PAKISTAN has reason to believe that its international fortunes have improved. A country that only a few years ago appeared perilously close to sovereign default has returned to international capital markets, strengthened ties with Washington and Gulf capitals, and regained some of the diplomatic relevance it had lost during years of political and economic crisis.
The latest symbol of that recovery is financial.
Islamabad has raised $3 billion through a dual-tranche Eurobond, Pakistan’s largest single international capital-market transaction. The issue attracted nearly $6 billion in orders. The transaction comprised a $1.75 billion, five-and-a-half-year bond carrying a 7.5% coupon and a $1.25 billion, 10-year bond carrying a 7.9% coupon.
The successful sale demonstrates that Pakistan has regained access to international capital markets. But it also leaves a more difficult question unanswered: what does renewed confidence abroad say about the country’s political and economic pressures at home?
The answer is complicated.
Balochistan remains affected by insurgency, militant violence and serious human rights concerns. Pakistan-administered Kashmir has experienced deadly political unrest. Khyber Pakhtunkhwa remains under severe security pressure. In Sindh, disputes over water, resources, provincial autonomy and administrative authority continue to generate political tension.
These are different crises. But together they raise a broader question about the strength of Pakistan’s federal compact.
The Sindh-Punjab Fault Line
The tension was evident in the Sindh Assembly in September, when political disagreement over the creation of new provinces and administrative units spilled into a wider confrontation.
The Pakistan Peoples Party rejected any division of Sindh. Opposition politicians argued for greater administrative and financial empowerment of existing divisions and criticised the provincial government’s position.
MQM-P and Jamaat-i-Islami lawmakers walked out during the confrontation. On one occasion, however, PTI and Jamaat-i-Islami members were not present in the chamber when proceedings became tense, making it inaccurate to describe PTI as participating in every stage of the confrontation.
The dispute culminated in a resolution rejecting the division of Sindh and the creation of new administrative units. Chief Minister Murad Ali Shah said there could be “no compromise on Sindh’s geographical unity”.
Behind the parliamentary dispute is a much older question: who controls Sindh’s water, land and resources, and how much power should Islamabad and the Punjab-dominated political establishment exercise over Pakistan’s provinces?
That question has become particularly acute over water.
Sindh, as the downstream province on the Indus river system, has long complained about water allocations and diversions. The proposed construction of six canals associated with agricultural development in Cholistan transformed those grievances into a major political mobilisation in 2025.
The Sindh Assembly unanimously rejected the canal project, while the PPP, Sindhi nationalists, lawyers, farmers and civil society organisations opposed it. The dispute also reached the National Assembly and Senate.
The controversy has not disappeared.
In June, Sindh authorities reported a substantial shortfall in the province’s water supplies. Sindh’s irrigation minister said the province was receiving roughly 40% less water than its allocation overall, while reporting a smaller shortfall at Sukkur Barrage. These were figures presented by Sindh authorities during an ongoing dispute over water allocation and should be understood in that context.
The political temperature has remained high.
During the earlier dispute over the Cholistan canals, Punjab Chief Minister Maryam Nawaz described the water intended for the project as “Punjab’s water”, remarks that provoked a strong response from the PPP and other opponents of the project.
On September 5, she went further, saying: “The unfortunate thing is that the threat Punjab faces comes less from my neighbouring countries and more from my neighbouring provinces.”
The statement prompted criticism from opposition politicians, who called for her to withdraw it and apologise.
Whatever the political intention behind the remark, its significance lies in the fact that relations between Pakistan’s provinces are increasingly being discussed in security as well as political terms.
Sindh sees the water dispute as a question of rights, resources and federal fairness. Punjab’s political leadership has increasingly emphasised security concerns involving neighbouring provinces.
The result is a political conversation increasingly focused on the boundaries of the federation itself.
Could Sindh Follow Balochistan?
Sindh is not Balochistan. There is no comparable insurgency in Sindh, and the two provinces face very different security and political circumstances.
The comparison nevertheless raises a legitimate question about how prolonged political grievances can evolve.
Disputes over natural resources, distrust of the centre, concerns about provincial autonomy, enforced disappearances and restrictions on political activity have all featured in debates about Pakistan’s troubled federal relationship.
The Human Rights Commission of Pakistan has repeatedly documented serious human rights concerns in Balochistan, including enforced disappearances, shrinking civic space, weak provincial autonomy and allegations of impunity. Following a fact-finding mission, the commission said these conditions were contributing to public alienation and political instability.
Those findings do not establish that Sindh is following the same trajectory.
They do, however, underline the consequences of allowing disputes between provinces and the centre to remain unresolved for long periods.
During the mobilisation against the canal project, journalist and author Zahid Hussain argued that the controversy had exposed deeper fault lines within Pakistan’s political system and warned that centralisation could weaken the federal structure.
Academic and commentator Aasim Sajjad Akhtar described the Sindh mobilisation as potentially the province’s largest mass movement since the Movement for the Restoration of Democracy in the 1980s.
PPP parliamentarian Naveed Qamar also warned during the canal controversy that political resistance could give space to “more violent and nationalist forces”.
The significance of those warnings is not that Sindh is destined to become another Balochistan. Rather, they point to the political cost of allowing constitutional and resource disputes to deepen.
Balochistan offers a case study in what can happen when grievances over political representation, resources and autonomy become intertwined with militancy and an increasingly securitised state response.
The challenge for Islamabad is to prevent political disputes elsewhere from following a similarly destructive path.
Pakistan-Administered Kashmir Offers Another Warning
The unrest in Pakistan-administered Kashmir provides another example of how quickly economic and political grievances can become a wider crisis of legitimacy.
During the June unrest, at least 24 people — 20 civilians and four police officers — were killed. More than 500 people were detained, roads were blocked and internet services were suspended. Journalists also faced restrictions on access.
The Human Rights Commission of Pakistan subsequently examined the crisis and raised concerns about institutional distrust, restrictions on expression and the authorities’ response. It called for allegations of excessive and lethal force to be independently investigated.
The circumstances in Kashmir, Balochistan and Sindh are not interchangeable.
Their grievances nevertheless converge around an uncomfortable question for Islamabad: how much confidence remains in Pakistan’s federal institutions as mechanisms for resolving disputes between the centre and its provinces and territories?
Borrowing $3bn Does Not Cure Pakistan’s Economy
Against this domestic backdrop, Islamabad’s celebration of the $3 billion Eurobond should be viewed in perspective.
Pakistan has regained the ability to borrow internationally, but it has also added $3 billion in foreign-currency debt. The bonds carry coupons of 7.5% and 7.9%, making access to international capital possible but far from costless.
The IMF continues to regard Pakistan’s public debt as sustainable under its baseline scenario, while identifying significant medium-term vulnerabilities, including high financing requirements and continued dependence on external financing.
Pakistan also remains confronted by limited fiscal space, a narrow tax base, debt-servicing pressures, energy-sector liabilities and the need for greater investment.
The successful bond sale therefore says something specific.
Pakistan has demonstrated that it can return to international capital markets and attract substantial institutional demand. It does not demonstrate that the economic problems that brought the country close to default have disappeared.
That distinction matters.
A successful sovereign bond sale can provide breathing room. It cannot, by itself, resolve structural weaknesses in an economy or political disputes within a federation.
Islamabad’s Success Abroad and Crisis at Home
Pakistan has undeniably regained some international financial and diplomatic space.
Investors have returned to its sovereign debt market. The country can point to renewed access to international capital and improving relations with important foreign partners. The $3 billion bond is a significant demonstration of that change.
At home, however, a different picture is visible.
Balochistan continues to confront insurgency and serious human rights concerns. Pakistan-administered Kashmir has experienced deadly unrest. Khyber Pakhtunkhwa remains exposed to terrorism and political confrontation. Sindh continues to contest questions of water, resources, administrative authority and provincial autonomy.
Even relations between provinces are increasingly being expressed in adversarial language.
When Punjab’s chief minister says that the threats facing her province come more from neighbouring Pakistani provinces than neighbouring countries, it illustrates how far the language of Pakistan’s internal political debate has moved from conventional appeals to national unity.
The answer cannot be found solely in another IMF programme, another sovereign bond or another security deployment.
Nor can political grievances be resolved indefinitely through confrontation.
The central question is whether Pakistan’s federal institutions can provide credible constitutional and political mechanisms for resolving disputes over resources, representation and provincial autonomy.
Balochistan demonstrates the cost of leaving such questions unresolved for decades. Pakistan-administered Kashmir has shown how quickly economic grievances can acquire a broader political character. Sindh’s continuing mobilisation over water and provincial authority provides another warning — while the dispute remains overwhelmingly political.
Pakistan has convinced international investors to lend it another $3 billion.
The more difficult task is convincing its provinces that their interests can be protected, their grievances heard and their future secured within the federation.
For a nuclear-armed country seeking greater international influence, that domestic question may ultimately matter as much as any financial transaction concluded abroad.
* Themba Hlophe is an academic, he holds qualifications from the university of the Witwatersrand. He is housed at the Communications University of China. The views expressed do not reflect those of the Pretoria News.
