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In Focus
11th National Finance Commission (NFC) inaugural meeting: A Profile
Centre presents bleak fiscal overview; provinces resist federal push to share expenditure; consensus reached on seven working groups with a special working group for KP’s merged districts
On 05 December, Dawn reported on the developments from the much-delayed inaugural meeting of the 11th National Finance Commission (NFC) held on 04 December. The meeting was chaired by Federal Minister for Finance and Revenue Muhammad Aurangzeb, with participation from the chief ministers of Sindh and Khyber Pakhtunkhwa (both holding the finance minister portfolio), the finance ministers of Punjab and Balochistan, four provincial non-statutory NFC members, KP Chief Minister’s adviser, and federal and provincial finance secretaries.
What are the key developments from the meeting?
First, the Centre presented a bleak fiscal overview. Federal officials stated that national finances had deteriorated significantly over the past 15 years, with debt servicing consuming nearly all available federal resources in the post-7th NFC Award period. This is said to have constrained defence and development spending, limiting improvements in infrastructure and social impact initiatives. A 30-year comparative analysis contrasting the pre-7th NFC period (1995–2010) with 2010–2025 showed that the fiscal deficit had expanded from an annual average of around 4 per cent to between 6.6 and 7 per cent.
With 57.5 per cent of the Federal Divisible Pool (FDP) going to provinces, the Centre contended that it still financed nearly 15 per cent of provincial functions, resulting in heavy federal borrowing and accelerating debt accumulation. It called for increasing the tax-to-GDP ratio by 3 to 3.5 per cent within three years, alongside provinces increasing their revenue effort to three per cent of GDP through improved mobilisation of property tax, agricultural income tax and sales tax on services. The federal government argued that without these measures, the fiscal imbalance created after 2010 would continue to worsen. It proposed mobilising additional consolidated revenues exceeding five per cent of GDP over the next three years, roughly PKR 6.5 trillion annually at current exchange rates.
Second, provinces resisted federal proposals to shift expenditure responsibilities. The Centre called for the provinces to increase their own revenue generation and assume financial responsibilities for the Higher Education Commission, Benazir Income Support Programme, and certain PSDP projects. Provinces strongly objected, stating that the NFC’s constitutional mandate concerns revenue distribution only, not expenditure assignments. Sindh and KP were particularly firm, stating that the Centre cannot “dictate” provincial responsibilities or question how provinces utilise transferred funds. Sindh Chief Minister Murad Ali Shah highlighted that Article 160 establishes the NFC as a revenue-sharing forum and that provinces were under no obligation to follow federal spending directives.
Third, consensus was reached on establishing seven thematic working groups. These committees will examine vertical and horizontal distribution of resources, provincial taxation policies, debt servicing impacts, poverty indices, and the fiscal requirements of Pakistan-occupied Kashmir and Gilgit-Baltistan. A follow-up meeting is expected between 8 and 15 January, depending on the readiness of the working-group reports.
Fourth, a special working group for KP’s merged districts was approved. KP’s chief minister put forth that the 7th NFC had become outdated after the 18th Amendment, given major devolved subjects such as population and education, and the province’s heavy financial burden arising from terrorism. KP’s finance adviser noted that the province’s development spending as a share of GDP had fallen below 2005 levels. The next NFC session will revisit these issues as federal-provincial disagreements over resource allocation continue. (Khaleeq Kiani, “Centre seeks Rs6.5tr revenue hike at 11th NFC meeting,” Dawn, 05 December 2025; Erum Zaidi & Mehtab Haider, “First NFC session: Provinces oppose Centre's plan to transfer HEC, BISP, PSDP cost,” The News International, 05 December 2025)
Military Affairs
Field Marshal Asim Munir appointed Pakistan’s first Chief of Defence Forces
On 05 December, Dawn reported that the President had approved the appointment of the first-ever Chief of Defence Forces of Pakistan, as per the advice of the Prime Minister. The decision was taken according to the revised Article 243 under the 27th constitutional amendment act and the updated military legal framework. Chief of Army Staff Field Marshall Asim Munir has been appointed concurrently as Chief of Defence Forces for a period of five years. In his remarks, he said that “Pakistan will now soar to greater heights from here.” COAS Field Marshal Asim Munir acquired the new post that places him in command of all armed forces.
Field Marshall Asim Munir was appointed as the 17th Army Chief in 2022. He started his defence career in 1986 when he was commissioned in the 23rd Frontier Force Regiment. He graduated from Fuji School, Japan, and also holds an MPhil from the National Defence University, Islamabad. Over the years, he has held several key military positions, including direct staff at Command and Staff College, Quetta; brigade major of a deployed infantry brigade in Kel; general staff officer, grade-2 at the CGS secretariat; and chief of staff of Mangla Corps. He also served as Quartermaster General at the General Headquarters and force commander in the Northern Areas, Gilgit, among others.
Particularly in the intelligence area, he has held top positions, including Director General of Military Intelligence and head of Inter Services Intelligence (ISI). He has become the first army chief to be awarded the Sword of Honour and, finally, the first Chief of Defence Forces of Pakistan. However, the Prime Minister's advisor said that regulations and rules for the post of CDF are not framed yet and that the government is taking great caution in framing the CDF’s rules, as this new position consolidates operational, administrative, and strategic authority in a single office. Along with the CDF appointment, the President also approved a two-year extension for the Air Chief Marshal, whose term ends in 2026. (“In consolidation act, army chief dons another hat,” Dawn, 05 December 2025; “COAS Asim Munir becomes first Chief of Defence Forces,” The News International, 05 December 2025; “Pakistan set to soar to new heights: Field Marshal Munir,” The News International, 05 December 2025)
On Pakistan-Kyrgyzstan
Pakistan and Kyrgyzstan revitalizes engagement; Concludes 15 MoUs across sectors and Islamabad offers Bishkek access to ports of Karachi and Gwadar
On 5 December, Dawn reported that Kyrgyzstan’s President Sadyr Japarov conducted a two-day state visit to Pakistan on 3 and 4 December. This marked the first such visit by a Kyrgyz head of state in 20 years, focusing on strengthening bilateral ties in trade, energy, and connectivity. Prime Minister Shehbaz Sharif offered the landlocked Kyrgyzstan access to regional and global markets through the sea ports of Karachi and Gwadar and has engaged in a series of memorandums across key areas.
Pakistan-Kyrgyzstan: Bilateral and trade relations
Diplomatic ties between Islamabad and Bishkek were formally established on May 10, 1992, shortly after Kyrgyzstan's independence from the Soviet Union in 1991, with Pakistan opening an embassy in Bishkek in 1995. Pakistan and Kyrgyzstan have longstanding ties rooted in deep cultural and historical connections. However, their economic engagement has weakened in recent years, with bilateral trade falling from USD 11.2 million in 2022-23 to USD 5.18 million in 2024-25. Pakistan primarily exports pharmaceuticals, surgical instruments, textiles, and rice to Kyrgyzstan, while imports from Kyrgyzstan are minimal, mainly consisting of raw materials and machinery parts. At the fifth meeting of the Pakistan-Kyrgyzstan Inter-Governmental Commission, Power Minister Sardar Awais Leghari underscored the urgency of revitalising economic links and reaffirmed the shared objective of raising trade to USD 100 million. He emphasised that achieving this goal would require steady and coordinated efforts across multiple sectors.
The revival of the Joint Business Council, stronger business-to-business exchanges, and an MoU on electronic customs data sharing were highlighted as essential for strengthening commercial cooperation. Further, Pakistan’s possible role in the proposed 500-kV Torugart-XUAR-Gilgit-Baltistan transmission line, which could form a strategic Kyrgyzstan-China-Pakistan power corridor, was also deliberated. Kyrgyz interest in Pakistan’s mining sector, especially in copper and gold exploration, was also welcomed. The meeting highlighted that improving transport and communication links remained vital for unlocking the broader economic potential of the relationship.
Latest round of MoUs exchanged
At the bilateral business forum to explore new pathways for collaboration in economic sectors, the leaders signed 15 Memorandums of Understanding across trade, agriculture, defence, education and energy, and pledged to increase bilateral trade from USD 16 million to USD 200 million by 2027-28. The two leaders signed a joint statement on "Strengthening of Comprehensive Cooperation in the Interest of Both Countries." The MoUs included those of Pakistan's Foreign Service Academy and Kyrgyzstan’s Diplomatic Academy, and between the commerce ministries of both states, collaboration in agriculture, mining and geosciences, the energy sector, and the use of Pakistani ports for regional connectivity. An agreement enabling the transfer of sentenced persons to serve their terms in the other country has also been signed. Further MoUs were exchanged on electronic customs data sharing, tourism cooperation, and surgical instruments, along with agreements on cultural cooperation and establishing sister-city ties between Bishkek and Islamabad.
Speaking at a joint press conference with Kyrgyz President Sadyr Nurgozhoevich Zhaparov, PM Sharif stated that such initiatives will further reinforce the solid foundation of friendship and brotherhood between the two countries,” adding that the MoUs “will serve as a framework for structured, result-oriented engagements and closer institutional linkages between the two countries.” The leaders also highlighted the need for secure, sustainable, and diversified connectivity routes between Pakistan and the Kyrgyz Republic to boost bilateral and regional trade. They expressed satisfaction at the activation of the road corridor linking the two countries under the Quadrilateral Traffic in Transit Agreement (QTTA).
Discussions also focused on the need to strengthen people-to-people exchanges through cultural initiatives, tourism promotion, and academic partnerships. President Zhaparov termed Pakistan an important partner of Kyrgyzstan in South Asia, and that the countries aimed for collaboration in trade, economy, investment, transport, logistics, education and science. He also emphasised strengthening the Kyrgyz-Pakistan Business Council as an effective platform for connecting the two countries’ business sectors. PM Sharif highlighted that maximising transport and transit links is a key area of cooperation, and noted that both sides underscored the central importance of the CASA-1000 project as a foundational step toward an integrated Central–South Asian energy network.
The Express Tribune reported that during the delegation-level talks held at the Prime Minister's House, the leaders stressed that regional peace hinges on the Afghan Taliban fulfilling their commitments to the international community and addressing Pakistan’s security concerns through concrete, verifiable action against terrorist groups. Both sides also reviewed key regional and global developments, voicing concern over rising threats to peace and stability. They agreed that disputes should be settled peacefully in line with international law, the UN Charter, and relevant Security Council resolutions. PM Sharif reaffirmed Pakistan’s long-standing commitment to strengthening its ties with Central Asian states under the “Vision Central Asia” policy. Both leaders underscored the importance of broadening and deepening Pakistan-Kyrgyz relations, rooted in historic ties, cultural affinities, shared values, and a mutual vision for regional stability and prosperity. The leaders also noted the success of the Fifth meeting of the Kyrgyz-Pakistan Joint Intergovernmental Commission on Trade, Economic, Scientific, Technical and Cultural Cooperation, held in Islamabad, on 28-29 July 2025.
President Zhaparov highlighted that both countries reaffirmed their commitment to tackling terrorism, extremism and transnational crime, agreeing to deepen coordination between their security agencies to promote regional stability. He also invited PM Shehbaz to attend the Shanghai Cooperation Organisation Summit and the World Nomad Games to be held in Bishkek in 2026. He welcomed an official state visit to Kyrgyzstan to strengthen bilateral ties further. (“Pakistan offers landlocked Kyrgyzstan access to its ports,” Dawn, 05 December 2025; “Kyrgyzstan backs Pakistan's security concerns,” The Express Tribune, 05 December 2025; “Pakistan and Kyrgyzstan agree to enhance trade volume up to $100m,” Dawn, 28 July 2025)
In Brief
POLITICS
KP CM again denied a meeting with Imran Khan
On 5 December, The News International reported that the Khyber-Pakhtunkhwa Chief Minister Sohail Afridi was denied a ninth time from meeting Imran Khan at Adiala Jail. Despite a scheduled visit by Afridi, he was still blocked from meeting Khan. Separately, Khan’s sister, Aleema Khan, had said that her interview with foreign media was misrepresented and said to the media outside of the Anti-Terrorism Court in Rawalpindi that Khan has been kept in solitary confinement and vowed their protest would continue. Afridi called the denial to meet Khan “discriminatory treatment” and said that the rejection had once again proved the obstruction of lawful meetings. (“KP CM again denied meeting with Imran,” The News International, 05 December 2025)
AFG-PAK
Pakistan-Afghanistan border reopening seen as humanitarian aid only; Kabul says otherwise
On 5 December, The News International had reported that after nearly two months of disclosure, Pakistan had reopened the Torkham and Chaman border the previous day, specifically for humanitarian aid being sent by the UN for the people of Afghanistan. The supplies include food, medicine, medical equipment, and other essential goods for health and education. The Pakistan government had clarified that trade and transit will continue to be suspended. In response to the reopening, the Afghan government criticised the Pakistan government as they misunderstood the intent and called the act a violation of their interests. The Afghanistan side demands for guarantee that the border will not be used to politically or economically pressure and questioned why trade continues to be blocked, and the border is opened just for aid. (“Kabul misunderstands move to reopen Pak-Afghan border only for UN aid: official,” The News International, 05 December 2025)
Afghan trade suspension leaves Pakistani truck drivers stranded
On 5 December, The Express Tribune had reported that days after the bilateral trade was suspended and amid new tensions, hundreds of Pakistani truck drivers remained stranded for weeks at the closed border crossings. The transporters carrying goods, which included Kinnow and other goods for Afghanistan, Central Asia, etc, have been blocked, which has led to losses and demurrage costs. Traders, operators, supply chains, seasonal exporters logistic firms were the ones to be hit the hardest. (“Afghan trade suspension leaves Pakistani truck drivers stranded,” The Express Tribune, 05 December 2025)
ECONOMY
Service exports rise 16 per cent in first four months of FY 26
On 5 December, Dawn had reported that according to the Pakistan Bureau of Statistics, the exports of services grew 15.95 per cent during the months July to October by reaching USD 3.034 billion, from USD 2.617 billion in the same period last year. According to the data consolidated by the State Bank of Pakistan, the exports of telecommunications, computer, and information services rose to USD 1.443 billion during July-October, up from USD 1.207 billion. These sectors saw strong demand in the global markets. However, the increase in imports rose to USD 1.050 billion in October, and the trade gap was widened by USD 1.161 billion compared to the USD 1.129 billion. (“Services exports rose 16pc in July October,” Dawn, 05 December 2025)
SOCIETY
Legal challenge emerges against Punjab’s revival of Basant festival
On 5 December, Dawn had reported that a petition was filed in the Lahore High Court against the Punjab government's decision to revive Basant by the Judicial Activism Panel, alleging that the Punjab Regulation of Kite Flying Ordinance 2025 was illegally issued while the Assembly was sitting and would result in a repetition of past deaths and injuries associated with dangerous kite strings. The petition references past Supreme Court decisions and recent deaths as proof that there are still significant safety risks associated with the festival. The government has responded to the challenge with a commitment to regulate Basant as a cultural festival with strict rules against participation by anyone under 18 years of age, require that kite manufacturers register with the government, mandate that all kites have QR codes on them and only cotton string be used, and impose significant penalties and possible incarceration for violations of these rules. Azma Bokhari, Information Minister for the Punjab, stated that the objective of reviving the festival is to ensure that it can be celebrated safely by establishing adequate controls and monitoring, and by implementing improved measures for traffic safety with special consideration of the safety of motorcycles and children. In addition to being banned, any person found responsible for producing or intentionally using metal or chemically coated string can face severe penalties, including imprisonment for up to five years and/or monetary penalties of PKR two million. Further, Bokhari has stated that there will be increased safety measures for motorcyclists; underage violators will not be arrested or handcuffed but will instead receive a monetary penalty. The LHC petition also creates an opportunity for what could be a significant legal and political challenge to Punjab's largest cultural festival while waiting for the ordinance to be formally presented to the Punjab Assembly. (“Move to revive Basant in Punjab faces first legal challenge,” Dawn, December 05, 2025)
EXTERNAL
Pakistan denies claims of Israeli-made spyware use
On 5 December, Dawn had reported that the government of Pakistan had denied allegations in Amnesty International's Intellexa Leaks report, claiming that Pakistan is using an invasive spyware called Predator created by the Israeli company Intellexa. A senior intelligence official has denied the existence of any Predator deployment in Pakistan, claiming that the accusations were simply to "malign Pakistan". The report discusses an alleged spyware attack on a Pakistani human rights attorney, with a fingerprint of the infection pointing back to a Predator command and control server. Amnesty's Security Lab has conducted this investigation using leaked internal Intellexa company documents along with partners from Greece, Israel and Switzerland, following up on previous global alerts from Google regarding suspected Predator users in Pakistan and elsewhere. (“Pakistan denies claims of use of Israeli spyware,” Dawn, 05 December 2025)
Italy, Pakistan move toward agriculture skills partnership
On 5 December, Dawn reported that Pakistan and Italy are expected to enter into a new memorandum of understanding in early 2023 to expand and improve their respective agricultural sectors through the establishment of training, skill development and modernisation. In a meeting held at the Italian Ministry of Agriculture in Rome, Mr Lollobrigida and Mr Rana Tanveer Hussain, Pakistan’s Minister of Food Security, discussed current activities between the two countries, which include the Italian EUR 20 million horticulture development project and a number of olive industry projects in Pakistan supported by the Italian Development Agency. During their discussions, they agreed to expedite the ratification of the professional capacity-building memorandum of understanding between their countries, as this will allow for the development of improved technical and vocational training and employee development for agricultural workers in Pakistan. In support of their future partnerships, Mr. Lollobrigida proposed that Italy be allowed to create a joint technical committee in order to deepen the work done together in the areas of research, mechanisation, and extraction technology for the olive oil industry, whereas Mr. Hussain suggested that he invite Italy to attend the next Joint Economic Conference, as well as attend the labour working group meetings that will take place in the near future. Both Ministers emphasised that their strengthened partnership will result in job creation, increased agricultural productivity and improved value chain quality standards. (“Italy, Pakistan set to seal agriculture skills pact,” Dawn, 05 December 2025)
ENVIRONMENT
Pakistan faces $22bn annual losses due to toxic air crisis
On 5 December, The News International had reported that a senior Pakistan Peoples’ Party leader, Sherry Rehman, while chairing a meeting of the Senate Standing Committee, stated the damage caused to Pakistan’s economy by air pollution, resulting in a loss of USD 22 billion annually, equivalent to 6.5 per cent of the national GDP. She has also quoted new statistics that indicate air pollution-related deaths have now reached an all-time high of approximately 256,000 per year and that these air pollution-related deaths have now been estimated to be more than double what was previously reported by government agencies and are more deadly than terrorism. Rehman expressed her concerns about the ongoing problems related to consistent smog throughout the province of Punjab, as well as the record of Lahore as the most polluted city in the world, due to a lack of control over the emissions produced by brick kilns and the emissions produced by industrial sources and vehicles. She also drew attention to a vacuum of reliable data within the Environmental Protection Agency. Lastly, she cautioned that smog may decrease the average life span by as many as 4.6 years and puts 11 million children under the age of five at risk in Punjab alone, so she implored both public and private partnerships to take a more proactive approach to deal with this situation. Rehman described this public health concern as an "apocalyptic" national public health emergency. (“Air pollution inflicts $22bn yearly losses on Pakistan,” The News International, 05 December 2025)
Editorials/Opinions
Society
Nabila Feroz Bhatti, “GBV and women in Pakistan,” Dawn, 05 December 2025
“The 16 Days of Activism against Gender-based Violence was initiated in 1991. Beginning each year on Nov 25 — International Day of Elimination of Violence against Women — and ending on Dec 10 — International Human Rights Day — the global campaign calls on individuals and groups to take action to end violence against women and girls. For the last year alone, the Digital Rights Foundation reported 3,171 complaints of tech-facilitated GBV. Of these, women filed 1,772. Thanks to underreporting, this is likely just the tip of the iceberg. According to a study, 65 per cent of Pakistani women who experience harassment online do not report abuse due to fear or shame or because they don’t trust institutions. Despite thousands of cases, Pakistan’s conviction rate remains dismally low, at just 0.5pc for rape and killings in the name of honour, 0.1pc for abduction, and 1.3pc for cases of domestic violence, exposing deep-rooted faults in the justice system. We can raise our voice for gender equality and women’s rights by engaging with lawmakers and policymakers to promote laws and policies that protect women from violence. We must lend an ear to survivors of violence, share their stories, empathise with them and support them in their healing journey. By amplifying their voices, we break the silence surrounding VAW and empower others to seek justice.”
https://www.dawn.com/news/1959256/gbv-and-women-in-pakistan
Faisal Bari, “Duty to care,” Dawn, 05 December 2025
“It was the International Day of Persons with Disabilities on Dec 3. With it came the usual platitudes, speeches and ceremonies. We still have such a long way to go before PWDs can enjoy all the rights, privileges and opportunities that any society should offer all citizens. Initially, education policies did not even mention children with disabilities, who were not in the picture for quite a while post-independence. When they did appear in official documents, it was usually implied that education for PWDs was an act of charity and beneficence to make the children independent only to the extent of not remaining a ‘burden’ on their families or the state. The situation is not too different today. Though the 18th Amendment added Article 25A to the Constitution giving each child the right to “free and compulsory” education up to the age of 16, most children with disabilities remain unseen, unacknowledged and underserved. Rather than just having celebratory events and moving forward at a snail’s pace, the government should take the lead and create the narrative and reality of recognition and implementation of all citizens’ rights and privileges — for PWDs as well. It should also provide the framework for the private sector. No one should be allowed to get away with disrespecting any person including a child.
https://www.dawn.com/news/1959255/duty-to-care
Unemployment
Aasim Sajjad Akhtar, “Dangerous classes,” Dawn, 05 December 2025
“Perennially obsessed with securing the next IMF bailout package, our economic managers spend much time and energy curating facts and figures to meet the demands of the proverbial donor. The publication of the latest Labour Force Survey caused a brief ripple but, predictably, the news cycle moved on swiftly. Working people from a relatively declining agrarian sector have faced displacement for decades, alongside manufacturing and service sectors that cannot absorb the surplus labour. But the gap between the supply of jobs and the demand for them has simply never been as big, and growing as rapidly, as it is today. Donors and Pakistan’s economic managers alike have consistently downplayed employment as a measure of the economy’s health because the object of state policy has patently not been working people. The British Raj once worried about ‘dangerous classes’ whose disaffection could pose a threat to the political and economic imperatives of the empire. Today, the successors to the Raj are busy turning the majority of working people into dangerous classes. An eruption of popular discontent from below is inevitable, sooner or later.”
https://www.dawn.com/news/1959254/dangerous-classes
External
Syed Mohammad Ali, “Rethinking foreign investment in Pakistan,” The Express Tribune, 05 December 2025
“Rather than being drawn into increasingly complex geostrategic conflicts, Pakistan has sought to leverage its geoeconomic potential, but unlike regional peers, it has struggled to attract significant foreign investment. More than a decade has passed since Pakistan persuaded China to launch CPEC. Alongside closer military cooperation, China has become Pakistan's largest foreign direct investor. US-supported initiatives examining Chinese influence in the Global South, such as the AidData project at William and Mary University, offer a cautious assessment of Chinese investment in Pakistan. Pakistan's history of elite capture risks channeling the benefits of incoming investments to the privileged few, while allowing multinational companies to reap outsized profits. If Pakistan cannot leverage foreign investment to improve the lives of its citizens, it is unrealistic to expect Chinese, American or other foreign investors to prioritise anything beyond profits. Investments that promote accountability, transparency and inclusion can reduce friction and ensure projects are more locally grounded. Rethinking foreign direct investment in Pakistan needs to go beyond attracting capital to strengthen its economic balance sheet. Instead, the incoming resources must be leveraged to maximise benefits to Pakistani citizens, which is the only path to securing long-term growth.”
https://tribune.com.pk/story/2580559/rethinking-foreign-investments-in-pakistan
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