AGP Executive Report

Middle East Risk-Off: The US carried out its first strikes in Iran’s Chabahar area since the April Pakistan-brokered ceasefire, while Iran and Qatar held talks on Hormuz security and Pakistan and the UK urged de-escalation—raising fears of higher shipping costs and energy disruptions. Aviation Update: Pakistan Navy and PMSA recovered wreckage of the missing K2 Airways Boeing 737 cargo plane off Ormara (53nm south); search continues for five crew members. Markets: PSX slid sharply as Middle East tensions spooked investors, with the KSE-100 down 4,626 points. Cost of Living: NEPRA approved a fuel charges adjustment of Rs0.3364 per unit for July bills, and gold prices in Pakistan fell Rs4,700 per tola. Policy & Finance: SBP expects the current account to stay balanced or in surplus for FY26; SMEDA inaugurated its Islamabad HQ to push SME support. Business Climate: A survey of foreign investors found security concerns—especially in Karachi and Balochistan—are a top drag on operations.

Aviation Crisis: Pakistan expanded the search for a missing K2 Airways Boeing 737-400 freighter carrying five crew off Karachi after it reported a navigational system issue, then showed a sharp heading change and rapid descent before losing radar and radio contact about 155nm west of Karachi; navy, air force and merchant vessels are involved, with no official confirmation yet. Markets & Energy: PSX came under heavy sell-off as US-Iran tensions escalated after Trump said the Iran ceasefire MoU is “over,” with KSE-100 plunging around 3.5% in the latest session; oil prices jumped more than 6% globally on renewed Strait of Hormuz disruption fears. Gold & Consumer Costs: Gold prices in Pakistan fell for a fourth straight day, down Rs4,700 per tola to about Rs430,236, while silver also eased. Policy & Business Climate: SECP briefed Finance Minister Aurangzeb on capital markets and ease of doing business, including new company registrations, a beneficial ownership registry portal and plans for business facilitation centres. Security Cooperation: Pakistan and China pledged stronger counterterrorism and internal security coordination, including border management and protection of Chinese nationals. Digital & AI: IT minister reaffirmed Pakistan’s push for global digital cooperation at UN-led AI governance events in Geneva. Corporate Moves: S.G. Power entered Pakistan’s medical devices market via a distribution agreement with Nipro. Cabinet Decisions: Federal cabinet approved PASCO closure by December with a Rs4.18bn employee compensation package, and also cleared Hajj policy 2027–2030 with digitised registration and a Shariah-compliant savings scheme.

Aviation Crisis: A K2 Airways Boeing 737 cargo flight from Sharjah to Karachi with five crew went missing after reporting a navigation system issue; radar and communication were lost about 155 nautical miles west of Karachi, with Pakistan Navy and Air Force assets joining the search. SME & Banking Reform: Finance Minister Muhammad Aurangzeb announced an SME Finance Task Force led by SBP to make SME lending an industry-wide priority, while an AI-led tax administration model approved by parliament will issue notices with minimal human intervention. Capital Markets: PSX closed down nearly 1,200 points as profit-taking hit multiple sectors, despite earlier optimism. Energy & Prices: Govt kept gas prices unchanged for 2026-27 despite lower prescribed tariffs, while Punjab and Sindh moved on enforcement—Punjab revenue rose 36% to Rs368bn and Sindh launched a crackdown on wheat hoarders; meanwhile, Lahore saw rain-triggered power disruptions as 70+ LESCO feeders tripped. Corporate/Competition: CCP cleared Treet Ltd’s rights issue expansion in Loads Ltd, and Engro Vopak partnered with S&P Global to study refrigerated LPG import infrastructure. Public Policy: Cabinet approved Pakistan’s first four-year Hajj policy (2027-2030) with one-time registration and a Shariah-compliant savings scheme; OIC will hold a women’s ministerial conference in Pakistan on July 12-13. Health & Compliance: Two doctors were suspended and show-cause notices issued after an HIV outbreak at Karachi’s Valika hospital affected 78 children.

Debt Pressure: Pakistan’s total debt hit a record Rs81.949trn, up Rs5.904trn in a year, with domestic debt rising sharply and interest costs projected at Rs8.054trn for FY26—squeezing fiscal space. SME Push for Exports: PM Shehbaz ordered SMEDA to make SME lending easier, including dedicated bank products, support for feasibility studies, and credit facilitation for farmers’ fruit and agri-processing ventures. Tax Tech for Retailers: The Finance Ministry built a mobile app for fixed-tax retailer registration, targeting Rs50bn revenue and issuing FBR “Green Plate” via the system in multiple languages. Budget Execution Plan: Finance unveiled a quarterly fund-release strategy for FY26-27, with PSDP disbursements front-loaded at 15%/20%/25%/40% across quarters. Privatisation Update: The government added Karachi, Islamabad and Lahore international airports to its revised privatisation roadmap for 25 SOEs. Capital Markets: SECP said 21 listed companies raised over Rs20bn in FY25-26, while PSX saw profit-taking after a record rally. Security & Business Risk: Militants attacked a Balochistan checkpoint in Ziarat, killing nine police; authorities continue clearance operations. Gold Watch: Gold prices fell for a fourth straight session, dropping below Rs435,000 per tola.

Digital Finance Push: Finance Minister Muhammad Aurangzeb launched InvestPak, a digital portal/mobile app letting individuals and corporates invest in government securities online, manage IPS accounts and trade in primary/secondary auctions—aimed at widening participation and reducing reliance on banks. Capital Markets: PSX’s KSE-100 surged 2,082 points to a record close of 187,454, with broad buying lifting market cap to Rs20.986trn. Railways Turnaround: Railways Minister Hanif Abbasi said Pakistan Railways earned a historic Rs115bn in FY2025-26 and posted its first profit in 78 years, with plans to privatize more passenger services and expand/upgrade ML-1 to ML-3. Corporate Governance: SECP urged businesses to corporatise to improve transparency and access financing, while also setting facilitation for steel firms to register under new tax-linked rules. Food Security & Fertiliser: Pakistan Maroc Phosphore in Morocco was highlighted as strategic for stable phosphate supply to Pakistan’s fertiliser sector amid global supply-chain stress. Security & Water: GHQ’s Corps Commanders’ Conference warned of continued counterterrorism operations against groups using Afghan Taliban-controlled territory and reaffirmed Pakistan’s stance on defending Indus Waters Treaty water rights. Policy Oversight: NA panel flagged transparency concerns in the NCLEX nursing training programme, questioning non-advertised selection of 500 trainees and nomination process.

Investment Facilitation: Finance Minister Muhammad Aurangzeb launched the InvestPak portal to digitise and simplify access to government securities, aiming to attract foreign and retail investors and gradually reduce reliance on commercial banks. Capital Markets Mood: The PSX opened the week bullish, with the KSE-100 crossing 186,000 points as buying spread across banks, energy, cement and auto stocks. Telecom Regulation: PTA told the merged Ufone-Telenor entity (to operate under the e& brand) to complete all legal and regulatory formalities before any brand launch or campaign. Transport Pressure: Transporters in Khyber Pakhtunkhwa warned of a nationwide wheel-jam over rising taxes and fees, including toll and permit charges. Education Access: A policy report says over 25 million children remain out of school despite the national education emergency, blaming weak implementation and financing gaps. Hajj Registrations: More than 232,000 Pakistanis completed online Hajj 2027-2030 registration in the first two weeks, with Punjab leading. Bilateral Moves: President Asif Ali Zardari begins a four-day visit to Kyrgyzstan, seeking deeper cooperation in trade, energy, mining, textiles, healthcare and the digital economy. Regional Humanitarian Tensions: Protests in PoK intensified as residents appealed to India for food and medicines amid alleged blockade and crackdown.

Pakistan-Türkiye Trade Push: PM Shehbaz Sharif and Turkish President Recep Tayyip Erdogan reaffirmed plans to lift bilateral trade to $5bn, with talks covering energy, defence, connectivity and investment. Banking & SME Finance: Pakistan Banking Summit 2026 is set for July 7–8 in Karachi, while LogiServe partnered with Mobilink Microfinance Bank to launch a merchant digital lending facility inside the SLGTrax ecosystem. Weather & Climate Resilience: The government earmarked Rs1.6bn for Pakistan Meteorological Department upgrades, including radar projects and Hydromet modernisation, plus rainfall enhancement support. Urban Enforcement in Karachi/Lahore: Karachi authorities stepped up action against encroachments and illegal construction, and Lahore also launched a crackdown on unlawful buildings. Education Budgeting: Shah Abdul Latif University’s finance panel recommended a Rs4.58bn budget for FY26-27 after cutting its deficit by over 56%. Security Flashpoints: Balochistan saw a BLA attack on army positions, while PoK protests turned deadly after Rangers opened fire. Healthcare for Overseas Pakistanis: Ahsan Iqbal urged overseas Pakistani doctors and investors to back healthcare modernisation, proposing a district-based telemedicine backup model.

Pakistan–Türkiye Trade Push: PM Shehbaz Sharif and President Recep Tayyip Erdoğan met in Istanbul, pledging to turn political ties into a dynamic economic partnership and lift bilateral trade to $5bn, with focus on energy, mining, IT, manufacturing, logistics and defence. Trade Friction: Pakistan’s anti-dumping probe on soda ash is sparking a methodology row, with Türkiye objecting to Pakistan’s use of a higher profit margin in “non-harmful price” calculations. Energy Costs: Pakistan raised LNG prices by up to 16.17%, lifting SSGC rates to $18.64/MMBtu and SNGPL to $19.52/MMBtu. Power Sector Reform: Energy minister Leghari told Turkish investors Pakistan has cut power distribution inefficiencies by 45% and is pitching metering and transmission investment. Banking Agenda: Pakistan Banking Summit 2026 (July 7–8) announced in Karachi to drive policy dialogue on financing priorities for agriculture, SMEs and sustainable finance. Customs Enforcement: Hyderabad Customs reported a jump in anti-smuggling seizures and a surge in auction revenue in FY25–26. Digital Services: NADRA launched free home-based sponsor visa biometric verification via the Pak ID app, aiming to cut delays. World Bank Watch: A new report flags sharp inequality in provincial spending, with capitals like Quetta and Lahore receiving far higher per-capita funds than other districts.

Maritime Reform: PM task force has completed 85 of 99 maritime reform action points, including port master planning, uniform tariffs, customs rules for transshipment/bunkering, and resumption of ship recycling after an eight-year gap. Digital Governance: Punjab became the first province to digitally map citizens’ health and demographic profiles, with 94.3 million records registered and a disaster recovery plan for the database. Tax Administration: FTO urged FBR to set a formal administrative protocol so Ombudsman recommendations and statutory tax powers work in a coordinated way, while also issuing a landmark order to strengthen taxpayer confidentiality protections. Power Sector Investment Push: Energy minister Leghari told Turkish investors that power distribution inefficiencies have fallen by over 45% in two years, with digitised metering and reforms aimed at privatization. Housing Finance Expansion: SECP expanded PM Apna Ghar by allowing NBFCs to lend under subsidised schemes, widening access for non-banking segments. Trade & Investment: Pakistan and Türkiye reaffirmed a $5bn trade target and discussed special economic zones; meanwhile, business groups urged export support as the trade deficit hit $39.5bn. Punjab Public Services: Cleanliness drive for all public hospitals and a crackdown that saw 4.33m driving licences issued this year. Security & Economy Link: A suicide VBIED attack hit a Coast Guard post in Gwadar, underscoring risks around strategic trade routes. Banking Dialogue: Pakistan Banking Summit 2026 set for July 7-8 in Karachi.

Pakistan-Türkiye Investment Push: PM Shehbaz Sharif in Istanbul invited Turkish firms to expand in energy, mining, IT, telecom, logistics and privatisation, pointing to investor-friendly reforms and one-window facilitation. Tax Burden Hits Cotton: Pakistan’s cotton ginning sector is reportedly shutting again in Sindh after the federal budget kept an 18% sales tax, squeezing farmers and factories and dragging down cotton prices. Housing Finance Boost: SECP-backed expansion of PM Apna Ghar now lets NBFCs offer housing loans up to Rs10m (5% markup for 10 years), widening access beyond bank-heavy areas. Markets & Corporate Growth: PSX extended gains, closing up 851 points, while SECP registered a record 43,559 new companies in FY25-26. Energy Procurement: Pakistan LNG Limited bought a spot cargo at $17.3700/mmBtu for July 10-11 amid supply uncertainty. Legal & Governance: SC upheld forfeiture of performance guarantees for contract breach; Karachi’s anti-corruption court sent BRT Yellow Line case accused Zamir Abbasi to jail. Public Safety & Crime: Lahore foreign women rape/kidnapping case saw fresh court statements; Punjab CM announced compensation for tuition centre roof-collapse victims. Security & Diplomacy: India designated 23 Pakistan-based individuals as terrorists under UAPA, while Pakistan and US leaders reiterated partnership and counterterrorism stances.

Indus Waters Treaty: India says the IWT will stay in abeyance until Pakistan “credibly and irrevocably” ends support for cross-border terrorism, while Pakistan counters that water is a national security lifeline. Digital Tax Push: Finance Minister Aurangzeb told Faisalabad business leaders that fully digitalised taxation is key to plug leakages and boost revenue without hassle, with advance and super taxes removed and electricity cross-subsidies eliminated. Growth & Reserves: SBP Governor Jameel Ahmad expects FY26 GDP growth to land above the govt’s 3.7% estimate (around 3.75–4.75%), with remittances projected to exceed $41.5bn and FX reserves rising despite debt repayments. Inflation Snapshot: SPI eased WoW by 0.98% as petrol/diesel prices fell, but year-on-year inflation remains elevated (13.52%) driven by food items like tomatoes and onions. Fuel Cut: Petrol and HSD prices were reduced by Rs1.97 per litre effective July 4. Trade Pressure: Exports may suffer if incentives favour domestic industries over exporters, as trade deficit hits $39.5bn in FY26. Tax Administration: FBR will nominate trader reps at RTOs and excludes agricultural income from tax expenditure calculations. Corporate Momentum: SECP recorded a record 43,559 new firms in FY25-26. Markets: PSX extended gains, closing up 851 points to above 185,000. Energy/Industry: PTEA flags industrial tariff anomalies; FBR plans enforcement on non-compliant textile spinning units over production monitoring systems. Infrastructure & Governance: NHA faces a Rs60bn budget cut under austerity; audit flags Rs25.744m irregularities in Diamer-Bhasha Dam project.

Pakistan-Iran Diplomacy: PM Shehbaz Sharif departs for Iran (July 3-5) to attend Ayatollah Ali Khamenei’s funeral, then heads to Istanbul for talks with President Erdogan focused on trade, investment and regional security. Trade & Macroeconomy: Pakistan’s trade deficit widened 21.6% to $39.47bn in FY2025-26 as exports fell to $30.126bn and imports rose to $69.597bn; SBP chief projects FY26 growth above the govt estimate (3.7%) and remittances resilient despite IMF-linked incentive cuts. Tax & Revenue Push: PM Shehbaz hails FBR for surpassing Rs12.957tr revenue target and signals a push for Rs15tr+ in FY26-27, with digitisation and anti-smuggling efforts. Business Climate: Aurangzeb says govt is addressing traders’ issues and seeking FBR cooperation on tax reforms while expanding SME financing; SECP reports a record 43,559 new company registrations in FY2025-26. Markets: PSX stays bullish with KSE-100 gaining in early trade amid easing US-Iran tensions and lower oil prices. Regional Connectivity: Pakistan and Türkiye agree to deepen maritime and transport cooperation; Pakistan also looks to use the FIFA World Cup to promote its football manufacturing exports. Legal/Local: LHC rejects a plea to restore airport taxi entry passes; Karachi Gul Plaza fire probe faces renewed prosecution pushback over incomplete police investigation. Crime & Compliance: FIA alleges a human placenta smuggling ring for anti-aging injections; Lahore police link a foreign women kidnapping/extortion case to a crypto dispute.

Telecom Disruption: PTA says a fault in the SEA-ME-WE 5 submarine cable is causing intermittent internet slowdowns nationwide, with traffic being rerouted while Transworld Associates works with the SMW-5 consortium to restore service. Public Finance & Tax: PM Shehbaz praised FBR for hitting a record Rs12.957tr revenue target in FY25-26 and set a new push for FY26-27; SBP also ended the remittance telegraphic transfer charges incentive scheme from July 1. ECC Economic Decisions: ECC approved PASSCO restructuring steps, including auctioning flood-damaged wheat and a Rs4.188bn severance package, plus an import policy amendment aligning “forced labour” with ILO standards. Trade & External Sector: Exports missed the FY25-26 target by $5.2bn, widening the trade deficit; SBP reserves rose $611m to $16.5bn on multilateral inflows. Energy & Industry: Shandong Xinxu is eyeing energy investments across Pakistan; ECC discussed K-Electric’s gas disconnection notice over alleged guarantee breaches and circular-debt-linked dues. Regional Diplomacy for Business: PM Shehbaz will visit Iran and Türkiye, while Pakistan says Iran-US indirect talks in Doha show “positive progress,” with Islamabad possibly hosting future rounds. Markets & Commodities: PSX rally extended as KSE-100 closed above 184,500; gold jumped Rs9,100 per tola on global gains.

Monetary & Remittances: SBP will discontinue the Sohni Dharti Remittance Program from July 1, 2026, ending reward points for formal remittance channels (points earned until June 30 remain redeemable until end-FY27). It also discontinued a telegraphic transfer charges reimbursement scheme from July 1, while keeping qualifying home remittances zero-cost for senders/beneficiaries. Telecom & Digital Services: PTCL appointed Mohammad Nadeem Khan as interim CEO for 14 days, and the Telenor Pakistan-Ufone merger has moved into PTML after statutory approvals. Separately, MoITT told a Senate panel Pakistan has no law declaring internet an essential service. Power & Markets: Privatization Commission extended EOI deadlines for FESCO and GEPCO under DISCO privatization. PSX rallied again, with KSE-100 jumping over 1,400 points midday on improving sentiment. Climate & Fuel Costs: PM Shehbaz ordered intensified monsoon preparedness and an emergency response mechanism. Fuel taxes were reshuffled under the IMF: Climate Support Levy on petrol and HSD doubled to Rs5/litre while Petroleum Levy was cut to keep pump prices unchanged. Regional Diplomacy: Pakistan and Qatar mediated US-Iran indirect talks in Doha, with “positive progress” on the Islamabad MoU and next talks expected after Ayatollah Khamenei’s funeral. Trade & Infrastructure: World Bank urged Pakistan to reform the NFC Award formula for stronger fiscal federalism and better service delivery; it also backed Punjab’s digital connectivity with $70m. Corporate/Business Moves: VEON and Mastercard plan to expand accessible financial services across Pakistan and other markets. Security/Crime: Six mining workers were abducted in Pakistan’s Balochistan.

Privatisation Watch: Pakistan’s Privatisation Commission has extended the deadline for Expressions of Interest for DISCO sell-offs—Fesco to Aug 7 and Gepco to Aug 21—while keeping Islamabad Electric’s deadline at Sept 7, aiming to attract strategic investors for efficiency and loss reduction. Banking Upgrade: PACRA upgraded Bank of Punjab to AAA (from AA+), making it the first and only provincial bank at Pakistan’s top credit tier, supported by deposit growth and stronger profitability. Markets & Inflation: PSX surged as KSE-100 jumped 3,748 points (+2.08%) on easing June inflation to 11.1% and hopes for macro stability; gold fell locally despite a global rebound. Tax & Governance: Finance Minister said FBR annual tax collection crossed Rs13trn after reforms; Sindh’s PAC also flagged “illegal” advance withholding tax deductions on provincial bodies’ bank transactions. Power Sector Politics: Public sector labour unions urged the government to halt DISCO privatisation, citing tariff and job risks. Digital Push: Sindh launched Google Gemini training for its cabinet and opened an AI education corner at NED, while SBP reiterated rules against unlawful account freezing. Security & Cyber: CTD registered multiple cases in the Rangers transport attack probe; officials warned Pakistan recorded 253 cyberattacks in 2026 so far, with ransomware a key threat. Regional Energy Diplomacy: US-Iran indirect technical talks in Qatar continued on Strait of Hormuz shipping and ceasefire terms, with Pakistan mediating.

Inflation Watch: Pakistan’s headline inflation rose to 11.1% YoY in June 2026, with PBS data showing CPI at 11.7% in May and a 0.3% MoM dip in June. Tax & Salaries: The Finance Act 2026 takes effect, introducing revised income tax slabs for salaried people, with 0% up to Rs600,000 and higher brackets above that. PSX Momentum: Stocks stayed in a buying mood, with PSX/KSE-100 gains reported across the week, including a 44% FY26 jump. Water & Cost Pressure: Karachi may see higher water tanker charges as KWSC reviews tariffs due to rising diesel costs; hydrant contractors also claim over Rs4.14bn unpaid dues. Indus Waters Treaty: Climate minister Musadik Malik framed the IWT dispute as a global “water justice” test, warning that control over flows is the real risk. Digital Push: World Bank approved $70m for Connected Punjab to expand broadband and cashless services. Finance Sector Reform: Pakistan unveiled a plan to make the financial system fully Shariah-compliant by end-2027, with gradual transition and existing debts honoured. Business & Jobs: Govt approved Rs1bn for the Global Accelerator on Jobs and Social Protection, aiming to formalise work and expand social protection.