DAWN Editorials 2nd January 2026

PM’s optimism

PRIME Minister Shehbaz Sharif’s declaration on New Year’s Eve that the government would exit crisis mode — “with macroeconomic indicators stabilised” — and shift towards growth is more a political statement than an economic message. His remarks, in fact, betrayed the ruling party’s anxiety over the criticism that the government lacked a programme to move the economy from stabilisation to growth. The broad reform agenda rolled out by the PM comprises 142 actions — 59 priority reforms and 83 complementary measures — to be implemented by 58 institutions within defined timelines. The key areas where actions are to be implemented include taxation, energy, privatisation, SOEs, pensions, tariff rationalisation, regulatory simplification, rightsizing of the federal government and digital governance. Describing his new reform agenda as a shift from crisis management to institution-building, Mr Sharif said the programme was “home-grown” and “irreversible”, boosting institutional stability and supporting sustainable growth led by the private sector.

The economy has undoubtedly come a long way from the days when it was on the brink. Headline macroeconomic fundamentals have shown improvements over the last couple of years. Inflation has come down sharply, foreign exchange reserves have increased significantly, and the twin current account and fiscal deficits have been drastically slashed. These improvements are advanced by the government as evidence that its — politically costly — decisions have delivered stability. But is this stability strong enough to shoulder future growth? After all, this stabilisation has been achieved by suppressing growth at the expense of productivity, development spending and job losses, and is founded more on bilateral debt rollovers than increased exports or investment. Although the tax-to-GDP ratio has moved up to above 10pc, the increase is not an outcome of structural reforms like broadening the tax base. Rather, it has been achieved by further burdening captive taxpayers such as salaried individuals and compliant organised businesses. Likewise, the government has offloaded PIA but it could not have been possible without a slew of tax and other concessions for the buyer. Nor did it attract any foreign investor.

Hence, the PM’s argument that the worst is over and the focus can now shift from management to medium-term reforms and growth is set to be tested no sooner than the economy is put back on a faster growth trajectory. The government is making a strong political and economic case that Pakistan has stabilised after a near-crisis and that reform momentum is now irreversible. The real test, however, lies in whether this stabilisation can translate into durable growth, exports, jobs and investor confidence — areas in which Pakistan has historically struggled once the crisis pressure eases. The desire for stronger growth notwithstanding, the economy is unlikely to come out of low-growth mode unless the government actually walks the talk and reforms are fast-tracked.

Published in Dawn, January 2nd, 2026

Just a handshake

IT was a handshake that sent a ripple through the region. On Wednesday, National Assembly Speaker Ayaz Sadiq and India’s External Affairs Minister S. Jaishankar shook hands in Dhaka, where they had both arrived to attend the state funeral of former Bangladeshi prime minister Khaleda Zia, who passed away earlier this week. It was, doubtless, a significant moment which invited attention across three countries.

The Chief Adviser of the Government of Bangladesh, Muhammad Yunus, made note of it in a post on his X account, which stated that the two men had “exchanged greetings” during their interaction ahead of the funeral programme organised for Ms Zia. Pictures of the two, sombrely attired for the occasion, accompanied his post.

Indian media downplayed the event, framing the handshake as a usual nicety at such events and therefore inconsequential. The Pakistani media, noting that it was the first high-level contact between the two nations since the May hostilities, ran with the statement issued by the National Assembly Secretariat, underlining the part where it claimed that the handshake and pleasantries had been initiated by Mr Jaishankar, who reportedly approached Mr Sadiq with an informal acknowledgement.

One reason for the interest could be that this is a slow time of the year for newsrooms. Another could be that anticipation has continuously been high for what happens next between Pakistan and India. Yet, given the prevailing atmosphere, not much can or should be read into a mere handshake.

Interestingly, the NA Secretariat’s statement on the ‘handshake’ notes that Pakistan has “consistently emphasised dialogue, restraint and cooperative measures, including proposals for peace talks and joint investigations into the alleged false flag Pahalgam incident, in order to prevent unprovoked aggression and escalation”. Can this be read as a signal to New Delhi that the door to talks remains open?

Unfortunately, the hostile rhetoric and posturing from next door show no signs of relenting. Recent reports regarding plans for controversial hydropower projects by India, which would violate the Indus Waters Treaty, are designed to be provocations for further tensions between the two states.

There is, without question, a strong need for temperatures to be brought down. But handshakes and exchanging pleasantries alone will not make that happen. It will require earnest effort, especially on New Delhi’s part, and diplomacy at the highest levels before a thaw can be expected.

Published in Dawn, January 2nd, 2026

NYC’s new mayor

ZOHRAN Mamdani’s swearing in as mayor of New York City places him at the helm of one of the world’s most complex cities. His rise has been rapid, polarising and noted globally, and these factors will shape the challenges ahead. Few modern mayors have assumed office amid such sharp political divisions or intense scrutiny, particularly with limited experience in executive public office. For Mr Mamdani, the margin for error is thin. NYC is not a forgiving political environment. Its residents form strong opinions early and rarely revise them generously. The mayor’s first 100 days will therefore matter disproportionately, not only for policy outcomes but for perception. Competence, clarity and discipline will be as important as ideology. Early mistakes such as administrative confusion, or messaging errors are likely to be magnified by critics. Mr Mamdani appears to understand this reality. His recent, low-key engagement with President Donald Trump suggested a willingness to separate symbolism from governance and to act pragmatically when required. That instinct will be essential. Many of his flagship promises, including taxing the wealthy to fund childcare, freezing rents, making buses free or lowering food costs depend on cooperation from the governor and state legislature, institutions not naturally inclined to embracing democratic socialism.

This gap between ambition and power is well known. Left-leaning reform efforts have often stumbled when they meet budget limits, legal barriers and entrenched economic systems. Yet dismissing Mr Mamdani’s programme as naive would miss its deeper logic. Many of his proposals are modest, practical and intensely local: improved access to affordable food, streamlined procurement and reduced police contact with vulnerable populations. One magazine writing about Mr Mamdani quoted writer Raymond Williams: “To be truly radical is to make hope possible rather than despair convincing.” The new mayor’s task is to translate mobilisation into governance and to do it patiently and credibly — in full view of a sceptical city.

Published in Dawn, January 2nd, 2026