Circular debt: claims collapse, liabilities return

Like other developing countries around the globe, Pakistan also seeks to optimize a higher and impact-oriented investment rate in order to achieve higher and sustainable economic growth. In this regard, Pakistan’s development partners provide knowledge advisory and financial assistance to support implementation of economic reforms that will spur sustainable economic growth. The priority of the incumbent federal government headed by Prime Minister Muhammad Shehbaz Sharif is to undertake development partners’ engagements around two key objectives: (i) achieve sustainable social and economic growth as envisioned in its development plans to reduce poverty and inequality, and to create equitable access to social services and create employment opportunities for the youth, and (ii) address the external and fiscal imbalances for enhanced macroeconomic stability. The disbursement of Foreign Economic Assistance (FEA) remained low during the financial year 2025-26, as against budgeted figures of Rs 5777654.488 million, foreign assistance received was Rs 5024516.997 million. For the new financial year 2026-27, Pakistan was most likely to receive Rs 6779624.460 million (US $ 23.38 billion) from its development partners. Breakup-wise, Pakistan will be borrowing US $ 400.422 million (Rs 116122.423 million) from bilateral resources, US $ 4866.223 million (Rs 1411204.727 million) from multilateral resources, (US $ 235.000 million) from foreign commercial banks, US $ 12000.00 million (Rs 3480000.000 million) through bilateral deposit, US $ 1122.370 million (Rs 325487.300 million) through Naya Pakistan Certificate, and US $ 530.000 million (Rs 153700.000 million) from International Monetary Fund (IMF). Foreign assistance secured by Pakistan from its development partners also include, as usual, foreign aid for autonomous bodies such as WAPDA (Power), National Transmission and Dispatch Company (NTDC), National Highway Authority (NHA), and Power Division. Higher Education Commission (HEC) and SUPARCO were among the autonomous bodies who also received foreign assistance during the financial year 2025-26, but both of these were not among the foreign assistance beneficiaries somehow for the just commenced fiscal year 2026-27. Figures have been avoided for want of space, please. External resources, as per information available from the official sources, are derived from a combination of financing instruments, including project loans and grants, programme loans and other loans. Project loans and grants are received from specialised International Financial Institutions and friendly countries with specific purposes; project loans and grants for Public Sector Development Programme (PSDP) are received for various projects being executed by Federal Government, Provincial Governments and various Autonomous Bodies such as WAPDA, PEPCO, NHA, etc.; there are certain projects which are kept out of PSDP and executed by Federal and Provincial Governments and Autonomous Bodies by receiving project loans and grants; programme loans are provided for budgetary support and are linked/tied with achievement of specific targets and goals; and other loans comprise of loans from Islamic Development Bank, Sovereign Bonds, Sukuk Bonds, etc. raised from non-traditional sources. Bilateral sources included China, Denmark, France, Germany, Italy, Japan, Korea, Kuwait, Oman, Saudi Arabia, and the USA. Multilateral sources included Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), EIB, International Bank for Reconstruction & Development (IBRD), International Development Association (IDA), International Fund for Agricultural Development (IFAD), IsDB, PEC Fund and the United Nations, and the International Monetary Fund (IMF). There was no Saudi Arabia Time Deposit and no SAFE China Deposit commitments for the financial year 2026-27. World Bank, Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB) and IsDB were the major multilateral development partners who have conducted important diagnostic studies as well as formulated well-aligned medium-term country partnership strategies. Developments in Pakistan’s economy were also being closely monitored and rated by important rating agencies like Fitch, Moody’s and S & P which help Pakistan in accessing capital markets. Support from development partners and international financial institutions is critical to implementing the federal government’s agenda for sustained and balanced development for the people. The aim and objective of seeking foreign or external financial assistance can be stated as “promoting economic and social development in the developing countries.” It can also be defined as “Administered transfer of resources from a donor country or international financial agency to the developing countries with a view to encourage economic growth.” Foreign aid can be in the form of money, goods or technical assistance and can also be between two (bilateral) or many (multilateral) countries/institutions. Foreign aid is also looked for to meet both the economy’s balance of payments gap and investment gap. That is why project and technical assistance alone are not sufficient.

 On the morning of June 23, 2026, oil traders watching screens in London and Singapore saw a rare combination: the price of Brent crude falling and tanker traffic in the Strait of Hormuz rising. The trigger was a one-page notice from the U.S. Treasury. Effective immediately, the United States would authorize the production, delivery and sale of Iranian crude oil and petrochemical products through August 21, a 60-day general license issued as American and Iranian officials concluded a first round of talks in Switzerland.   For a waterway that carries roughly one-fifth of the world’s oil consumption, the shift was significant. After months in which oil had spiked above $100 on fears of a closure of the Strait, Brent fell back below $85. European shares opened August higher on hopes that diplomacy would hold. The question now confronting energy markets and foreign ministries alike is whether this “Hormuz Corridor” arrangement marks the beginning of a stabilization of global energy security, or merely a tactical pause in a longer confrontation.   From Maximum Pressure to Managed De-escalation   To understand the current opening, it is necessary to recall how the Strait became a flashpoint. The Strait of Hormuz, a narrow channel 21 miles wide at its narrowest point between Iran and Oman, has long been the world’s most important oil chokepoint. About 20 million barrels of oil per day transit it, along with a third of global liquefied natural gas trade.   U.S.-Iran tensions over the waterway escalated sharply after 2018, when the United States withdrew from the Joint Comprehensive Plan of Action and reimposed sweeping sanctions on Iranian oil exports. Iran, whose economy relies heavily on crude sales, responded by threatening to impede shipping and, at times, seizing tankers. The cycle repeated in late 2025 and early 2026, with a series of attacks and counter-threats that pushed insurance premiums for Gulf shipping to multi-year highs and forced major refiners in China, India, and South Korea to seek alternative barrels.   The talks that began in Switzerland in late June followed that period of acute risk. Mediated by Oman, Qatar and Pakistan, according to official statements, the first round concluded with what U.S. Vice President J.D. Vance described as a “good foundation for a successful final deal.” The resulting U.S. general license does not lift sanctions permanently. It is a temporary waiver, valid through August 21, designed to allow Iranian oil to flow legally while negotiators pursue a final peace framework within 60 days. Iran’s Foreign Ministry, for its part, said it was discussing a temporary safe route through the Strait and denied that direct bilateral talks were continuous, underscoring the fragility of the process.   For Washington, the calculus is twofold. Domestically, lower energy prices ahead of the autumn reduce inflationary pressure. Crude futures had risen sharply earlier in the year on supply fears, contributing to volatility in equities. Strategically, a temporary de-escalation allows the U.S. to reallocate diplomatic and military resources and to test whether Tehran is willing to agree to constraints on its nuclear program and regional activities in exchange for sanctions relief.   For Tehran, the incentive is economic. Iran holds the world’s third-largest proven oil reserves, but its exports had been curtailed to well below capacity. Even under sanctions, Iranian-linked tankers continued to move oil, according to tracking data, but at steep discounts and with high transaction costs. A legal channel to sell crude through August 21 provides immediate revenue and a measure of relief for an economy facing high inflation and currency pressure.   Market Relief and Market Skepticism   The initial market reaction has been cautiously optimistic. After reports that both sides had agreed on a roadmap, oil prices settled down more than 3 percent in a single session, with the more active August Brent contract settling around $73.86 to $79.04 per barrel in late June trading, down from earlier highs near $93. European equities, sensitive to energy costs, began August higher.   Analysts interviewed for this article point to two competing interpretations of this relief.   The optimistic view holds that the waiver creates a positive feedback loop. By allowing Iranian oil back into the formal market estimated at 1 to 1.5 million barrels per day of additional supply if fully utilized it eases global balances at a time when OPEC+ is managing voluntary cuts first announced in April 2023 and set to continue into August 2026. Lower prices reduce the incentive for further escalation, giving negotiators space to discuss the more difficult issues: the future of uranium enrichment, the status of Iranian support for armed groups, and verification mechanisms for any corridor through Hormuz that would give Iran a role in monitoring inbound traffic, as suggested in one proposal reported by Reuters.   The skeptical view, which currently dominates private commentary among Gulf-based energy executives, is that the structure of the deal itself reveals its limits. A 60-day license is, by design, reversible. It does not resolve the underlying lack of trust, nor does it provide long-term certainty for refiners and shippers to sign term contracts. Tanker operators continue to price in risk, and traffic data showed an initial uptick as talks progressed, but not a full normalization. One proposal that would give Iran formal control over inbound traffic through the Strait has alarmed some Gulf states, who have privately warned that such an arrangement could be used as leverage in the future.   Stakeholders Beyond Washington and Tehran   The implications extend far beyond the two principal parties.   For Gulf Arab states, particularly Saudi Arabia and the United Arab Emirates, the Hormuz arrangement presents a dilemma. They benefit from lower oil prices and reduced risk of a regional war that could target their own infrastructure, but they are wary of any deal that enhances Iran’s ability to control shipping lanes or that is reached without binding security guarantees. Iran’s recent warning that it could target Gulf states if the U.S. launches new strikes has reinforced that anxiety.   For

Pakistan has never lacked economic advice. Since independence, successive governments have experimented with socialist planning, import substitution, nationalisation, structural adjustment, privatization, fiscal decentralisation, value added taxation, documentation drives, digital governance and, most recently, artificial intelligence in tax administration.  Almost every reform has been presented as the missing ingredient that would place the country on the path of sustained prosperity. However, Pakistan continues to oscillate between balance-of-payments crises, external dependence, fiscal instability and repeated recourse to the International Monetary Fund (IMF). This persistent failure raises a more fundamental question. Is Pakistan’s crisis primarily economic, or are economists asking the wrong questions? For decades, the dominant explanation has remained remarkably consistent. Pakistan is said to suffer from a narrow tax base, inadequate domestic resource mobilisation, weak public institutions, poor governance and inconsistent implementation of otherwise sound policies. According to this view, if taxes were broadened, exemptions withdrawn, administration digitalised and markets allowed to function efficiently, sustainable growth would eventually follow. There is much truth in these observations. They identify many of the symptoms. But they do not fully explain why technically sound reforms repeatedly fail in Pakistan while producing very different outcomes elsewhere. The reason, as suggested in earlier writings, is that Pakistan cannot be understood through the conventional assumptions of public finance alone. Economic policy does not operate in a constitutional vacuum; it reflects the incentives created by the political and legal institutions within which governments function. Orthodox economics generally assumes a constitutional order within which governments seek, however imperfectly, to maximise public welfare. Fiscal policy, taxation and expenditure are analysed as instruments for correcting market failures, financing public goods and promoting economic growth. Political constraints are acknowledged but usually treated as external distortions rather than integral components of economic analysis. Pakistan presents a different reality. Here, constitutional arrangements, political incentives, strategic considerations and informal institutions have shaped fiscal outcomes as much as, and often more than, economic policy itself. Taxation has frequently reflected the distribution of political power rather than principles of efficiency or equity.  Public expenditure has often been determined by strategic imperatives rather than developmental priorities. External assistance has repeatedly substituted for difficult domestic reforms. Elite bargains have preserved privilege while transferring the burden of adjustment to documented businesses, salaried individuals and ordinary consumers. These outcomes cannot be adequately explained by models that assume an impartial state pursuing coherent economic objectives. The analytical framework itself, therefore, requires reconsideration. This series proceeds from a simple but powerful proposition: before analysing taxes, budgets or debt, one must first understand the constitutional rules that shape political incentives. This is the central insight of Constitutional Political Economy (CPE).  Unlike conventional public finance, CPE begins not with taxes or budgets but with the constitutional rules, institutional incentives and political structures that determine how economic decisions are actually made. It asks a prior question: Who designs the rules under which economic policy operates, whose interests do those rules serve, and how do they shape incentives for both governments and citizens? Once that question is asked, many of Pakistan’s recurring puzzles begin to appear less mysterious. Why do technically sound tax reforms repeatedly fail? Why do successive governments rely on indirect taxation while avoiding politically influential sectors? Why has documentation remained elusive despite extraordinary advances in digital technology? Why does every external crisis quickly become a fiscal crisis? Why has debt expanded despite repeated stabilisation programmes? The answers lie not merely in economics but in the constitutional and political environment within which economics operates. This series proposes a different approach. Rather than examining taxation, debt or fiscal federalism as isolated subjects, it will analyse them as interconnected manifestations of Pakistan’s constitutional political economy. Future parts will explore how colonial legacies, post-independence constitutional choices, geopolitical dependency, elite capture, federal arrangements, judicial interpretation and administrative incentives have combined to shape Pakistan’s economic trajectory. The purpose is not to reject orthodox economics. Public finance remains indispensable. Sound taxation, efficient expenditure and macroeconomic stability are essential for any modern state. However, these instruments cannot achieve their intended objectives when the institutional environment within which they operate generates incentives that systematically frustrate reform. Pakistan’s crisis is not simply a fiscal crisis. Nor is it merely a crisis of governance. It is, more fundamentally, a crisis of constitutional political economy. Unless that deeper reality is understood, technical reforms, however well designed, will continue to produce disappointing results because they address the symptoms rather than the constitutional incentives that generate them. In the next part, we shall examine why the assumptions of orthodox public finance differ fundamentally from those of constitutional political economy, and why that distinction matters profoundly for understanding Pakistan. [To be continued]  ____________________________________________________________________ Dr. Ikramul Haq, Advocate Supreme Court, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds an LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996. 

The passing of Professor Amin Mughal in London on August 12, 2026, at the age of 91, has left me with an overwhelming sense of personal bereavement. I have lost a mentor, friend and former colleague; Pakistan has lost one of the last representatives of a generation for whom progressive politics was inseparable from humanism, scholarship, intellectual integrity and personal courage. Harris Khalique called his departure “یہ ماتمِ وقت کی گھڑی ہے”—an hour for mourning the times—and described him as “the last of the Mohicans who touched so many lives.” These words capture the magnitude of the loss. Professor Mughal belonged to a generation that imagined Pakistan as a democratic, pluralistic and egalitarian state—not as a security-dominated order governed by fear, dogma and privilege. Born in Punjab in 1935, he taught English at Islamia College, Civil Lines, Lahore. His teaching career there ended because of his trade union activities. For Professor Mughal, principles were never dispensable instruments of convenience. Losing employment did not silence him. Along with Professor Manzoor Ahmed, he helped establish Shah Hussain College, transforming an act of official victimisation into another avenue for education and intellectual resistance. As a leader of the National Awami Party, he was imprisoned more than once. His politics sprang from compassion for workers, peasants, minorities and all those denied dignity by structures of power. It was not the doctrinaire radicalism of slogans. It was a deeply humane commitment to freedom from exploitation, arbitrary authority and cultural suffocation. He was associated with Lail-o-Nahar and later with the weekly Viewpoint, edited by the legendary Mazhar Ali Khan. I had the privilege of working with Professor Mughal at Viewpoint from 1979 to 1984. Its modest office at 4-Lawrence Road, Lahore, became my real university. Mazhar Ali Khan, I.A. Rehman, Zafar Iqbal Mirza—affectionately known as ZIM—Alys Faiz and Amin Mughal represented journalism as a public trust rather than a commercial enterprise. Reflecting on those formative years in my tribute to ZIM, I wrote: “Amin Mughal and Alys Faiz were so proficient in writing that few could match their stature. They also taught me the art of journalism with great affection and dedication.” That remains one of the greatest blessings of my life. Professor Mughal taught by example. His scholarship was vast, his editing precise and his intellectual standards uncompromising. He corrected younger colleagues without belittling them and encouraged inquiry without demanding conformity. The Viewpoint collective stood firm during General Ziaul Haq’s brutal dictatorship, when truth invited censorship, dismissal, imprisonment or exile. Literature and journalism became important sites of resistance during those years. Professor Mughal understood that control over language, culture and historical memory was central to authoritarian rule. His engagement with Urdu and Punjabi literature was therefore never merely aesthetic; it was part of a larger struggle to recover suppressed voices and alternative visions of Pakistan. Forced into political exile in 1984, he settled in London and never returned to Pakistan. Exile, however, could not sever his intellectual or emotional relationship with his homeland. He worked for Daily Jang and, in the early 1990s, edited the Urdu daily Awaaz. Although the newspaper survived for only a little over a year, it represented another attempt to provide Britain’s Pakistani community with a serious and progressive public forum. Writing in The News on Sunday in 2008, Arif Azad recalled Professor Mughal as looking “his usual sharp and buoyant self, dressed in impeccable attire as is his wont.” He described him as belonging to “the vanishing breed of left-wing Pakistan intellectuals” in whom one could still discern the lofty and humane aspirations associated with Pakistan’s early journey. The description was exact. Professor Mughal’s impeccable dress reflected something deeper: an inner discipline, dignity and refusal to be diminished by adversity. Political persecution could deprive him of employment and homeland, but it could not deprive him of intellectual independence or personal grace. His Finchley home gradually became, in Arif Azad’s memorable formulation, “a port of call” for visiting writers, politicians and political and cultural activists from both sides of the border. For decades it served as an informal salon, archive and classroom. Generations of visitors encountered there a formidable memory, an incisive mind and a host of unfailing generosity. Even when he withdrew from active engagement in South Asian politics, he remained an enduring reference point for politically conscious Pakistanis in Britain. His interests ranged across philosophy, literature, history, political economy and contemporary affairs. He wrote perceptively on Bhagat Singh and, following Benazir Bhutto’s assassination, produced After Benazir Bhutto: Some reflections. Although he had opposed her politics, he recognised her courage and wrote that in the imagination of the masses she had acquired a mystical significance destined to inspire future struggles. That ability to rise above personal political preference and acknowledge truth distinguished him as a genuine intellectual. Professor Mughal’s life reminds us that exile is not merely physical displacement. It is also the condition imposed upon ideas that a state refuses to accommodate. Pakistan expelled or marginalised many of its finest minds and then wondered why intolerance, intellectual poverty and historical amnesia prevailed. Professor Mughal remained physically in London, but intellectually he never ceased to inhabit the Pakistan for which he had struggled. One by one, the great teachers of my Viewpoint years have departed. Their passing makes the country feel lonelier and its moral landscape immeasurably poorer. Professor Amin Mughal leaves no office, fortune or monument carrying his name. His true legacy survives in the minds he liberated, the writers he encouraged, the causes he defended and the generations he taught to question received wisdom. Farewell, dear mentor and friend. You lived in exile, but your ideas never left us. They will remain at home wherever people struggle for a democratic, pluralistic, just and humane Pakistan.

The subject idea of “Road To The East” is conceived by me by a textbook when the store Marco polo was described a story with a title of road to the east. The fascination of culture is everywhere especially, within the walled city of Kashi which is located comparatively on a high altitude like a natural fort. As this area from central east was under the invasion of different ethnic communities in the past. I got a chance to walk through the downtown streets which are relatively wider than the downtown streets of Lahore. The construction of the houses is also showing its beauty and culture with their traditions. Now the walled city have totally been preserved by the Chinese government and as I mentioned the tourism have become one of the most important growing industry in the region. The most famous place historically in this region is called Eig Gah. That is this famous mosque was built during the fifteenth century with the capacity of 20,000 people, can offer a prayer within the, inside of compound. While there is a huge yard outside of this compound which is the center of an attraction for all the tourists. Vice President Pakistan-China Joint Chamber There was a camel ride for the tourist attraction and these camels are special, only found in the Gobie desert, with two humps. These kind of camels are also an iconic symbol of China same as panda. It was also arranged a horse ride for the tourist who love to have a picture by riding at the back of the horse. At one time, in this area, the horses were used to have mainly without saddles. The local people are very fond of music, almost every coffee house have the people to play the traditional music, as their tradition music is with the history of hundreds of years. Duff is one of a very important part of their music playing with one instrument called Algoza. Always with the musicians, there is a singer playing the ancient music even though I did not understand the meaning but I got to know that this was mainly related with the stories of their local warriors. The conventional tea houses normally have their dance performance showing heir culture and dance skill. That all is very amazing. I love to watch that performance in different tea shops. Now, the culture have expended in different restaurants where not only girls but also men perform their traditional dance. I hope we can be able to arrange a cultural linkage between the cities of Lahore and Kashgar. All that modern restaurants are very beautiful, a clean and rich with their construction style. The waiters always dressed up like a female servant serving in the royale courts. Most of them are very beautiful to pass an impression of a royale age. Food of Kashgar (Kashi) is very traditional and tasty. The local people are really lamb lovers. You can find halal food in every corner of Kashi. Where you never need to ask the food quality is halal or not. Despite that, I have experienced the most lamb served in all over China is mostly done by the Muslims. The horse meat is one of the traditional delicacy of this region. But normally in our society we refrain to eat it. Camel milk is served as a soveigner to all the visitors. It was my first time to experience the camel milk. Most of the Xinjiang due the weather is dry and the rainfall is very limited. Despite of this all, Xinjiang is very rich for its fruit production in recent years. Chinese government have paid a lot of attention to improve the agriculture and food industry. This have helped a lot for the locals to improve their life standard. The government have paid a special attention to develop an agricultural farming industry in this region.   Walnut once it was used to exported from Pakistan to China but the border trade now have become an iconic product of Yecheng, is normally called as the capital of walnuts. They have also developed a technology to cultivate pomegranate in a sandy surface. I really hope under the BRI agriculture, is one of the major subject in Pakistan. Can we be able to get an experience from China that how they converted their barren lands into green fields. This is my proposal to the green initiative Pakistan, is that they are willing to improve their yield capability by the technology that have already been successful in the similar environment. Pakistan with its huge barren land along with the Gilgit city which can be experienced by using the technology already existing in this region. Mines and minerals is one of biggest subject that we need to pay attention. Till today, we are not been able to address our natural resources in to a successive model. I have observed to Pakistan side is full of natural resources with mines and minerals while the other sider of the border have already established the biggest units of processing. My advice to our provincial government of Gilgit Baltistan that why they don’t take an opportunity as China is already a friendly country with Pakistan, with a will of the transfer of technology. That means this can change the entire financial position of this region. We feel there is a lack with the technology of preservation of food and fruits. GB as a basket of the fruits, is not able to perform its strength where there are a lot of chances to earn a technology or going for a joint venture to improve the life standard of locals.

By Asma Rahmat, Final Year Law Student, SLC, Superior University and Muhammad Ameer Hamza, Final Year Law Student, SLC, Superior University   The legal profession has long been regarded as one of the most respected and tradition-bound institutions in society, founded on human intellect, ethical judgment, and the pursuit of justice. Yet, like every other profession, it is now experiencing the profound impact of Artificial Intelligence (AI). Across the globe, AI is transforming industries by automating routine tasks, enhancing productivity, and improving decision-making. The legal sector is no exception. While countries with advanced legal systems have already begun integrating AI into legal practice and judicial administration, Pakistan is only beginning to explore its potential. The challenge before us is not whether AI will become part of the legal profession, but whether we are prepared to embrace this technological revolution while preserving the fundamental values of justice, fairness, and the rule of law. Artificial Intelligence has the ability to process vast amounts of information within seconds, making it an invaluable tool for legal professionals. Today, AI-powered software can conduct legal research, review contracts, summarize lengthy case files, identify relevant judicial precedents, and even assist in drafting legal documents. These are tasks that traditionally consumed hours or even days of a lawyer’s time. By automating repetitive and time-consuming work, AI enables lawyers to focus on the more complex aspects of their profession, including legal strategy, courtroom advocacy, negotiation, and client counseling. Rather than replacing legal professionals, AI has the potential to become a reliable assistant that enhances both efficiency and accuracy. For Pakistan, where the judicial system continues to struggle with delays and an ever-growing backlog of cases, the responsible use of AI could bring much-needed reform. Thousands of litigants wait years for the resolution of their disputes, often because courts are overburdened and administrative processes remain largely manual. AI can assist in organizing digital records, managing court schedules, classifying legal documents, and simplifying legal research for judges and lawyers alike. These improvements could significantly reduce delays, improve case management, and make the justice system more efficient without compromising judicial independence. Importantly, AI should support judicial decision-making rather than replace it, as the final responsibility for interpreting the law must always remain with judges. Beyond improving efficiency, AI also offers an opportunity to strengthen access to justice. A significant portion of Pakistan’s population cannot afford legal representation or lacks access to basic legal information. AI-powered legal assistance platforms, particularly those available in Urdu and regional languages, could provide citizens with preliminary guidance on their legal rights, court procedures, and available remedies. Such tools would not replace qualified lawyers but could empower individuals by helping them understand the legal system before seeking professional assistance. In a country where legal awareness remains limited, technology can become a powerful means of promoting legal literacy and strengthening public confidence in the justice system. The emergence of AI is equally significant for legal education. Law students now have access to intelligent research tools that can summarize judgments, explain complex legal principles, compare international legal systems, and assist in legal writing. These technologies can make legal education more interactive and research-oriented. However, they also present a challenge. Students must avoid becoming overly dependent on AI-generated content, as legal education is ultimately designed to develop analytical reasoning, critical thinking, and independent judgment. Future lawyers must learn not only how to use AI responsibly but also how to question its outputs, verify legal authorities, and apply legal principles thoughtfully. Despite its many advantages, Artificial Intelligence raises several legal and ethical concerns that cannot be ignored. AI systems are not infallible. They may generate inaccurate information, misinterpret legal authorities, or reflect biases contained within the data on which they were trained. A lawyer who relies solely on AI without verifying its results risks providing incorrect legal advice or presenting flawed arguments before the court. Furthermore, the use of AI raises important concerns regarding client confidentiality and data protection. Lawyers have a professional and ethical obligation to protect sensitive client information, and any use of AI must ensure that confidential data is handled securely. These concerns highlight the importance of developing ethical guidelines governing AI’s use within the legal profession. Pakistan currently lacks a comprehensive legal framework specifically regulating Artificial Intelligence. While existing laws address cybercrime and certain aspects of electronic transactions, they do not adequately address issues such as AI accountability, transparency, liability, algorithmic bias, or the protection of personal data in AI-assisted legal services. As AI becomes more prevalent, policymakers must establish a clear regulatory framework that encourages technological innovation while safeguarding constitutional rights, including privacy, equality before the law, and the right to due process. Such regulation will be essential to ensuring that AI serves society without undermining public trust in legal institutions. Perhaps the greatest misconception surrounding AI is the belief that it will eventually replace lawyers. In reality, the legal profession depends upon qualities that no machine can fully replicate. Lawyers do not merely apply legal rules; they exercise judgment, interpret complex factual situations, negotiate settlements, understand human emotions, and advocate persuasively before courts. Similarly, judges must balance competing rights, interpret legislation in light of constitutional principles, and deliver reasoned decisions based on justice and equity. These responsibilities require wisdom, experience, empathy, and moral reasoning—qualities that remain uniquely human. AI can provide information and support, but it cannot replace the conscience, ethical responsibility, and professional judgment that define the legal profession. The future of the legal profession in Pakistan therefore lies in collaboration rather than competition between humans and technology. Law schools should introduce courses on Artificial Intelligence, legal technology, and digital ethics to prepare future lawyers for an increasingly technology-driven profession. Bar councils and regulatory authorities should establish professional standards governing the ethical use of AI in legal practice, while the judiciary should continue investing in digital infrastructure to improve the administration of justice. At the same time, legal professionals must embrace lifelong learning so they can adapt to technological advancements without compromising the integrity