Photo : Dawn
NIAS Area Studies
PAKISTAN READER
Photo : Dawn
In Focus
Budget 2025: Taxation, pension rationalization, and a shortfall in development expenditure
Federal government is keen to implement structural reforms
On 18 June, The Express Tribune reported that Minister for Finance, Muhammad Aurangzeb, stated that the federal government is determined to implement structural reforms to achieve long-term economic growth and stability. Under a broader fiscal strategy, various initiatives are envisioned, including revising areas of taxation, energy, and state-owned enterprises (SOEs), improving tariff structures, and rationalising pensions. The minister stressed the need for fiscal prudence as in this year's budget, as the pension bill alone crossed PKR 1 trillion, asserting that
pension reform is critical to ensuring macroeconomic sustainability, predictability in government finances, and managing costs effectively. Further, the minister announced that the government has also recommended a progressive taxation measure, saying “we have proposed a 5 per cent tax on the annual pension income exceeding PKR 10 million, which has been submitted to parliament for approval.” The entire ambit of reforms is aimed at providing relief to pensioners and transforming Pakistan into a more competitive economy.
Shortfall in spending on water projects
On 18 June, The Express Tribune reported that the federal government is expected to underutilise fund allocation on water sector projects in the outgoing fiscal year 2024-25. An amount of PKR 142.6 billion had been allocated for water projects under the Public Sector Development Programme (PSDP) for FY25. However, as per the revealed Annual Plan 2025-26 while reviewing the performance in FY25, the estimated expenditure by the end of May was PKR 79.4 billion. Considering the strategic importance of the water sector, the FY25 development programme comprised 59 projects with a total approved cost of PKR 2,298.3 billion. By the end of June 2025, out of the 59 projects, 23 projects worth PKR 163.5 billion are expected to be completed or closed. These include ten projects in Balochistan, six in Sindh, four in Khyber-Pakhtunkhwa (K-P), two in Punjab, and one scheme of the Ministry of Water Resources.
National Assembly panel unanimously rejects solar panel, hybrid car tax
On 18 June, The Express Tribune reported that a National Assembly panel on 17 June unanimously rejected the 18 per cent sales tax on solar panel imports, while the government announced it would withdraw another controversial proposal to increase the sales tax on hybrid vehicles. The International Monetary Fund (IMF) had not endorsed the tax, and its rejection by the committee will not affect the IMF programme.
Current account deficit of USD 103 million recorded in May
On 18 June, The Express Tribune reported that Pakistan recorded a current account deficit of USD 103 million in May 2025, narrowing from a deficit of USD 235 million in the same month last year but reversing the USD 47 million surplus seen in April 2025.
PTI proposes tax exemption for salaried class; PPP calls for reasonable increase in salaries
On 18 June, Dawn reported that speaking in the National Assembly on 17 June during ongoing budget discussions, Pakistan Tehreek-e-Insaf (PTI) Chairman Barrister Gohar Khan suggested increasing the minimum taxable income to PKR 2.2 million per annum from the current PKR 0.6 million to provide relief to the salaried class. The government has proposed a new income tax structure in the federal budget whereby revised rates offer tax cuts of up to 80 per cent for low-income salaried individuals, while limiting relief for higher earners to just 3 per cent. The tax exemption limit has remained unchanged at PKR 50,000 per month.
On 18 June, The Nation reported that Pakistan People’s Party’s Member of National Assembly Shazia Marri criticized the federal government’s failure to announce minimum wages for workers. She called for a reasonable increase in government employees’ salaries.
References
“Aurangzeb pledges tax, energy and SOE reforms,” The Express Tribune, 18 June 2025
“Spending on water projects to fall short of target,” The Express Tribune, 18 June 2025
“Solar panel, hybrid car tax rejected,” The Express Tribune, 18 June 2025
“C/A slips back into $103m deficit,” The Express Tribune, 18 June 2025
“PTI’s Gohar suggests tax exemption for salaried class earning upto Rs2.2m annually,” Dawn, 17 June 2025
“PPP calls for reasonable increase in govt employees’ salaries,” The Nation, 18 June 2025
Pakistan on Iran-Israel conflict: Islamabad instructs diplomats stationed in Tehran to return; PTI postpones protest against government
On 17 June, The Express Tribune reported that Islamabad has instructed its diplomatic and non-essential crew who are stationed in Tehran to return. As per the Ministry of Foreign Affairs, the decision was taken in view of the ongoing Israel-Iran conflict. The Ministry informed that the Embassy of Pakistan and its Consulate in Tehran would continue to operate. Reportedly, 78 Pakistani nationals have returned from Iran via the Taftan border. So far, close to 1200 Pakistani nationals have returned. from Iran. Majority of those returning from Iran are pilgrims who were stuck because of the Iran-Israel confrontation.
On the same day, Deputy PM Ishaq Dar held a telephonic conversation with his counterpart from the UAE, Sheikh Abdullah bin Zayed Al Nahyan. Dar and Nahyan delved into the emerging circumstances in the region. As per the Foreign Office, the two leaders emphasized measures to secure “peace and stability” in the region.
PTI on Israel-Iran conflict
On 17 June, Noreen Khanum and Uzma Khan who are sisters of PTI supremo Imran Khan informed that the latter has instructed them to postpone the earlier planned demonstrations by 14 days. Previously, on 1 June, Khan had instructed to initiate a country-wide demonstration against the current government, proclaiming that he would lead the demonstrations from inside the prison. He, nevertheless, had not announced the commencement date of the demonstration.
Print media on Israel-Iran conflict
On 18 June, an editorial in The Nation titled “Impending catastrophe,” highlighted the increasing likelihood of the US engaging in the Israel-Iran conflict, which previously had seemed improbable. The editorial mentioned the recent remarks of US President Donald Trump in which he warned the Supreme Leader of Iran and asserted that America and its allies have full control over Iran’s airspace. Further, Trump also demanded that Iran “surrender unconditionally.” As per the editorial, if the US fully engages in the war, it would have devastating repercussions for the entire region. The editorial urged the Pakistani state to take steps to ensure peace and stability in the region. Further, the editorial urged the state to help Iran “diplomatically, logistically and morally” to thwart the Israeli offensive. The editorial also highlighted how a change of “regime” in Tehran after the conflict could have negative consequences on “security and strategic projects” of Pakistan.
On 17 June, an editorial in The Express Tribune titled “Instant ceasefire a must,” urged for steps to ensure speedy cessation of hostilities between Iran and Israel. The editorial viewed calls from Russia and Turkiye demanding an immediate end to hostilities between Iran and Israel as a “welcome development.” The editorial demanded that the United Nations take steps to ensure that the situation is brought under control. It called out the Arab League and Organization of Islamic Cooperation (OIC) for not being proactive and taking steps to diffuse tensions between the two countries. The editorial expressed fear over how Iran and Israel are calling for complete destruction of each other. Further, the editorial criticized US President Trump for allowing tensions between the two countries to escalate.
On 18 June, an editorial in Dawn titled “Rampant disinformation,” discussed the alleged spread of “disinformation” with regard to the Iran-Israel conflict. The editorial highlighted how there has been an increase in the spread of false information regarding Islamabad’s collusion in the conflict. The editorial suggested that the Pakistani state must keep a close eye on what is being disseminated. Further, it urged Islamabad to continue to convey its official stance on the conflict.
References:
“Pak, UAE DPMs discuss situation post-Israel attacks on Iran,” The Nation, 18 June 2025
Khalid Mehmood, “Pakistan recalls diplomats, non-essential staff from Tehran amid escalating Israel-Iran conflict,” The Express Tribune, 17 June 2025
“Total of 1,200 Pakistanis repatriated via Taftan border,” The Express Tribune, 17 June 2025
Qaiser Sherazi, “Gulf crisis: Imran defers protest for 2 weeks,” The Express Tribune, 18 June 2025
“Impending catastrophe,” The Nation, 18 June 2025
“Instant ceasefire a must,” The Express Tribune, 17 June 2025
“Rampant disinformation,” Dawn, 18 June 2025
Vast potential for Pakistan’s blue economy, says PM Sharif
On 17 June, The Nation reported that PM Shehbaz Sharif highlighted the vast potential of Pakistan’s blue economy. He called it the nation's “new economic frontier” during the launch of the 2nd Pakistan International Maritime Expo & Conference (PIMEC) 2025. In the conference, he praised the Pakistan Navy for showcasing the maritime sector’s promise and urged public-private collaboration, academic integration, and investment-friendly policies to harness this potential. PM Sharif also maintained Pakistan’s commitment to maritime security and regional peace. In a separate meeting with the UAE delegation, he sought to learn from the UAE’s modern governance practices to boost administrative reforms and digitization in Pakistan. He called for creation of advanced IT training programs to transform Pakistan into a regional tech hub at the national level, calling the youth a valuable asset. He also stressed that no law should be used to harass taxpayers and ordered protective measures to ensure fairness and transparency in tax enforcement. (“Blue economy is Pakistan’s new economic frontier: PM,” The Nation, 18 June 2025)
ECONOMY
PPP-led government in Balochistan presents ‘biggest’ annual budget
On 18 June, Dawn reported that the annual budget of the provincial government of Balochistan was presented by Finance Minister, Mir Shoaib Nausherwani, in the Balochistan Assembly on 17 June. The budget included a record outlay of PKR 1.03 trillion and a proposed development expenditure of PKR 349.5 billion, aiming to produce a provincial cash surplus of PKR 36.5 billion. The minister upheld the budget, stating it was “not a mere document”, but a “roadmap for sustainable economic progress” of the strife-ridden province. The budget projects its receipts worth PKR 801 billion from the federal tax divisible pool and straight transfers. The province’s revenue generation (independent from federal transfers) is estimated to be PKR 101 billion. The federal and foreign assistance for development projects is estimated to be PKR 104.5 billion. He also claimed that the government had fully utilized the development budget of PKR 219 billion for the first time in history in the outgoing fiscal year. The government had extended the ban on the purchase of new cars (except for law enforcement agencies) as a part of its austerity drive.
The government has proposed an increase of 10 per cent in salaries and a 7 per cent in pensions of all public-sector employees, in line with the federal government’s decision. For the first time, a PKR 500 million grant has been allocated to protect the environment under the Balochistan Climate Change Fund. Finance Minister Nausherwani in his budget speech said that “the major initiatives of the government for the FY 2025-26 include improving the basic infrastructure in far-off and backward areas of the province, preemptive measures to deal with emergency situations, introduction of modern reforms, strengthening of the social sector, steps for social protection, creation of job opportunities and restoration of complete peace.”
On June 18, an editorial in Dawn titled “Big challenges” expressed discontent over the Pakistan government’s attitude towards Balochistan and pointed out difficulties in implementation of the annual budget of the province. The editorial stated that the challenges the region faces are multifaceted; a few hundred billion rupees may not resolve these problems. Highlighting a contrast between the region’s rich geography and its poor socioeconomic indicators, the editorial drew attention to the growing separatist insurgency, sectarian militancy, poor governance, and endless corruption prevailing in Balochistan, hampering growth and security. Additionally, citing the average development budget utilisation of around 55 per cent, the editorial speculated that funds from last year’s budget have been misappropriated, countering the Finance Minister’s claims of complete utilisation of development funds.
Further, the editorial argued that Balochistan is not grappling with developmental challenges that the other provinces face, criticising the Pakistani government and establishment’s outlook towards Balochistan’s problems and population as security-centric. The editorial stated that this budget does not reflect a change in perspective; it only exacerbates the growing trust gap between the rulers and the ruled. Providing examples of inoperative projects such as CPEC and Gwadar port, the editorial revealed that private companies are afraid of investing their money in industrial development in the province. The editorial concluded that no amount of investments can address the issues that Balochistan faces until its political economy challenges are addressed first, and that it is pertinent to do so not just through kinetic action but also through stakeholder consultation and dialogue. (“Balochistan Budget 2025-26: Biggest-ever Rs1.03tr budget unveiled for ‘sustainable progress,’” Dawn, 18 June 2025 ;“Big challenges,” Dawn, 18 June 2025)
SOCIETY
On hate speech:
“Hate speech goes beyond words, often fuelling real-world violence, as highlighted on the International Day for Countering Hate Speech,” argues an editorial in Dawn
On 18 June, an editorial in Dawn titled “Spread of hate” reported that on the occasion of the International Day for Countering Hate Speech, they have given a theme for this year, which focuses on ‘Hate speech and artificial intelligence’, on how biased algorithms and unregulated digital platforms amplify harmful content, creating new spaces for abuse and harassment. The editorial stated that Pakistan has faced the worst consequences for ignoring hate speech, and these hate speeches have provoked members of the majority community to prevent the minority groups from observing their religious rights.The editorial mentioned that despite on ban on such groups, individuals spreading hate must face legal consequences. The editorial highlighted that hate speech is a worldwide problem, while it gave examples such as those seen in India where elected officials have allegedly been witnessed using vile, inflammatory language against Indian Muslims and record-high Islamophobic incidents in the UK and US. Far-right groups often target Muslims, immigrants, and people of colour as scapegoats, stoking racial unrest as seen in Northern Ireland. The editorial suggested that all governments should take action against hate groups and adopt a zero-tolerance policy. (“Spread of hate,” Dawn, 18 June 2025)
SECURITY
On the terror threat in Balochistan:
“The recurring threat of terrorism in Balochistan, most recently seen in the attack on the Jaffer Express, remains a serious obstacle,” argues an editorial in The Nation
On 18 June 2025, an editorial in The Nation titled “Unlocking Reko Diq” discussed that Prime Minister Shahbaz Sharif chaired a meeting regarding the Railways linking network, the Reko Diq project in Balochistan, to meet the strategic need for the future. It aspires to assimilate its economy with the global economy through rare earth minerals like gold, copper, and lithium and turn Pakistan into a “major mining hub”.The growing international interest in mining regions like Saudi Arabia’s Manara Minerals indicated its willingness to acquire a 10–20 per cent stake in the Reko Diq project during January. The exploration would be planned in the region for the prospects of mining in Balochistan. Further, there are aspirations to extend the national rail network to connect Reko Diq with Gwadar and Karachi for cost-effective and efficient transport that will reduce cost and achieve its full economic potential. The infrastructure would play a critical role in its flourishing. The editorial stated that the security constraints pose a threat as the recurring attacks by terrorist groups like the Balochistan Liberation Army and Tehreek-e-Taliban- Pakistan target infrastructure. It would lead to destabilization of the region and” hinder national integration”. To make Reko Diq successful, the government needs to take significant steps to curb the terrorist network. Not only provides security for the project sites, but also the transportation corridors that link to essential ports, so that it can contribute to its economy. It would develop Balochistan's mineral sector and would also provide employment opportunities to people. This project was to strengthen the transportation and cargo services. (“Unlocking Reko Diq,” The Nation,18 June 2025)
EXTERNAL
Italian Navy Ship arrives in Karachi for a three-day visit.
On 18 June, The Nation reported that the Italian Navy Ship ‘Its Antonio Marcegila’ has arrived at Karachi Port for a three-day visit, which is a major milestone between the Italian Navy and the Pakistan Navy. Officials of the Pakistan Navy received the Commanding Officer and crew of the visiting ship. This visit focuses on discussing maritime security, joint training sessions, and cross-ship visits. Through these engagements, they aim to strengthen bilateral naval cooperation, mutual understanding, and advance operational interoperability between the two navies. This visit of the Italian Navy Ship ‘Its Antonio Marcegila’ strengthens the growing maritime partnership between both countries. (“Italian Navy Ship arrives in Karachi for three-day goodwill visit,” The Nation, 18 June 2025)
Chief of Army Staff to meet President Trump at White House
On 18 June, as per the president's daily public schedule, President Donald Trump and Chief of Army Staff Asim Munir are set to meet for a private lunch at the White House Cabinet Room. The visit is followed by the recent ceasefire between Pakistan and India, in which President Trump played a significant role. The deadly clash between the two neighbours was a result of a terrorist attack in Pahalgam. The 87 hour-long conflict resulted in heavy casualties, including 40 civilians and 113 personnel from Pakistan. Operation Bunyan-um-Marsoos was launched by Pakistan, which it claimed led to the alleged downing of six Indian jets. The newspaper stated that on 10 May ceasefire agreement was brokered by the US between India and Pakistan. President Trump also offered to mediate on the Kashmir issue. A nine-member parliamentary delegation is visiting countries to put forward Pakistan's stance. United States General Kurilla acknowledged the strong anti-terror efforts, including the Daesh terrorists, that resulted in the deadly Abbey Gate bombing. In his US visit, Munir also interacted with the Pakistani diaspora in Washington, DC. He appreciated their support for the Pakistani economy through remittances and investments. The community praised him for his role in Operation Bunyanum Marsoos. (“President Trump hosts Field Marshal Asim Munir for lunch today,” The News International,18 June 2025); (“Overseas Pakistanis ambassadors of Pakistan: Field Marshal Asim Munir,” The Nation, 18 June 2025)
|
