Author: Ibraheem Sohail

In a bid to improve intra-national connectivity, authorities have decided to rehabilitate and expand the GT Road (N-5). According to reports, Minister of Communications Abdul Aleem Khan chaired a meeting where relevant authorities decided to complete the upgrade in two phases.

Analysts have outlined how GT Road will become a three-lane roadway, similar to the layout of motorways. Information from a press statement reveals that the project aims to standardise road quality across the GT Road.

Reports suggest that key officials passed suggestions regarding the GT Road’s rehabilitation process. These officials were primarily from the Economic Affairs Division, Planning Department and the Ministry of Communications. 

According to a press statement, the Chairman of the National Highway Authority presented recommendations during the meeting as well. Abdul Aleem highlighted the importance of a prompt response to the worsening condition on GT Road.

Moreover, he outlined the need to combat financial mismanagement by prudently employing the available project funds to prevent cost overruns. Historically, infrastructure projects have faced significant cost overruns and been plagued by transparency issues.

Abdul Aleem has issued directives to relevant authorities to get officials to begin work on upgrade proposals. Reports reveal that he conceded how previous projects resulted in massive losses to the national exchequer. 

However, he also revealed that he would be inspecting the process closely, visiting project locations on the GT Road. Furthermore, he ordered key officials, including the NHA’s chairman, to carry out visits throughout the development stages. 

If authorities carry out field visits diligently, it could ensure that progress continues smoothly. Upgrades to the GT Road could also cut travel times, allowing a greater volume of goods to pass across the country. Lower travel times could significantly facilitate production processes and boost exports. 

According to reports, authorities have already shared restoration plans based on the project’s current budget. Officials intend to reduce travel-related difficulties by upgrading the GT Road on a district-to-district basis. 

Relevant stakeholders have claimed that the first phase restoration works and necessary upgrades will be completed before FY 2025-26 starts. With approximately two months remaining till the end of the current fiscal year, many remain sceptical regarding the speed of the progress, given how upgrades will have to be completed along the full length of the 2,400 kilometre road.

Officials have resumed trade talks in an attempt to boost bilateral trade volume between Pakistan and Afghanistan. According to credible reports, this development has come to light after trade talks were put on hold over a year ago.

If trade relations improve, cross-border cargo movement could surge. Reports indicate that high-profile discussions regarding international trade were held in early 2024 when senior Pakistani officials met with Afghanistan’s Minister for Industry and Commerce, Nooruddin Azizi, in Kabul.

Facing a slew of international sanctions, Afghanistan remains largely cut off from the rest of the world. However, lawmakers and officials in Kabul want to access global markets.

Afghanistan’s Commerce Ministry has released a statement outlining calls to renew the Afghanistan-Pakistan Transit Trade Agreement (APTTA). Moreover, the statement highlighted the demand for exporting Afghan goods, such as coal, to Pakistan.

According to the Observatory of Economic Complexity, Pakistan imported a staggering $647 million worth of coal briquettes in 2023. While part of this import demand was satisfied by Afghan coal, South Africa and Indonesia were also major suppliers.

However, many believe that importing from Afghanistan would be a good economic decision, as it could reduce transportation costs. Afghanistan seems poised to seize this opportunity, as the commerce ministry’s statement reportedly mentions the need for counter-smuggling commodities.

Afghan officials have talked about operationalising Torkham port while utilising Ghulam Khan port to facilitate commercial activities. Moreover, they have expressed interest in the crossing of heavy vehicles for cargo transit and the possibility of banks providing guarantees. 

Afghanistan’s financial system remains handicapped as $9.4 billion of the war-torn country’s reserves remain frozen by the United States (US). Gaining access to Pakistan’s banking network for commercial reasons could significantly benefit Afghanistan’s economy.

Afghanistan’s Minister for Industry and Commerce is leading a delegation to Pakistan to boost bilateral trade relations. He met his counterpart, Commerce Minister Jam Kamal Khan, to discuss potential avenues of collaboration.

According to reports, Pakistani officials have suggested creating a joint committee to address concerns related to trade. Pakistan stands to benefit from boosting ties with Afghanistan.

In the first eight months of FY 2024-25, year-on-year exports to Afghanistan grew by a respectable 84.25 percent. Import volumes have logged a sharp increase as well, as imports jumped from $5.47 million in the first eight months of FY 2023-24 to $18.21 million during the current fiscal year.

Pakistan is posting signs of economic revival as the State Bank of Pakistan (SBP) has recorded the single largest monthly current account surplus of $1.195 billion.

While experts believe that this spells great news for Pakistan as the inflow of funds could help alleviate macroeconomic pressures, the surplus comes after Pakistan logged consecutive current account deficits in January and February which is not unusual for the cash-strapped country. 

Historically, Pakistan has run large current account deficits, largely because of its trade deficit.

Analysts have chimed in, outlining how an uptick in remittances is to be credited for the large surplus as the country was able to attract a staggering $4.1 billion in monthly remittances in March.

Compared to the corresponding month in the previous year, the surplus stands at $832 million higher as compared to March 2024’s $363 million.

This brings Pakistan’s current account surplus in the first nine months of fiscal year (FY) 2024-25 to a respectable $1.86 billion. According to reports, this is a stark improvement from the $1.65 billion deficit the economy experienced over the same period in FY 2023-24. 

The current account’s health has improved significantly, as it has witnessed a whopping 212.5 percent improvement. Pakistan’s trade deficit has not logged any significant improvements, reportedly worsening instead by 7.1 percent from a year ago to $2.41 billion.

The trade gap has widened on a year-on-year (YoY) basis as import growth has outpaced export growth. In March 2025, imports grew from $5.48 billion to $5.92 billion on a YoY basis which translates into a growth rate of about 8 percent.

Conversely, exports recorded a growth as well, surging to $3.51 billion from their earlier value of $3.23 billion amounting to a growth rate of 8.7 percent. While it might seem as if exports have grown faster, it is important to consider the larger initial value of imports which has caused the gap to widen.

Considering the first nine months of FY 2024-25, the trade deficit has widened by 14.7 percent. This indicates the overwhelming positive impact of remittances on the economy. 

Many believe that remittances will continue to rise as throngs of Pakistani citizens head abroad for better economic prospects. While this could exacerbate the domestic brain drain issue, tackling the issue could dampen the influx of much needed inflows.

The Cabinet Division has revealed plans to slash government expenditures by reducing public posts. According to credible reports, this decision could result in yearly savings of up to Rs 36 billion.

Of the Rs36 billion, approximately Rs7.2 billion will be saved by eliminating the positions of low-ranking grade-1 public servants such as sweepers, peons and gardeners. Authorities revealed the pay scale-wise details of approximately 40,000 positions to the Senate Standing Committee on Finance, which was chaired by Senator Saleem Mandiviwalla. 

Reports suggest that 29 percent of post eliminations were grade-1 – a post with an average salary of approximately 43,000 rupees per month. In contrast, only two positions were binned from the highest pay scale-22, which reportedly led to savings of just 0.05 percent.

This revelation led to the total annual savings value of Rs 36.3 billion coming to light, which could spell good news for the national exchequer. The savings could allow lawmakers to consolidate the cash-strapped economy’s fiscal position. Reports indicate that these posts are either abolished or have been deemed ‘dying’ positions, which means that this decision will not result in major layoffs in the public sector.

According to reports, these posts were mostly vacant already, and public servants still employed in these positions will be temporarily protected from the threat of being laid off. Under the proposed plan, the serving period of daily wagers will not be extended, and no newly inducted public servants will be able to occupy these posts anymore. 

While many consider downsizing to be beneficial for the public sector, the Cabinet Secretary has conceded that the plan’s monetary impact will not be significant. Reports suggest that authorities are moving under the directives of Prime Minister Shehbaz Sharif, who intends to boost efficiency in government departments.

As per the cabinet secretary, reforms are already underway to support Shehbaz Sharif’s rightsizing plan. Directives to abolish the aforementioned posts had come from Islamabad in August 2024 to reduce the staggering number of public servants that were bloating up the bureaucracy.

Reports claim that previous governments have hired vast numbers of employees to curry political support from the general public. However, Shehbaz Sharif’s initiatives have been met by a barrage of criticism, some from his own political allies.

For instance, a senator from PPP (PMLN’s coalition partner) outlined how Shehbaz Sharif “talks about cutting costs” while simultaneously doubling the size of his cabinet.

The federal government has amended the Petroleum Products Ordinance of 1961 to block the possibility of a Rs 10 per litre cut in petroleum prices, credible reports reveal.

In previous price revision periods, the government periodically tacked on increments to the petroleum levy, which eventually surged to Rs 70 per litre on high-speed diesel (HSD) and high-octane blending component (HOBC). This was a legal ceiling beyond which the government could not raise levies, which is why an ordinance amendment was required.

Prior to the aforementioned developments, many analysts and experts alike believed that prices of petroleum products would decline substantially. This is because petrol prices have reportedly recorded a drop of $6 per barrel while HSD logged a more conservative fall of $5 per barrel in the international market over the past fortnight.

Citing environmental issues, the federal government has decided that fuel prices should not drop further, as it is likely to increase the demand for private transportation, which could increase national carbon emission levels.

Moreover, higher demand could have resulted in larger petroleum import orders, possibly exacerbating the strain on the trade deficit. This would have spelt bad news for cash-strapped Pakistan, which has a measly $10.699 billion in foreign exchange reserves at its disposal.

However, the general public will not witness any fall in domestic petroleum product prices as they remain unchanged. The ex-depot price of petrol will remain undisturbed for the upcoming fortnight at Rs 254.63 per litre.

Conversely, the price of HSD will remain Rs 258.64 per litre. Meanwhile, as domestic prices remain undisturbed, government revenues from one litre of petrol and diesel have surged to approximately Rs 97 per litre.

Given how petroleum products face inelastic demand, revenues from the additional levy could boost Islamabad’s revenue, allowing the cash-strapped economy to consolidate its fiscal position. 

Prime Minister Shehbaz Sharif has revealed that proceeds from the levy will be utilised to fund infrastructure projects, primarily road construction, in Balochistan and Sindh. Concerningly, reports have indicated that Shehbaz Sharif could have made this move to secure the ‘political’ backing of coalition partners. 

According to reports, the federal government has also made a commitment with the International Monetary Fund (IMF) to levy a Rs 5 per litre carbon tax under the $1.3 billion Resilience and Sustainability Facility program.

Finance Minister Muhammad Aurangzeb is set to participate in the International Monetary Fund (IMF) and World Bank’s (WB) 2025 spring meetings held in Washington, United States (US). As per credible reports, Aurangzeb’s visit may also help address concerns surrounding Donald Trump’s 29 percent reciprocal tariffs against Pakistan.

Reports seem to back Pakistan’s intention to discuss the US’s trade restrictions with the Trump administration. While the trade war escalates between the US and China, Pakistan seeks to resolve the issue amicably.

A list of 75 countries, including Pakistan, have decided to respond to US tariffs by engaging in negotiations. Muhammad Aurangzeb is slated to hold meetings with key financial institutions to go over the impact of the devastating tariffs on Pakistan’s economy.

The IMF and WB are expected to provide Pakistan with a framework to deal with the tariffs, as both international lenders play a pivotal role in forming Pakistan’s macroeconomic policies. Islamabad often has to look towards the IMF for their nod before making any major changes.

A recent report conducted by the Pakistan Institute of Development Economics (PIDE) revealed that US tariffs could result in Pakistan experiencing a foreign exchange inflow reduction of approximately $1.4 billion.  Moreover, a spike in the domestic unemployment rate is possible as PIDE projects that half a million workers could be fired.

Reports indicate that a slew of central bankers, experts and finance ministers will also take part in the Spring Meetings. While the tariffs remain suspended for 90 days, it would be beneficial for Pakistan to engage with the aforementioned international players and gain trading partners in case the US decides to resume tariffs again.

Diversification in Pakistan’s export destinations is vital, given that its largest single-country export destination is the US. This could help insulate Pakistan’s cash-strapped economy from international adverse shocks. 

However, many believe that it may not be feasible to find trade partners who would be able to plug the gap in exports left by the US. Earlier, analysts speculated that a high-profile delegation from Pakistan could visit Washington after the Spring Meetings conclude to normalize trade relations between both countries.

Prime Minister Shehbaz Sharif’s office has now established that a delegation is slated to visit Washington DC with Commerce Minister Jam Kamal Khan at the helm. Some believe that if Pakistan decreases the tariffs it levies on US imports, the Trump administration could reduce its rate on Pakistan.