ISLAMABAD: Pakistan’s weekly inflation, measured by the Sensitive Price Indicator (SPI), has slowed to 3.57 percent on a year-on-year basis in the week ending on Dec. 5, the country’s statistics bureau said, with Prime Minister Shehbaz Sharif congratulating the nation over the drop.
The SPI, which comprises 51 essential items collected from 50 markets in 17 cities, is computed on a weekly basis to assess the price movement of essential commodities at shorter interval of time so as to review the price situation in the country.
Inflation for the week ending on Dec. 05 decreased by 0.34 percent as compared to the previou week, with a major decrease observed in prices of tomatoes, chicken, pulses wheat flour, rice and liquefied petroleum gas (LPG).
In a statement issued from his office, Sharif noted that inflation had fallen to its lowest level since October 2018, saying that his government was working tirelessly to resolve public issues.
“Further steps are being taken for employment generation, industrial development and promotion of foreign investment in the country,” he said on Saturday.
The prime minister said an increase in remittances and investment from friendly countries as well as stable diplomatic relations were a reflection of Pakistan’s development journey.
“All stakeholders are playing their role in the national development journey,” he added.
Pakistan’s annual consumer inflation slowed to 4.9 percent in November largely due to a high base a year earlier, the statistics bureau said this week, lower than the government’s forecast.
The finance ministry had projected inflation would slow to 5.8 percent-6.8 percent in November and ease to 5.6 percent-6.5 percent in December, it said in its monthly economic report published last week. Consumer inflation cooled from 7.2 percent in October, a sharp drop from a multi-decade high of nearly 40 percent in May 2023.
The South Asian country, which has been facing an economic slowdown, also slashed interest rates by 250 basis points earlier in November to help revive a sluggish economy amid a drop in the rate of inflation.
On Friday, the Pakistan Stock Exchange (PSX) crossed 109,000 points as the bullish sentiment prevailed at the market, analysts said. The benchmark KSE-100 index surged by 814 points, or 0.75 percent, to hit a record high of 109,053 points as compared to the previous day’s close of 108,238 points.
Pakistan weekly inflation slows to 3.57 percent year on year
https://arab.news/68bc7
Pakistan weekly inflation slows to 3.57 percent year on year
- Pakistan also slashed interest rates by 250 basis points in Nov. to help revive a sluggish economy amid drop in inflation
- PM Shehbaz Sharif congratulates nation as inflation hits lowest level since Oct. 2018, promises to resolve public issues
Pakistan urges urgent water reforms as India tensions escalate, climate risks mount
- In the outgoing fiscal year, government completed 34 of 59 water-related projects at a cumulative cost of $1.06 billion
- Additional $368 million had been allocated for continued investment in ongoing schemes, finance minister says
ISLAMABAD: Pakistan must overhaul its water management system “on a war footing,” Finance Minister Muhammad Aurangzeb said on Tuesday, as the country grapples with intensifying climate threats and renewed tensions with neighboring India over transboundary river flows.
Hostility between nuclear-armed neighbors Pakistan and India is high after they struck a ceasefire on May 10 following their most intense military confrontation in decades. The latest escalation, in which the two countries’ militaries traded missile, drones and artillery fire, was sparked after India accused Pakistan of supporting militants who attacked dozens of tourists in Indian-administered Kashmir on April 22, killing 26. Islamabad denies involvement.
Following the attack, Delhi unilaterally “put in abeyance” the Indus Waters Treaty of 1960, which governs the usage of the Indus river system. The accord has not been revived despite the rivals agreeing on a ceasefire on May 10.
Delivering the federal budget speech for fiscal year 2025–26, the finance minister said India’s decision to suspend the decades-old water sharing mechanism had added urgency to the longstanding issue of water security.
“In recent days, following the Pakistan-India war, India has threatened to block the waters meant for Pakistan. India is trying to use water as a weapon. I want to make it clear that water is vital to Pakistan’s survival and no stoppage in this regard will be tolerated,” Aurangzeb told parliament during the budget speech.
“At the same time, it is essential that we expand our water reservoirs on a war footing. The government, despite its limited resources, will ensure the implementation of its water reservoir projects.”
Islamabad had said after India suspended the Indus Waters Treaty that it considered any attempt to stop or divert the flow of water belonging to Pakistan to be an “act of war.”
About 80 percent of Pakistani farms depend on the Indus system, as do nearly all hydropower projects serving the country of some 250 million.
Despite resource constraints, Aurangzeb said the government was committed to expanding its storage capacity and revamping its water infrastructure, adding that a detailed implementation plan would be announced in the coming days.
The minister also described climate change as an “existential threat” to Pakistan, saying the country was among the most affected nations due to its impact.
Aurangzeb said the government had given significant attention to climate finance in the last 16 months and issued green sukuk not only to lower its carbon footprint but also provide investors with a chance to support environmental initiatives.
Aurangzeb cited Pakistan’s 2018 National Water Policy as the foundation for a renewed push to manage water resources more efficiently and equitably.
Among key goals, he said, was expanding water storage by 10 million acre-feet, increasing water-use efficiency by 30 percent and deploying real-time discharge monitoring systems to reduce wastage, which is currently estimated at 33 percent.
He also said in the outgoing fiscal year, the government completed 34 of 59 water-related projects at a cumulative cost of Rs295 billion ($1.06 billion).
An additional Rs102 billion ($368 million) had been allocated for continued investment in ongoing schemes, the finance minister added.
Pakistan calls on US, UK to urge India to come for dialogue at neutral location
- After brokering May 10 ceasefire, US had said Pakistan and India had agreed “to talks on a broad set of issues at a neutral site”
- Weeks after worst military confrontation in decades, India and Pakistan have dispatched top lawmakers to press their cases in US, UK
ISLAMABAD: The head of an official delegation visiting London to present Islamabad’s position following a recent military standoff with New Delhi said on Tuesday the United States and the United Kingdom should encourage India to come for dialogue at a neutral location.
Weeks after their worst military confrontation in decades, India and Pakistan dispatched top lawmakers to press their cases in the United States, where President Donald Trump has shown eagerness for diplomacy between them. The Pakistan delegation is currently in London in the next stop of its mission and will go onwards to Brussels.
Gunmen on April 22 massacred 26 tourists on the Indian-administered part of Kashmir in the deadliest attack on civilians in decades in the scenic region that has seen a long-running insurgency and is disputed between India and Pakistan since 1947. India accused Pakistan of backing the assailants — which it denies — and launched strikes on Pakistani territory.
More than 70 people were killed in missile, drone and artillery fire on both sides for around four days before the US and other allies brokered a ceasefire on May 10. US secretary of state Marco Rubio also said at the time the two nations had agreed “to start talks on a broad set of issues at a neutral site.” He did not specify when the talks would take place or where.
“As part of our achieving this ceasefire, it was agreed at the time that going forward, we would have a dialogue at a neutral location, covering all friction points,” said Bilawal Bhutto Zardari, the head of the Pakistani delegation and the scion of the political Bhutto dynasty.
Bhutto Zardari, who was speaking to BBC Radio, said it seemed from recent statements by Indian leaders and actions of the government in New Delhi that they were not in favor of pursuing talks.
“We still believe that the United States and other allies can engage with India as a friend and explain to them that these decisions are not in their interest,” he said. “Similarly, here in the United Kingdom, you have a long history with India and Pakistan. [Disputed] Kashmir is the unfinished agenda of the partition [of India and creation of Pakistan in 1947] and forms the root cause of our conflict.
“Your [UK] government too is well-placed to speak to the Indian government as a friend and explain to them that refusing to engage with their neighbor, for two nuclear-armed countries to have no dispute resolution mechanism, is not in anybody’s interest.”
Separately, Bhutto Zardari led Pakistan’s delegation in a discussion with the Financial Times Editorial Board in London.
“We reaffirmed Pakistan’s abiding commitment to peace, emphasizing that dialogue, not domination, remains the only sustainable path forward with India,” the leader wrote on X.
“Expressed grave concern over the erosion of strategic stability: India’s violations of the Indus Waters Treaty, the weaponization of water, and the dangerous descent toward conflict in a nuclearized region, a trajectory that threatens to condemn future generations to perpetual insecurity.”
Pakistan announces income tax relief for salaried class in FY2025-26 budget
- Tax rate for those earning between $2,128–$4,255 annually to be cut from 5% to 2.5%
- Pakistan’s tax-to-GDP ratio remains below 10%, among the lowest in the region
ISLAMABAD: Pakistan announced significant income tax relief for the salaried class on Tuesday as it announced its federal budget for the fiscal year 2025-26, aiming to ease the burden on working people amid high inflation and economic uncertainty.
Pakistan’s tax-to-GDP ratio remains below 10%, among the lowest in the region. The government has pledged to raise this ratio to 14% through tax reforms, digital enforcement, and expanding the tax base.
“First of all, we are providing relief where it is most needed, relief for the salaried class,” Finance Minister Muhammad Aurangzeb, presenting his first full-year budget in the National Assembly, said.
“In this regard, there is a proposition for a significant reduction in the income tax slabs for the working class.”
Aurangzeb said the income tax rate for individuals earning between Rs600,000 and Rs1.2 million ($2,128–$4,255) annually would be cut from 5% to 2.5%.
“For those earning up to Rs22,000,000 [$7,788], the tax rate has been proposed at 11% instead of 15%. Similarly, those who earn a higher salary, there is a proposition of tax reduction,” the finance minister said.
“For those who are earning between Rs22,000,000 [$7,788] up to Rs32,000,000 [$11,328], the tax rate has been proposed to be reduced from 25% to 23%.”
For high-income earners making over Rs10 million ($35,460) annually, a 1% reduction in the additional surcharge has been recommended to help curb the ongoing brain drain, the minister said.
Aurangzeb described the changes as part of broader efforts to simplify the tax structure and “strike a balance between inflationary pressures and take-home pay.”
The federal budget, with a total outlay of Rs17.57 trillion ($62 billion), comes as Pakistan seeks to stabilize its economy under a $7 billion International Monetary Fund (IMF) bailout program approved last year.
The budget also includes a 20% increase in defense spending, while total government expenditure is expected to be 7% lower year-on-year compared to the last fiscal, reflecting fiscal consolidation goals tied to IMF negotiations.
The proposed budget will be debated in parliament before final approval.
Pakistan to raise defense spending by 20% in FY26 amid tensions with India
- Pakistan unveils $62 billion budget, a 7% decrease in overall spending, debt servicing to consume half of total spending
- Budget reflects attempt to balance security concerns with ongoing fiscal reform efforts under $7 billion IMF loan program
ISLAMABAD: Pakistan will increase defense spending by more than 20% in the 2025-26 fiscal year to Rs2.55 trillion ($9.04 billion) as it seeks to bolster military capabilities following the country’s worst confrontation with India in nearly three decades.
The move comes as the government unveiled a Rs17.57 trillion ($62 billion) federal budget on Tuesday, reflecting a 7% decrease in overall spending compared to the current fiscal year. The largest portion of the budget – Rs8.21 trillion ($29 billion), or nearly half of total expenditures – will go toward debt servicing, continuing to strain Pakistan’s fiscal space.
“National defense is the most important priority of the government,” Finance Minister Muhammad Aurangzeb said while presenting his first full-year budget in the National Assembly. “For this national duty, Rs2,550 billion [$9.04 billion] will be allocated.”
Pakistan’s defense budget for the outgoing fiscal year stood at Rs2.12 trillion ($7.44 billion). The increase comes weeks after a four-day military standoff with India in May, which erupted following an attack in Indian-administered Kashmir that left 26 Hindu pilgrims dead. New Delhi blamed Pakistan-backed militants, a charge Islamabad denied.
The two nuclear-armed neighbors exchanged missile, drone, artillery, and air strikes before agreeing to a ceasefire on May 10.
Aurangzeb said the budget was being presented “at a very important and historic moment when the nation in recent days showed extraordinary unity, determination and strength.”
“After the Pak-India war, India has threatened to block the flow of river water into Pakistan. India is trying to use water as a weapon. I want to make it clear that water guarantees Pakistan’s survival and no hindrance will be tolerated in this respect,” the finance minister added.
Fiscal consolidation under IMF watch
Pakistan remains under a $7 billion IMF loan program approved last year, and the budget reflects an attempt to balance security concerns with ongoing fiscal reform efforts.
The government has set a GDP growth target of 4.2% for the next fiscal year, while aiming to reduce the fiscal deficit to 3.9% of GDP. The economy grew just 2.6% in 2024/25, falling short of its 3.6% target due to weak agriculture and industrial output. Inflation is projected at 7.5%.
In a May 23 statement, the IMF said Pakistan had pledged to maintain fiscal consolidation while safeguarding “social and priority expenditures,” targeting a primary surplus of 1.6% of GDP in 2025/26.
Aurangzeb said the new budget aimed to “change the DNA of our economy” by boosting exports, building foreign exchange reserves, and promoting productivity to avoid recurring balance of payment crises.
Bridging the gap
The government expects total revenues of Rs11.1 trillion ($39 billion), leaving a Rs6.5 trillion ($23 billion) financing gap to be filled through domestic and external borrowing, as well as privatization proceeds. Privatization is expected to bring in Rs87 billion, while Rs106 billion ($376 million) is projected from foreign sources.
The Federal Board of Revenue (FBR) has been tasked with collecting Rs14.1 trillion of the projected Rs19.3 trillion in gross revenue, marking a 19% year-on-year increase.
Under the Public Sector Development Program (PSDP), Rs1 trillion ($3.5 billion) has been allocated, with Rs328 billion ($1.16 billion) earmarked for transport infrastructure projects. The government also set aside Rs113 billion ($399 million) for education and Rs32 billion ($113 million) for health care.
Aurangzeb also announced plans to grow IT exports to $25 billion over the next five years and forecast a rise in workers’ remittances to $38 billion by the end of the current fiscal year.
Mixed reaction from markets
The budget drew mixed reactions from analysts and market participants.
Muhammad Waqas Ghani, head of research at JS Global Capital Ltd., said the proposals prioritized “tax reduction, energy sector changes, and austerity” in line with the last two budgets.
He noted the construction sector was favored, while the auto industry was the most negatively affected.
“On equities, CGT (capital gains tax) remains at 15%, but income from loans will be taxed at 25% to encourage mutual funds to divert their funds toward the equity asset class,” Ghani said.
Amreen Soorani, head of research at Al Meezan Investment Management, said the budget proposals were largely in line with market expectations.
“While there are some discernible disparities in the taxation of various asset classes, the initial reaction from the listed equity market appears to be one of cautious optimism,” she told Arab News.
However, the Overseas Investors Chamber of Commerce and Industry (OICCI), which represents over 200 multinational companies in Pakistan, expressed disappointment, urging the government to overhaul tax structures to improve competitiveness and attract foreign investment.
Pakistan PM urges global powers to take ‘immediate action’ to end Israeli offensive in Gaza
- Over 54,000 Palestinians have been killed since Israel launched its latest military offensive in Oct. 7, 2023
- Pakistan has for decades called for establishment of independent Palestinian state based on pre-1967 borders
ISLAMABAD: Pakistan’s Prime Minister Shehbaz Sharif on Tuesday urged world powers to take immediate action to end Israel’s military offensive in Gaza, saying he hoped innocent Palestinians would achieve their dream of freedom soon.
Over 54,000 Palestinians have been killed and much of the coastal enclave of Gaza devastated since Israel’s latest air and ground offensive began in October 2023, health authorities in Gaza say.
“The oppression, cruelty and barbarism taking place in Palestine and Kashmir — no matter how much we condemn it, it is not enough” Sharif said while addressing a federal cabinet meeting.
“But I believe this is a very critical time for the global powers to effectively use their influence to ensure a ceasefire in Palestine, because what is happening there is the shedding of innocent Muslim blood — the blood of little girls, children and parents.”
The Pakistani PM added:
“I have strong hope in Allah Almighty, God willing, that the people of Palestine will gain freedom, the people of Kashmir will gain freedom. They have made tremendous sacrifices.”
Pakistan has been calling for a ceasefire and unimpeded humanitarian access to Gaza since the latest war broke out.
Pakistan, which does not recognize Israel, has for decades called for the establishment of an independent Palestinian state based on pre-1967 borders, with Al-Quds Al-Sharif as its capital.
Although nearly 150 countries have recognized Palestine statehood, most major Western powers including the United States, Britain, France, Germany and Japan, have not.
Muslim countries that do not recognize Israel include Pakistan, Saudi Arabia, Iran, Iraq, Syria and Yemen.
