Pakistan is scrambling to secure energy supplies after QatarEnergy halted liquefied natural gas (LNG) production following missile attacks linked to Iran. The sudden disruption has once again exposed the country’s heavy dependence on imported LNG, particularly from Qatar, and raised concerns about supply stability amid rising geopolitical tensions.

Officials say emergency contingency measures are being considered to offset a potential supply shortfall, including restoring previously curtailed domestic gas production and seeking alternative LNG cargoes from other suppliers. The situation has been further complicated by renewed security risks to shipping routes through the Strait of Hormuz, a critical artery for global energy trade.

Heavy Reliance on Qatari LNG

Qatar forms the backbone of Pakistan’s imported LNG portfolio. Under long-term agreements, Pakistan typically receives nine LNG cargoes per month from Qatar. In addition, one monthly cargo is supplied by Italy’s Eni.

This steady stream of imports plays a central role in maintaining pipeline pressure and ensuring fuel availability for power generation, industry, and residential consumption. Any prolonged disruption in Qatari supplies could strain the gas transmission system and create shortages in the coming months.

Energy officials have acknowledged that Pakistan’s reliance on a limited number of LNG suppliers leaves it vulnerable to external shocks, particularly those driven by geopolitical instability in the Gulf region.

Immediate Contingency Measures

To cushion the immediate impact of the disruption, authorities plan to restore approximately 350 million cubic feet per day (MMcf/d) of domestic gas production that had previously been curtailed to manage line-pack pressure. Reinstating this output is expected to provide short-term relief and stabilize the system.

Further measures under consideration include ramping up local oil and gas production where feasible. Officials are also evaluating the option of securing spot or short-term LNG cargoes to plug any supply gaps if demand increases unexpectedly.

However, availability remains uncertain. SOCAR has existing commitments to buyers in China, Japan, and India, which could limit the volume available for diversion to Pakistan.

Demand Adjustments and Prior Planning

Earlier this year, Pakistan had successfully negotiated with Qatar to defer two LNG cargoes per month scheduled for delivery in 2026. The decision was based on projections that domestic gas demand would decline by around 300 MMcf/d.

The Power Division had described nine LNG cargoes per year as “additional” due to reduced reliance on gas-fired power generation. Domestic gas usage had been hovering near 400 MMcf/d, reflecting lower consumption patterns in certain sectors.

Seasonal Relief and Demand Management

Seasonal factors may offer temporary breathing space. Lower heating and cooling demand during March is expected to keep consumption manageable. Electricity demand is also unlikely to surge significantly in the short term.

In the event of a sudden spike in demand, officials have indicated that industrial and commercial users could face extended load-shedding to protect residential consumers. Historically, households have been prioritized during supply shortages to minimize public hardship.

While these measures can mitigate immediate pressures, they are not long-term solutions to structural vulnerabilities in the energy mix.

Broader Geopolitical Implications

The disruption comes amid heightened regional tensions linked to the US-Israel conflict with Iran. Escalating hostilities have unsettled global energy markets, tightened tanker movements near the Strait of Hormuz, and contributed to price volatility.

Energy analysts warn that each crisis in the Gulf highlights Pakistan’s over-reliance on imported LNG and crude oil. When key chokepoints such as Hormuz face threats, the country has limited buffers to absorb supply shocks.

Structural Vulnerability Remains

While emergency measures may help manage short-term disruptions, Pakistan’s broader challenge lies in reducing structural dependence on imported fuel. Expanding renewable energy, improving energy efficiency, and strengthening domestic production capacity could help cushion future shocks.

For now, policymakers are focused on stabilizing gas supplies and ensuring uninterrupted service. However, the latest disruption serves as a reminder that energy security remains closely tied to geopolitical stability in the Gulf region.

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Pakistan’s Trade Gap Expands 25% in Eight Months

Pakistan’s trade deficit expanded by 25 percent during the first eight months of FY26, reaching $25.042 billion as exports declined sharply while imports remained elevated. The widening gap between external receipts and payments underscores mounting pressure on the country’s external account.

The latest trade figures show that despite some moderation in monthly import demand, overall import volumes continue to significantly outpace export earnings, contributing to a growing imbalance in the trade account.

Exports Post Notable Decline

During the July–February period of FY26, Pakistan’s total exports stood at $20.462 billion. This marks a 7.3 percent decline compared to $22.073 billion recorded in the same period of the previous fiscal year.

The drop in exports reflects weakening external demand and possible competitiveness challenges in key sectors. The decline is particularly concerning given the need to boost foreign exchange inflows at a time when the country is managing tight reserve levels and external financing requirements.

A sustained slowdown in exports limits the country’s ability to offset rising imports and stabilize the trade balance.

Imports Continue to Outpace Exports

While exports contracted, imports rose during the eight-month period. Total imports reached $45.504 billion, up 8.1 percent from $42.110 billion in the corresponding period of FY25.

The rise in imports, despite ongoing efforts to contain non-essential purchases, highlights continued demand for raw materials, machinery, fuel, and other essential goods. Although imports are critical for supporting domestic production and economic activity, higher import bills without corresponding export growth deepen the trade imbalance.

The persistent gap between imports and exports has kept the trade deficit on an upward trajectory.

February 2026: Monthly Trade Performance

On a monthly basis, Pakistan recorded a trade deficit of $2.981 billion in February 2026. Exports during the month stood at $2.272 billion.

February exports declined 8.8 percent compared to the same month last year. On a month-on-month basis, the drop was even sharper, with exports plunging 25.6 percent from January’s $3.055 billion. The steep monthly contraction suggests a significant slowdown in external shipments, possibly linked to seasonal factors or reduced global demand.

Imports in February were recorded at $5.253 billion. On a year-on-year basis, imports fell slightly by 1.6 percent from $5.339 billion in February 2025. Compared to January 2026, imports declined by 9.5 percent from $5.805 billion, indicating some easing in monthly demand.

While the monthly reduction in imports may provide temporary relief, the overall trade picture remains challenging due to the persistent export weakness.

Pressure on External Account

Trend data indicate that although imports have moderated from recent peaks, they continue to exceed exports by a wide margin. This structural imbalance keeps sustained pressure on Pakistan’s external account.

A widening trade deficit directly impacts foreign exchange reserves, as more dollars are required to pay for imported goods than are earned through exports. If the trend continues, it could increase reliance on external borrowing or financial assistance to bridge the gap.

Managing the trade deficit remains a critical policy challenge. Boosting export competitiveness, diversifying export markets, and encouraging value-added production are essential for improving external stability.

Outlook and Economic Implications

The 25 percent expansion in the trade deficit during the first eight months of FY26 highlights the urgency of corrective measures. While some moderation in imports suggests demand adjustment, the sharp contraction in exports is a key concern.

For sustainable improvement, policymakers will need to focus on export-led growth strategies, industrial support measures, and policies aimed at reducing the structural import dependency of the economy.

Unless export performance rebounds in the coming months, the trade deficit could remain elevated, continuing to strain reserves and complicate broader macroeconomic management.

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Pakistan’s Auto Industry Loses Rs. 60 Billion, 40,000 Jobs Due to Used Car Imports: CCP

Imported used vehicles caused an estimated Rs. 60 billion loss to Pakistan’s domestic automobile industry in FY25 and displaced more than 40,000 potential jobs, according to a recent study by the Competition Commission of Pakistan (CCP). The findings have raised serious concerns about the long-term sustainability of local car manufacturing amid growing inflows of second-hand vehicles.

The Commission’s assessment highlights how increasing used car imports are undermining domestic assembly operations, discouraging investment, and threatening the broader industrial ecosystem built around the automotive sector.

Surge in Used Car Imports

During FY2025, more than 38,000 used cars were imported into Pakistan. These vehicles accounted for nearly one-fourth of total passenger vehicle sales during the fiscal year, signaling a major shift in market dynamics.

According to the report, schemes originally designed to facilitate overseas Pakistanis — such as Gift, Transfer of Residence, and Baggage categories — are increasingly being used for commercial trading purposes. While these schemes were intended to allow expatriates to bring vehicles for personal use, their growing commercial application has effectively created an alternative import channel.

This trend has weakened local manufacturing by diverting demand away from domestically assembled vehicles.Impact on Local Manufacturing and Employment

The study emphasizes that each imported used vehicle effectively replaces the demand for a locally assembled car. This substitution effect extends beyond vehicle assembly plants to the entire supply chain, including vendors and manufacturers of locally produced components.

As a result, the domestic industry suffered an estimated Rs. 60 billion loss in FY25. More critically, over 40,000 potential jobs were displaced due to reduced local production volumes.

Pakistan’s auto sector supports a wide network of parts manufacturers, service providers, and skilled labor. A decline in production not only impacts assembly lines but also small and medium-sized enterprises involved in component manufacturing.

The report warns that continued reliance on used car imports could erode the industrial base that has been gradually developed through localization policies and long-term investment.

Threat to Localization Efforts

Localization has been a key policy objective for Pakistan’s automotive industry. Increasing domestic production of parts reduces reliance on imports and enhances value addition within the country.

However, sustained inflows of used vehicles threaten these gains. When demand shifts toward imported second-hand cars, local assemblers face shrinking production volumes. Lower volumes reduce economies of scale and discourage further investment in localized manufacturing.

Over time, this dynamic could slow technological advancement and weaken the industry’s competitiveness.

Broader Economic Risks

Beyond the industrial impact, the study highlights broader macroeconomic concerns. A sustained drop in local production would expand the structural import bill, placing additional pressure on foreign exchange reserves.

At a time when Pakistan is working to stabilize its external accounts, increased dependence on vehicle imports could heighten economic vulnerability. Reduced domestic production also weakens the multiplier effect associated with manufacturing, limiting broader economic growth.

The automotive sector plays a significant role in employment generation, tax revenue, and industrial development. Prolonged disruption could therefore have wide-ranging economic consequences.

Importance of the Auto Parts Industry

The report underscores that Pakistan’s auto parts industry currently saves approximately USD 1.25 billion annually through import substitution. By manufacturing components locally, the sector reduces the need for expensive imports and strengthens domestic industrial capacity.

However, this protective cushion could diminish if used vehicle imports continue to rise unchecked. Lower production of locally assembled vehicles would directly reduce demand for domestically manufactured parts, undermining years of progress.

Need for Policy Reassessment

While imported used vehicles may provide consumers with more affordable options, the findings suggest policymakers must carefully balance consumer benefits with long-term industrial sustainability.

The study calls for a comprehensive review of existing import schemes to ensure alignment with national industrial objectives. Without corrective measures, rising used car imports could pose a lasting challenge to Pakistan’s automotive manufacturing sector.

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IMF Begins Second Review Through Online Meetings From Türkiye

Pakistan and the International Monetary Fund (IMF) have formally commenced the second round of review negotiations under the Extended Fund Facility (EFF) programme. The outcome of these discussions will play a decisive role in determining the timing and size of future loan disbursements, making this phase particularly significant for the country’s economic stability efforts.

Officials from the Ministry of Finance confirmed that talks are starting today, with the IMF mission participating virtually from Türkiye due to prevailing security considerations. The review will cover a broad policy spectrum, including fiscal management, governance reforms, and structural adjustments at both federal and provincial levels.

Economic Performance and Fiscal Targets in Focus

A central component of the review is the assessment of Pakistan’s overall economic performance since the last evaluation. IMF officials will examine key macroeconomic indicators such as revenue collection, fiscal deficit management, public debt trends, and compliance with agreed performance benchmarks.

Fiscal consolidation remains a cornerstone of the EFF programme. The government is expected to present updated data on revenue mobilization and expenditure control measures. Meeting quantitative targets agreed with the IMF is essential to ensure continued financial support under the programme.

Provincial governments will also take part in the discussions, briefing the IMF team on reforms in administration and public finance. The Fund has increasingly emphasized coordination between federal and provincial authorities to ensure policy consistency and effective implementation across the country.

Provincial Digitization and Administrative Reforms

Digitization efforts at the provincial level are expected to receive particular attention during this review. Provincial representatives will outline progress made in modernizing public services and strengthening governance through digital platforms.

Khyber Pakhtunkhwa is set to highlight the transition of services in 173 sectors to digital systems. These reforms are intended to enhance service delivery, improve efficiency, and reduce opportunities for corruption and administrative delays.

In addition to digitization, provincial tax revenue performance will also be evaluated. Strengthening revenue collection at the provincial level is considered vital for achieving long-term fiscal sustainability and reducing reliance on federal transfers.

Revenue Mobilization and Agricultural Income Tax

Revenue generation remains one of the most critical aspects of the negotiations. The IMF team is expected to closely assess measures related to the implementation of income tax on the agricultural sector, which has been introduced in the current fiscal year.

Bringing agriculture into the formal tax net represents a significant structural reform. The move is aimed at broadening the tax base and addressing longstanding imbalances in revenue collection. The IMF has consistently stressed the importance of equitable taxation to support fiscal stability.

Governance, Procurement, and Public Financial Management

Governance and accountability reforms form another major pillar of the review. A dedicated session will examine progress in strengthening public financial management systems, audit mechanisms, and transparency in government spending.

Proposed amendments to public procurement rules under the Public Procurement Regulatory Authority will also be reviewed. The emphasis will be on enhancing transparency, ensuring competitive bidding processes, and promoting compliance in public sector purchasing.

Institutional Coordination and Oversight

The agenda will also include discussions on improving coordination among key oversight and regulatory bodies. Information-sharing mechanisms involving the National Accountability Bureau and the Competition Commission of Pakistan are expected to be reviewed.

Enhanced institutional coordination is viewed as critical for strengthening accountability, preventing anti-competitive practices, and ensuring effective enforcement of regulatory standards. The IMF has repeatedly highlighted the importance of robust institutional linkages to sustain reform momentum.

A Critical Stage for Future Disbursements

The second review under the Extended Fund Facility represents a pivotal moment for Pakistan’s economic reform programme. A positive outcome could unlock the next tranche of financial assistance, bolster foreign exchange reserves, and reinforce investor confidence.

As negotiations proceed, the government will aim to demonstrate measurable progress in fiscal discipline, structural reform, and governance improvements. The success of this review will not only influence the immediate disbursement schedule but also shape the country’s broader economic outlook in the months ahead.

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No Bids Submitted for Second Tender, Karachi IT Park Faces Further Delay

The Karachi IT Park project has encountered another major setback after its second tender failed to attract any bidders, raising fresh concerns about timelines and execution. In response, the Ministry of IT and Telecommunication has sought Rs. 11,500 million in the Public Sector Development Programme (PSDP) for 2026–27 to ensure the Rs. 31,200 million project stays on course despite ongoing delays.

Originally envisioned as a flagship technology hub for Pakistan’s commercial capital, the project has already been delayed by nearly three years, pushing its completion further into the future.

Funding Status and Project Progress

According to official documents, cumulative spending on the project has so far reached Rs. 1,443 million. However, physical progress stands at only 10 percent, while financial progress is recorded at 5 percent. The IT Park is planned as a six-year initiative, but early-stage complications have slowed implementation significantly.

The fresh PSDP allocation request is aimed at maintaining project continuity and preventing further disruption as authorities prepare to float a third tender.

Regulatory Hurdles Near Karachi Airport

One of the primary reasons behind the delay has been regulatory complications. The project site, located near Karachi airport, drew objections from the Civil Aviation Authority (CAA). These concerns required revisions to the building’s design to meet aviation safety requirements.

Additionally, the initial land allotment was cancelled, compelling the Ministry to secure fresh approvals. This process consumed considerable time and contributed to the project’s extended timeline. Officials say these regulatory issues have now largely been addressed, allowing the government to move forward with renewed clarity.

Tender Process Struggles

The procurement phase has proven equally challenging. The Ministry sought to hire a Korean contractor through two separate advertisements, but both attempts failed to generate bids.

The first tender round coincided with heightened Pakistan-India tensions, which officials believe may have discouraged participation. The second attempt, despite a more stable environment, also did not attract any bidders.

Following the approval of the draft Request for Proposal (RFP) by the Korean Exim Bank, authorities are now preparing to launch a third tender. Officials remain optimistic that the next round will see competitive participation, particularly after proactive engagement efforts.

Financing Model and International Support

The Karachi IT Park is structured on the same development model as the Islamabad IT Park and is expected to be financed through a loan from the Export-Import Bank of Korea (Korean Exim Bank).

Around 20 to 25 firms are currently registered with the bank and eligible to bid. To encourage participation, authorities have already conducted a webinar aimed at clarifying project details and addressing contractor concerns.

Officials acknowledged that strict enforcement actions linked to delays in the Islamabad IT Park project may have influenced bidder sentiment regarding Karachi. However, they believe most of those concerns have now been resolved, improving the likelihood of a stronger response in the upcoming tender round.

Project Scope and Facilities

Designed as a 111,000 square meter facility, the Karachi IT Park aims to serve as a comprehensive technology ecosystem. The project is expected to boost innovation, entrepreneurship, and collaboration within Pakistan’s growing IT sector.

The planned facility will include:

• Office spaces for startups and small and medium enterprises (SMEs)

• Testing and research laboratories

• Classrooms and training centers

• An industry-academia linkage center

• An auditorium and conference rooms

• A guest house and daycare facility

• A gym and recreational amenities

• Restaurants and shared working areas

• A modern data centre

Groundbreaking for the project took place in 2022. Since then, the boundary wall has been completed, land testing finalized, and a detailed design prepared by a Korean consultant.

Cost Remains Unchanged Despite Delays

Despite repeated setbacks, the Ministry of IT has maintained that the overall project cost of Rs. 31,200 million will remain unchanged. The focus now is on securing successful bids in the third tender round and accelerating construction to recover lost time.

While the Karachi IT Park continues to face implementation challenges, officials remain confident that once completed, it will play a transformative role in strengthening Pakistan’s digital economy and positioning Karachi as a leading regional technology hub.

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Global Oil Tops $80 Following US-Israel Attacks on Iran