Photo : Dawn
NIAS Area Studies
PAKISTAN READER
Photo : Dawn
In Focus
IMF projects lower growth as Pakistan courts foreign investment amid structural challenges
On 30 July, The Express Tribune reported that the IMF has forecasted Pakistan’s economic growth at 3.6 per cent for 2025, below the government's target of 4.2 per cent, citing a more cautious outlook despite official optimism about agriculture and industrial recovery. This projection comes amid concerns about poverty, which the World Bank estimates affect nearly 45 per cent of the population. Although Pakistan reduced poverty between 2001 and 2018 through remittances and off-farm job growth, recent gains have reversed. According to the World Bank, in 2024, the poverty rate in Pakistan stood at 42.3 per cent, with 2.6 million more people falling below the poverty line compared to the previous year. Socio-economic challenges persist: over one-third of school-age children are out of school, nearly two-thirds of students are learning-deprived, and 40 per cent of children face stunting.
The World Bank has also projected that Pakistan’s GDP growth will remain a modest 2.6 per cent in FY2025, reaching only 3.5 per cent by FY2027 as the economy is constrained by tight macroeconomic policies and structural issues. High population growth and sluggish wage increases mean poverty is unlikely to decline soon. The Bank stressed that sustained recovery depends on reforms under the IMF’s Extended Fund Facility and Pakistan’s “Uraan” economic transformation plan, with emphasis on trade liberalisation, reduced state intervention, and business climate improvements. Pakistan's official poverty and unemployment statistics remain unavailable, pending updates from the Pakistan Bureau of Statistics (PBS).
Meanwhile, the government briefed diplomats from countries including the US, UK, and Saudi Arabia on economic reforms, seeking to boost foreign direct investment (FDI). Diplomats raised concerns about Pakistan’s growing debt burden, tax relief policies, and the sustainability of a PKR1.25 trillion borrowing plan to reduce circular debt. Finance Minister of State Bilal Azhar Kayani and Power Minister Sardar Awais Ahmad Khan Leghari led the briefing. They cited reforms in taxation and the power sector and claimed a 3.1 per cent primary surplus, a 10 per cent rise in per capita income (to USD 1,824), and declining inflation at 4.5 per cent, the lowest in nine years. The policy rate was also halved to 11 per cent, while the debt-to-GDP ratio dropped to 69 per cent.
Officials reported a USD 2.1 billion current account surplus, the first in 14 years, supported by higher remittances and exports. However, the central bank's USD 7.3 billion domestic dollar purchases raised concerns over currency manipulation. Energy Minister Leghari acknowledged structural flaws in the power sector, including unaffordable tariffs and inefficiencies. He said reforms were underway, including a consumer-borne surcharge and plans to privatise three distribution companies by early 2026.
FBR Chairman Rashid Langrial presented the FBR reform plan, highlighting improved compliance and enforcement that led to a 46 per cent increase in real tax collection. The tax-to-GDP ratio rose to 10.24 per cent, though the IMF revenue target was narrowly missed despite record taxation. Officials urged international investment, particularly in energy infrastructure, renewable projects, and grid modernisation.
References:
Shahbaaz Rana, “IMF puts growth below govt target,” The Express Tribune, 30 July 2025
“IMF expects Pakistan’s GDP to grow at 3.6pc in FY26”, The News International, 30 July 2025
“The World Bank In Pakistan”, 25 March 2025
PAC criticizes policy inconsistencies amid ongoing sugar crisis
On 30 July, The Express Tribune reported that despite a sugar surplus of 1.3 million tons in 2023–24, Pakistan is grappling with a sugar crisis. The Public Accounts Committee (PAC) was told that 750,000 tons worth PKR 111 billion had been exported to 21 countries, while 1.9 million tons remained in stock, enough until November 2024. Still, retail shortages persist. The national food security secretary claimed that sugar was selling at PKR 173/kg, but lawmakers reported prices exceeding PKR 200/kg. PAC members slammed the government’s erratic policies of exporting one year and importing the next. Member of the National Assembly (MNA) Khawaja Shehraz Mehmood called it a “daylight robbery,” saying firms earning from exports now profit from imports. MNA Amir Dogar alleged PKR 287 billion had gone to politically linked mill owners, naming President Zardari, Jahangir Tareen, and the Sharif family. Officials noted that sugar spoils within three to four months without proper storage. The government plans to import 300,000 tons before the next crushing season, but lawmakers warned against harming farmers or sourcing from previous export destinations. (Waqas Ahmed, “PAC lambasts govt's faulty sugar policies,” The Express Tribune, 30 July 2025)
PM Dar invites India to engage in a “composite dialogue”
On 30 July, The Express Tribune reported that while addressing a press conference in New York, Foreign Minister Isaq Dar has expressed readiness on the Pakistani side to engage in a composite dialogue with India to settle all outstanding issues. Dar further clarified that the dialogue would not solely be about terrorism and stated that “Pakistan has been one of the biggest victims of terrorism.” He highlighted that during a recent bilateral meeting, US Secretary of State Marco Rubio acknowledged Pakistan’s sacrifices in the fight against terrorism. Dar also shared that discussions on Kashmir also took place in the meeting, reiterating that lasting peace in the region hinges on the resolution of the Jammu and Kashmir dispute. On the Indus Waters Treaty, Dar stressed Pakistan’s resolute position that the agreement remains binding and cannot be altered or abandoned by a single party. He warned that any move to obstruct or divert Pakistan’s water share would be met with strong opposition. Responding to a separate query, Dar reiterated Pakistan’s refusal to recognise Israel, calling for a Gaza ceasefire and urgent humanitarian aid. He reaffirmed support for an independent Palestinian state with Al-Quds Al-Sharif as its capital. Dar termed his US visit successful, highlighting Pakistan’s call for UN Security Council reforms and greater Organisation of Islamic Cooperation representation. (“Pakistan ready for composite dialogue with India, says Dar”, The Express Tribune, 30 July 2025)
In Brief
ECONOMY
Pakistan projects low inflation amid economic recovery, warns of weather-related risks
On 30 July, The News International reported that the government is moving toward deregulating the sugar industry and lifting a ban on new mill licenses amid public concern over rising prices. Minister for Food Security Rana Tanveer Hussain stated that sugar prices had stabilised at PKR172–173 per kg in Islamabad, though some remote areas still saw prices as high as PKR195/kg. He attributed the price spike to millers halting supply and retailers hoarding stocks. The minister also defended last year’s sugar export policy, citing a surplus of 7.6 million tons, but acknowledged that production has since fallen to 5.8 million tons due to climate-related issues. A high-level committee, chaired by Power Minister Awais Leghari, has been tasked with drafting a deregulation plan within 30 days. The government hopes to raise production to 10 million tons and enable future exports without disrupting local markets, while also promising better returns for sugarcane farmers. (Israr Khan, “Govt eyes sugar industry deregulation, lifts ban on new mill licences,” The News International, 30 July 2025)
HEALTH
Pakistan joins global platform to expand access to paediatric cancer treatment
On 30 July, Dawn reported that the World Health Organisation (WHO) and the Government of Pakistan have signed an agreement to provide cost-free, quality-assured cancer medications for children battling the disease in Pakistan, which sees over 8,000 new diagnoses each year. The formal partnership is under the Global Platform for Access to Childhood Cancer Medicines. Pakistan is the second nation in the Eastern Mediterranean Region, following Jordan, to participate in the Platform, which was co-founded by WHO and St. Jude Children’s Research Hospital in 2021. The agreement strives to improve treatment access and raise the survival rate from 30 per cent to 60 per cent by 2030. Signed by Health Minister Mustafa Kamal and WHO representative Dr Dapeng Luo, the agreement will remain effective until 31 December 2027. The programme will be run in partnership with the United Nations Children's Fund (UNICEF), which will handle procurement and delivery of the medicines. Mr Kamal called the agreement “a big day for Pakistan,” expressing gratitude to global partners, while Dr Luo reaffirmed WHO’s commitment to ensuring that no child dies due to lack of access to essential cancer treatment. (Ikram Junaidi, “Pakistan, WHO sign deal for cancer medicine”, Dawn, 30 July 2025)
Editorials/Opinions from Pakistan
On US-Pakistan Relations
Zahid Husssain, "Back in the US embrace," Dawn, 30 July 2025
With the end of America’s two-decade-long war in Afghanistan in 2021, Pak-US relations have come full circle. Originally touted as a strategic relationship, it morphed into a transactional one. Perhaps the biggest confusion in various US departments revolves around how to deal with Pakistan — as friend or foe? Post-9/11, the two nations could at best be described as ‘frenemies’.
https://www.dawn.com/news/1927563/back-in-the-us-embrace
On Relations with India
By Javid Husain, "A strategic reset is long overdue," The News, 30 July 2025
Over the past seven decades, Pakistan’s friendly relations and cooperation with China have grown steadily based on the convergence of the strategic interests of the two countries, mutual benefit and non-interference in each other’s internal affairs. There is every reason to believe that the coming decades will witness the continued strengthening of this link, which is vital for Pakistan’s security and economic well-being.
https://www.thenews.com.pk/print/1331754-a-strategic-reset-is-long-overdue
Violence in Tirah
Editorial, "Tirah disturbances," Dawn, 30 July 2025
"...civilian leaders have been unable to secure public consent for security operations, which are expected to entail widespread displacement. There is an urgent need for all stakeholders to agree on a common plan for eradicating terrorism that minimises the harm to civilians. This should not be allowed to turn into a three-way conflict between terrorists, civilians and security forces."
https://www.dawn.com/news/1927565/tirah-disturbances
Internal Politics
Editorial, "PTI's unending woes," The Express Tribune, 30 July 2025
The PTI's woes seem to be unending, as well as the government's policy to push it to the wall. The swift manner in which the Election Commission disqualified three party legislators, on the premise of their convictions by the anti-terrorism courts over May 9 vandalism testifies the intolerance that institutions have bred towards the opposition. The cases are subject to appeal and the breakneck speed was unwarranted.
https://tribune.com.pk/story/2558535/ptis-unending-woes