Photo : REUTERS/Yuri Gripas
NIAS Area Studies
PAKISTAN READER
Photo : REUTERS/Yuri Gripas
In Focus
IMF pushes Pakistan to ensure the federal budget falls in line
On 19 May, the International Monetary Fund (IMF) and Pakistan began discussions for the upcoming “federal budget” for the financial year 2025-2026. The talks between the IMF and Pakistan would go on until 23 May which would examine whether the budget put forward by the federal government would be able to meet the objectives set by the IMF. The final budget would be put forward by the federal government on 2 June. IMF has been continually stressing that the upcoming budget must fulfil the objectives of bringing back “macroeconomic stability,” increase foreign reserves and make “structural reforms” for a comprehensive economic growth.
The latest set of conditions put forward by the IMF
The IMF has enforced stringent conditions for Pakistan to obtain loans. Pakistan would also have to look towards imposing “agricultural income tax” in all the provinces. It also has to come up with a proposal which would aim at eliminating the current “incentives” enjoyed by the industrial sector. The IMF has also demanded that Pakistan amend the energy rates in a “timely” manner.
Pakistan has conceded to the IMF’s demand to reduce import duties on “used vehicles.” The import duties imposed on “used vehicles” would be brought down by 10 per cent every year so that by 2030 there would be no additional taxes for the import of “used vehicles.” In the future, Pakistan has also vowed that it would not look to initiate further regulatory duties. For the financial year 2026, Pakistan would enforce rules and “testing regime” to examine the “safety and environment standards” of the vehicles which come into the country. As per the “new policy,” the federal government would permit importing of vehicles that are “five years old”
The positive side of Pakistan’s economy
For the financial year 2025, the current account has sprung to a positive number, which approximately stands at 0.5 per cent of the total GDP. r the previous financial year, this number was in negative. This has been achieved primarily through a growth in remittances and increase in “political stability.” The headline inflation which stood at approximately 40 per cent in 2023, now stands at 0.7 per cent (March data). This has also enabled the State Bank of Pakistan to reduce its “policy rate” to 12 per cent (January data).
The remaining obstacles
Pakistan continues to incur an “external financing gap” which is expected to climb to USD 19.75 billion for the Financial year 2026. It is anticipated that the “external financing gap” would continue to remain over USD 19 billion for Financial year 2027 as well. IMF had also voiced its concerns regarding the impact to Pakistan’s economy amidst surge in tensions with India. As per the IMF, this could disrupt “financial markets,” discourage the investors from further infusing funds and delay the process of executing reforms. IMF also expects that Pakistan must put efforts to bring down the “fiscal deficit” to 5.1 per cent in the coming year.
(“Pakistan, IMF open talks on budget finalisation,” Dawn, 20 May 2025; “IMF condition: Pakistan to cut tax curbs on import of used vehicles,” The News International, 20 May 2025; “IMF tightens conditions for Pakistan to get fresh loans: report,” The News International, 20 May 2025)
ON INDIA-PAKISTAN TENSIONS
PM Shehbaz Sharif praises Pakistan navy’s role, claims it shifted the regional balance of power
On 20 May, The News International reported on Prime Minister Shehbaz Sharif’s strong praise for the Pakistan Navy, wherein he declared that it had altered the regional balance of power. Speaking at the Pakistan Navy Dockyard, he recalled the alleged achievements of the Navy’s 1965 ‘Operation Dwarka’ and affirmed its continued preparedness to defend the nation.
PM Sharif lauded the Navy’s defensive successes, noting that Karachi Port, Port Qasim, and surrounding commercial maritime activities remained operational despite the tensions, he alleged that, in contrast, disruptions were observed on India’s western coast. He highlighted the Pakistan Navy's deterrence by stating that India’s aircraft carrier Vikrant remained over 400 nautical miles away, avoiding confrontation. He claimed that Vikrant retreated, sensing the Pakistan Navy’s preparedness. He credited this strategic success to the armed forces' integrated approach, led by COAS General Asim Munir. The Prime Minister emphasized national unity, stating all Pakistanis stood firmly with the armed forces, and highlighted the strong bond between the Army, Air Force and Navy. (Mariana Baabar, Muhammad Anis, “Pak Navy altered balance of power in region: PM,” The News International, 20 May 2025, Syed Irfan Raza, “Navy thwarted Indian aircraft carrier threat, says Shehbaz,” Dawn, 20 May 2025)
Responses from media
Calls for return of normalcy
On 20 May, an editorial in Dawn titled “Drawdown,” noted that a fragile but hopeful normalcy is returning to India-Pakistan tensions. With both countries stepping back from the brink of -scale war, ongoing talks between senior military officials from both sides are reinforcing the sustainability of the ceasefire, groundwork for which was laid by Trump, claimed the article. Both sides appear to recognise that this ceasefire, though does not have an ‘expiry date’, is to be upheld without formal renewal.
The editorial stressed that this pause in hostilities must be used to address the underlying causes of conflict and avoid another slip toward nuclear confrontation. This will also allow public discourse to shift from rhetoric to the bigger picture. It accused and called on India to recognise that preserving the status quo benefits no one and that continued provocation will only deepen regional instability. It reiterated the call for reopening of the Kartarpur corridor, noting the positive move that Afghan transit trade has resumed through the Wagah-Attari border. (“Drawdown,” Dawn, 20 May 2025)
ON CHINA
Sino-Pakistan relations reaffirmed in a three-day meeting in Beijing
On 20 May, Dawn reported on Pakistan's Deputy Prime Minister and Foreign Minister Senator Mohammad Ishaq Dar's three-day visit to Beijing starting on 19 May. The meeting reportedly covered political, local, regional and global issues. Mr Dar stated that "China was a major trading partner of Pakistan and that both countries enjoyed an iron-clad close relationship." Chinese Foreign Ministry Spokesperson Mao Ning noted that “China and Pakistan are all-weather strategic cooperative partners," and added that China would "play a constructive role" in maintaining the ceasefire between India and Pakistan, and in regional peace and stability.” ("Dar arrives in Beijing to bolster strategic partnership," Dawn, 20 May 2025)
In Brief
ECONOMY
Pakistan's mobile phone imports drop by 14.21 per cent
On 20 May, The News International reported a 14.21 per cent drop in mobile phone imports during the first ten months of the current fiscal year. The Pakistan Bureau of Statistics (PBS) reported that while the 2023-25 fiscal year recorded imports worth USD 1.462 billion, between July and April 2024-25 recorded imports worth USD 1.254 billion during the same period. The year-to-year imports of mobile phones saw a 22.47 per cent dip from the previous year, and April 2025 recorded USD 125.119 million in imports against exports of USD 1161.384 million in April 2024. The month-on-month imports also dropped by 3.96 per cent during April 2025 against the March 2025 imports of USD 130.274 million. The report highlighted that "the overall merchandise exports from the country increased by 6.4 per cent during the first 10 months of the current fiscal year as compared to the corresponding months of last year." Additionally, July-April exports for 2024-25 stood at USD 26.896 billion, and imports increased by 7.55 per cent, reaching USD 48.292. In contrast, the 2023-24 exports for the corresponding period were USD 25.278 billion, and imports USD 44.9 billion. ("Mobile phone imports decrease 14.21% to $1.254bn in 10 months," The News International, 20 May 2025)
Pre-budget PSX closes flat amidst economic reforms and IMF report
On 20 May, Dawn reported on the Pakistan Stock Exchange (PSX) closing flat at a USD 3.4 billion deficit in April during the pre-budget session. The investors are reportedly concerned by the "PKR 700 billion new tax measures and lowering economic growth forecast to 2.6 per cent by IMF for FY25." However, projections of higher tax collection at 12.6 per cent of GDP at PKR 14.4 trillion and monetary policy eases are reported to have contributed to a positive close. Investor optimism was boosted by clarity in Pakistan's "macroeconomic trajectory and policy direction" through the release of the IMF report under the Extended Fund Facility. The trade volume dip of 25.67 per cent to 425.37 million shares and the trade value fall of 23.26 per cent to PKR 22.27 billion caused a decline in market participation. ("PSX stays flat on renewed economic concerns," Dawn, 20 May 2025)
Pakistan reaches out for foreign loans to meet financing gap amidst the IMF programme
On 20 May, Dawn reported on ongoing discussions between Finance Minister Muhammad Aurangzeb and banks in the United Arab Emirates- Sharjah Islamic Bank, Abu Dhabi Islamic Bank, and Ajman Bank- for a USD 350 million loan to Pakistan. The loans will be backed by Asian Development Bank guarantees. The government had received about USD 504 million, mostly from UAE-based foreign lenders, in the first three quarters of the current financial year. The government has budgeted USD 3.8 billion financing from foreign banks and has also targeted USD 1 billion in international bonds for the 2025 financial year. Additionally, Pakistan has also projected USD 9 billion inflows from China and Saudi Arabia, including a USD 5 billion time deposit from Saudi Arabia and USD 4 billion from China's SAFE deposit. The projections are reported to be "critical for Pakistan to meet its external financing gap as part of the IMF programme." ("Pakistan hopeful of getting $350m loans from UAE banks," Dawn, 20 May 2025)
SOCIETY
Child marriage restraint bill opposed on grounds of violating Islamic ideology
On 20 May, an article in The News International titled “Fazl opposes child marriage restraint bill,” reported on the opposition by the JUI-F chief, Maulana Fazlur Rehman, to the child marriage restraint bill. He stated that the bill goes against Islamic Shariah. He warned that his party would take to the streets if the bill was not withdrawn, especially when national unity was crucial. He asked the government to consult the Council of Islamic Ideology (CII) before proceeding with the bill. He stated this could spark unnecessary controversy during this unstable moment. He approached the speaker of the National Assembly to issue a ruling against this bill. The bill has already been passed by both the National Assembly and Senate, making it impossible to issue a ruling against it, said Abdul Qadir Patel, the PPP parliamentarian, who also stated that he wanted to get the bill evaluated by the CII. Still, it was moved to the house by the Standing Committee on Human Rights, even though recommendations to refer it to the CII first were preferred. Fazl Rehman stated that Chinese military technology has beaten European and Israeli technologies in recent encounters. He praised the Pakistani military for its effective actions against Indian aggression, he claimed that India's Prime Minister Modi was “frustrated and embarrassed” and would resort to committing “another blunder.” The report also highlighted that Fazl Rehman emphasised the need for peace, especially along the Afghan border and mentioned the recent Waziristan drone attack. It also reported on the passing Pakistan Navy bill which would protect the sensitive information of the serving and retired naval personnel. (“Fazl opposes child marriage restraint bill,” The News International, 20 May 2025)
SECURITY
Five terrorists killed in Khyber Pakhtunkhwa and Balochistan
On 20 May, the Dawn reported on intelligence-based operations carried out in Khyber Pakhtunkhwa and Balochistan districts that resulted in the deaths of 12 terrorists and two Frontier Corps (FC) personnel during an exchange of fire. The report claimed that the terrorists were linked to India-backed groups and that five Indian sponsored terrorists were killed during the operation, and those in Balochistan were associated with the previously banned Baloch Liberation Front. Weapons, ammunition, and explosives were recovered from the terrorists. Prime Minister Shehbaz Sharif and President Asif Ali Zardari praised the security forces and stated that, “We will continue to foil the designs of the terrorists and their supporters present in the region to destroy peace in Pakistan,” and they blamed India for the attacks. The areas currently under threat are undergoing "sanitation operations" to eliminate the terrorists. (Umer Farooq, Saleem Shahid, “12 terrorists killed in KP, Balochistan ops: ISPR,” Dawn, 20 May 2025)
ENERGY AND ENVIRONMENT
Firefighters struggle to contain the Spin Ghar forest fire
On 20 May, Dawn reported on the wildfires that broke out in the Spin Ghar forests of Qila Saifullah district in northern Balochistan. Strong winds in the region aggravated the flames despite the efforts of the Levies forces and the additional teams dispatched by the Provincial Disaster Management Authority (PDMA). Deputy Commissioner Saeed Khan Dummor said that “a dam located about 15 kilometres from the affected area could serve as a water source for aerial firefighting.” ("Forest fire spreads across northern Balochistan’s mountains," Dawn, 20 May 2025)
China claims acceleration of the Mohmmad Hydropower Project in response to India's Indus Water Treaty abrogation
On 20 May, The Express Tribune referenced the South China Morning Post report on China's claims of "accelerating construction on the Mohmand Dam in Pakistan in response to India’s recent threats to cut off water supplies." Located in Khyber-Pakhtunkhwa, the dam is a vital project of the China-Pakistan Economic Corridor (CPEC) under the Belt and Road Initiative. The construction of the multipurpose facility "aimed at flood control, irrigation, power generation, and water supply" was undertaken by the state-owned China Energy Engineering Corporation in 2019, and is meant to be completed in 2026. The report also highlighted the Diamer-Bhasha Dam or the "Three Gorges Project" as a major resource-infrastructure collaboration between Pakistan and China. China's claimed acceleration is perceived as a sign of "growing geopolitical manoeuvring in the region, with water security emerging as a new axis of strategic influence." ("China accelerates Mohmand Dam project after India's Indus Water threat," The Express Tribune, 20 May 2025)
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