NIAS Area Studies
PAKISTAN READER
Photo : Reuters
In Focus
IMF and Pakistan finalize Staff-Level agreement for USD 1.2 billion
On 15 October, Dawn and The News International reported that Pakistan had reached a staff-level agreement (SLA) with the International Monetary Fund (IMF) for USD 1.2 billion in the form of new loans, subject to approval from the IMF Executive Board. The SLA amounts to USD 1 billion in the form of the Extended Fund Facility (EFF), and USD 200 million in the form of the Resilience and Sustainability Facility (RSF), raising cumulative disbursements under both facilities to USD 3.3 billion. As noted by the IMF, the SLA was reached following extensive discussions led by Iva Petrova in Islamabad from 24 September to 8 October. The discussions focused on the ongoing 37-month Extended Fund Facility arrangement and the climate-related Resilience and Sustainability Facility arrangement. The Fund noted that Pakistan's recovery "remains on track," with a current account surplus for FY25 — the first such surplus in 14 years; attaining primary fiscal balance performance above targets; and improving financial conditions, evidenced by narrowing sovereign spreads and controlled inflation.
The IMF cautioned that recent floods have hampered economic momentum, especially in agriculture, which resulted in the downward revision of FY26 GDP to 3.25-3.5 percent.
The Fund stressed Pakistan's exposure to climate-related disasters and the urgent need for investments in resilience in the areas of green mobility, water management, and disaster risk financing reforms. On the fiscal discipline front, the government reconfirmed a FY26 primary surplus of 1.6 percent of GDP, continuation of tax policy and compliance reforms, and improvements in the fiscal tension between the federal and provincial levels. The State Bank of Pakistan (SBP) has also noted that it will maintain a tight monetary stance with the view to keeping inflation in the 5-7 percent range, while the government provided commitments to prevent the accumulation of circular debt by enforcing cost-recovery energy tariffs and proceeding with initiatives to privatize inefficient state-owned utilities.
In summary, the IMF noted Pakistan's "commitment to firm policy" regarding fiscal discipline, institutional reform, and climate adaptation as critical to ensuring sustainable growth, stability of the external account, and the welfare of the vulnerable population.
IMF, Pakistan reach staff-level agreement over another $1.2bn in loans, Dawn, 15 October 2025; IMF, Pakistan reach preliminary deal on $1.2bn payout, The News International, 15 October 2025
Af-Pak Clashes:
Another flare-up in Kurram
On 15 October, Dawn and The Express Tribune reported that new hostilities broke out along the Pakistan–Afghanistan border, specifically in Kurram sector of Khyber Pakhtunkhwa, by Afghan Taliban forces and their followers in Tehreek-e-Taliban Pakistan (TTP), which Islamabad refers to as Fitna al-Khawarij, while the Army developed what officials called a “strong and decisive counteroffensive”, attacking multiple Taliban posts and tanks on the border. According to security sources who spoke to The Express Tribune, six tanks and several posts were destroyed, including training camps in Afghanistan used by militants operating in Kurram. Footage obtained through night-vision technology reportedly captured flames and explosions in Taliban-held areas of Afghanistan, and some Taliban were seen raising white flags in surrender. The Army reportedly stated a prominent TTP commander was killed in the operation as well. They have said the attacks were a “measured but powerful” response to continued cross-border attacks on Pakistan and were also focused on dismantling militant infrastructure along the borderlands.
According to Dawn, Pakistan's Foreign Office updated resident diplomats in Islamabad about the recent clashes, reaffirmed Pakistan's legitimate security concerns, and confirmed the death of 23 Pakistani soldiers and over 200 Afghan Taliban fighters in the recent clashes, which occurred over October 11-12. Officials stated there was no truce, and there will be continued operations by Pakistan due to "territorial integrity." Border crossings, such as Torkham and Chaman, remained closed, with exceptions allowed for any limited humanitarian movement. Meanwhile, JUI-F chief Maulana Fazlur Rehman offered to mediate between the two sides and requested some measure of restraint and dialogue, especially to avoid escalation of their dispute. Regional actors, including China, the U.S., Qatar, Saudi Arabia, and Iran, expressed concerns about the renewed conflict and requested that both parties de-escalate. Fighting demonstrates the underlying tensions of the volatile Pakistani-Afghan frontier and reflects on an increasing impatience on the part of Islamabad with what it views as Kabul's inability or unwillingness to limit militant activity, as it is occurring from Afghan territory.
Pakistan Army destroys Afghan Taliban tanks, posts in retaliatory strikes near Kurram border, The Express Tribune, 15 October 2025; Army responds after another flare-up on Afghan border, Dawn, 15 October 2025
Pakistan rare earth shipment to the US
China slams reports
On 14 October, China's Foreign Minister slammed reports of rare earth shipment sent by Pakistan to US firm. He rejected the claim made by media reports and called them "misinformed, invented or designed to drive a wedge" between Pakistan and China.
The Global Times reported that Pakistan used Chinese technology to export rare earth minerals to the Missouri- based firm, US Strategic Metal, which prompted Beijing to put stricter control on rare earth and related technologies exports to US.
China's Foreign Minister also commented on the mineral samples gifted by Pakistan leadership to US President Donald Trump. FM claimed that those are not rare earth materials rather just gems purchased by staff of Pakistan.
On 8 November, China's restrictions on exports of rare earths will come into effect, impacting exports of rare earth extraction technologies, single crystals, synthetic diamond powders and related materials.
References
“China rejects reports of Pakistan supplying rare earth samples to US”, The News International, 15 October 2025; “Chinese FM slams relevant reports on alleged Pakistan rare-earths exports to US as baseless, or even attempt to sow discord” , The Global Times, 13 October 2025
In Brief
POLITICS
KP CM to be sworn in today
On 15 October, Dawn reported that Peshawar High Court's Chief Justice during hearing of the Khyber Pakhtunkhwa CM election process issue, observed that under Article 255, a chief minister's resignation did not require any approval from the Governor. The Chief Justice also observed that the Governor had raised objections over Mr Ali Amin Gandapur's signature on a resignation letter that was sent to the Governor office. As per Dawn reports, Governor Kundi will be there in Peshawar by 15 October. He also said that he never refused to administer oath and would administer the oath abiding by the constitution. The oath ceremony is expected to be held today.
“KP CM to be sworn in today after court ultimatum”, Dawn, 15 October 2025
SOCIETY
Polio Team attacked in Khyber Pakhtunkhwa
On 15 October, Dawn reported that Polio Vaccination drive was attacked in Swat district. A levies constable on duty for protection of polio workers was shot dead by assailants in the Enzergae Dag area of Swat's Matta tehsil. The attack took place after the latest National Polio Drive was launched under Pakistan Polio Eradication Initiative aiming to complete eradication of polio from the country. The Prime Minister also condemned the attack and emphasised on continuous resolve by the Government to eliminate polio from the country.
“Levies man guarding polio team martyred in Swat”, Dawn, 15 October 2025
ECONOMY
IMF warns of Inflation and current account deficit amid floods assessment
On 15 October, Dawn reported that the IMF predicted Pakistan economic growth rate for the current fiscal year at 3.6 per cent, combined with current account deficit and higher inflation. The IMF estimated higher growth rates than World Bank estimates of 2.6 per cent, although the inflation rate to rise by 6 per cent this year from 4.5 per cent last year and it also projected Pakistan's Current Account Balance to shift from a 0.5 per cent surplus last year to a 0.4 per cent deficit this year. However, the IMF has yet to assess flood impacts on the economy.
“IMF warna of rising inflation and current account deficit”, Dawn, 15 October 2025
Editorials/Opinions
"Washington meetings," Editorial, Dawn, 15 October 2025
"While Islamabad may eventually secure the agreement after more discussions and assurances, the repeated delays in finalising each review, despite the IMF staff’s positive assessments of Pakistan’s progress on programme targets, do not send a reassuring signal to the international community. This approach is doing little to help Pakistan regain the confidence of investors or bilateral lenders, as evidenced by the stagnation in both official and private inflows, which will be key to sustaining economic stability and kick-starting growth in the post-IMF years."
https://www.dawn.com/news/1949020/washington-meetings
Zahid Hussain, "A dangerous collision," Dawn, 15 October 2025
"The worsening conflict between the two neighbouring nations carries serious implications for regional security. It seems Pakistan has lost patience with the Afghan Taliban administration refusing to act against the TTP sanctuaries being used to stage cross-border attacks. The tension further heightened after Pakistan claimed it had evidence about Afghan Taliban men also being involved in some of the terrorist attacks inside Pakistan. What the state is not willing to accept is that the rise of militancy is directly linked with political instability. Only kinetic operations cannot defeat militancy. The growing political alienation in KP and Balochistan is most alarming. There is a huge trust gap between the local population and the security forces in the troubled areas, making it much more difficult to fight militancy."
https://www.dawn.com/news/1949025/a-dangerous-collision
Asif Durrani, "What Muttaqi’s India visit means for Pakistan," The News International, 15 October 2025
"Muttaqi’s warning to Pakistan during the press conference in the Afghan embassy in New Delhi – that Pakistan should read Afghan history when it defeated the British, Soviets and the Americans – was quite instructive. Muttaqi’s refusal to admit to the TTP and its leadership’s presence on Afghan soil were equally belligerent. The visit has been portrayed as India’s ‘success’ in luring the Taliban to align with India in return for economic and humanitarian assistance. Therefore, instead of being swayed by emotions, policymakers in Pakistan would be well advised that, while improving relations with the Taliban regime, they should keep a respectable distance and treat Afghanistan as a sovereign state."
https://www.thenews.com.pk/latest/1351078-what-muttaqi-s-india-visit-means-for-pakistan
Hafiz Ahsaan Ahmad Khokhar, "KP’s constitutional double trouble," The News International, 15 October 2025
"The current attempt to hold an election and request oath administration from the governor while the previous chief minister’s resignation remains unaccepted represents an unprecedented constitutional anomaly. It disrupts the orderly transition of power and contravenes the very spirit and text of constitutional continuity and stability. Any actions, decisions, or directives issued by an individual claiming to be the chief minister without a constitutionally valid election or oath-taking are extra-constitutional and without lawful authority. To restore political stability and institutional credibility, all state organs must return to the clear text of the constitution and respect the plain language of the law."
https://www.thenews.com.pk/latest/1351079-kp-s-constitutional-double-trouble