AGP Executive Report

AI & Startups: Pakistan’s MoITT unveiled the National AI Initiative with seven AI hubs in Islamabad, Lahore, Karachi, Peshawar, Quetta, Muzaffarabad and Gilgit to incubate 560 startups and fund 150 with non-dilutive seed grants. Monetary Policy: The SBP kept the policy rate unchanged at 11.5% as inflation eases but remains elevated, with Middle East-linked oil and external risks still in focus. Energy & Markets: Oil slid to around $88 after the US paused strikes on Iran and Tehran signalled calm; PSX jumped as investors priced in de-escalation and easing shipping stress. Cotton & Agri Inputs: Organic cotton prices in Pakistan rose 3.75% on seed cotton shortage, while wheat supply worries persist with reports of missing wheat in Punjab and Sindh and a plan to import 1m tonnes. EV Safety Regulation: A National Assembly panel recommended shutting electric motorcycle makers using lead-acid batteries over safety and heat-related explosion risks. Governance & Accountability: NAB sealed bungalows and plazas in the Lyari Expressway Resettlement probe, alleging fake files and plot sales for illicit gains. Gold Watch: Gold prices in Pakistan moved higher again, with 24-karat tola reported at Rs431,736.

Red Sea Disruption: Bab el-Mandeb traffic hit a months-low after Houthis attacked Saudi oil installations, while Strait of Hormuz stayed subdued over the weekend—raising fresh shipping and fuel-supply risks for Pakistan-linked cargoes. Energy Cashflow Stress: Mounting gas and power receivables are squeezing Pakistan State Oil (PSO) liquidity, with SNGPL overdue payments at Rs536bn and power-sector dues rising, forcing PSO into costly short-term borrowing. Hydropower Cost Overruns: Pakistan’s key hydropower projects face major cost escalations—Diamer Basha Dam’s dam component up 134%—driven by inflation, currency depreciation, security and land issues. Consumer Power Options: Rooftop solar and retail aggregation are being pitched as a practical way to blunt electricity bill shocks and give consumers more control. IT Sector Skills Push: Pakistan’s IT exports are growing, but leaders say long-term momentum needs deeper human-capital investment, institutional reforms and a stronger tech ecosystem. Kuwait-Pak Defense Ties: Kuwait ratified a wide defense cooperation deal with Pakistan covering training, intelligence sharing, logistics and military manufacturing. Trade Link to Libya: Lahore business leaders say Pakistan-Libya trade could top $1bn, with opportunities in textiles, food, engineering and oil-gas services. Local Infrastructure: Karachi’s Munawwar Chowrangi underpass opened to traffic to ease congestion, built by KDA at about Rs2bn. Pakistan FX Backstop: Pakistan has asked the US for a $10bn exchange stabilization support facility to ease rupee pressure and reduce IMF reliance.

US-Iran De-escalation Watch: Iran reported a second straight night without US airstrikes as Pakistan and Qatar push fresh messaging to restart talks, while the Strait of Hormuz remains the key risk point for global shipping. Maritime Safety Talks: Iran says it made “productive” progress with Oman on operational mechanisms for safe Hormuz passage, stressing transit status is unchanged. FBR Modernisation: Finance Minister Muhammad Aurangzeb says FBR reforms are accelerating with AI, digital integration and a cashless push to widen the tax net and curb evasion. Customs Crackdown: Islamabad Customs Enforcement seized smuggled vehicles, foreign cigarettes and cosmetics worth over Rs525.5m in intelligence-led operations. Punjab Overseas Jobs: PSDF held consultative sessions with licensed Overseas Employment Promoters to expand youth overseas employment under the Parwaaz Card scheme. Telecom Industry Shift: Telenor Pakistan’s brand was removed from Islamabad HQ after its merger into PTML, marking a major consolidation in Pakistan’s mobile sector. Security Alert: Punjab Police arrested an ISI-backed BKI operative in Jalandhar with a ready-to-use IED, foiling a planned attack. Regional Defence Ties: Kuwait approved a military cooperation framework with Pakistan, enabling deeper training, tech and intelligence-sharing. Energy/Industry Cost Pressure: Miftah Ismail blamed taxes and OMC margins for high petrol prices, renewing debate on daily fuel pricing.

Glacial Floods Disrupt Supply Lines: Gilgit-Baltistan’s valleys are isolated for a fourth straight day as glacier lake outburst floods and flash flooding block key roads, with heavy machinery deployed but rising river levels slowing relief. Fuel Pricing Sparks Business Pushback: Pakistan Business Forum and Jamaat-i-Islami both target the daily petroleum pricing mechanism and petroleum levy, warning it fuels commodity price hikes; petrol and diesel rates were kept unchanged for two days at Rs335.18 and Rs383.46. Inflation Watch for SBP: Economists urge the SBP to hold the policy rate at 11.5% as core inflation remains sticky despite easing headline figures. Exports Drive: At Expo Faisalabad 2026, officials reiterated a $60bn export push to cut IMF dependence, while Commerce Minister Jam Kamal Khan backed PHDEC’s fruit bagging expansion to more crops. Horticulture Value Addition: PHDEC was directed to modernise processing and localise fruit-bag material production to reduce import reliance and boost export competitiveness. Wheat Supply Tensions: Flour mills and Sindh authorities discussed wheat/flour stability as PFMA seeks permission for direct wheat imports to lower costs and reduce corruption risks. Power and Markets: PSX extended its losing streak despite S&P upgrading Pakistan’s sovereign rating to ‘B’, while K-Electric’s industrial consumption hit record highs. AI for Finance: Experts say AI can help banks curb rising fraud and cyber scams as complaints climb.

US Tariffs & Trade Legal Fight: The Trump administration’s new 10% Section 301 tariff has triggered alarm in India’s textile lobby, with CITI warning of reputational and export-hit risks and concerns that US tariff-rate quotas could shift sourcing away from India. US-Iran Mediation Push: Pakistan is exploring a renewed path to restart stalled US-Iran talks, with China backing the effort after Iran’s interior minister visited Islamabad; sources say hurdles remain, especially given Pakistan’s ties with Saudi Arabia. Middle East Shipping Shock: Red Sea and Hormuz tensions are worsening for trade and energy routes, with US strikes on Iran continuing and Saudi air defences intercepting missiles; insurers are also advising shipping clients to avoid the Red Sea. Garments & Compliance Gains: Better Work Pakistan says participating garment factories are more resilient and buyers are more confident, with one-third likely to increase sourcing over the next 2–3 years if labour and traceability progress continues. Energy & Food Pressure at Home: Petrol and diesel prices were raised again, LPG jumped to Rs410/kg amid gas shortages, wheat prices reportedly hit up to Rs4,850/40kg, and Punjab said flour supply remains uninterrupted. Monsoon Disruptions: Flooding risks rose in Punjab as Chenab/Ravi levels climbed, while Karachi and other areas faced rain/thunderstorm alerts. Pakistan-China Health Deal: A Pakistan-China healthcare conference produced $629.5m in agreements across vaccines, APIs, clinical trials and medical devices. Security in Balochistan: Operation Azm reported 13 militants killed, while separate reports flagged detentions in Quetta.

US-Iran Mediation Push: Pakistan is exploring a path to restart stalled US-Iran talks after China’s push, with exploratory discussions reportedly held during Iran Interior Minister Eskandar Momeni’s repeated visits to Islamabad; officials warn obstacles remain high as strikes intensify. Red Sea Shipping Shock: Saudi-led coalition strikes hit Yemen’s Hodeida after Houthi attacks on Saudi tankers, deepening Hormuz/Red Sea risks that are already feeding oil-price volatility and trade uncertainty. Garment Worker Rights: A new labour report says major fashion brands’ audit systems are “systemically silencing” garment workers in Pakistan, citing unlawful wages, excessive hours, harassment and fear of retaliation. Energy & Inflation Pressure: Markets watch the next policy move as inflation is expected to rise (July CPI forecast around 9.1%) while oil prices ease slightly; Pakistan also faces fuel-price sensitivity and tariff-driven cost concerns. Industrial Support for MSMEs: SMEDA backs Expo Faisalabad 2026 with helpdesks and SME registration support to help micro and small firms formalize and access markets. Healthcare Supply Rules: DRAP drug-pricing and availability decisions are under review, while medical equipment importers warn DRAP policy leaves used devices in limbo, risking higher costs and job losses. Power Sector Accountability: An audit alleges distribution companies overbilled consumers by Rs47bn in one month, spotlighting losses and recovery failures in the electricity chain.

US-Iran Tensions: The Middle East crisis keeps deepening as the US carries out its 13th night of strikes on Iran, while Iran rejects a ceasefire proposal and warns escalation would come at a heavy cost—raising fresh risks for regional shipping and energy flows. Maritime Security: Pakistan issued a “red line” warning to Yemen’s Houthis, saying any attack on Pakistani vessels will be treated as an attack on Pakistan, and reaffirmed support for Saudi Arabia to keep Red Sea and Hormuz routes open. SCO Diplomacy: Deputy PM Ishaq Dar urged the SCO to press the Afghan Taliban to end terrorism from Afghan soil, linking regional stability to counter-terror commitments. Trade Shock for Industry: The US imposed new 10%–12.5% Section 301 forced-labour tariffs on 60 economies, including Pakistan, with knock-on pressure for textile and apparel supply chains. Fuel & Costs: Pakistan raised petrol and high-speed diesel prices under the daily pricing mechanism, adding to cost pressures. Agribusiness Exports: REAP secured orders for 60,000 metric tons of Pakistani rice from China, boosting confidence in rice demand. Automotive Investment: Bestway signed a strategic partnership with Geely, moving toward local assembly in Karachi. Monsoon Fallout: Lahore and KP reported rising rain deaths and injuries, with authorities pushing stronger urban flood and power-safety measures.

Industrial AI Push: Pakistan’s first Center for Industrial Innovation and AI (CIINAI) is set to be established at NUTECH, Islamabad, via a MoU with PIDC and NED UET, with the centre to operate from Korangi Creek Industrial Park in Karachi and offer industrial AI solutions, advanced manufacturing support, R&D and training. Fuel & Transport Pressure: Pakistan raised petrol and high-speed diesel prices again, while transporters warned of a nationwide strike over daily fuel pricing and toll/withholding taxes. Energy-Water Link: UNOPS handed over $7.6m solar-powered water and sanitation systems to Sindh and K-P, cutting grid-linked operating costs for nearly 300,000 people. Agri Supply Moves: Punjab sought an additional 1 million tonnes of wheat from PASSCO to stabilise prices, as PTI’s Kisan Wing demanded an agricultural emergency and a halt to sugar exports. Red Sea Shockwaves: Houthi attacks on Saudi tankers and US-Iran escalation kept oil above $100 and raised shipping risks, feeding into broader market volatility. Finance Watch: SBP reported reserves up $33m to $17.26b, while economists questioned Pakistan’s push for a $10bn US exchange stabilisation backstop. Climate & Cities: Monsoon flooding hit Lahore with underpasses submerged, and Punjab plans mandatory recharge wells for new homes to protect groundwater.

Middle East Shipping & Security: Pakistan warned it will use force to protect Pakistani-flagged vessels after Houthi threats and attacks linked to the Red Sea crisis, while PM Shehbaz Sharif and Saudi Crown Prince MbS agreed to stay in close contact to safeguard regional peace and uninterrupted lawful maritime trade. Diplomacy for De-escalation: Foreign Minister Ishaq Dar urged ASEAN partners not to waste Gulf diplomatic gains, saying Pakistan did “everything within its capacity” and pushing sustained dialogue to prevent wider instability. Energy & Geopolitics: The US carried out a 12th night of strikes against Iran as the Strait of Hormuz and Red Sea routes remain under pressure, raising risks for global energy flows. Pakistan’s Forex Push: Reuters reports Pakistan asked the US for a $10bn exchange stabilization backstop after Iran mediation, but economists doubt it will fix deeper reform gaps. Automotive Manufacturing: BYD says its $150m Gharo, Sindh EV assembly plant is in final stages for Pakistan’s first locally assembled BYD vehicle; Airlink plans an electric bike assembly plant in Lahore; MG Pakistan rolled out CKD hybrid SUV production. Agriculture & Food: REAP secured 60,000 metric tons of Pakistani rice orders from China; wheat crisis deepens amid low provincial procurement; cotton output decline is costing billions annually. Weather Impact: Monsoon rains killed 43 and injured 177 across Punjab and K-P, with Lahore hit hard and drainage operations intensified. Markets: Gold prices in Pakistan fell after four straight hikes; S&P upgraded Pakistan’s sovereign rating to ‘B’ on reform progress.

Red Sea Shipping Risk: Pakistan’s Foreign Office condemned Houthi threats to commercial shipping and Saudi ports, warning it may use “lawful use of force” to protect Pakistani-flagged vessels and maritime interests. Middle East Energy Shock: As US-Iran strikes continue and Hormuz tensions rise, oil prices climbed and shipping rerouted, with multiple tankers changing course after Houthi warnings. Pakistan-Egypt Diplomacy: DPM/Foreign Minister Ishaq Dar met Egypt’s FM Badr Abdelatty in Manila, pushing de-escalation, rejecting violence in Palestine, and discussing trade, investment and economic cooperation. Nuclear Policy Watch: The US and Saudi Arabia signed a civilian nuclear “123 agreement,” raising regional proliferation concerns as enrichment capability could be enabled. Industrial & Urban Resilience: Karachi faces monsoon flood worries as storm-drain cleaning lags; experts urged long-term rainwater harvesting. Local Governance & Works: Contractors in Sindh protested alleged “skewed” ADP allocations; Punjab moved to revoke Rawalpindi Ring Road NOCs over procedural concerns. Energy Costs & Policy: JI rejected Pakistan’s daily fuel price mechanism, backing protests as petrol/diesel pricing remains politically sensitive.

Middle East Risk to Trade: Pakistan’s Foreign Office condemned Houthi threats against Saudi Arabia and Red Sea commercial shipping, warning they undermine freedom of navigation and global commerce, and said any attack on Pakistani-flagged vessels would be treated as a grave national security threat. Pakistan’s Forex Push: Reuters reports Pakistan has asked the US for a $10bn bilateral exchange-rate stabilization facility (up to five years) to bolster reserves and ease rupee pressure after its Iran mediation role. Diplomacy vs Escalation: US forces completed an 11th straight night of strikes on Iran as Iran’s interior minister Eskandar Momeni visited Pakistan to revive talks, but negotiations remain unclear while Strait of Hormuz and Red Sea routes stay strained. Energy Shock Spillover: Oil shipping disruptions and rising crude prices are feeding inflation risks, with the World Bank chief economist warning global growth could fall to 1.3% in a worst-case scenario. Domestic Pressure on Fuel Costs: Petrol dealers announced a nationwide 24-hour shutdown from 6am Thursday over daily fuel pricing changes, with transporters expected to join. Regional Infrastructure Link: Ishaq Dar urged ADB to expedite financing for Pakistan’s ML-1 railway project during the ASEAN Regional Forum in Manila.

Middle East Energy Shock: US-Iran attacks and Houthi threats are again disrupting Strait of Hormuz and Red Sea shipping, pushing crude higher and forcing Saudi tankers to reroute—raising costs risk for Pakistan’s energy-import dependent economy. Pakistan Diplomacy Role: Iranian Interior Minister Eskandar Momeni visited Islamabad as mediators race to revive a 10-day US-Iran truce, with Pakistan trying to keep talks alive amid escalating strikes. Fuel Pricing Pressure: Pakistan raised petrol by Rs4.93/litre and HSD by Rs7.15/litre under the daily pricing mechanism; petrol pump owners announced shutdown/strike plans, adding uncertainty for transport and exports. Crypto Enforcement: FIA set up a dedicated cryptocurrency investigation unit to tackle money laundering and terrorism financing linked to digital assets, alongside PVARA’s licensing and supervision. EV & Energy Transition: Pakistan and China signed an EV ecosystem MoU for local manufacturing and tech transfer, tied to a new Battery Energy Storage System Policy. Capital Markets: SECP cleared Tasdeeq Information Services’ IPO for FY26-27, marking the first IPO approval for the new fiscal year. Textiles/Exports: Ijaz A Khokhar elected vice president of the International Apparel Federation, aiming to boost Pakistan’s value-added apparel export voice globally.

Middle East Ceasefire Push: Qatar, Egypt, Pakistan and other mediators have presented the US and Iran with a 10-day truce proposal to halt attacks and reopen Strait of Hormuz shipping, but Washington is weighing it while preparing for escalation. Pakistan-Iran Mediation: Iran’s Interior Minister Eskandar Momeni met Pakistan’s Army Chief Asim Munir and later PM Shehbaz as efforts to revive the collapsed interim deal continue amid a 10th day of strikes. Energy & Shipping Shock: Iran hit Kuwait’s power and desalination plants again; Iran also attacked a tanker in Hormuz, while Bahrain and Jordan reported intercepted missiles/drones—raising risks for Gulf oil and water supplies. Freelancing Exports: Pakistan’s freelancers earned a record $1.76bn in FY26 (SBP), with IT freelancers at $1.16bn and non-IT at $592m, boosting FX inflows. G-B Development: PM Shehbaz assured Gilgit-Baltistan’s new CM federal support, including a 100MW solar project, knowledge schools and Pakistan Asaan Khidmat Centres. Fuel Pricing Backlash: Industry groups warned daily petroleum price revisions could hurt exports and planning, as protests and policy pressure grow.

Middle East Energy Shock: The US launched its 10th straight night of strikes on Iran to reopen the Strait of Hormuz, while Iran retaliated across the Gulf and Yemen’s Houthis declared a Red Sea maritime blockade on Saudi Arabia—raising shipping risk, insurance costs, and oil-price volatility (Brent above $88). Pakistan as Mediator: Iran’s interior minister Eskandar Momeni visited Islamabad to follow up agreements and discuss trade expansion, as Pakistan remains a key go-between amid the stalled US-Iran ceasefire. Fuel Pricing Pressure at Home: Pakistan cut petrol by 35 paisas but raised high-speed diesel by Rs 5.71 for July 21, moving to daily pricing tied to a seven-day average; dealers and industry groups warned daily swings could hit costs and inflation. Food Security Watch: KP CM and WFP discussed food security and climate risks, highlighting irrigation needs like the Chashma Right Lift Bank Canal. Industrial & Market Signals: SBP data showed foreign investors repatriated $2.31bn in profits/dividends in FY26; meanwhile, Pakistan’s auto parts makers urged stable policies, and gold in Pakistan inched up amid regional tensions.

Rail Modernisation: PM Shehbaz ordered timely, high-quality completion of Pakistan Railways’ ML-1 upgrades, including Rohri–Multan, to strengthen trade and connectivity. Logistics Disruption: A freight train derailment near Wahab Shah/Tando Adam in Sindh suspended rail traffic on both tracks, halting multiple passenger services while teams worked to restore lines. Telecom & Digital: PTA directed mobile operators to accelerate nationwide 5G rollout, adding 1,000 new towers per operator within a year and prioritising major cities including Karachi, Lahore and Islamabad. Energy & Industry Costs: Pakistan’s petroleum import bill rose to $16.86bn in FY2025-26, exceeding IMF estimates as Middle East tensions pushed crude higher; separately, Agritech’s urea plant halted RLNG supply after SNGPL suspension amid regional disruptions. Trade & Investment: Canada’s FM Anita Anand began a visit to Pakistan, announcing security and development support and agreeing to deepen cooperation; Pakistan and Canada also set annual progress reviews. EV Uptake: BYD’s largest-ever shipment of 2,000+ NEVs arrived at Karachi Port, signalling growing EV interest despite infrastructure gaps. Consumer Tech Imports: Mobile phone imports hit Rs530.49bn in FY2025-26 (+27%), underscoring rising smartphone demand. Healthcare Access: Cancer patients face delays as 40 new medicines await price approvals, pushing families toward costly informal imports. Climate & Safety: Monsoon flash floods in Khyber-Pakhtunkhwa killed three people, with warnings to avoid rivers and seasonal waterways.

Pakistan-US trade push: Finance Minister Muhammad Aurangzeb arrived in Washington for a 3-day visit to resume trade and tariff talks and explore a bilateral trade agreement, plus financing for Pakistan’s infrastructure, energy and private sector. Punjab industrial boost: Punjab unveiled a new industrial policy for free industrial zones, offering zero duty on import of machinery and 10-year income tax relief, with new plants planned in pharma, food, lithium batteries, electric bikes and tiles. Energy and metals risk: IEA warned copper supply is worsening, driven by a sulphuric acid shortage that could hit copper processing and the broader energy transition. Pakistan diplomacy amid Iran-US escalation: Pakistan reviewed diplomatic priorities as US strikes on Iran continue; Iran also rejected talks with Washington and reiterated its Strait of Hormuz stance. Regional trade shock: Afghanistan-Pakistan transit trade collapsed to $367m in FY26 as Kabul shifted routes, while Afghanistan urged easier business visas and procedures with India. AI governance milestone: Pakistan joined China-led World Artificial Intelligence Cooperation Organization as a founding member, as WAICO was announced in Shanghai. Port and EV logistics: Karachi Port handled its first RoRo shipment carrying over 2,000 EVs, marking a new logistics milestone. Local governance: Lahore DC issued an advisory against dumping construction debris on roads, tightening dust control and site compliance rules.