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In Focus
Government unveils PKR 18.8 trillion budget for FY2026-27
Growth rate projected at 4 per cent; development spending stands at PKR 3.6 trillion while defence budget rises by 17.6 per cent
On 13 June, Dawn reported that Finance Minister Muhammad Aurangzeb presented Pakistan’s FY2026-27 federal budget with a total outlay of PKR 18.8 trillion after delays and political consultations. The government projected 4 per cent GDP growth, 8.2 per cent inflation and a fiscal deficit of 3.6 per cent of GDP. Key measures included reduced income tax rates across several salaried slabs, a seven per cent increase in government salaries and pensions, a 10 per cent rise in minimum wage, and higher allocations for social support programmes.
In contrast, development spending was restrained despite a PKR 3.675 trillion national development envelope. Federal Public Sector Development Programme (PSDP) spending was kept at PKR one trillion, with emphasis on transport, energy, water, education and strategic infrastructure rather than new projects. Major allocations included the N-25 highway, M-6 Sukkur-Hyderabad Motorway, energy projects and funding for “Azad Jammu and Kashmir”, “Gilgit-Baltistan” and merged districts in Khyber Pakhtunkhwa. The government also highlighted privatisation plans and tax administration reforms.
Dawn also reported that defence remained one of the budget’s clearest priorities, with allocations rising to PKR three trillion - about 17.6 per cent higher than the outgoing year’s original allocation - amid tensions with India, militancy concerns and border security pressures. Meanwhile, Pakistan Tehreek-e-Insaf (PTI) rejected the budget, calling it an elite-focused plan reliant on taxation, debt and privatisation while offering insufficient relief for households and small businesses. Coalition tensions were also visible as the Pakistan Peoples Party (PPP) staged symbolic protests over Sindh’s water concerns. (“Govt unveils Rs18.8tr budget for FY2026-27; GDP growth targeted at 4pc,” Dawn, 12 June 2026; “Budget offers tax break to salaried class, businesses,” Dawn, 13 June 2026; “BUDGET 2026-27: CPEC 2.0 only new project in Rs3.6tr development kitty,” Dawn, 13 June 2026; “BUDGET 2026-27: Defence gets Rs3tr amid security concerns,” Dawn, 13 June 2026; “PTI rejects federal budget for FY2026-27, terms it an 'exercise in elite self-preservation',” Dawn, 12 June 2026)
State Bank of Pakistan releases Economic Survey 2025-26
Report reveals moderate growth amid rising poverty and fiscal strain; slower growth linked to devastating 2025 floods
On 12 June, Dawn reported that the State Bank of Pakistan (SBP) released the Pakistan Economic Survey 2025-26, showing GDP growth of 3.7 per cent, which is above last year’s 3.18 per cent but below the 4.2 per cent target. Agriculture grew 2.89 per cent, industry expanded 3.51 per cent with a rebound in large-scale manufacturing, and services rose 4.09 per cent. Fiscal indicators improved, with the deficit narrowing to 0.7 per cent of GDP during July-March and tax revenues increasing 11.3 per cent to PKR 10.17 trillion. The survey also noted external public debt of USD 92.2 billion, including USD 42.5 billion in multilateral loans and USD 9.9 billion owed to the IMF.
The survey showed a rare decline in tax exemptions after seven consecutive years, falling 3.37 per cent to PKR 2.35 trillion, even as sales tax concessions increased modestly. At the same time, Pakistan’s IT and telecom sector recorded expansion, with a USD 509.6 million 5G spectrum auction, broadband penetration reaching 64.2 per cent, telecom revenues of PKR 837 billion, and ICT export remittances rising 19 per cent to USD 3.38 billion, reflecting continued investment in digital infrastructure and connectivity.
Dawn reported worsening social pressures despite macroeconomic gains, with national poverty increasing from 21.9 per cent in 2018-19 to 28.9 per cent in 2024-25, pushing around 27 million additional people into poverty and raising the total to 70 million. Inequality also widened across provinces. The survey also linked slower growth to the 2025 floods, which caused PKR 822 billion in losses, killed 1,039 people, displaced over four million, and severely damaged agriculture, infrastructure, and employment across the country.
Read the report:
"Pakistan Economic Survey 2025-26," State Bank of Pakistan, 12 June 2026
(“Economy grows 3.7pc in FY26 — fastest in four years, but short of target,” Dawn, 11 June 2026; “ECONOMIC SURVEY 2025-26: 2025 floods hit agriculture hardest with Rs430bn losses,” Dawn, 12 June 2026; “ECONOMIC SURVEY 2025-26: Digital economy grows as IT sector posts gains,” Dawn, 12 June 2026; “Cash-starved govt doles out Rs2.35tr in tax exemptions,” Dawn, 12 June 2026; “ECONOMIC SURVEY 2026-27: Poverty surges 7pc, pushing 27m people into financial distress,” Dawn, 12 June 2026)
In Brief
EXTERNAL
CDF Munir meets Turkish Land Forces commander to boost ties
On 11 June, Dawn reported on Chief of Defence Forces (CDF) and Chief of Army Staff (COAS) Field Marshal Syed Asim Munir meeting General Metin Tokel, Commander of the Turkish Land Forces, at General Headquarters (GHQ) in Islamabad. The two sides discussed matters of mutual interest, regional security dynamics and avenues for enhanced bilateral defence cooperation. General Tokel also separately called on Chief of Naval Staff Admiral Naveed Ashraf and Chief of Air Staff Air Chief Marshal Zaheer Ahmed Baber Sidhu, with discussions focusing on maritime security and bilateral military cooperation. General Tokel praised the professionalism of Pakistan's armed forces and expressed his commitment to further strengthening defence ties between the two countries. (“CDF Munis Discusses Enhanced Defence Cooperation with Turkish Land Forces Commander,” Dawn, 11 June 2026)
Pakistan calls for inter-civilisational dialogue at UN event
On 11 June, Dawn reported that Pakistan’s Permanent Representative to the UN, Ambassador Asim Ifthikhar Ahmad, stressed the importance of inter-civilisational dialogue at a high-level event marking the International Day of Dialogue among Civilisations, organised by China’s Permanent Mission to the UN. Ambassador Ahmad described dialogue and diplomacy as the most effective tools to bridge differences and foster mutual understanding. He highlighted Pakistan’s geographic position as a melting pot of civilisations and reaffirmed the country’s commitment to advancing interfaith harmony and pluralism as both a national value and a foreign policy driver. He also recalled a resolution on interreligious and intercultural dialogue that Pakistan co-sponsored with the Philippines, which was adopted by the UN General Assembly on 20 May. (“At UN Pakistan Terms Inter-civilization Dialogue Key to Addressing Contemporary Challenges,” Dawn, 11 June 2026)
Pakistan wins top honour at UK military drill competition
On 12 June, Dawn reported on the Pakistan Army team winning first place at the International Pace Sticking Competition 2026 held at the Royal Military Academy (RMA) Sandhurst in the United Kingdom. The nine-member contingent, led by Major Haider Gulzar and representing the Pakistan Military Academy PMA), made a clean sweep by securing the Overall Team Trophy, Best Pace Sticker and Best Driver awards. A total of 16 international teams competed in the annual event. The Inter-Services Public Relations (ISPR) described the victory as a reflection of the high standards of professional training maintained by Pakistan’s armed forces. (“Pakistan secures top position at international military drill competition in UK: ISPR,” Dawn, 12 June 2026)
ECONOMY
PM approves strategic roadmap for Pakistan Railways
On 11 June, Dawn reported that Prime Minister Shehbaz Sharif approved a strategic roadmap for comprehensive reforms in Pakistan Railways. The roadmap includes targets to increase market share in both passenger and freight sectors with improvements in services, digitisation, track upgradation and private-sector investment. The reforms also include the use of modern coaches, provision of facilities for passengers in trains and at stations, upgradation of ML-1, ML-2, ML-3 and other tracks. Prime Minister emphasised that Pakistan Railways has immense potential to become a safe and affordable mode of transportation for the public and freight services. (“PM Shehbaz approves strategic roadmap for comprehensive reforms in Pakistan Railways,” Dawn, 11 June 2026)
POLITICS & GOVERNANCE
PPP’s Bilawal welcomes PM Shehbaz’s support to form government in “Gilgit-Baltistan”
On 12 June, Dawn reported that Pakistan Peoples’ Party (PPP) Chairman Bilawal Bhutto Zardari welcomed Prime Minister Shehbaz Sharif’s support for government formation in “Gilgit-Baltistan” after unofficial results from the 07 June elections showed the PPP leading with 11 of 24 assembly seats. According to Radio Pakistan, the prime minister said the Pakistan Muslim League (N) would sit in opposition but support the PPP’s formation of government through its votes. Bilawal described the move as a continuation of democratic practice and said a consensus arrangement would allocate the governor and deputy speaker positions to PML-N, while PPP pledged to focus on property, employment and constitutional rights in the region. (“Bilawal welcomes invitation to form PPP govt in GB, expresses gratitude to PM Shehbaz,” Dawn, 12 June 2026)
SECURITY
Bannu: Two policemen killed in separate attacks
On 12 June, Dawn reported that two police constables were killed in separate targeted attacks in Bannu, which authorities classified as acts of terrorism. Police Constable Mishqat Amir was shot dead on Bannu-Miranshah Road near Azad Mandi while returning home after attending a religious gathering, while Police Constable Muhammad Roshan, posted at the North Waziristan TDP camp, was attacked outside his residence in Saidgi Baka Khel and later died of his injuries. Police launched investigations and intelligence-based search operations to apprehend those responsible. The killings come amid worsening security conditions in Khyber Pakhtunkhwa, where militant violence and attacks on security personnel have intensified in recent months. (“2 policemen martyred in separate 'targeted attacks' in Bannu,” Dawn, 12 June 2026)
SOCIETY
Literacy rate climbs to 63 per cent; Education spending trends downward
On 12 June, Dawn reported that the Economic Survey showed the literacy rate for people aged 10 and above saw a two per cent increase from 61 per cent to 63 per cent. The male-female literacy gap narrowed, with male literacy standing at 73 per cent and female literacy at 54 per cent. Urban areas had a literacy rate of 74 per cent, whereas rural areas had a 55 per cent literacy rate. Rural female literacy had the greatest improvement of any group. The survey recorded that education expenditure dropped in the 2024-2025 period as compared to 2022-2023, with the former expenditure reaching 0.8 per cent of Pakistan's GDP, whereas the 2022-2023 expenditure was higher at 1.5 per cent of GDP. This statistic in itself is lower than 2021-2022's 1.7 per cent expenditure, showing a clear downward trend. Pakistan's out-of-school children rate declined from 38 per cent in 2023 to 28 per cent in 2025. The report highlighted infrastructure discrepancies between provinces, particularly in electricity, where only 65 per cent of the country had access to it. (“Literacy rate improves by 2pc, but education spending falls in 2025,” Dawn, 12 June, 2026)
PROVINCES
Punjab draws surplus water as Sindh and Balochistan face severe shortages
On 11 June, Dawn reported that, according to the Sukkur Barrage Control Room, upstream inflow at Sukkur Barrage stood at 50,620 cusecs, whereas withdrawal stood at 32,120 cusecs. Irrigation department. Irrigation department sources stated the water allocation for Sindh is 53,200 cusecs, whereas the actual supply stood at just 32,120. This indicates a shortage of approximately 39.6 per cent. Both right and left bank canals and the Kotru barrage faced severe shortages, with the Dadu Canal facing the most critical deficit at 85.7 per cent. Balochistan also faced a deficit as its 2200 cusec allocation was greater than its total North West Canal supply of 2100 cusecs. Irrigation officials communicated the deficit to the Chief Engineer of the Barrage, requesting equitable distribution. The water crisis continued to heavily affect the Larkana Division, the leading rice-producing region in Pakistan. Of the 650 rice mills in Sindh, 500 are located in Larkana. (“Punjab draws excess water as Sindh and Balochistan face severe shortages,” Dawn, 11 June, 2026)
PAKISTAN AND THE US-IRAN WAR
“Final agreed-upon” text has been reached, says PM Shehbaz
On 12 June, Dawn reported that Prime Minister Shehbaz Sharif said a “final agreed-upon” text for a peace deal between the United States and Iran had been reached, raising hopes for ending months of conflict. The announcement followed remarks by US President Donald Trump that an agreement could be signed as early as the weekend and reopen the Strait of Hormuz. PM Shehbaz said Pakistan was working closely with both sides and warned against misinformation aimed at derailing negotiations. Iranian Foreign Minister Abbas Araghchi also described the emerging accord as the “Islamabad Memorandum of Understanding”, while US Vice President JD Vance said the deal prioritised security concerns while offering economic benefits if commitments were met. (“'Peace has never been this close': PM Shehbaz says text of 'final' US-Iran peace deal agreed upon,” Dawn, 12 June 2026)
Editorials/Opinions
US-Iran war
Editorial, "Peace in retreat," Dawn, 11 June 2026
"The ceasefire announced in April was supposed to create space for negotiations. Instead, it has been repeatedly tested by military confrontations. The latest and most serious exchange began with the downing of a US Apache helicopter near the Strait of Hormuz and escalated into American strikes on Iranian military targets and retaliatory Iranian attacks on US bases in Jordan, Kuwait and Bahrain. While both sides continue to speak of diplomacy, events are moving in the opposite direction."
https://www.dawn.com/news/2006803/peace-in-retreat
Imran Jan, "How US and Israel are the biggest losers of this war," The Express Tribune, 11 June 2026
"When the Soviet Union lost the Cold War, it was not like it became an occupied territory where the American occupiers handled Russian slaves. But rather the Soviet Union lost the global power status and communism lost the influence it was supposed to have around the world. Likewise, when the United States lost the war in Vietnam, America did not sign some document of surrender and it wasn't like Ho Chi Minh was marching in the streets of Hanoi dictating the terms of the American defeat."
https://tribune.com.pk/story/2612472/how-us-and-israel-are-the-biggest-losers-of-this-war
Provinces
Editorial, "Karachi's crime culture," The Express Tribune, 10 June 2026
"There is little debate left about Karachi's liveability as it plunges further into disorder every year, especially when compared with other big cities of Pakistan. But one question will always remain unanswered - do citizens get the government they deserve, or does the government instigate citizens into living anarchically? Regardless, it comes as no surprise that an inflation-ridden land with barely any social protection is, according to the Citizens Police Liaison Committee (CPLC), reporting an uptick in crime and a deteriorating law and order situation."
https://tribune.com.pk/story/2612288/karachis-crime-culture
Economy
Ishrat Husain, "Regulation and deregulation," Dawn, 11 June 2026
"Pakistan’s real challenge is not to choose between regulation and deregulation, but to regulate intelligently, promote competition and enforce rules impartially. Strong, independent and professionally managed regulators are essential for attracting investment, protecting consumers and ensuring affordable, reliable energy supplies. Only then can regulation become an instrument of economic efficiency, instead of remaining an obstacle to growth."
https://www.dawn.com/news/2006808/regulation-and-deregulation
Budget 2026-27
Editorial, "Centre vs provinces," Dawn, 10 June 2026
"Delays in budget announcements are normal. After all, it is not easy to satisfy different lobbies competing for a bigger share of the shrinking fiscal pie. But the current impasse is of a different order. It signifies a constitutional and political crisis that the government is struggling to contain. The immediate cause is clear, even if the government is reluctant to state it openly."
https://www.dawn.com/news/2006555/centre-vs-provinces
Society
Muhammad Hamid Zaman, "Reimagining healthcare for the displaced," The Express Tribune, 10 June 2026
"The idea that the system to protect and deliver quality healthcare to those displaced because of conflict or persecution remains broken is not particularly novel. It is self-evident now. Funding to support distressed communities has all but evaporated, and whatever fiction of international law we believed in, is no longer believable."
https://tribune.com.pk/story/2612322/reimagining-healthcare-for-the-displaced-1
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