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Interview

“Rural Sindh, Islamabad, and Rawalpindi have appropriately ‘Colonised’ Karachi.

In this exclusive interview, Shabbar Zaidi, Pakistan’s leading economist and former FBR chairman, talks to SouthAsia Magazine.

October 2025


Syed Mohammad Shabbar Zaidi, a Chartered Accountant by profession, is the former Chairman of the Federal Board of Revenue (FBR). He also served as a provincial minister in the Sindh Government during the 2013 caretaker setup. Before assuming the FBR office, he worked with A.F. Fergusons & Co. and also served as the President of the Institute of Chartered Accountants of Pakistan (ICAP). He has authored several books.

How would you assess Pakistan’s economy under Prime Minister Shehbaz Sharif’s leadership?

The status of Pakistan’s economy cannot be linked with any particular personality. It is heavily tied to the IMF program, whereby possibilities for innovation and concrete corrections are minimal. It is generally not understood that the IMF program, per se, is always anti-growth and basically adopted to mitigate the chances of default. It is there to bring the patient from the ventilator to the ICU, but it does not teach the patient how to earn a living after getting out of the ICU. On the contrary, the patient brought from a ventilator is advised not to exert more.

Nevertheless, Pakistan’s relationship with the USA and the IMF strained during Imran Khan’s tenure as prime minister. There has been some easing during Shahbaz Sharif’s period. Without prejudice to the current ruling regime, domestic corrections such as an increase in tax base, bleeding in IPP (Independent Power Producers), and SOS (State-Owned Enterprises) have not stopped. In short, the latitude available is very narrow, where leaders’ personal attributes do not matter.

Is there any indication of significant economic improvement, or are we headed towards further stagnation and disaster?

There is no sign of improvement in the overall economic structure. Recent floods in Pakistan have exposed the vulnerability of the country’s infrastructure. The country’s governance structure is being dismantled, directly affecting economic activity. The country is facing a ‘war’ in two geographically large provinces. The bigger tragedy is that the ultimate reason for this problem, ‘economics’, is being ignored, and disturbances are solely attributed to foreign intervention. A foreign country can only operate with a softer corner in one’s belly. The system has failed to deliver.

The government has faced severe criticism for handling inflation, unemployment, and debt. In your opinion, what has been the major economic misstep of this government, and what immediate reforms would you recommend?

The first step is to recognise and accept the problems. This is not the case with Pakistan. Islamabad and Rawalpindi are not ready to do so, and the media is impotent. When one looks at the government or establishment’s narrative, there appears to be no problem except foreign intervention. Pakistan cannot function under the present system with four unmanageable provinces, a financially unworkable NFC Award, and a tax rate almost double that of any other country.

Islamabad and Rawalpindi have an inherent, deep, and vested-interest desire in maintaining the status quo without realising that this system is choking economic activity. For example, after the 18th Amendment to the Constitution, all economic regulations and responsibilities lie with the provincial government, whereas in the case of Balochistan, the ‘Hub Industrial Area’ is at least 1000 miles away from the capital, Quetta. Furthermore, the people of Loralai and Zhob have nothing in common in language, economics, and demography, unlike those living almost 700 miles away in Gwadar. This system cannot work. The same is the case with all other constituents of the Federation. A common religion cannot be a binding factor. If it had been so, then Kabul would be more Muslim than us.


How would you describe Karachi’s current status in terms of political and economic neglect, especially post-18th Amendment?

With respect to Karachi, there is a ‘method in the madness.’ This neglect is not unintentional. Those making decisions have no political, economic, cultural, or demographic relation with the people of Karachi. Furthermore, there is an inherent misunderstanding and misperception that development in Karachi is at the cost of other parts of the country, such as Lahore, Faisalabad, or Sialkot. This perception led to a ‘designed’ neglect of Karachi, and the political forces in Karachi were fabricated with an agitational attitude to strengthen that feeling.

What is your vision for Karachi’s future politically, economically, and culturally, since the country’s financial and economic hub now looks like a city conquered by the Sindh Government?

I would disagree that the city of Karachi has only been conquered by the Sindh Government. Why don’t you include ‘Establishment’ in that colonisation? The city has been under ‘Rangers’ control for over 30 years. The Rangers have occupied the hostels of D.J. College, the beautiful buildings of Jinnah Courts, and Mitha Ram. Six cantonment areas in Karachi are not under the management of the City Mayor. In short, Rural Sindh, Islamabad, and Rawalpindi have appropriately ‘colonised’ Karachi. I have lived in this city with very deep roots in the political base of this city and state, with clarity that this is the short-sightedness of people who matter. They do not understand Karachi, which is the Shenzhen of Pakistan. These people should study China’s development and Shenzhen’s role in that process. Pakistan can prosper only when we develop import and re-export facilities in Karachi; otherwise, we would not be able to have any exportable surplus.

Those making decisions have no political, economic, cultural, or demographic relation with the people of Karachi.

Karachi has been struggling with severe infrastructure issues, including inadequate public transport, power shortages, and a failing health system. What immediate measures should the federal government take to address these issues, and do you think the provincial government is adequately equipped and sincere to manage them?

I do not like any short-term solution for Karachi. Before embarking upon any corrective measures for the city, I want the people who matter in Pakistan to understand that (a) the system is not working, (b) the economic system can only work with development in Karachi, and (c) Karachi can no longer be governed by the ‘divide and rule’ policy. There is a problem in Karachi, and all the inhabitants of Karachi, whether speaking Urdu, Sindhi, Brohi, or Pushto, are in the same boat.

You assert that Karachi’s Liaquatabad (Lalukhet) market contributes more in taxes than the entire city of Lahore, which arguably benefits more from state resources than any other part of the country. Do you believe there exists a racial bias at both the provincial and federal levels that perpetuates the marginalization of Karachi in the development process?

As Chairman of FBR, I stated that the tax collection of markets in one location of Lalukeht in Karachi contributes more tax than all markets of Lahore. There is no denial of this. There is no racial bias. It is a regional bias. Those who matter do not own Karachi. For them, Dubai is closer to Islamabad and Rawalpindi than Karachi.

The political fragmentation in Karachi between various parties—MQM, PPP, and JIT/PTI—has contributed to the city’s mismanagement. What steps would you recommend to foster political cohesion and work towards Karachi’s collective progress?

At the moment, only one force in Karachi will get the popular vote, which is PTI. They will get votes at least once, whether the party is organised or disorganised. But they are also not a solution and will add to the problems. Imran Khan, Nawaz Sharif, Zardari, Bilawal Bhutto Zardari, and Maryam Nawaz are all products of the status quo. They do not want to change the system. They want that system to own them. In the long run, they will not be the agents of change that are urgently required. MQM has destroyed Karachi. The remaining parties named by you are there on account of the establishment’s support or relations with some media or funds received from abroad in the name of religion. They are worthless. The problem with Karachi is discrimination in policies and governance of the city. Karachi is to be run under one mayor like any other metropolitan city of this size. The political angle is placed in this picture to confuse the citizens. Karachi requires one empowered mayor looking after municipal schools, hospitals, waste management, roads, water, law and order, transport, electricity, gas, etc. All military establishments should be shifted out of the city for security purposes.

The federal government’s economic policies have often been criticized for focusing on short-term solutions rather than sustainable growth. How can Pakistan develop a long-term, inclusive economic plan that brings tangible benefits to all regions?

What do you mean by ‘economic policies’ in Pakistan’s context? Policies are made to execute a plan. Pakistan has no economic plan in hand. Sometimes we say CPEC is the game changer, then we move to minerals, etc. I again say that there is a ‘method in the madness’ that perpetuates in the status quo. We have to understand that on the economic front, we have failed. The first step for correction is to accept the failure. With this mindset of denial, there cannot be any correction. Nevertheless, I have achieved many goals through continuous dialogue with people, interviews, and podcasts. The future is not that bad.

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