Pakistan says will push Central Asian states, UAE to expedite trans-Afghan railway project

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Policemen walk along trains stationed on a deserted platform at Karachi Cantonment railway station in Karachi, on March 26, 2020. (AFP/File)
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Updated 06 December 2024
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Pakistan says will push Central Asian states, UAE to expedite trans-Afghan railway project

  • The railway corridor will run from northeastern Kazakhstan to Pakistan via Uzbekistan and Afghanistan
  • Aim is to use both land and sea routes to eventually link South and Central Asia with Jebel Ali port in UAE

ISLAMABAD: Federal Minister for Commerce Jam Kamal Khan said this week Pakistan would reach out to Uzbekistan, Turkmenistan as well as the UAE to expedite work on a trans-Afghan railway project that will connect South and Central Asia with the aim of enhancing trade and economic opportunity in the region.

Running from northeastern Kazakhstan to Pakistan via Uzbekistan and Afghanistan, the railway initiative is part of a broader strategy to establish a southern corridor using both land and sea routes to eventually link South and Central Asia with the port of Jebel Ali in the UAE.

On Thursday, the Pakistani commerce minister reaffirmed Islamabad’s commitment to the project in a meeting with Kazakh Ambassador Yerzhan Kistafin to discuss trade, regional connectivity, and economic cooperation and lay the groundwork for several collaborative initiatives.

“The Minister reiterated the significance of the Trans-Afghan railway for strengthening connectivity with Central Asia,” the commerce ministry said in a statement on Thursday. “He committed to reaching out to Afghanistan, Uzbekistan, Turkmenistan, and Abu Dhabi authorities to expedite the project’s completion.”

In recent months, the railway project has seen the involvement of several countries, including Pakistan, the UAE, Uzbekistan, Afghanistan and Qatar.

Earlier this year, the Taliban government in Kabul signed a memorandum with Uzbekistan and the UAE to begin studies on the project’s viability after a meeting in Tashkent on Feb. 19, where technical, financial, and strategic aspects of the scheme were discussed. These developments followed an earlier meeting between transport ministers from Uzbekistan, Afghanistan, Pakistan, and Qatar, which led to the approval of the main routes and implementation modalities for the corridor.

However, Pakistan faces several challenges to the corridor’s completion. 

Political instability, insurgency in the southwestern Balochistan province bordering Afghanistan and Iran, and security threats to ongoing projects under the China-Pakistan Economic Corridor (CPEC) are significant hurdles. Strained relations with Afghanistan due to the activities of the Tehreek-e-Taliban Pakistan (TTP) militant groups, which Islamabad says operates from safe havens in Afghanistan, and an expulsion drive targeting Afghan refugees will also complicate Pakistan’s aim to secure trade routes vital to the corridor. The Taliban rulers in Afghanistan deny they allow Afghan soil to be used by terror groups. 

The railyway project is part of Pakistan’s wider push to consolidate its role as a pivotal trade and transit hub connecting the landlocked Central Asian states with the rest of the world, leveraging its strategic geographical position. In recent weeks, there has been a flurry of visits, investment talks and economic activity between officials from Pakistan and the Central Asian nations.


Pakistan unveils five-year tariff reform plan, warns of additional taxes if compliance measures blocked​​

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Pakistan unveils five-year tariff reform plan, warns of additional taxes if compliance measures blocked​​

  • Pakistan plans to cut overall tariff regime by more than 4% to shift the country towards an export-led growth model
  • Government has removed additional customs duties on 4,000 tariff lines, reduced them on another 2,700, out of total 7,000

KARACHI: Pakistan plans to cut its overall tariff regime by more than 4% over the next five years, part of sweeping reforms aimed at boosting exports and shifting the country towards an export-led growth model, Finance Minister Muhammad Aurangzeb said on Wednesday.

At a post-budget press conference in Islamabad, Aurangzeb outlined details of the proposed tariff rationalization, saying the government had already removed additional customs duties on 4,000 tariff lines and reduced them on another 2,700, out of a total 7,000.

The reforms align with Pakistan’s commitments under a $7 billion IMF program approved last year and signal a shift toward an export‑oriented growth model built on a leaner tariff structure, protection of social welfare, and improved tax collection.

“First, the goal is to change the overall protected regime. When you lower protection and dismantle walls around it, you improve the economy’s resource allocation, better capital allocation, better human resource allocation, so that’s the overall macroeconomic framework," Aurangzeb said, adding that the changes would reduce input costs for exporters and improve competitiveness.

The reforms are part of the National Tariff Policy 2025–30 under which the government plans to abolish additional customs duties, regulatory duties, and the fifth schedule of the Customs Act, 1969. The policy envisions a streamlined customs structure with just four duty slabs ranging from 0 to 15%, which would become the maximum rate.

“According to the World Bank, after the successful implementation of these reforms, Pakistan’s average tariff will decline to the lowest level in the region,” Aurangzeb had said during his full-year budget speech on Tuesday, when he presented the Rs17.6 trillion ($62 billion) federal budget for FY2025–26.

Pakistan’s Finance Minister Muhammad Aurangzeb speaks during a media briefing in Islamabad on June 11, 2025, a day after presenting the 2025–26 fiscal budget. (AFP)

Describing the initiative as Pakistan’s “East Asia moment” during the post-budget speech, the minister said the plan was designed to help the country avoid recurring balance-of-payments crises.

“So that when we go toward growth we don’t get into the dollar situation, we don’t get into a balance of payment problem,” he said. “So that we can continue to grow at a certain pace which is export-led.”

Aurangzeb emphasized that the tariff cuts would be phased in gradually, starting this year.

“This I am talking about year one. We will take it towards a more than 4 percent reduction in the overall tariff regime in Pakistan,” he said.

Vehicles move past a shipping container yard along a road in Karachi, Pakistan, on June 10, 2025. (REUTERS)

The government is aiming to lift exports, which grew more than 6% year-on-year to $26.9 billion during July-April, against imports of $48.3 billion, up 8% in the same period.

ENFORCEMENT, ADDITIONAL TAXES

Aurangzeb also warned that the government could be forced to impose Rs400–500 billion ($1.4-1.75 billion) in additional taxes if the Pakistani parliament failed to pass enabling legislation needed to implement enforcement provisions tied to Rs312 billion ($1.1 billion) in proposed new tax measures for the coming fiscal year.

“The parliament should help us in enabling amendments so we don’t opt for additional measures to stop the leakages in the system,” he said.

The minister noted that enforcement actions in the current fiscal year had already yielded Rs400 billion ($1.4 billion) in additional revenue. Without legislative support, the government may be compelled to introduce further taxation to close gaps.

Corporate employees watching television screens as Pakistan Finance Minister Muhammad Aurangzeb presents Pakistan’s $62 billion federal budget for fiscal year 2025–26, in Islamabad on June 10, 2025. (APP)

Without naming them directly, Aurangzeb said international financial institutions had signed off on Rs389 billion ($1.36 billion) in additional taxes for FY26 as part of budget negotiations.

“We now have the credibility and trust internally and externally that we can do the enforcement,” he said.

BUDGET NUMBERS “LOCKED” WITH IMF

Flanking the finance minister, Finance Secretary Imdadullah Bosal said the government had “locked” all key budget numbers with the IMF. The $7 billion loan program the lender approved for Pakistan in 2024 comes with a strict reforms agenda on fiscal consolidation, debt rationalization, revenue mobilization, among other issues.

The IMF, in a recent statement, confirmed Pakistan had committed to continued fiscal consolidation while safeguarding social and priority spending in the new budget.

This handout photograph taken on June 10, 2025, and released by Pakistan's National Assembly shows Finance Minister Muhammad Aurangzeb presenting the 2025–26 fiscal budget at the Parliament House in Islamabad. (AFP)

Bosal said the government had managed to reduce current expenditures to under 2% growth in FY25 from 26% in FY24.

“This is our response back to those people who are paying taxes in this country,” Aurangzeb said, adding that the budget had attempted to extend relief to pensioners, salaried individuals, and businesses, despite fiscal constraints.

“The federal government, whatever it is giving, is from the loans that we are taking because we start [the new year] with a deficit.”


Pakistan’s plan to sharply increase growth faces headwinds — analysts

Updated 9 min 37 sec ago
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Pakistan’s plan to sharply increase growth faces headwinds — analysts

  • Pakistan unveils $62.2 billion budget under IMF program
  • Defense spending increased 20 percent after India confrontation

ISLAMABAD: Pakistan is aiming to sharply increase economic growth under its annual federal budget unveiled on Tuesday, but analysts are skeptical about the country’s ability to meet its ambitious goals.

The budget targets higher revenues and a steep fiscal deficit cut under International Monetary Fund (IMF) backed reforms. Yet, defense spending was hiked 20 percent, excluding military pensions, after last month’s conflict with India.

Finance Minister Muhammad Aurangzeb said in a post-budget press conference on Wednesday that customs duties have been cut or removed on thousands of raw materials and intermediate goods.

“Industry here has to be competitive, competitive enough to export,” he said.

But growth drivers remain unclear. The government is targeting 4.2 percent GDP growth in fiscal 2026, up from 2.7 percent this year, which was revised down from an initial 3.6 percent as agriculture and large-scale manufacturing underperformed.

“Pakistan’s GDP growth projection of 4.2 percent appears ambitious given recent performance, and overly optimistic assumptions may place tax targets out of reach,” said Callee Davis, senior economist at Oxford Economics.

Pakistan’s past growth spurts were consumption-led, triggering balance-of-payments crises and IMF bailouts. The government says it now wants higher-quality, investment-driven growth.

Aurangzeb said structural reforms are underway, pointing to East Asia-style pro-market transitions. “This is an East Asia moment for Pakistan,” he said.

“BUDGET KEEPS IMF HAPPY”

The 17.57 trillion rupee ($62.24 billion) budget comes as Pakistan remains under a $7 billion IMF program. Revenues are projected to rise over 14 percent, driven by new taxes and broadening the tax base. The fiscal deficit is targeted at 3.9 percent of GDP, down from this year’s 5.9 percent.

Key reforms include taxing agriculture, real estate, and retail, and reviving stalled privatizations. But revenue shortfalls this year have raised doubts, with both agriculture income tax and retail collections missing targets. Only 1.3 percent of the population paid income tax in 2024, government data shows.

“Pakistan’s budget keeps the IMF and investors happy, even if it comes at a near-term cost to growth,” said Hasnain Malik, head of equity strategy at Tellimer.

“The political setup, with the military firmly in charge, also lowers the risk of protests.”

While overall spending will fall 7 percent, defense will rise after the worst fighting between the nuclear-armed neighbors in decades. Including pensions, defense spending will total $12 billion, 19 percent of the federal budget or 2.5 percent of GDP, matching India’s share, per World Bank data.

The hike was enabled by a sharp drop in interest payments, as the central bank cut policy rates from 22 percent to 11 percent over the past year, easing domestic debt servicing costs. Aurangzeb said cuts in subsidies also helped create fiscal space.

($1 = 282.3000 Pakistani rupees)


Pakistan seeks UK support on Kashmir, Indus Waters Treaty amid India tensions

Updated 11 June 2025
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Pakistan seeks UK support on Kashmir, Indus Waters Treaty amid India tensions

  • Weeks after worst military confrontation in decades, India and Pakistan have dispatched top officials to press their cases in US, UK
  • Head of Pakistani delegation meets with prominent UK-based Kashmiri leaders and senior British diplomats in London

ISLAMABAD: The head of an official delegation visiting world capitals to present Islamabad’s position following a recent military standoff with New Delhi met senior British officials and Kashmiri diaspora leaders in London this week, urging the UK to play a more active role in defusing tensions with India and restoring the suspended Indus Waters Treaty. 

Pakistan and India have launched parallel diplomatic offensives in world capitals weeks after their worst military confrontation in decades last month saw the two nuclear-armed nations exchange missile, drone and artillery strikes until the US and other allies brokered a ceasefire on May 10. The Pakistan delegation is currently in London after visiting the United States and will go onwards to Brussels. Officials of both countries are lobbying for international support over the disputed region of Kashmir, which both countries rule in part but claim in full. 

In London on Tuesday, Pakistan’s former foreign minister, who is heading the Pakistani delegation, met with prominent UK-based Kashmiri leaders and senior British diplomats, warning of the dangers of rising hostilities and accusing India of violating long-standing international agreements.

“The Jammu & Kashmir dispute remains the unfinished agenda of the United Nations and the unhealed wound of Partition,” Bhutto Zardari said in a post on X, formerly Twitter. “In all my interactions, Kashmir was central— its people’s inalienable right to self-determination under UNSC resolutions must be upheld.

He also accused India of “aggression, violations of sovereignty, and the illegal suspension of the Indus Waters Treaty,” saying the move endangered over 240 million lives in Pakistan and called for its immediate restoration.

Bhutto Zardari separately met with Christian Turner, former UK High Commissioner to Pakistan and now Britain’s incoming Permanent Representative to the United Nations, as part of Islamabad’s push to rally international diplomatic support.

“Welcomed the UK’s emphasis on diplomacy and dialogue, and encouraged its continued, constructive role in supporting de-escalation and encouraging dialogue for resolution of the Jammu & Kashmir dispute, the unfinished agenda of Partition and British legacy,” the Pakistani leader wrote following a luncheon hosted by Pakistan’s High Commission.

The Pakistani outreach coincides with a parallel tour by a senior Indian delegation led by opposition MP and former UN under-secretary Shashi Tharoor, who is lobbying Western allies to support New Delhi’s position that Kashmir is an internal matter and that Pakistan is stoking tensions for political ends. India also accuses Pakistan of backing separatist insurgents and the attacks they carry out, including one in April 22 which triggered the latest conflict. Islamabad denies the charges. 

Pakistan has long maintained that Kashmir is a disputed territory under UN resolutions, while India insists the region’s status was settled after its full constitutional integration in August 2019, a move Pakistan continues to reject as illegal.

The standoff has also drawn concern over shared water resources, particularly the Indus Waters Treaty, a 1960 World Bank-brokered agreement seen as a rare example of cooperation between the two neighbors. Recent Indian actions to suspend the treaty and threaten to halt water flow into Pakistan have added to Islamabad’s grievances.

As tensions grow, both nations are leveraging historic ties with Western powers in an effort to shape the diplomatic narrative. In London, Bhutto Zardari reiterated the need for “restraint, immediate restoration of treaty obligations, and comprehensive dialogue to prevent conflict and secure lasting peace.”

The visits come ahead of a high-level UN session on South Asia later this month, where both Indian and Pakistani envoys are expected to present competing narratives.


Saudi Arabia leads surge as Pakistan’s May remittances hit $3.7 billion

Updated 11 June 2025
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Saudi Arabia leads surge as Pakistan’s May remittances hit $3.7 billion

  • Inflows bring total remittances for July-May FY2024-25 to $34.9 billion, a 28.8 percent increase from $27.1 billion in same period last year
  • Saudi Arabia remained largest contributor in May, sending $913.9 million, followed by UAE ($754.2 million), UK ($588.1 million), US ($314.7 million)

KARACHI: Pakistan received $3.7 billion in workers’ remittances in May 2025, a strong 16 percent increase month-on-month and 13.7 percent year-on-year, the State Bank of Pakistan (SBP) said on Wednesday, with Saudi Arabia remaining the largest contributor, sending $913.9 million.

The inflows brought total remittances for July-May FY2024-25 to $34.9 billion, marking a 28.8 percent increase from $27.1 billion in the same period last year. The rise follows a record breaking $4.1 billion in March, the highest-ever single-month inflow, and a robust $3.2 billion in April. 

The strong performance has helped offset Pakistan’s trade deficit and support its fragile foreign exchange reserves amid continued macroeconomic pressure.

“This is the highest level of remittances recorded in recent months,” the SBP said in a statement, noting that the increase reflected stronger flows from key corridors and a growing shift toward formal remittances channels. 

Analysts attribute the surge to a combination of factors, including improved exchange rate management, government crackdowns on hawala and hundi informal systems for transferring money internationally, and seasonal flows during Ramadan and Eid.

Saudi Arabia remained the largest contributor in May, sending $913.9 million, followed by the United Arab Emirates ($754.2 million), the United Kingdom ($588.1 million), and the United States ($314.7 million).

Remittances remain a critical source of foreign exchange for Pakistan, which is currently under a $7 billion IMF program and facing over $24 billion in external debt repayments over the next fiscal year.

The central bank has raised its full-year remittance forecast to $38 billion, reflecting optimism that flows will continue to support economic stabilization.

The surging remittances, especially from Saudi Arabia, help cushion Pakistan’s chronic current‑account deficit and bolster its foreign exchange reserves, offering relief ahead of major debt repayments. With global commodity prices still volatile and external financing constrained, continued inflows from overseas workers, particularly from the Gulf, are seen as crucial to maintaining macroeconomic stability and supporting Pakistan’s growth outlook under IMF conditions.


‘Soaring in the air’: Returning Pakistani Hajj pilgrims praise spiritual experience despite intense heat

Updated 56 min 39 sec ago
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‘Soaring in the air’: Returning Pakistani Hajj pilgrims praise spiritual experience despite intense heat

  • Pakistani pilgrims laud Saudi Hajj arrangements as post-Hajj flight operation begins
  • About 1,500 Pakistani pilgrims are scheduled to return to various cities on June 11

ISLAMABAD: Pakistani pilgrims returning from Saudi Arabia on Wednesday praised the smooth organization and facilities provided during this year’s Hajj, despite facing intense heat in the holy cities of Makkah and Madinah.

Pakistan’s post-Hajj flight operation began with the arrival of PIA flight PK732 in Islamabad earlier in the day, carrying 307 pilgrims. According to the Ministry of Religious Affairs, a total of seven flights are scheduled to transport 1,496 pilgrims to Islamabad, Lahore, Multan and Karachi on the first day of the repatriation operation.

“A total of seven flights carrying 1,496 pilgrims will land on June 11, while the post-Hajj flight operation will conclude on July 10 with the last flight landing in Islamabad,” Muhammad Umer Butt, spokesperson for the religious affairs ministry, informed.

Speaking to Arab News at Islamabad International Airport, returning pilgrims praised the Hajj experience, describing it as spiritually uplifting and logistically smooth, crediting the Saudi authorities for their efforts.

“It [Hajj] was very good and an amazing experience,” said Muhammad Waseem from Attock. “It was very hot, but the Saudi government had made good arrangements— there was water and fans everywhere.”

Family members welcome Hajj pilgrims at the Islamabad International Airport in Islamabad on June 11, 2025, upon their return from Hajj. (AN Photo)

He said the Saudi authorities had taken excellent care of the pilgrims and ensured things remained smooth.

Those who followed their group schedules found the experience far less strenuous, he continued.

“Only those people got tired and faced difficulties who did not follow their scheduled timings fixed by the authorities for different groups for the Hajj rituals,” he noted.

Abdul Malik, a pilgrim from Lakki Marwat in Khyber Pakhtunkhwa, echoed similar sentiments.

Family members welcome Hajj pilgrims at the Islamabad International Airport in Islamabad on June 11, 2025, upon their return from Hajj. (AN Photo)

“The arrangements were very good,” he said. “When Allah calls a person to visit His House and the Mosque of His Prophet [PBUH], it feels as if the person is soaring in the air. Such is the feeling which cannot be described in words.”

Samina Bibi from Islamabad called her Hajj deeply spiritual and fulfilling.

“My experience of Hajj was very good and I prayed for everyone, including all the Muslims,” she said. “Only Allah Almighty can understand my feelings during Hajj.”

Bibi informed it was her second visit to the Holy Places, having previously performed Umrah, and found the arrangements to be “very good.”

Abdul Haq, another pilgrim from Islamabad, reflected on the ease with which his journey unfolded.

“When I intended to perform Hajj, after that, Allah made everything easy upon easy, and we prayed for everyone including Muslims sitting in front of the Holy Kaaba,” he said. “The arrangements made by the Saudi government were excellent. We faced no difficulties during Hajj.”

Family members welcome Hajj pilgrims at the Islamabad International Airport in Islamabad on June 11, 2025, upon their return from Hajj. (AN Photo)

While he acknowledged the natural hardships due to the heat in Mina and Muzdalifah, Haq said the experience remained “smooth and truly unforgettable.”

“In Hajj, there were not really difficulties, but there is hardship, mainly due to the heat,” he added. “However, overall, our Hajj was so wonderful that it’s beyond words, and we kept thanking the Saudi government for all the arrangements throughout.”

This year’s Hajj pilgrimage took place from June 4 to June 9, drawing millions of pilgrims to the holy cities.

Pakistan, which sent over 116,000 pilgrims under both government and private schemes, was among several countries managing large-scale contingents in the annual Islamic pilgrimage.