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In Focus
Despite decline in terrorism, high-profile attacks continued in June: PICSS
184 of the 262 killed in June were terrorists, 52 were civilians; Balochistan records 31 per cent decline in attacks
On 01 July, Dawn reported that Pakistan experienced a decline in anti-state violence during June, according to the Pakistan Institute for Conflict and Security Studies (PICSS). The think tank recorded 108 terrorist attacks, down from 128 in May, while total fatalities fell to 262, including 184 militants, 52 civilians and 26 security personnel. Kidnappings also halved compared with the previous month, although the report noted four suicide attacks, including the 27 June attack on a Rangers facility in Karachi.
The report found that violence declined significantly in Balochistan and the former tribal districts of Khyber Pakhtunkhwa (KP), while attacks rose slightly in the rest of KP and Sindh. Punjab recorded one militant attack, while no attacks were reported in Islamabad, “Azad Jammu and Kashmir” or “Gilgit-Baltistan”. During the first six months of 2026, PICSS recorded 2,166 conflict-related deaths, including 1,442 militants, 404 civilians and 307 security personnel. (“High-profile attacks persist in June despite overall decline in terrorism: PICSS,” Dawn, 01 July 2026)
Weak fiscal federalism is undermining revenue and public finances, finds World Bank
Report says constitutional devolution remains incomplete despite Pakistan making “meaningful progress” since 2010
On 01 July, Dawn reported that the World Bank said Pakistan had made "meaningful" progress on fiscal federalism since the 18th Constitutional Amendment in 2010 but continued to diverge from international best practices. In its report, “Strengthening Fiscal Federalism in Pakistan”, the World Bank said expenditure responsibilities remained poorly defined, the federal government continued operating in devolved sectors, and the division of sales tax powers had fragmented the tax system, increasing compliance costs and weakening revenue collection. It also said agricultural income and property taxes remained significantly underutilised.
The report further argued that the current National Finance Commission (NFC) transfer system had failed to improve fiscal equalisation or incentivise provincial revenue generation, contributing to a structural federal fiscal deficit and rising public debt. It also criticised the weak fiscal autonomy of local governments, noting that Provincial Finance Commission awards were infrequent and transfers largely discretionary. Among its recommendations, the World Bank called for harmonising the GST system, strengthening local governments, reforming federal-provincial revenue sharing, and reviving institutions such as the NFC and the Council of Common Interests to improve coordination and accountability. (“Pakistan made 'meaningful' progress in fiscal federalism, but deviations remain: WB,” Dawn, 01 July 2026)
Read the report:
“Strengthening Fiscal Federalism in Pakistan”, World Bank, 27 June 2026
In Brief
ECONOMY
Pakistan's consumer inflation eases to 11.1 per cent in June as transport costs fall
On 01 July, Dawn reported that Pakistan's Consumer Price Index inflation eased to 11.1 per cent year-on-year in June 2026 from 11.7 per cent in May, according to the Pakistan Bureau of Statistics, driven primarily by a 7.22 per cent month-on-month fall in transport costs following petrol and diesel price cuts. However, the government has yet to fully pass on the benefit of lower international oil prices to consumers. On a month-on-month basis, inflation declined 0.3 per cent. Average inflation for FY26 as a whole stood at 7.05 per cent against 4.49 per cent the previous year. Core inflation stood at 8.7 per cent in urban areas and 7.9 per cent in rural areas, while non-food inflation remained elevated at 13.1 per cent in urban areas and 12.3 per cent in rural areas. Urban food items recording sharp month-on-month increases included tomatoes at 90.1 per cent, onions at 20.8 per cent, and potatoes at 17.76 per cent, while chicken fell 22.44 per cent and eggs 10.74 per cent. Housing, water, electricity, gas, and fuels posted a 15.5 per cent annual increase. The SBP's policy rate remains at 11.5 per cent, raised from 10.5 per cent in April in response to rising inflation. The government has set an inflation target of 8.2 per cent for FY27. ("Consumer inflation rate eases slightly to 11.1pc in June due to lower energy, food prices: PBS," Dawn, 01 July 2026)
Pakistan needs 7 per cent growth to absorb 1.8 million new job-seekers annually as population pressure mounts
On 01 July, Dawn reported that Planning Minister Ahsan Iqbal warned at the launch of a research study on population growth and human security that Pakistan requires a seven per cent annual economic growth rate to absorb 1.8 million new job-seekers entering the labour market each year, a target being undermined by a population growth rate of 2.55 per cent and a fertility rate of 3.6 per cent that adds six million people to the country annually. Iqbal noted that with the economy currently growing at around three per cent against population growth of 2.5 per cent, real per capita progress is reduced to just half a per cent, creating a contradiction where macroeconomic indicators approach middle-income status while social indicators resemble those of least developed nations. He flagged a structural flaw in the NFC framework, which links resource allocation and political representation directly to population size, inadvertently discouraging provinces from implementing effective family planning by penalising demographic success with reduced federal transfers. The minister called for reforms to reward demographic efficiency rather than population numbers within the NFC formula. The study warned that if current trends continue, Pakistan's population will reach 340 million by 2050 and exceed 400 million by 2100. ("7pc growth needed to create 1.8m new jobs annually: minister," Dawn, 01 July 2026)
Government borrowing exceeds full-year FY25 level before year-end as domestic debt crosses PKR 58 trillion
On 01 July, Dawn reported that the government borrowed PKR 611 billion in just five working days between 15 and 19 June, at a rate of PKR 122 billion per day, pushing total FY26 borrowing to PKR 5.529 trillion, exceeding the full-year FY25 figure of PKR 5.434 trillion before the fiscal year had even closed. By comparison, borrowing up to 20 June in FY25 had stood at PKR 4.71 trillion, highlighting a sharply accelerated pace this year. Domestic debt had already crossed PKR 58 trillion by April 2026. With the government expected to spend PKR 8 trillion on debt servicing in FY27 against a federal PSDP allocation of only PKR 1 trillion, analysts warned that the growing debt burden was crowding out development spending and limiting private sector credit, constraining growth and job creation. Banking experts noted that economic growth below four per cent is insufficient to generate new employment or meaningfully increase government revenues. ("Govt borrowing crosses FY25 level before year-end," Dawn, 01 July 2026)
Board of Revenue beats revised tax target by PKR 21 billion in FY26
On 01 July, Dawn reported that the Federal Board of Revenue (FBR) collected PKR 13.004 trillion in FY26, exceeding its revised target by PKR 21 billion, driven by stronger-than-expected income tax receipts of PKR 6.579 trillion. The petroleum development levy also outperformed at PKR 1.564 trillion against a PKR 1.468 trillion target, aided by levy rates of up to PKR 120 per litre on petrol. Sales tax, customs duty, and federal excise duty all fell slightly short of their respective revised targets. Total collection nonetheless fell PKR 975 billion short of the original IMF-agreed target of PKR 13.979 trillion. ("FBR beats revised tax target by Rs21 billion," Dawn, 1 July 2026)
USD 70 million loan approved by World Bank for Connected Punjab digital infrastructure programme
On 01 July, Dawn reported that the World Bank approved a USD 70 million loan for the Connected Punjab Programme, part of a broader USD 278 million investment with Punjab government counterpart funding of USD 208 million. The programme aims to expand broadband coverage to 9.9 million people, deploy AI-enabled public services reaching 28.9 million people, increase women's use of digital government services from 19 to 30 per cent, and register 350,000 active cashless payment users, all by June 2031. ("World Bank approves $70m loan for Connected Punjab Programme aimed at improving digital infrastructure," Dawn, 01 July 2026)
Sindh Revenue Board posts record PKR 370 billion collection in FY26, surpassing annual target
On 02 July, Dawn reported that the Sindh Revenue Board collected a record PKR 370.064 billion in FY26, exceeding its annual target of PKR 362 billion and growing 20.17 per cent from PKR 307.93 billion the previous year. Sales tax on services, the board's primary mandate, reached PKR 344.602 billion, up 21.2 per cent year-on-year. June alone saw PKR 45.08 billion collected, the highest monthly figure since the board's inception. The newly assigned Agricultural Income Tax missed its PKR 6 billion target, collecting just over PKR 1 billion. The SRB has been set a sales tax target of PKR 456 billion for FY27. ("Sindh collects record Rs370bn in FY26," Dawn, 02 July 2026)
EXTERNAL
Pakistan pledges increased funding for UN mission for Palestine refugees
On 02 July, The Express Tribune reported that Pakistan pledged to increase its financial contribution to the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) after António Guterres appealed for countries to help bridge a major funding shortfall. Speaking at a UNRWA pledging conference, Pakistan’s Deputy Permanent Representative to the UN, Ambassador Usman Jadoon, called for the agency’s mandate to be preserved and adequately funded, condemned Israeli measures targeting UNRWA, and said no other organisation could replace its role in supporting Palestinian refugees. He also urged greater international financial support and reaffirmed Pakistan’s backing for a two-state solution. (“Pakistan to boost UNRWA funding,” The Express Tribune, 02 July 2026)
POLITICS & GOVERNANCE
Punjab: Complete redraft of Anti-Social Behaviour Bill ordered by Assembly
On 01 July, Dawn reported that Chief Minister Maryam Nawaz ordered a complete redraft and reconsideration of the Punjab Control of Habitual Offenders and Anti-Social Behaviour Bill. The announcement had been made during a Punjab Assembly session. It was said that the bill would return to the law department, which would in turn hand it over to the provincial cabinet.
The bill is set to be completely reworked and returned to the Punjab Assembly, due to human rights concerns. The session had faced turmoil when Opposition lawmaker Rana Shahbaz alleged routine neglect of patients in government hospitals, in reference to the victim of a shooting dying due to delayed medical aid. Overall, the assembly passed three resolutions unanimously: a water scarcity resolution, an anti-drug campaign, and finally a resolution to celebrate the transition of the Punjab assembly into the country’s first fully digital legislature. (“PA to return controversial bill to govt for changes,” Dawn, 01 July 2026)
PTI currently not holding talks with government, says chairman Gohar
On 01 July, Dawn reported that, while speaking to the media, PTI Chairman Barrister Gohar remarked that it was “the responsibility of those who hold authority” to reach out and respond to the PTI’s offer for negotiations, arguing that the Leader of the Opposition in the assembly had shown generosity in offering talks with the government. He stated that social media rumours that the PTI were boycotting the upcoming elections were false. Furthermore, Gohar expressed concerns over the condition of facilities for former prime minister and PTI founder Imran Khan, and rejected the move to tax previous Fata districts. He also criticised PM Shehbaz as not seeing KP as “part of Pakistan,” further remarking that the government was “trampling the constitution” and that it did not handle unrest in “AJK” properly. Earlier in June, the government had invited the opposition to consult with PM Shehbaz on national issues. (“Barrister Gohar says PTI not talking with govt at the moment,” Dawn, 01 July 2026)
SECURITY
Sindh: Counter Terrorism Department investigates attack involving Karachi Rangers
On 01 July, The Express Tribune reported that the Counter Terrorism Department (CTD) had registered five cases linked to the terrorist attack on a Karachi Rangers facility that killed three Rangers personnel. Investigators alleged that the assailants were members of the banned Jamaat-ul-Ahrar (JuA) group. During the 27 June attack, a suicide bomber detonated explosives at the main gate of the Rangers workshop before armed militants opened fire. Rangers personnel, including the Special Force and Quick Response Force, responded, killing two attackers and capturing a third after he was wounded. According to investigators, the captured suspect identified his accomplices as two Afghan nationals - one of whom carried out the suicide bombing and the other was killed in the firefight - and one Pakistani national, who was also killed. The development follows a large-scale crackdown on Afghan nationals residing illegally in Karachi's Malir district. (“CTD opens five fronts in Karachi Rangers attack probe,” The Express Tribune, 01 July 2026)
Peshawar: One person killed, six injured in suspected drone strike
On 01 July, Dawn reported that sources stated seven individuals apart of the same family were rushed to the hospital following the incident. One of the individuals, a woman, was in critical condition. Two individuals were identified: Sher Mast and his teenage son. It was confirmed that Sher Mast’s daughter-in-law had died. Sources state the strike happened in the Chandoka area bordering between Peshawar and Kohat (“1 killed, 6 others injured in suspected drone strike in Peshawar outskirts,” Dawn, 01 July 2026)
JUDICIARY
No Supreme Court judge on JCP High Court appointment committee
On 01 July, Dawn reported that the Judicial Commission of Pakistan constituted separate committees to interview candidates for appointment as additional judges in the Lahore, Islamabad, Sindh and Balochistan high courts, with no Supreme Court of Pakistan judge included on any panel. The committees, formed under the Judicial Commission of Pakistan (Appointment of Judges) Rules, 2024, are chaired by judges of the Federal Constitutional Court and include high court chief justices, the attorney general, two senators and a representative of the Supreme Court Bar Association. The move follows the 27th Constitutional Amendment, which empowered the commission to establish procedures for judicial appointments. (“No Supreme Court judge in JCP panels for vetting high court judges,” Dawn, 01 July 2026)
ENVIRONMENT/CLIMATE CHANGE
Accelerated glacier melt triggering floods, mudslides in “GB”, warns Disaster Management Authority
On 02 July, Dawn reported that accelerated glacier melting caused by an ongoing heatwave has triggered flooding, mudslides and a Glacial Lake Outburst Flood (GLOF) alert in parts of “Gilgit-Baltistan”. The National Disaster Management Authority (NDMA) warned of heightened risks in the Hoper and Hisper valleys of Nagar district as rising river levels damaged roads, bridges, electricity infrastructure and farmland across multiple districts. Flooding temporarily blocked the Karakoram Highway near the Khunjerab Pass, while authorities and Rescue 1122 urged residents and tourists to avoid rivers, glaciers and unnecessary travel amid fears of further flash floods and glacial lake outburst events. (“NDMA issues alert as rapid glacier melt triggers floods across GB,” Dawn, 02 July 2026)
Karachi faces environmental crisis over worsening water shortages, says experts at WWF-Pakistan workshop
On 02 July, The Express Tribune reported that environmental experts and government officials warned that Karachi is facing an escalating water crisis driven by declining groundwater levels, pollution, urban flooding and deteriorating infrastructure. Speaking at a workshop organised by WWF-Pakistan, participants from multiple government agencies and academic institutions called for a coordinated approach to address the interconnected challenges. Sindh Environmental Protection Agency Director General Waqar Hussain Phulpoto stressed that stronger environmental governance, improved institutional coordination and stricter enforcement of environmental laws were essential to safeguarding the city's water resources. (“City staring at 'environmental catastrophe',” The Express Tribune, 02 July 2026)
PM Shehbaz orders national emergency mechanism ahead of monsoon season
On 02 July, Dawn reported that Prime Minister Shehbaz Sharif directed federal and provincial authorities to strengthen preparations for the upcoming monsoon season by establishing a national emergency response mechanism. He approved the formation of an Emergency Response Committee, headed by the planning minister, to coordinate weekly preparedness and response efforts with the National Disaster Management Authority (NDMA) and provincial governments. The prime minister also ordered advance arrangements for an emergency disaster fund and instructed climate and disaster management officials to visit all provinces, “Azad Jammu and Kashmir”, and “Gilgit-Baltistan” to finalise preparedness plans. (“PM for response mechanism ahead of monsoon spell,” Dawn, 02 July 2026)
ON INDIA
Pakistan & India exchange prisoner lists under consular agreement
On 01 July, Dawn reported that Pakistan and India exchanged lists of prisoners held in each other's custody under the 2008 Agreement on Consular Access. Pakistan provided a list of 250 Indian nationals, comprising 52 civilians and 198 fishermen, while India shared a list of 439 prisoners believed to be Pakistani, including 386 civilians and 53 fishermen. Pakistan also urged India to release and repatriate 97 Pakistani prisoners who have completed their sentences, ensure their safety and welfare, and grant prompt consular access to verify the nationality of those believed to be Pakistani. (“Pakistan calls for release, repatriation of 97 prisoners who have completed sentences in Indian jails,” Dawn, 01 July 2026)
Foreign Office rejects India's criticism of cross-border strikes in Afghanistan
On 01 July, Dawn reported that Foreign Office (FO) spokesperson Tahir Andrabi rejected India's criticism of Pakistan's recent cross-border operation against militant hideouts along the Afghan border, describing New Delhi's statement as "preposterous" and "baseless". Andrabi said Pakistan's actions were legitimate, targeted and proportionate, adding that the country would continue taking measures to protect its citizens in accordance with international law. The statement followed India's condemnation of the operation, which it described as a threat to regional stability. (“Pakistan rejects India's 'preposterous' statement on strikes against terrorist infrastructure along Afghan border,” Dawn, 01 July 2026)
Pakistani & Indian civil society leaders urge revival of bilateral dialogue
On 01 July, Dawn reported that more than 100 civil society representatives from Pakistan and India jointly appealed to Prime Minister Shehbaz Sharif and Prime Minister Narendra Modi to take meaningful steps towards restoring peace, dialogue and cooperation in South Asia. Coordinated by the Centre for Peace and Progress, the appeal called for the restoration of diplomatic ties, the resumption of bilateral talks, the reopening of transport and trade links, the easing of visa restrictions, and greater people-to-people engagement, arguing that continued hostility was depriving millions of opportunities, prosperity, and a more secure future. (“South Asian leaders urged to choose ‘talks over hostility’,” Dawn, 01 July 2026)
Editorials/Opinions
On the US
Inam Ul Haque, “Power and prerogative,” The Express Tribune, 02 July 2026
“Last week, commenting on the US military's apparent predicament in its war against Iran, we opined that General staff, as professional as USMIL, delivered a weak hand to its politicians in imposing its will on Iran, militarily speaking. Either the Generals said what Team Trump/Hegseth wanted to hear (less likely), or Team Trump ignored military's professional advice (more likely). In either case, the USMIL will continue to share the blame, as they do for similar costly errors of omission and commission in Vietnam, Afghanistan, Iraq, Iran (twice), etc. US military's track record in prosecuting wars, in mostly Asian and Muslim context, is not very bright."
https://tribune.com.pk/story/2615979/power-and-prerogative
Economy
Khurram Husain, “World Bank and NFC Award,” Dawn, 02 July 2026
“A rather damning indictment of the seventh NFC Award has just been published by the World Bank in a study titled Strengthening Fiscal Federalism in Pakistan. The study plugs a crucial gap in our understanding of the impact that the NFC Award has had on the state’s ability to function and deliver social services. The findings are not flattering for the performance of the provincial governments across Pakistan, since 2009."
https://www.dawn.com/news/2012354/world-bank-and-nfc-award
Politics & governance
Amna Hashmi, “Data policy,” The Express Tribune, 01 July 2026
“The draft ‘Data Governance Policy’, released by the IT ministry recently, is a welcome step towards modernising the state’s data management. However, the success of the policy will depend less on the principles it has ambitiously outlined and more on the legal, institutional and administrative reforms that must accompany it. As seen in the debate surrounding tax authorities’ bid to directly access and cross-match citizens’ banking information, data is becoming an increasingly important tool for the government as it attempts to improve service delivery, formulate better policies and regulate the digital economy. However, data-led decision-making is not possible without a coherent framework governing who can access public-sector data and under what conditions."
https://www.dawn.com/news/2012345/data-policy
Haroon Rashid Siddiqi, “An assault on property rights,” The Express Tribune, 02 July 2026
“The Pakistan Telecommunication Reorganisation (Amendment) Bill, 2026 was presented as a measure to accelerate fibre-optic expansion and facilitate the rollout of 5G services. Few would dispute the importance of modern telecommunications infrastructure. What raised alarm, however, was the extraordinary authority the proposed law sought to place in the hands of private telecom companies."
https://tribune.com.pk/story/2615802/an-assault-on-property-rights
Indus Water Treaty
Ali Tauqeer Sheikh, “Re-reading the water treaty,” Dawn, 02 July 2026
“Two senior officials, one each from Pakistan and India, have laid their arguments before an international readership. Dr. P.K. Saxena, former Indian Commissioner for Indus Waters, published a two-part indictment of the Indus Waters Treaty in May 2026, now circulating through Indian embassies worldwide. Syed Mehar Ali Shah, Pakistan’s serving commissioner, replied in Dawn on June 16. Both men know the IWT’s text better than most people today. Read together, their exchange is the most technically precise public debate on the Indus since the IWT was signed. It is also, ultimately, a debate between two officials who are both looking backwards. The rivers they are arguing over are not the rivers that existed in 1960."
https://www.dawn.com/news/2012355/re-reading-the-water-treaty
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