In collaboration with the State Bank of Pakistan and Pakistan Bank Association, the Finance Division has launched Zarkhez-e, a digital platform aimed at digitising agriculture finance and expanding access to formal credit for small farmers.

The move follows the surge in the country’s food import bill by 28.33 per cent to $3.85 billion in the first five months of FY26 from Rs2.99bn in the same period last year. Meanwhile, large-scale manufacturing, which drives growth across all sectors of the economy, suffers from a shortage of farm inputs such as cotton.

Officials said the product was designed not only to provide financing but also to improve productivity by ensuring access to quality inputs and advisory services.

Beyond that, the International Finance Commission (IFC) has announced its first local currency investment in Pakistan to strengthen the agriculture sector.

Its first Pakistani rupee-denominated investment via an unfunded partial credit guarantee of up to Rs33.6bn would support long-term financing from Standard Chartered Bank Pakistan to Engro Fertilisers. It will enable Engro to strengthen the agri-value chain by mobilising local capital.

Since industrialisation is low among policymakers’ priorities, progress will depend on the combined effects of economic, political, social, security and external policies

Through the Zarkhez-e app, farmers will be able to apply digitally for financing of up to Rs1m. After verification and agronomic assessment, applications will be forwarded to the bank chosen by the farmer for processing.

The programme provides that 75pc of the financing will be disbursed in kind for the purchase of agricultural inputs through banks’ pre-approved agri-vendors. Farmers will also receive advisory services through the Land Information Management System.

To encourage banks to increase lending to small farmers, the government has offered a 10pc first-loss coverage and an operational cost subsidy of Rs10,000 per borrower for the net increase in banks’ outstanding borrowers.

The IFC’s first local-currency investment in Pakistan will expand access to long-term financing solutions in both local and foreign currency, critical for economic growth, particularly in key sectors such as agriculture and micro, small, and medium enterprises, the IFC press release said.

The food and agriculture industry strengthens the foundations of the traditional economy, says political, security and defence analyst Shahzad Chaudhry. “We need to reinforce it with better and persistent policies, not through handouts.”

The large-scale manufacturing sector posted a year-on-year growth of 8.3pc in October, according to the Pakistan Bureau of Statistics. The growth was driven, says the Pakistan Banks Association, by a surge in private sector credit to $1.5tr trillion during FY26. The LSM posted a 5.02pc year-on-year increase during the first four months of FY26.

Sustainable growth demands a different orientation, says former CEO of Unilever Pakistan and the Pakistan Business Council, Ehsan Malik, “Firms must be externally focused, productivity-driven, and globally competitive. It requires a new alignment between the state and business.”

He advocates for a ‘Charter for Business’ for predictable policy, fair taxation, and functional infrastructure from the government, while businesses commit to investment, innovation, export orientation and input indigenisation.

Sindh has approved a development package of more than Rs9.28bn for Karachi’s industrial areas to improve the infrastructure. The project, to be completed in six months, aims to make Karachi a competitive international industrial and commercial hub.

Progress depends on the combined effects of economic, political, social, security and external policies, says political economist Niaz Murtaza. Economically, he stresses, industrialisation is low among policymakers’ priorities, though we need it badly.

The IMF now expects federal tax contributions to remain stagnant over the next five years, with a slight improvement from the provinces. The countries cited by the IMF with sustainable tax-to-GDP ratios of 15pc have significantly higher GDP per capita compared to countries where the tax ratio stalls around 10pc, precisely, say analysts, where Pakistan has been for a while and appears destined to remain.

Our fiscal woes need not translate into a development dilemma, say analysts at Dawn. The government has enormous room to slash its bloated non-development spending. However, that requires strong political will and a long-term growth policy vision.

Development spending under the federal Public Sector Development Programme has remained subdued in the first five months of FY26, with utilisation amounting to just 9.2pc of the annual allocation amid fiscal rationing to meet the IMF’s contingency measures for growing revenue shortfall, as per analysts.

In a letter to the prime minister, Pakistan Business Forum President Khawaja Mehboob-ur-Rehman said persistently high input costs, soaring energy tariffs, and an increasingly uncompetitive tax regime continued to erode industrial productivity, weaken exports, and discourage both local and foreign investment. “These pressures have significantly reduced Pakistan’s ability to compete with regional economies.”

It may be noted here that the Islamabad High Court directed the Federal Board of Revenue chairman on December 24 to take “necessary action” against officers involved in hindering tax collection under the guise of statutes.

And the World Bank has approved another $700m loan to promote a fair tax system and improve budget transparency, giving funds to areas needed for improvement in governance. This is an addition to an earlier $470m loan aimed at increasing taxes.

Published in Dawn, The Business and Finance Weekly, January 5th, 2026