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In Focus
IMF reaches staff-level agreement with Pakistan for USD 1.2 billion disbursement
Performance review finds that Pakistan met most quantitative targets; circular debt, policy consistency among concerns
On 28 March, Dawn reported that an International Monetary Fund (IMF) mission led by Iva Petrova concluded its review of Pakistan’s economic performance under the USD seven billion Extended Fund Facility (EFF) and USD 1.1 billion Resilience and Sustainability Facility (RSF), reaching a staff-level agreement for the release of about USD 1.2 billion. The review, conducted through meetings in Islamabad and Karachi, assessed progress as of December 2025, with officials indicating that most quantitative targets were met despite some revenue shortfalls. The discussions also focused on shaping the upcoming FY2026-27 budget, particularly provincial finances and fiscal consolidation measures, while ensuring continued macroeconomic stability and reform momentum.
The IMF noted that Pakistan’s programme implementation remained broadly aligned with its objectives, including strengthening public finances, containing inflation within the State Bank’s target range, and improving energy sector viability. Economic indicators showed signs of recovery, with inflation under control, a stable current account, and improving external buffers. However, challenges persist, including missed indicative targets and structural benchmarks, as well as concerns over circular debt and policy consistency in the power sector. Analysts observed that revenue gaps, partly linked to Federal Board of Revenue (FBR) targets, could be partially offset following favourable judicial rulings on taxation measures.
The agreement follows a period of prolonged negotiations in which both sides initially struggled to reach a staff-level agreement within the scheduled timeframe due to heightened global uncertainty. Officials cited the evolving geopolitical situation, particularly tensions in the Middle East and risks surrounding the Strait of Hormuz, as key factors complicating projections for oil imports, exports, and fiscal balances. Talks continued beyond the 11 March deadline and shifted to a virtual format, with further discussions on the upcoming budget expected into April and May. Pakistan had previously received about USD 1 billion in May and December 2025 under the EFF. (“IMF, Pakistan reach staff-level agreement unlocking $1.2bn tranche,” Dawn, 28 March 2026; “IMF Reaches Staff-Level Agreement on the Third Review for the 37-month Extended Arrangement under the Extended Fund Facility (EFF) and the Second Review for 28-month Arrangement Under the Resilience and Sustainability Facility (RSF) – Pakistan,” International Monetary Fund, 27 March 2026)
ALSO READ:
R Preetha, "Pakistan and IMF’s Governance and Corruption Diagnostic Assessment: Risks, Reforms and Trajectories," PR Explainer, 30 November 2025
Vani Vyshnavi Jupudi, "Pakistan Budget 2025-26: Legislating stabilisation under IMF discipline and coalition constraints," Pakistan in 2025, 31 December 2025
In Brief
AF-PAK
Repatriation of Afghan nationals halted after border attack at Torkham
On 27 March, Dawn reported that the repatriation of undocumented Afghan nationals was abruptly suspended at the Torkham border crossing after a border security official was injured in a cross-border attack from the Afghan side. The incident, which occurred late Thursday evening at the Awal Khan post, prompted authorities to place forces on high alert and halt processing operations. The crossing had only just reopened after remaining closed since February 26 during Operation Ghazab lil-Haq. Officials said around 220 undocumented Afghans were registered and repatriated on Thursday before operations were stopped. Staff from the National Database and Registration Authority (Nadra), the Federal Investigation Agency (FIA), the National Logistics Corporation (NLC), and other departments were present but instructed to cease registration immediately due to the deteriorating security situation. Authorities cited the “aggressive attitude” from the Afghan side as a key concern, adding that facilitation under the Illegal Foreigners Repatriation (IFR) process could not continue under current conditions. (“Afghan repatriations suspended after border security official injured at Torkham,” Dawn, 27 March 2026)
ECONOMY
Provincial governments reluctant to share fuel subsidy burden
On 28 March, Dawn reported that provincial governments are not ready to contribute to fuel subsidies. As international crude oil prices increased due to the Iran conflict, the Federal government had earlier approached provincial governments to share the burden of fuel subsidy. After consultations, the provincial government stated its inability to contribute PKR 200 billion to the fuel subsidy sought by the Ministry of Finance. Both the Punjab and Sindh governments were supposed to share more than PKR 102 billion and PKR 60 billion, respectively. However, both provinces suggested passing global prices on to the domestic market. At a consultation meeting with the Finance Ministry, Provincial governments raised concerns about high fuel consumption due to subsidies provided by the government. Therefore, provincial governments emphasised the need to shift the burden of rising oil prices to consumers for responsible fuel consumption. A meeting is going to be held on 31 March to build consensus on austerity and conservation measures. The meeting is going to be attended by the President, Prime Minister and four chief ministers and their teams. (“Provinces look to avoid fuel subsidy burden,” Dawn, 28 March 2026)
LPG prices surge across cities amid supply disruptions
On 28 March, Dawn reported that Liquefied Petroleum Gas (LPG) prices had increased by PKR 3,900 to PKR 5,135 per 11.67kg cylinder from PKR 3,150 to PKR 3,968. Due to the Iran war, gas prices have increased enormously in the last few days across cities, adding to the hardships for low and middle-income groups who mainly travel using LPG-driven rickshaws and buses. As per the Convenor Standing Committee on LPG of the Federation of Pakistan Chambers of Commerce and Industry, the country’s total annual LPG requirements are two million tonnes, with 1.2 million tonnes imported and 800,000 tonnes produced by local refineries. Arrival of gas from Iran has particularly slowed down due to the Eid and Nowruz holidays. The situation will likely improve after the holidays, which may help stabilise demand and supply, as the country has only 13-14 days of LPG stocks remaining. (“LPG prices skyrocket,” Dawn, 28 March 2026)
PM Shehbaz once again rejects recommendations to increase fuel prices
On 27 March, Dawn reported that Prime Minister Shehbaz Sharif had once again rejected recommendations to increase the prices of petrol and high-speed diesel. The recommended price hike for petrol was PKR 95 per litre, while it was PKR 203 for high-speed diesel. There remains a mounting pressure on the government to increase oil prices in the domestic market as international oil prices have increased enormously in the last few days due to the Iran war. The government also launched a mobile application quota system for the provision of fuel for two-and three-wheelers to ensure a targeted subsidy for the low-income strata. The federal government has shifted PKR 100 billion from the development budget to support fuel subsidies and urged people to travel responsibly in times of fuel crisis. (“PM Shehbaz again rejects increase in petrol, diesel prices,” Dawn, 28 March 2026)
KP seeks revision of NFC resource distribution formula
On 28 March, Dawn reported that the Khyber Pakhtunkhwa government requested the federal government to revise the National Finance Commission's (NFC) resource distribution formula. In a recent net hydel profit (NHP) meeting, the KP team walked out as the other three provinces refused to include the region’s population in the new resource distribution formula, which could have increased KP’s share from the existing 14.62 per cent to 18.96 per cent. In case the NFC fails to address the issue, KP could take the matter to court, as eight annual modifications of the seventh NFC under Article 160(6) had reportedly been raised as being in violation of the constitution. KP Finance Minister Muzzammil Aslam stated that, as the annual modification of the seventh NFC was no longer a consensus formula and provincial shares were being unlawfully disbursed without a valid constitutional basis, KP was requesting the centre to implement a revised formula or institute discretionary grants until consensus was reached. KP demanded that the NFC give them the share of the newly-merged FATA area to their province for the development of the region. (“KP seeks revision of National Finance Commission formula, warns of legal action,” Dawn, 28 March 2026)
FPCCI defends GSP+ scheme amid criticism
On 27 March, The Express Tribune reported that the Senior Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Saqib Fayyaz Magoon, condemned the propaganda against the country’s status for the European Union’s Generalised Scheme of Preference Plus (GSP Plus) scheme. He said extension of GSP+ status in 2023 reflected Pakistan’s compliance with international laws, with both government institutions and the business community aligned with the EU. Pakistan’s exports to the European Union had increased by 108 per cent over the past decade under the GSP + scheme. He stated that no one would be allowed to conspire on such a sensitive issue. Magoon's statement came a day after Information Minister Attaullah Tarar accused the Pakistan Tehreek-i-Insaf (PTI) and the son of former Prime Minister Imran Khan of acting against national and economic interests. (““Lifeline of economy”: Business community condemns negative propaganda against Pakistan's GSP+ status,” The Express Tribune, 28 March 2026)
EXTERNAL
Pakistan eases border trade with Iran
On 28 March, Dawn reported that Pakistan has exempted exporters from mandatory banking instruments for shipments of food and pharmaceutical products to Iran via land routes, valid from 24 March 24 to 21 June. The exemption covers ten food items, including rice, meat, onions, and frozen chicken, and also permits rice exports to the Central Asian Republics and Azerbaijan transiting through Iran. Exporters are still required to submit undertakings guaranteeing repatriation of proceeds within the required timeframe. A commerce ministry official described the move as a routine extension, noting that food and medicine exports to Iran do not fall under international sanctions. ("Pakistan eases trade rules with Iran," Dawn, 28 March 2026)
China backs Pakistan's mediating role, supports resumption of US-Iran peace talks
On 27 March, Dawn reported that Foreign Minister of China Wang Yi telephoned Deputy Prime Minister, Minister of Finance and Senator Ishaq Dar on Wednesday and discussed initiation of the process for peace talks over the ongoing conflict in Iran so that ships may have safe passage through the Strait of Hormuz. During the call, Foreign Minister Wang Yi reaffirmed that China would continue to support and endorse all efforts by Pakistan to play a constructive and effective role in the quest for lasting peace and stability in the region. He underscored the need for an early ceasefire, cessation of hostilities and recommencement of peace talks so that precious human lives may be saved and non-military targets protected. The Foreign Minister also shared the development on his X handle and said that Pakistan was striving to bring an end to fighting, protect human life and facilitate safe passage of oil shipments for the sake of the region. This was the second call of Foreign Minister Wang Yi in a matter of weeks on this very subject. He had called Foreign Minister Ishaq Dar on 10th March and thanked him for Pakistan’s positive role in reducing tensions in the region. Pakistan is facilitating dialogue between the US and Iran with the help of Turkiye and Egypt, wherein messages are being conveyed after first conveying a proposal by the US to Iran. Iran is said to be mulling over a 15-point proposal. ("China says US-Iran talks would help restore Hormuz transit, supports Pakistan as mediator," Dawn, 27 March 2026)
Kuwait's crown prince endorses Pakistan's mediation efforts between US and Iran
On 27 March, Dawn reported that Kuwait's Crown Prince Sheikh Sabah Al Khaled Al Hamad Al Sabah fully endorsed Pakistan's mediation efforts between the US and Iran during a phone call with Prime Minister Shehbaz Sharif. The PM briefed the Kuwaiti leadership on Pakistan's diplomatic efforts to end the war in the Middle East, while also expressing condolences over Kuwaiti casualties and condemning attacks on the country. The crown prince expressed his desire to visit Pakistan once the regional situation improves. ("In call with PM, Kuwait crown prince endorses Pakistan's efforts to mediate between US and Iran," Dawn, 27 March 2026)
FM Dar holds trilateral consultations with Egypt and Türkiye; UN chief backs Islamabad's diplomatic push
On 27 March 2026, The Express Tribune reported that United Nations Secretary-General António Guterres expressed full support for Pakistan's diplomatic efforts in the Middle East during a telephonic conversation with Deputy Prime Minister and Foreign Minister Ishaq Dar. Guterres conveyed appreciation for Islamabad's push for peace and stability amid the ongoing conflict involving the United States, Israel, and Iran. Dar noted that the two exchanged views on developments in West Asia and their implications for international peace and security, reaffirming Pakistan's commitment to "diplomacy and dialogue as the only viable path to sustainable peace." Pakistan's diplomatic outreach has been coordinated with Türkiye and Egypt. Dar separately spoke with Egyptian Foreign Minister Dr Badr Abdelatty and Turkish Foreign Minister Hakan Fidan, with all three sides underscoring the need for dialogue, restraint, and collective efforts toward regional de-escalation. The Foreign Office stated that the engagements reaffirmed shared commitments to advancing peace and stability in the region. ("UN chief appreciates, expresses full support for Pakistan's diplomacy in US-Iran war," The Express Tribune, 27 March 2026)
Pakistan and China hold talks on counter-terrorism and protection of Chinese investors
On 27 March 2026, Dawn reported that Interior Minister Mohsin Naqvi met with Chinese Ambassador Jiang Zedong at the Chinese Embassy in Islamabad, where discussions covered counter-terrorism, security cooperation, the Police Exchange Programme, and the broader regional situation. The two sides agreed to hold a business conference to address security concerns of Chinese investors in Pakistan, to be conducted in two phases: first with Chinese businesses already operating in Pakistan, and subsequently with prospective investors. Naqvi also announced the establishment of a Special Protection Unit for the security of foreign nationals, with a particular focus on Chinese citizens in Islamabad. Officers of the unit are to receive Chinese language training as part of their preparation. The meeting follows a series of high-level Pakistan-China engagements this week, including a Thursday meeting between Ambassador Jiang and Prime Minister Shehbaz Sharif, attended by Foreign Minister Ishaq Dar and other senior officials, where Pakistan's role in promoting regional de-escalation was discussed. On Tuesday, Chinese Consul General Sun Yan separately met with Punjab Home Secretary Dr Ahmad Javed Qazi to review law and order conditions and security arrangements for Chinese nationals in the province. ("Mohsin Naqvi discusses counter-terrorism and security cooperation with Chinese envoy in Islamabad," Dawn, 27 March 2026)
ENVIRONMENT
Four killed as heavy rains lash Balochistan
On 28 March, Dawn reported that at least four people lost their lives and two others were injured as heavy rains and thunderstorms continued to lash 27 districts of Balochistan over the past five days, causing widespread damage to homes and infrastructure. According to the Provincial Disaster Management Authority (PDMA), a child was swept away in a seasonal stream in the Jaffarabad area, while a man died after the roof of a mud house collapsed in Kholu district. Two more fatalities were reported in Kech district when individuals were carried away by floodwaters while attempting to cross a stream. Officials said dozens of mud houses were destroyed in affected areas, including Kech, Harnai, Kholu, Qila Abdullah, Chaman, and Pishin. Meanwhile, heavy rainfall in Gwadar and other southern regions over the past 24 hours has disrupted daily life, highlighting the vulnerability of infrastructure to extreme weather conditions. (“Four killed as heavy rains batter Balochistan,” Dawn, 28 March 2026)
Editorials/Opinions
War & geopolitics
Hassan Aslam Shad, “New dawn in the Gulf,” Dawn, 27 March 2026
"In a significant shift in Middle Eastern geopolitics, a quadrilateral meeting was convened in Riyadh on March 19 on the sidelines of the consultative meeting of foreign ministers of Islamic countries to discuss Iranian attacks on Gulf countries. This quadrilateral meeting was held between the foreign ministers of Pakistan, Turkiye, Egypt and Saudi Arabia. Steered by Ankara, this meeting explored a quadruple alliance between Pakistan, Egypt, Turkiye and Saudi Arabia — a proverbial ‘Green Nato’ designed to retire the era of external dependency. This quartet represents more than a mere diplomatic overture. It could be the shattering of the Western aegis and the coming of age of an indomitable security architecture in the region."
https://www.dawn.com/news/1985692/new-dawn-in-the-gulf
Editorial, “War on Lebanon,” Dawn, 27 March 2026
"While most of the world’s attention is fixated on the Gulf, where the US-Israeli war on Iran continues, another destructive conflict is underway in the region: the brutal Israeli war on Lebanon. The most recent hostilities began when pro-Iran Lebanese armed group Hezbollah started striking Israel on March 2. However, the truth is that the Zionist state had been violating Lebanese sovereignty repeatedly since the November 2024 ceasefire. The UN has listed thousands of Israeli truce violations. Simply put, Lebanon was a volcano waiting to erupt, thanks to Tel Aviv’s provocative behaviour and penchant for aggression."
https://www.dawn.com/news/1985695/war-on-lebanon
Climate change
Faisal Bari, “Limiting screen time,” Dawn, 27 March 2026
"Computers, mobile phones and the internet are tremendous channels for learning and interaction, but, and there is plenty of evidence about this now, they also have a strong negative impact on learning and children’s mental health. Many countries are trying to limit the use of computers and social media for young people to ensure the positive remains but the negative is curtailed. One way of doing this is to engage young people in physical and other activities, not only to ensure their well-being but also to limit the overuse of screens and social media. But structuring physical activity and sports/ skill clubs in today’s changed environment is difficult. We need innovation in schools and communities to create spaces that allow us opportunities for gainfully engaging young people."
https://www.dawn.com/news/1985693/limiting-screen-time
The Middle East crisis and Pakistan
Ziad Bashir, “Time to hold the line,” The News International, 27 March 2026
"Pakistan cannot control global events. It cannot control oil prices or geopolitical tensions. But it can control how it responds. Staying measured, targeted and focused while protecting the most vulnerable, protecting exports, preserving employment and keeping the economy moving will define the outcome."
https://www.thenews.pk/print/1406444-time-to-hold-the-line
Pakistan-Afghanistan
Dr Raashid Wali Janjua, “Ghazab Lil Haq,” The News International, 27 March 2026
"The temporary Eid pause was a good confidence-building gesture by Pakistan. There should be no quarters given, however, to the TTP leadership, even if they lie ensconced in the comfort of Kabul Green Zone, which must feel the inexorable heat of Operation Ghazab Lil Haq."
https://www.thenews.pk/print/1406446-ghazab-lil-haq
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