Connect with us

Pakistan News

Budget 2025-26: Austerity budget offers ‘crumbs’ for relief

Published

on

• Next year’s revenue target set at Rs14.13tr
• Provinces’ contribution helps Centre outperform fiscal target, record lowest budget deficit in a decade
• Subsidy allocations have been reduced by 14pc
• Reduced debt servicing drives expenditure containment of nearly Rs2.26tr
• Generous tax relief, incentives for construction sector
• Fuel levy, electricity surcharges to rise next year
• Tough crackdown planned on non-filers, tax evaders
• Development spending squeezed to cut deficit

ISLAMABAD: Maintaining an aggressive stance on fiscal consolidation, as required by the Int­ernational Monetary Fund (IMF), Finance Minister Muhammad Aurangzeb on Tuesday still managed to offer some notional relief to the salaried class in the federal budget for fiscal year 2025-26, along with incentives for the real estate and construction sectors, in an effort to revive the struggling industrial sector and stimulate economic growth.

At the same time, however, the government announced it was imposing a ‘carbon levy’ of Rs2.5 per litre on petrol, diesel and furnace oil in the upcoming fiscal year, to be doubled the following year. It also introduced a 5 per cent tax on large pensions, an 18pc tax on imported solar panels, and an increase in the debt servicing surcharge on electricity to finance not only interest payments, but also principal debt. Additionally, it announced the gradual elimination of tax exemptions for the tribal areas beginning this year.

Ambitious targets

Despite a record tax shortfall of Rs1.07 trillion recorded for the current fiscal year, the finance minister set next year’s revenue target at Rs14.13tr — an 18.7pc increase from this year’s revised estimate of Rs11.9tr, against the original budget target of Rs12.97tr. This would include approximately Rs840 billion in additional revenue measures, on top of a Rs1.39tr automatic tax increase supported by projected inflation of 7.5pc and economic growth of 4.2pc and expenditure containment of nearly Rs2.26tr (equivalent to 2pc of GDP), driven primarily by reduced debt servicing costs, and also at the expense of development and public welfare initiatives.

Not only the Federal Board of Revenue (FBR), but the provincial governments, too, were unable to meet their commitment of maintaining a Rs1.22tr surplus for the current year. Still, they provided vital support to the federal government with a surplus of Rs1.01tr.

This contribution enabled the federal government to outperform its fiscal target and record a budget deficit of just 5.6pc of GDP (Rs6.44tr) — the lowest in a decade since FY2015-16 — compared to a higher projected deficit of 5.9pc (Rs7.28tr). This notable fiscal tightening was achieved through punishing additional taxation measures amounting to Rs2.2tr (1.8pc of GDP) alongside a reduction in expenditure as interest rates declined from a historic peak of 22pc.

Accordingly, the FY2025–26 budget sets an ambitious target to reduce the budget deficit to 3.9pc of GDP (Rs5.04tr), contingent upon a cash surplus of Rs1.46tr from the provinces. As a result, the primary budget surplus is projected to rise to 2.4pc of GDP, or Rs3.17tr, for the next year — up from this year’s 2.2pc of GDP (Rs2.5tr).

Relief for select groups

The government found sufficient fiscal space to offer some relief to the salaried class, who have been burdened by high tax rates, declining real incomes, and severe inflation over the past two years.

The finance minister proposed a reduction in income tax by half, to 2.5pc, on annual income between Rs600,000 and Rs1.2 million. It is pertinent to mention that there was a discrepancy in the income tax rate for the lowest taxable bracket announced by the finance minister and the tax rate mentioned in the finance bill, which was even lower at 1pc.

https://www.dawn.com/news/card/1916323

Clarity is awaited on this matter. Similarly, the annual tax on a salary of Rs1.2m was proposed to be reduced to Rs6,000, down from the current Rs30,000. Mr Aurangzeb added that the income tax rate for those earning up to Rs2.2m per annum would be cut to 11pc, down from the current 15pc. Similarly, the tax rate has been reduced to 23pc from 25pc for salaried income between Rs2.2m and Rs3.2m. In addition, the finance minister acknowledged that oppressive tax rates were driving highly skilled professionals to migrate, contributing to a “brain drain”. As a corrective measure, he announced a 1pc reduction in the surcharge on annual incomes exceeding Rs10m.

Apart from this, a 10pc increase in salaries and 7pc rise in pensions was announced for government employees. The salaries of armed forces personnel would also be increased by 25pc, including a special relief allowance in recognition of their recent heroic performance in response to Indian aggression, the finance minister said.

At the same time, the government introduced a generous tax relief and incentives for the construction sector, including access to cheaper mortgage financing, in a bid to revive large-scale manufacturing, which has been contracting for the past three years due to unprecedented increases in energy and borrowing costs. To this end, the finance minister announced a reduction in the withholding tax on the purchase of real estate from 4pc to 2.5pc. The next two current withholding tax rates of 3.5pc and 3pc will also be reduced to 2pc and 1.5pc respectively.

Additionally, a 7pc federal excise duty imposed last year on the transfer of commercial properties, plots and houses has also been proposed to be abolished.

As a new initiative, the budget includes a tax credit on mortgages for homes of up to 10 marla (250 square yards) and flats of up to 2,000 square feet. This is in addition to a new scheme aimed at promoting mortgage financing. The finance minister also announced a reduction in stamp duty on property purchases in Islamabad Capital Territory, from 4pc to 1pc, and expressed hope that provincial governments would follow suit by reducing heavy taxation on immovable property.

The government also succeeded in persuading the IMF to exempt fertilisers and insecticides from taxation for the current year, in an effort to position agriculture as the engine of economic growth.

Tightening the net

On the other hand, the finance minister announced an increase in the tax rate on interest income from 15pc to 20pc, a move that may discourage savings. However, he clarified that this would not apply to small savers or investments in national saving schemes.

Similarly, digital marketplaces and online businesses are to be brought into the tax net through courier companies, it was announced. The minister also announced a 5pc income tax on pensions exceeding Rs10m per annum for pensioners under the age of 70. In a move to promote a cashless economy, non-filers will now be subject to a 1pc advance tax on cash withdrawals, up from the existing 0.6pc. Taxpaying businesses will be discouraged from making cash sales exceeding Rs200,000. Additional measures have also been introduced to encourage online transactions and digital payments.

https://www.dawn.com/news/card/1916314

Strict steps will be taken against non-filers. Only taxpayers who submit their wealth statements will be allowed to undertake large financial transactions, such as the purchase of vehicles, immovable properties, securities, mutual funds, or the opening of certain bank accounts.

Tightening the noose around unregistered traders, the finance minister proposed the freezing of bank accounts, restrictions on property transfers, and the sealing of business premises in cases of serious violations of sales tax laws, with the involvement of trade bodies. In the same vein, he also announced a notional 0.5pc reduction in the super tax for corporate firms with annual incomes between Rs200m and Rs500m.

Improved tax collection

The finance minister noted a rise in the tax-to-GDP ratio, which has historically been one of the weakest aspects of Pakistan’s economy, from 8.8pc in June 2024 to 10.3pc in the first nine months of the current year. This figure is projected to reach 10.4pc by June 30, 2025. Including non-tax revenue, the federal tax-to-GDP ratio has improved to 11.6pc, representing an increase of 1.2 percentage points, up from 0.8 percentage points last year. The consolidated tax-to-GDP ratio, the finance minister added, has reached 12.3pc, including a 0.7pc contribution from the provinces. “The 1.6pc of GDP increase in FBR revenue is not only the highest in Pakistan’s history, but is also rarely seen anywhere else in the world in recent times,” the minister boasted.

Balancing the budget

The government has set the non-tax revenue target for the next year at Rs5.15tr, slightly higher than the current year’s Rs4.9tr. This brings the total gross federal revenue (FBR plus non-tax) to Rs19.28tr, up from the current year’s original budget target of Rs17.8tr, which was later revised down to Rs16.8tr. After transferring Rs8.2tr to the provinces, the net federal revenue is estimated to be Rs11.07tr for the next year, compared to Rs9.8tr this year. This leaves a projected federal deficit of Rs6.5tr, a reduction from the current year’s budgeted Rs8.5tr, which was later revised to Rs7.44tr.

Subsidy allocations have been reduced by 14pc to Rs1.19tr for the next year, down from Rs1.38tr in the current year. This is primarily due to a 13pc (Rs154bn) cut in power sector subsidies. The tariff differential subsidy for ex-Wapda distribution companies has been reduced by 9.7pc (Rs27bn) to Rs249bn, from Rs276bn this year. Meanwhile, the tariff subsidy for K-Electric has been cut by 28pc (Rs49bn), to Rs125bn from Rs174bn. An even larger reduction has been applied to the tariff subsidy for Azad Jammu and Kashmir, which has been reduced to Rs74bn from Rs108bn, reflecting a cut of 31.5pc.

The major non-tax revenue item is expected to be the petroleum levy on POL products, projected at Rs1.47tr, which is a 26pc increase from the current year’s Rs1.16tr. An even larger contribution is anticipated from State Bank of Pakistan profits, estimated at Rs2.4tr for the next year, though this marks a slight decline from Rs2.6tr this year.

The debt servicing cost for next year has been estimated at Rs8.2tr, representing an 8pc decline from actual repayments of Rs8.95tr, and 16pc lower than the original budget estimate of Rs9.78tr. Pension expenditure is expected to rise by around 4pc, reaching Rs1.06tr, up from Rs1.01tr this year. Military pensions are projected to grow by 12pc to Rs742bn, compared to a 10pc increase in civil pensions, which are expected to reach Rs243bn.

As a result, total current expenditure has been set at Rs16.29tr for the next year, slightly below this year’s figure of Rs16.39tr.

Published in Dawn, June 11th, 2025

Pakistan News

Pakistan launches strikes on Afghanistan, with Taliban saying dozens killed

Published

on

By

Pakistan has carried out multiple overnight air strikes on Afghanistan, which the Taliban has said killed and wounded dozens of people, including women and children.

Islamabad said the attacks targeted seven alleged militant camps and hideouts near the Pakistan-Afghanistan border and that they had been launched after recent suicide bombings in Pakistan.

Afghanistan condemned the attacks, saying they targeted multiple civilian homes and a religious school.

The fresh strikes come after the two countries agreed to a fragile ceasefire in October following deadly cross-border clashes, though subsequent fighting has taken place.

The Taliban’s defence ministry said the strikes targeted civilian areas of Nangarhar and Paktika provinces.

Officials in Nangarhar told the BBC that the home of a man called Shahabuddin had been hit by one of the strikes, killing about 20 family members, including women and children.

Pakistan’s Ministry of Information and Broadcasting said it had carried out “intelligence based selective targeting of seven terrorist camps and hideouts”.

In a statement on X, it said the targets included members of the banned Tehreek-i-Taliban Pakistan, which the government refers to as “Fitna al Khawarij,” along with their affiliates and the Islamic State-Khorasan Province.

The ministry described the strikes as “a retributive response” to recent suicide bombings in Pakistan by terror groups it said were sheltered by Kabul.

The recent attacks in Pakistan included one on a Shia mosque in the capital Islamabad earlier this month, as well as others that took place since the holy month of Ramadan began this week in the north-western Khyber Pakhtunkhwa province.

Pakistan accused the Afghan Taliban of failing to take action against the militants, adding that it had “conclusive evidence” that the attacks were carried out by militants on the instructions of their leadership in Afghanistan.

The Taliban’s defence ministry later posted on X condemning the attacks as a “blatant violation of Afghanistan’s territorial integrity”, adding that they were a “clear breach of international law”.

It warned that “an appropriate and measured response will be taken at a suitable time”, adding that “attacks on civilian targets and religious institutions indicate the failure of Pakistan’s army in intelligence and security.”

The strikes come days after Saudi Arabia mediated the release of three Pakistani soldiers earlier this week, who were captured in Kabul during border clashes last October.

Those clashes ended with a tentative ceasefire that same month after the worst fighting since the Taliban returned to power in 2021.

Pakistan and Afghanistan share a 1,600-mile (2,574 km) mountainous border.

Continue Reading

Pakistan News

KASHMIR SOLIDARITY DAY AND HUMAN RIGHTS VIOLATION IN INDIAN-OCUPIED JAMMU AND KASHMIR

Published

on

By

Consulate General of Pakistan, Los Angeles (USA)

Akhtar Hussain Sandhu

California (USA)

Every year, 5th February is observed as Kashmir Solidarity Day in Pakistan, Kashmir, and in different parts of the world where Pakistanis are residing. The main purpose of observing the day is to honor the freedom struggle of the Kashmiri people against the human rights violations in the Indian-occupied Jammu & Kashmir. It also aims at highlighting the human rights violations by the Indian government and the forces to attract the world community’s attention to the plight of the Muslims. Pakistan supports this struggle for its right to self-determination as enunciated in the United Nations’ charter (Articles 1(2) and 55) and the pledge of a plebiscite in Kashmir made by the Indian government. The Consulate General of Pakistan, Los Angeles (USA), arranged a meeting on 4 February 2026 in which the Muslims and Sikhs participated to express their solidarity with the people of Jammu & Kashmir. Consul General Asim Ai Khan inaugurated the session with the messages of the President, Prime Minister, and Foreign Minister of Pakistan.

Asim Ali Khan introduced the audience to the background and importance of 5th February. He reiterated the national stance of the Pakistani government that they would always support the Kashmiri freedom struggle and would condemn the brutality of the Indian armed forces in the Indian-occupied Jammu and Kashmir. This was my first appearance as a speaker at an official event, and the arrangements and the audience’s deep interest in Pakistan’s state narrative encouraged me to believe that one day the struggle of the Kashmiri people will bring a shining dawn for posterity. Besides Asim Ali Khan, the host, eminent journalist Arif Zaffar Mansuri, Dr. Akhtar Hussain Sandhu, Sultan Ahmed, and Ismail Keekibhai expressed their concern about the ongoing suffering of the Kashmiri people and pledged full support from the Pakistani government and people. Arif Mansuri said that the international community ought to come forward to rescue the oppressed from the Indian forces and their inhuman treatment of the innocent Muslims of the Indian-occupied J&K.

The program was conducted by a talented young girl, Asma Khan, who beautifully started and ended the seminar. she played a documentary which highlighted beauty of the valley, facts and figures of the martyrs and brutality of the BJP government. Sultan Ahmad, with an impressive administrative and political portfolio in the US, reminded the audience to spread this message at a higher level and that he would be a helping hand in exposing India’s nefarious intentions and human rights violations. I had been invited by Mubashir Khan (Deputy Consul General), but he was in Pakistan, so we could not meet on the occasion. I shared my view that this is a dilemma of human history: humans inflict barbarity upon humans. But the redeeming aspect is that humans endeavor to support the oppressed and condemn the aggressor. Humans ensure and restore peace. It is often perceived that philosophical and technological advanceshaveopened new avenues for conflict resolution and appeasement. Fatality of the wars experienced especially during the 20th century made the world realize to establish a forum of reconciliation, the League of Nations and United Nations, to block the way to future wars and violence settling the dispute through dialogue and negotiations. Civil society organizations, universities, peace-loving projects, published material, and media keep on highlighting the importance of peace, coexistence, interfaith harmony, minority rights, protection of vulnerable social groups, including minority, women, children and the aged, but despite all this exhortation, we see inhuman treatment and brutality in many parts of the world. Look at Jammu & Kashmir administered by India, wherein the innocent Muslims are going through ordeals such as torture, sexual violence, extrajudicial killing, ban of expression, detention, unjustifiable deployment of Indian forces, and psychological hammering. No human ethics and international humanitarian laws allow this maltreatment and repressive measures that the people of Jammu & Kashmir have been experiencing for many decades. The BJP government changed the political and geographical status of Jammu & Kashmir after the revocation of Articles 370 and 35A on 5 August 2019, depriving J&K of its Special Sovereign Status. Although it is never welcomed by the majority of the Kashmiri people but the Indian government did not listen to the people of J&K. Even the Indian Supreme Court on 11 December 2023 upheld the government’s revocation of 370 and 35A and gave observation, JK had no internal sovereignty after its ‘accession’ to India although‘accession’ is a disputed issue and the matter is still pending in the UN. Many dissidents were imprisoned and many have been facing police and court cases. The Indian governments concluded laws, acts such as Public Safety Act and even amendments to justify their repressive and oppressive attitude. Amnesty International expressed concern over the arrests of Muslim and Hindu leaders.

Pakistan is usually blamed by the Indian government for supporting the Kashmiri Muslims, but why were the Hindu leaders arrested by the Indian government? This is to prove that even the Hindus support the Pakistan’s stance on the issue of human rights. The Americans have just celebrated Martin Luther King, Jr.’s day with the message that ‘violence breeds more violence’ and ‘unjust laws are laws at all… and it is a moral duty to defy the unjust laws,’ therefore, the Americans ought to defy unjust laws which are contradictory to human or natural rights.’ Right now, the people of Indian-Occupied Jammu & Kashmir are victims of unjust laws and inhuman treatment by the BJP government. Not only Muslims of the Indian-Occupied J&K, but also the Christians, Achhoot, and Sikhs are also undergoing cruel and ill-treatment. Investigation concludes that the Indian-sponsored killing squad assassinated and targeted the Sikh leaders in England, Canada, Pakistan and the US. It is a moral obligation of the international community to redeem the oppressed people from the tyrannical and dictatorial rule of the Indian government under the Bhartiya Janata Party. Moreover, I do appreciate the international organizations and countries which raise their voice against the violation of human rights in Indian-Occupied J&K as yes, the oppressed Kashmiri people do need the international support in the name of humanity so that the coming generations of the valley can be saved from such a physical torture and mental agony. The world community should become the voice of the voiceless people and ensure the following:    

  1. Withdrawal of the Indian armed forces from the Indian-occupied J&K must be ensured immediately so that the people can live a normal and peaceful life. 
  2. The autonomous status of the Indian-Occupied J&K should be restored to what it was in 2019. Intention to change the demography of the valley must be blocked, and property once owned by the local Kashmiris must be returned to the previous Kashmiri owners.
  3. A UN resolution to hold a plebiscite in Kashmir is the best way to determine the will of the people.
  4. An inquiry under the UN umbrella should be conducted to investigate police and court cases against locals in the valley. The findings should be made public so that the world can come to know what brutality has been inflicted upon the innocent people of Indian-occupied J&K.
  5. The civil society organizations, media people, and UN delegations should be facilitated to visit the region to collect the facts relating to abuse of authority, violence, torture, ban on expression and religious rituals, presence of the Indian army, and police cases against the youth. Fake encounters should also be stopped, and the judicial proceedings should be monitored by the UN emissary.    

Consul General Asim Ai Khan thanked the scholars and audience. At the end of the program, Navdeep Singh and I presented the 3rd edition of my book, Punjab: An Anatomy of Muslim-Sikh Politics, to Consul General Asim Ai Khan. All the participants gathered in the hall and shared their thought on the subject with each other. This was a great day that sensitized many Muslim and Sikh people about international politics and the violation of human rights in different regions of the world. If this generation plans to convert the world into a peaceful place for posterity, they will have to condemn state violence and extremism existing anywhere in the world.    

Continue Reading

Pakistan News

The Epstein Files Set Imran Khan Apart

Published

on

By

Paris (Imran Y. CHOUDHRY) :- Former Press Secretary to the President, Former Press Minister to the Embassy of Pakistan to France, Former MD, SRBC Mr. Qamar Bashir analysis : When the latest waves of documents connected to the Jeffrey Epstein investigation began surfacing, most of the names that appeared followed a familiar and uncomfortable pattern. The references revolved around social proximity, elite networks, reputational damage, and questions of judgment. Against that backdrop, one name stood apart — not because of scandal, but because of how it was framed.
Imran Khan’s reported mention was different. According to summaries that emerged from the broader document releases, he was not linked to misconduct or impropriety. Instead, he was described in private correspondence as “really bad news” and a “greater threat.” The tone was political rather than personal, strategic rather than social. In a collection of files that cast shadows over many reputations, his distinction appeared to lie in geopolitical discomfort rather than scandal.
That difference matters because it shifts the conversation from morality to strategy. A leader described as a threat is not being accused of vice but of independence. The question then becomes: dangerous to whom, and for what reason? To understand why that framing resonates so strongly in Pakistan, one must revisit a moment that altered the country’s political trajectory. That moment arrived in early March 2022.
On August 9, 2023, The Intercept published a classified Pakistani diplomatic cable documenting a March 7, 2022 meeting between Pakistan’s ambassador to Washington and U.S. Assistant Secretary of State Donald Lu. The document, labeled “Secret,” recorded Washington’s displeasure with Khan’s visit to Moscow on February 24, 2022 — the very day Russia invaded Ukraine. According to the cable, Lu stated that if a no-confidence vote against Prime Minister Khan succeeded, “all will be forgiven in Washington.” Otherwise, he warned, it would be “tough going ahead,” and the prime minister could face “isolation” from Europe and the United States.
The language recorded in the cable is unmistakably conditional, tying bilateral warmth to a specific political outcome. Forgiveness if he is removed; difficulty if he remains.
The sequence that followed intensified scrutiny. The meeting took place on March 7, procedural steps toward a no-confidence vote began on March 8, and by April 10, Khan had been removed from office. Correlation does not prove orchestration, and political transitions are rarely explained by a single document. Nevertheless, the cable demonstrates that diplomatic pressure was applied at a sensitive moment. It also reveals that Washington viewed Khan’s neutrality on Ukraine as a personal policy choice rather than institutional consensus.
Khan’s foreign policy posture had consistently emphasized strategic independence. He refused to grant U.S. military basing rights after America’s withdrawal from Afghanistan, publicly declaring “Absolutely not” when asked about hosting foreign forces. He defended Pakistan’s abstention at the United Nations on Ukraine and rejected public pressure from European diplomats, asking pointedly at a rally whether Pakistan was expected to behave as a subordinate state. He argued that engagement with Russia was necessary to secure affordable energy and food for Pakistan’s struggling population.
Beyond Ukraine, Khan elevated the issue of Islamophobia on the global stage, pressing the United Nations to recognize anti-Muslim discrimination and urging respect for religious dignity. He framed Pakistan as a country that would engage with all powers without entering rigid alliances. Supporters viewed this as sovereignty in action, while critics considered it diplomatic miscalculation. What cannot be denied is that his posture disrupted established expectations about alignment in a polarized global environment.
Following his removal, Pakistan’s external positioning shifted noticeably. Military-to-military engagement with the United States regained momentum, and reports surfaced of Pakistani-manufactured ammunition appearing in Ukraine. Diplomatic warmth between Islamabad and Western capitals returned, and new defense cooperation frameworks were discussed. These developments do not conclusively prove that pressure determined political outcomes, but they align with the cable’s suggestion that a change in leadership would ease tensions and remove the “dent” in relations.
It is within this broader context that the contrast with the Epstein-related references acquires symbolic weight. Many powerful men whose names appeared in those documents faced reputational questions because of association with a disgraced financier. Imran Khan’s distinction, by contrast, was reportedly rooted in strategic apprehension rather than personal scandal. He was not depicted as compromised; he was characterized as disruptive.
The cable published by The Intercept reinforces that interpretation. Its “assessment” section records the Pakistani ambassador’s view that Lu could not have delivered such a strong message without approval from higher authorities. Whether or not that assessment was accurate, it underscores how the exchange was perceived inside Pakistan’s diplomatic apparatus. The document captures a moment when international expectations and domestic politics collided.
Since Khan’s removal, Pakistan has experienced deep polarization, economic strain, and intensified debate over the balance of civilian and military authority. His critics argue that his governance record warranted parliamentary removal and that institutional checks functioned as designed. His supporters argue that his defiance of geopolitical alignment invited external pressure that altered the course of domestic politics. The truth may reside in the interplay of both internal and external forces.
What the documentary record shows is not a signed directive of regime change, but evidence of diplomatic leverage. In international politics, leverage often operates through incentives and signals rather than commands. The phrase “all will be forgiven” is not an order; it is a conditional promise. Such language does not prove conspiracy, but it does demonstrate expectation.
That is why the distinction matters. The Epstein files, as publicly discussed, did not place Imran Khan among scandal-tainted elites. Instead, they appear to reflect concern about his independent trajectory. The March 7 cable then provides context for why that concern may have existed, showing that his policies generated friction at the highest levels of diplomacy. In a world structured around predictable alignments, independence can be unsettling.
Imran Khan’s story, therefore, is not merely about allegations or denial. It is about how sovereignty interacts with global power. He was not framed in those documents as morally compromised; he was framed as politically inconvenient. Whether that inconvenience contributed to his removal remains debated, but the documentary evidence confirms that it was noticed.
In the end, what set him apart was not scandal but stance. In a system accustomed to compliance, saying no can carry consequences. The documents do not resolve the debate over his ouster, but they illuminate the pressures surrounding it. And in doing so, they explain why, among many powerful names, one stood apart.

Continue Reading

Trending