Pakistan, Uzbekistan sign multiple agreements, establish strategic council to strengthen cooperation

Prime Minister Shehbaz Sharif and Uzbek President Shavkat Mirziyoyev witness the MOUs and Agreements exchange ceremony between Pakistan and Uzbekistan in Tashkent on February 26, 2025. (PMO)
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Updated 26 February 2025
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Pakistan, Uzbekistan sign multiple agreements, establish strategic council to strengthen cooperation

  • Leaders vow that bilateral trade, which currently exceeds $400 million, would be increased to reach $2 billion
  • Under strategic council, ministries and relevant bodies will report monthly on implementation of projects

ISLAMABAD: Pakistan and Uzbekistan on Wednesday signed a joint declaration to establish a High-Level Strategic Council aimed at strengthening economic, diplomatic and security cooperation, as Prime Minister Shehbaz Sharif met Uzbek President Shavkat Mirziyoyev during a state visit to Tashkent. 
Sharif landed in Tashkent late Tuesday following a visit to Baku, during which multiple agreements were signed to enhance cooperation in trade, energy, tourism and education, among other sectors. 
Pakistan is seeking to leverage its strategic position as a key trade and transit hub to connect the landlocked Central Asian republics to the global market. Since last year, there has been a flurry of high-level visits, investment discussions and other economic engagements between Pakistan and the Central Asian states.
On Wednesday, Sharif arrived at the Congress Center in Tashkent, where he was received by the Uzbek president. The two leaders jointly oversaw the signing of multiple memoranda of understanding (MoUs) covering trade, technology, security, youth affairs and media cooperation.
“This historic visit is an important event that will open a new chapter in the expansion of our strategic partnership,” Mirziyoyev said after the signing of the agreements, vowing to increase bilateral trade, which currently exceeds $400 million, to $2 billion.




A photo of Prime Minister Shehbaz Sharif and Uzbek President Shavkat Mirziyoyev during the Pakistani prime minister's visit to Tashkent on February 26, 2025. (Photo courtesy: PMO)

“We have also decided to establish a High-Level Strategic Council ... Once in two months we will have calls by mobile phones. Once a month, all the ministries and relative bodies will report to us in the online format on the implementations of the instructions and measures.”
He said the council would evaluate challenges to bilateral cooperation and work to address them.
Speaking about the status of economic ties, he said there were at least 130 joint ventures between the two nations while more trade houses had been opened in Karachi and Tashkent. 
An intergovernmental commission was “working effectively” while many political consultations, business events and exhibitions of national products had been successfully organized, and more were in the works. 
“The chairperson of Uzbek central bank will go to Pak and his counterpart will come here. We will resolve any possible challenges,” the Uzbek leader said. 
Mirziyoyev said he had also held detailed discussions with Sharif on regional connectivity with a focus on the trans-Afghan rail service aimed at linking the three countries. 
“We are planning to increase the trade turnover to $2 billion and we will increase the industrial cooperation, develop the transport and logistic connections, we will create favorable conditions and incentives for the entrepreneurs and that was the main topic for our discussions today,” the Uzbek president said. 
“And regarding the pharmaceuticals, textiles, leather industry, agriculture, honorable Prime Minister [Shehbaz Sharif] also made the proposals on the energy, geology, and the mining spheres, to develop those industries and to have regional cooperation and access to third countries.”
While air travel had already been launched between Tashkent and Lahore, the number of flights would be increased and new routes introduced connecting Samarkand and Bukhara to Karachi, Mirziyoyev added. 

 


Speaking at the occasion, Sharif said the two leaders had discussed and decided on “a joint way forward in economic terms.”
“We will explore joint projects such as the Afghan railway connectivity, which will be a game-changer not only for Pakistan and Uzbekistan but for the entire region,” he said, adding that they had also discussed cooperation in mining and minerals, the potential for investment in each other’s economic zones, and the expansion of trade. 
“We will also expand tourism, allowing people from Peshawar, Quetta, Karachi, and Lahore to visit Bukhara and Samarkand, while the people of Uzbekistan will also come to visit the historic sites in Pakistan,” Sharif said.
“I look forward to increasing flight connectivity between Tashkent, Lahore, Karachi, and other cities, to facilitate greater interaction and cooperation between our nations. Through industry, investment, agriculture, trade, and culture, we will strengthen our ties and build on the roots of our shared history.”
Among the MoUs signed was one for cooperation between news agencies, and others on youth affairs, science and visa-free travel.
Sharif and Mirziyoyev are also scheduled to participate in a Pakistan-Uzbekistan Joint Business Forum after their bilateral meeting, while the Pakistani prime minister will visit the Tashkent-based Technopark, where he will tour Uzbekistan’s industrial manufacturing units. 
Uzbekistan is the largest consumer market and the second-biggest economy in Central Asia. It is central to Pakistan’s regional connectivity plans and was the first Central Asian nation with which Pakistani officials signed a bilateral Transit Trade Agreement (UPTTA) and a Preferential Trade Agreement (PTA) covering 17 items.
A landmark moment in the relationship was the signing of the Joint Declaration on the Establishment of a Strategic Partnership during a high-level Pakistani visit to Uzbekistan on July 15-16, 2021. This was followed by President Shavkat Mirziyoyev’s visit to Pakistan on March 3-4, 2022, which resulted in the signing of another Joint Declaration on Further Steps to Enhance the Strategic Partnership and multiple agreements covering trade, investment, and economic cooperation.
In February 2023, Pakistan and Uzbekistan signed a $1 billion trade deal to enhance bilateral commerce, facilitating the exchange of goods and services. 
Last month, Uzbekistan’s Ambassador to Pakistan, Alisher Tukhtaev, announced plans to launch direct flights between Uzbekistan and Pakistan’s southern port city of Karachi. Uzbekistan and Pakistan are also working toward optimizing cargo flows, green corridors at border customs points, and digitalization of customs clearance processes to facilitate smoother trade operations.

 


Economists flag high production costs, low exports as key risks for Pakistan in 2026

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Economists flag high production costs, low exports as key risks for Pakistan in 2026

  • Financial experts urge government to address high interest and taxation rates to attract more foreign direct investment this year
  • Economists note strong performance by Pakistan’s stock market, reduced inflation as key macroeconomic gains in the last year

KARACHI: Pakistani economists and business leaders urged the government on Wednesday to cut high production costs, arrest inflation and increase exports to capitalize on macroeconomic gains in 2025 as the country prepared to ring in the new year.

Prime Minister Shehbaz Sharif this week highlighted his government’s economic achievements over the past two years, saying that inflation had fallen from 29.2 percent to 4.5 percent, while foreign exchange reserves had more than doubled from $9.2 billion to $21.2 billion.

While Pakistan reported some economic gains during the year, such as comparatively low inflation, a $100 million current account surplus in November and a strong performance by the stock market, economist Sana Tawfik said deeper reforms were still needed to address pressing economic issues.

“When we talk about stability and growth, we cannot deny that there are challenges in the economy,” Tawfik, head of research at Arif Habib Limited, told Arab News. “High energy tariffs, interest rates and the broader cost of doing business need to be addressed if Pakistan wants to sustain growth, boost exports and attract foreign investment.”

Pakistan reported consumer inflation at 6.1 percent in November, saying it was projected to remain within the moderate 5.5-6.5 percent range in December.

Muhammad Rehan Hanif, president of the Karachi Chamber of Commerce and Industry (KCCI), agreed that high power tariffs were eroding the effectiveness of Pakistan’s exports.

“Our interest rate is still 10.5 percent, while the region is at six or seven percent,” Hanif lamented. “[While] electricity costs around 12 cents per unit here, compared to about nine cents in Bangladesh.”

The KCCI president also pointed to the country’s poor infrastructure, particularly that of its commercial capital Karachi, as a major challenge for the year ahead.

He said dilapidated roads, poor drainage and poor industrial conditions were damaging Pakistan’s image for visiting buyers and diplomats, discouraging investment.

“Infrastructure is the biggest challenge the industrialists in Karachi are facing,” he explained.

‘EXPORTS ARE OUR LIFELINE’

More troubling for Pakistan is the fact that foreign direct investment (FDI) inflows fell by more than 25 percent to $927 million during the July-November period, as per data from the central bank. Pakistan’s FDI inflows have never surged beyond $3 billion in nearly 20 years.

Economists say high energy costs along with interest and taxation rates are responsible for low FDI in the country.

Hanif stressed the importance of increasing Pakistan’s exports to ensure macroeconomic gains in 2026.

“Exports are our lifeline,” he said. “When 7 to 8 million Pakistanis abroad can generate $37 billion [in remittances], why are 250 million people here exporting only $32 billion?“

Tawfik agreed, saying that shifting to an export-driven economic model was essential for long-term sustainability.

“It is about time that we move from an import-driven economy to an export-driven one,” she said, adding that macroeconomic stability was a prerequisite for restoring investor confidence and attracting FDI.

Meeting the International Monetary Fund’s benchmarks, ensuring timely inflows from creditors and continuing reforms such as privatization of state-owned enterprises (SOEs) will also be critical in 2026, she added.

‘YEAR OF MACROECONOMIC STABILITY’

Despite these challenges, financial experts recognized that 2025 marked a clear improvement for Pakistan compared to the previous two years.

“The year 2025 can be described as a year of macroeconomic stability and overall, we saw some improvement in different macroeconomic indicators,” Tawfik said.

She noted that inflation, which had surged to a record 38 percent in May 2023, had been reduced to single-digit figures in 2025.

Pakistan’s Finance Adviser Khurram Schehzad said this week the Pakistan Stock Exchange has delivered 50 percent-plus returns in US dollar terms since January 2025, making it one of the “best markets in Asia.”

Tawfik said 2026 could see “positive” developments if the government maintains macroeconomic stability.

The economist said she expected growth at around 3.7 percent, inflation to remain within the central bank’s five to seven percent target range and a relatively stable exchange rate with modest depreciation.

However, she cautioned that without addressing high energy costs, easing business conditions and boosting exports, the government could risk squandering its hard-won macroeconomic gains.

“It is important to take all stakeholders on the same page and work in the same direction for overall economic betterment.”