and restaurant businesses to establish a stronger presence across the UK.

Opportunities in Islamic Finance

Pakistan and Britain also discussed financial-sector cooperation, particularly in the field of Islamic finance.

Greater collaboration could help develop stronger financial connections between Pakistan and the Pakistani community living in the United Kingdom.

Such links could support investment, business expansion and the movement of capital between the two markets.

UK Expertise Could Support Pakistan’s Minerals Industry

The minerals sector was another key area of interest.

Pakistan is seeking international technical expertise and experienced partners to improve mineral exploration and develop commercially viable projects. Joint ventures and professional services could play an important role in strengthening the country’s domestic mining capabilities.

British companies could contribute expertise in areas such as legal services, finance, insurance and other supporting fields.

The UK also showed interest in encouraging its businesses to participate in Pakistan’s upcoming minerals conference.

2027 Could Bring New Business Opportunities

The two countries also discussed plans surrounding Pakistan’s 80th anniversary in 2027.

The anniversary could be used to organize business, educational and cultural activities designed to showcase Pakistani products and highlight investment opportunities.

Such initiatives could provide Pakistani businesses with additional exposure in the UK while strengthening people-to-people and commercial ties between the two countries.

A Broader Partnership Taking Shape

The latest talks demonstrate that Pakistan-UK economic relations are expanding beyond traditional trade areas. Aviation, particularly the possible involvement of Airbus and Rolls-Royce in PIA’s fleet requirements, could become an important component of this relationship.

For PIA, leasing and potential financial support could provide a route toward addressing immediate fleet shortages. For Pakistan more broadly, cooperation with the UK could open new opportunities in technology, agriculture, healthcare, financial services and minerals.

The next challenge will be turning these discussions into specific agreements, investments and commercial projects. Both sides have indicated their intention to continue working together and prepare practical proposals for the next Trade Dialogue.

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