Page 52 - CMA Journal (Mar-Apr 2026)

great diplomatic dominance over India. Further, the security With an active and acceptable diplomatic move by Pakistan
hazards from Afghanistan compelled Pakistan to initiate an facilitating mediation especially the backdoor efforts and
open war against Taliban rule to protect itself from the hosting a top-level meeting on April 11, 2026 in Islamabad, it
ongoing terrorist activities in the northern areas of Pakistan is crucial for economic revival if opportunities are best
when the international community silently supported utilized in the post-war scenario, a rare opening cultivating a
Pakistan's cause. All this elevated Pakistan's position on the
gentle global illustration, enhancing FDI, restoring Iran-
international strategic front which forced the world to look at
Pakistan gas pipeline, safe trade water passages and many
Pakistan and expect its important role to bring about the US- other development projects especially under the power and
Iran war to stop. Pakistan rightly offered to serve as mediator
IT sectors.
and played the role of envoy between the two warring
nations, also offering itself as a venue for peace talks by Remittances Decline
hosting a meeting with the foreign ministers of Saudi Arabia,
Turkey and Egypt on March 29, 2026, in Islamabad to ease the Around 8 million Pakistanis are working in the Middle East,
tension. Soon after the meeting, Pakistan's foreign minister
contributing over 53 percent of total remittances of $38
left for China — all towards achieving a cease re and easing
billion (2025). The Iran–US war has caused a huge negative
the prevailing tension by taking China into con dence. Many
impact on the Middle East economy reducing the income of
countries, including China, Kuwait and Russia have
supported Pakistan's mediation efforts as an important this workforce, resulting in a drop of around 10–30 percent in
diplomatic key player on the global stage. Pakistan nally remittances, adversely affecting the foreign earnings of the
brought both con icting parties to the negotiating table on country. Such remittances account for over 10 percent of
April 11, 2026, in Islamabad, attended by the Vice President GDP. Reduced in ows of dollars together with increased
of the USA and the Foreign Minister of Iran. The two-day crude oil prices touching $120 per barrel would cast a heavy
meeting remained inconclusive. blow to the economy as Pakistan's oil needs are mostly met
through imports.
Economic Challenges
In ationary Spiral
Pakistan is already facing acute economic challenges
compounded by rising oil prices and gas shortages, which The world has become a global village, mainly due to
play an important role in keeping the economy moving. technological advancements, where countries share the
However, the government was never serious about advantages of each other's natural and technical resources.
encouraging alternate power supply sources. This is bound
Pakistan is reaping the bene ts from many developed
to multiply Pakistan's miseries. Pakistan is loaded with
countries and similarly earning from the exports of textiles,
unending economic challenges, currently under debt of 74
food products especially rice, IT services and cement, and
percent of its GDP, ghting with Afghanistan to protect itself through imports of fuel oil, edible oil, vehicles and electronic
from terrorism and now facing expensive oil and gas
equipment. Countries with strong and smart leadership are
shortages due to the Iran-US war, where the monthly oil
earning signi cantly through international trade by
import bill increased from $1.2–1.5 billion to $3.5–4.5 billion,
causing a big blow to the fragile economy. During March exporting more and importing less, converting foreign trade
2026, petrol and diesel prices were increased by 42 percent in their favour.
and 36 percent respectively, the highest ever, shocking the The country's heavily reliant economy on imports has
people. This brought about a spiral of price increases, rising
suffered serious economic shocks due to the Iran–US war
production costs, declining exports, lower foreign
where oil prices have already been increased considerably, a
remittances and pressure on foreign reserves.
big jump of 42 percent in petrol and 36 percent in diesel
To mitigate the pressure, the government has taken various brought a wave of price hikes while most traders hastily took
austerity measures including work from home, reduced the opportunity to increase prices of almost every product
working days, a high petrol levy on luxury cars, school disproportionately causing a ripple effect.
closures and online classes, 50% reduction in fuel quota to
government departments and officers, 20% cut in Public Sector Resilience
government spending, a 10% slash in the government
development programme, salary cuts for some high officials The word 'resilience' is widely discussed but never put into
and Prime Minister's Austerity Relief Fund established to practice in this country, especially in the public sector where
receive donations. the institutions are mostly involved in conducting reforms
but can hardly achieve desired results. FBR has been under

50 ICMA’s Chartered Management Accountant, Mar-Apr 2026