Dr. Ikramul Haq & Abdul Rauf Shakoori
Pakistan’s Constitution has now been amended twenty-seven times, including the changes that followed Operation Fair Play, the 1999 military takeover, and the 2007 emergency. Over the years, Parliament has introduced several major revisions, but the most debated was the 18th Amendment, which shifted significant authority to the provinces.
More recently, the Constitution (Twenty-sixth Amendment) Act, 2024 [26th Amendment] and Constitution (Twenty-seventh Amendment) Act, 2025 [27th Amendment] have reshaped the country’s judicial and military architecture.
The 26th Amendment changes the method for appointing the Chief Justice, effectively setting aside the seniority principle established in the Al-Jehad Trust case. The 27th Amendment goes even further by creating a Federal Constitutional Court and abolishing the Joint Chiefs of Staff Committee, which was originally designed to maintain balance among the three armed forces.
In its place, the amendment establishes a new position, the Chief of Defense Forces, a role that will be held concurrently by the Chief of Army Staff. As a result, the Army Chief now effectively sits at the top of all service branches, with the entire military structure operating under his direction.
The political objectives behind the changes have been achieved with these amendments passed and legal immunity secured for those seeking them. But the broader governance picture remains bleak.
These amendments may consolidate power for certain offices, however, they do nothing to strengthen Pakistan’s institutional capacity, but they risk weakening it further. Similarly, accountability will be limited to dissenting voices, and the governance vulnerabilities repeatedly flagged by the International Monetary Fund (IMF) including corruption, weak fiscal controls, and poor transparency will continue to harm the governance system.
The tax-to-GDP ratio is unlikely to improve, structural flaws in the tax system will remain unaddressed. The regressive tax burden will continue to grow. The low revenue collection will keep undermining social sector development. The checks and balances to monitor the functioning of the powerful individuals are already fragile, however, these changes may stretch them even thinner.
The legislature in Pakistan, whenever amending the Constitution, has consistently ignore the fundamental principle of good governance. The genuine progress is only possible when checks and balances are improved, decision-making is responsibly decentralized, and fiscal management is supported by evidence rather than political power. However, in Pakistan the governance approach benefits the influentials, resultantly, even after the significant achievement against India in May 2025, Pakistan has been unable to translate its strategic success into meaningful economic gains.
The country’s image may have improved, but persistent governance failures and political instability continue to discourage major economic players and friendly nations from investing with confidence.
The classic example is the defense agreement signed between Pakistan and Saudi Arabia. It was widely viewed as an important step in redefining ties between the two countries, and it was hoped that it would open the door for substantial Saudi investment to support Pakistan’s economic recovery. However, Pakistan has still been unable to secure a confirmed date for the Crown Prince’s visit. Despite repeated announcements of potential investment initiatives, none have materialized.
On the contrary, during the Crown Prince’s visit to Washington the investment increased from US$600 billion to one trillion focusing on artificial intelligence, rare earth minerals and other emerging technologies.
Additionally, Saudi Arabia is seeking a NATO like agreement like NATO Article 5. Similarly, the cautious approach of China towards Pakistan and its reluctance to expand investment in China Pakistan Economic Corridor (CPEC) reflects deep concerns over governance, transparency, and institutional reliability.
Beijing remains hesitant to commit additional funds because Pakistan has yet to address their concerns and demonstrate consistent fiscal discipline and the ability to implement reforms effectively. This cautious approach highlights that without strengthening domestic institutions and addressing structural economic flaws, even strategic partnerships with global powers are unlikely to yield meaningful, long-term economic benefits.
Additionally, the persistent revenue failure in Pakistan continues to be a fundamental barrier to its economic and institutional development. The chronically low tax-to-GDP ratio highlights the state’s inability to mobilize domestic resources effectively.
The deep flaws in the tax structure, including extensive exemptions, preferential treatment for powerful people, and a large undocumented sector, extend the problem. The heavy reliance on indirect taxes excessively burdens salaried persons and consumers, creating a regressive system that undermines equity and public trust. Similarly, limited revenue generation limits social and infrastructure development, deepens fiscal deficits, and increases reliance on debt, which in turn erodes confidence among international and domestic stakeholders.
The basic reason behind the governance is weak institutions, politicized decision-making, and poor enforcement have crippled tax administration, while a lack of transparency and accountability fuels public resistance to compliance. Repeated warnings from the IMF have highlighted governance vulnerabilities that delay reforms, yet reforms remain shallow and inconsistently implemented. The persistent failure to implement structural reforms, paired with ongoing political instability, ensures that the cycle of fiscal inefficiency and weak institutional capacity continues.
The military oriented foreign policy though improved the image of Pakistan, but it is not translating it to monetary benefits due to governance issues. The reliance on aid, loans, and episodic support is not aligning with the Saudi–U.S. One trillion-dollar investment pledge, which demonstrates trust built on stability, predictability, and institutional credibility. Pakistan’s diplomacy, however, often fails to translate into long-term economic partnerships because investors face policy inconsistency, governance risks, and institutional uncertainty.
The broader implication of lack of good governance is clear. The lack of comprehensive oversight mechanisms, together with the authoritarianism resulting from the 26th and 27th Amendments, has contributed to a situation in which decisions are influenced more by political importance than by objective analysis. Similarly, fiscal mismanagement, coupled with poor regulatory oversight, erodes confidence among both domestic and international actors. The cycle of low revenue, weak governance, and delayed investment perpetuates economic stagnation and limits the state’s capacity to pursue strategic objectives independently.
The solution requires a comprehensive and multi-dimensional approach. The strengthening institutions, enhancing judicial independence, and restoring checks and balances are essential for credible governance. Similarly, tax reform must be prioritized, focusing on broadening the base, reducing exemptions, and implementing transparent enforcement mechanisms to restore public trust.
The coordination between federal and provincial authorities is critical to reducing division and ensuring consistent policy implementation. Only through these measures can Pakistan create an environment favorable to sustained domestic revenue mobilization and secure meaningful foreign investment.
The integration of these reforms into Pakistan’s foreign policy and economic strategy is equally important. The strategic partnerships must be anchored in institutional reliability, fiscal discipline, and transparent governance to attract and retain investment. Pakistan should learn the lessons from Saudi Arabia’s trillion-dollar U.S. investment pledge and China’s cautious approach to further CPEC investments demonstrate the critical role that governance credibility plays in facilitating international economic engagement.
Pakistan risks remaining a passive recipient of promises rather than an active architect of its economic future unless meaningful internal reforms are implemented. Its stagnation stems not from external pressures but from deep-seated internal dysfunctions, including the persistent revenue crisis, weak institutions, and centralized political and military power that undermine both domestic and international confidence.
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Dr. Ikramul Haq, Advocate Supreme Court, specializes in constitutional, corporate, environment, media, ML/CFT related laws, IT, intellectual property, arbitration and international tax laws. He holds LLD in tax laws with specialization in transfer pricing. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He served Civil Services of Pakistan from 1984 to 1996.
He established Huzaima & Ikram in 1996 and is presently its chief partner. He studied journalism, English literature and law. He is Chief Editor of Taxation. He is country editor and correspondent of International Bureau of Fiscal Documentation (IBFD) and member of International Fiscal Association (IFA).
He is Visiting Faculty at Lahore University of Management Sciences (LUMS) and member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE).
He has coauthored with Huzaima Bukhari many books that include, Tax Reforms in Pakistan: Historic & Critical Review, Towards Broad, Flat, Low-rate, and Predictable Taxes (third edition, 2024), Pakistan: Enigma of Taxation, Towards Flat, Low-rate, Broad and Predictable Taxes (revised/enlarged edition of December 2020), Law & Practice of Income Tax, Law , Practice of Sales Tax, Law and Practice of Corporate Law, Law & Practice of Federal Excise, Law & Practice of Sales Tax on Services, Federal Tax Laws of Pakistan, Provincial Tax Laws, Practical Handbook of Income Tax, Tax Laws of Pakistan, Principles of Income Tax with Glossary and Master Tax Guide, Income Tax Digest 1886-2011 (with judicial analysis).
He is author of Commentary on Avoidance of Double Taxation Agreements, Pakistan: From Hash to Heroin, its sequel Pakistan: Drug-trap to Debt-trap and Practical Handbook of Income Tax. Two books of poetry are Phull Kikkaran De (Punjabi 2023) and Nai Ufaq (Urdu 1979 with Siraj Munir and Shahid Jamal).
He regularly writes columns/article/papers for many Pakistani newspapers and international journals and has contributed over 3000 articles on a variety of issues of public interest, printed in various journals, magazines and newspapers at home and abroad.
X (formerly Twitter): DrIkramulHaq
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Abdul Rauf Shakoori, Advocate High Court, is a subject-matter expert on AML-CFT, Compliance, Cyber Crime and Risk Management. He has been providing AML-CFT advisory and training services to financial institutions (banks, DNFBPs, Investment companies, Money Service Businesses, insurance companies and securities), government institutions including law enforcement agencies located in North America (USA & CANADA), Middle East and Pakistan. His areas of expertise include legal, strategic planning, cross border transactions including but not limited to joint ventures (JVs), mergers & acquisitions (M&A), takeovers, privatizations, overseas expansions, USA Patriot Act, Banking Secrecy Act, Office of Foreign Assets Control (OFAC).
Over his career he has demonstrated excellent leadership, communication, analytical, and problem-solving skills and have also developed and delivered training courses in the areas of AML/CFT, Compliance, Fraud & Financial Crime Risk Management, Bank Secrecy, Cyber Crimes & Internet Threats against Banks, E–Channels Fraud Prevention, Security and Investigation of Financial Crimes. The courses have been delivered as practical workshops with case study driven scenarios and exams to insure knowledge transfer.
His notable publications are: Rauf’s Compilation of Corporate Laws of Pakistan, Rauf’s Company Law and Practice of Pakistan and Rauf’s Research on Labour Laws and Income Tax and others.
His articles include: Revenue collection: Contemporary targets vs. orthodox approach, It is time to say goodbye to our past, US double standards, Was Due Process Flouted While Convicting Nawaz Sharif?, FATF and unjustly grey listed Pakistan, Corruption is no excuse for Incompetence, Next step for Pakistan, Pakistan’s compliance with FATF mandates, a work in progress, Pakistan’s strategy to address FATF Mandates was Inadequate, Pakistan’s Evolving FATF Compliance, Transparency Curtails Corruption, Pakistan’s Long Road towards FATF Compliance, Pakistan’s Archaic Approach to Addressing FATF Mandates, FATF: Challenges for June deadline, Pakistan: Combating the illicit flow of money, Regulating Crypto: An uphill task for Pakistan. Pakistan’s economy – Chicanery of numbers. Pakistan: Reclaiming its space on FATF whitelist. Sacred Games: Kulbhushan Jadhav Case. National FATF secretariat and Financial Monitoring Unit. The FATF challenge. Pakistan: Crucial FATF hearing. Pakistan: Dissecting FATF Failure, Environmental crimes: An emerging challenge, Countering corrupt practices .
X (formerly Twitter): Adbul Rauf Shakoori
The recent publication, coauthored by these writes with Huzaima Bukhari is:
Pakistan Tackling FATF: Challenges & Solutions, available at:
https://aacp.com.pk/book-detail/pakistan-tackling-fatf-challenges-and-solutions-35
https://www.amazon.com/dp/B08RXH8W46