Pakistan News
Budget 2025-26: Austerity budget offers ‘crumbs’ for relief
• 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.
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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.
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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
CELEBRATES PAKISTAN’S 79TH INDEPENDENCE DAY AND 150TH BIRTH ANNIVERSARY OF QUAID-E-AZAM MOHAMMAD ALI JINNAH IN FRANCE
Paris ( Imran Y. CHOUDHRY):- On the occasion of the 79th Independence Day of Pakistan, Ambassador Mumtaz Zahra Baloch hoisted national flag to the tune of the national anthem at the Embassy of Pakistan, Paris and welcomed distinguished members of the Pakistani community including large number of children.

Messages of the President, the Prime Minister and Foreign Minister of Pakistan were read out on the occasion.
Congratulating all on the Independence Day, the Ambassador said that 14th August was truly auspicious as it brought together the entire nation – in celebration, in paying homage to the Quaid-e-Azam and other leaders of the freedom movement, in remembrance of the supreme sacrifices of our forefathers and drawing inspiration from our glorious past and the tremendous achievements over the decades.

The Government of Pakistan is observing the current year – 2026 – as the “Year of Quaid-e-Azam Muhammad Ali Jinnah” to mark his 150th birth anniversary, she added. The great intellectual vision of Quaid requires the nation to uphold his principles and play its due role in the development and progress of Pakistan. The Ambassador highlighted that Quaid-e-Azam had given the nation three golden principles, faith, unity and discipline and adherence to these principles would lead the nation towards a bright future for the generations to come.
Ambassador Baloch said that as we celebrate our freedom we should remember our Kashmiri and Palestinian brothers and sisters, who have been struggling for over seven decades for their freedom and right to self-determination. She reaffirmed Pakistan’s political and diplomatic support to the people of the Indian Illegally Occupied Jammu and Kashmir (IIOJK) and Palestine for their legitimate rights.



Ambassador also appreciated the contributions of Pakistani diaspora in France in promoting Pakistan-France relations. She reiterated Embassy’s fully commitment to continue to facilitate Pakistanis based in France.
Later, the Ambassador inaugurated the ‘historic photo exhibition’ based on the life and works of Quaid-e-Azam Muhammad Ali Jinnah at the Embassy. The exhibition showcased a remarkable collection of
archival records and photographs chronicling the visionary leadership and enduring
legacy of the founder of Pakistan. The guests especially the children took a keen interest in the exhibition and raised slogans of Pakistan Zindabad.
Pakistan News
Pakistan PUBG MOBILE team ‘4Thrives’ visited the Embassy of Pakistan in Paris, France.
Paris ( Imran Y. CHOUDHRY):- Ambassador Mumtaz Zahra Baloch today received the top professional Pakistan PUBG MOBILE team ‘4Thrives’, which is competing in the high-stakes competition, PUBG MOBILE World Cup 2026 Grand Finals at the Esports World Cup (EWC) being held in Paris.
The team members of ‘4Thrives’ briefed the Ambassador on the game and the hard work they all had put in to finish at the top of the qualifying round and reaching the Grand Finals. They were enthusiastic about their performance which has cemented their position among the world’s best PUBG MOBILE teams.

The Ambassador appreciated the team members for their enthusiastic participation and accomplishments and wished them success for the Grand Finals. She said the Pakistani nation has proudly witnessed the recent achievements of the 4Thrives team and expressed confidence that it would win the prestigious trophy in Paris as well.



This is the first time that EWC is being held in Paris – a true global phenomenon represented by more than 2,000 players from 200 clubs and 100 different countries.
Let’s celebrate and cheer Pakistan PUBG MOBILE team ‘4Thrives’ for the Grand Finals this week!
Pakistan News
The Mecca Defence Pact: The Threats Behind the Alliance
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 : The Mecca Joint Defence Agreement signed by Saudi Arabia, Türkiye and Pakistan is being described as a Muslim version of NATO. Turkish Foreign Minister Hakan Fidan himself said its collective-defence clause is technically similar to NATO’s Article 5: an armed attack on one member will be treated as an attack on all. Yet most commentary has concentrated on the pact’s wording, its possible expansion and whether it is aimed at Iran or Israel. The more important question has received less attention: what threat does each signatory actually perceive?
Without answering that question, analysis of the agreement remains incomplete. Alliances do not acquire meaning merely from ceremonial signatures. Their real character is determined by the dangers their members fear, the capabilities they contribute and the circumstances in which they are prepared to act.
For Saudi Arabia, the immediate security environment is deeply paradoxical. The kingdom has long relied upon the United States, but the presence of American forces and facilities across the Gulf can also attract retaliation whenever Washington uses regional territory or infrastructure in military operations against Iran.
Tehran has repeatedly maintained that its quarrel is not with Gulf societies as such, but with military threats launched from or supported through their territories. Whether one accepts Iran’s justification or not, the underlying dilemma is real: foreign protection can simultaneously become a source of exposure.
This raises a difficult question. If foreign bases had not facilitated attacks against Iran, would Tehran have attacked Gulf countries on the same scale? The answer cannot be proven, but the question exposes Saudi Arabia’s strategic vulnerability. Riyadh wants protection without remaining permanently hostage to decisions made by an external guarantor.
Threats from the Houthis in Yemen and Iran-aligned armed groups in Iraq remain serious, particularly for oil facilities, desalination plants, shipping and civilian infrastructure. Nevertheless, Saudi Arabia has spent heavily on modern aircraft, missiles, surveillance systems and air defence. These dangers alone do not fully explain the need for an Article 5-style pact with Türkiye and nuclear-armed Pakistan.
The wider concern is Israel’s expanding military reach and the fear that no regional state can assume it will remain permanently outside Israeli calculations. The “Greater Israel” project is not merely a slogan invented by Israel’s critics. It is a documented ideological and political current rooted in expansionist interpretations of biblical territory, including the most extreme vision of land stretching from the Nile to the Euphrates, and in revisionist Zionist ideas of sovereignty on both sides of the Jordan River.
Israel’s wars and military operations across Gaza, Lebanon, Syria and elsewhere have intensified regional fears that its use of force and territorial ambitions are becoming geographically unconstrained. Because the most expansive interpretation of Greater Israel encompasses territory belonging to several Arab states, including Saudi Arabia, Riyadh has legitimate reasons to treat this ideology and Israel’s growing regional reach as a long-term strategic threat.
The Mecca agreement therefore creates strategic depth, reduces Saudi Arabia’s exclusive dependence on Washington and strengthens the kingdom’s leadership position in the Muslim world.
Türkiye enters the pact with a different threat map. It possesses NATO’s second-largest army, an increasingly sophisticated defence industry, formidable drone capabilities, warship and helicopter production, and substantial operational experience in Syria, Iraq and the eastern Mediterranean.
Kurdish militancy and instability along Türkiye’s southern borders remain persistent threats, but Ankara is largely capable of managing these challenges without Pakistani or Saudi military intervention.
The more consequential concern is Israel. Turkish and Israeli rhetoric has become increasingly hostile, while their strategic interests collide in Syria, Gaza and the broader eastern Mediterranean. Türkiye’s conventional size gives it considerable strength, but Israel is widely understood to possess nuclear weapons, while Türkiye does not. This creates a dangerous asymmetry at the highest level of escalation.
Pakistan’s participation therefore adds deterrent weight, but it is essential not to overstate what has formally been agreed. The published language does not establish an explicit Pakistani nuclear umbrella over Türkiye or Saudi Arabia. Nor does it automatically commit Islamabad to nuclear retaliation.
Its value at this stage lies in strategic ambiguity. Any adversary contemplating extreme escalation must now consider the possibility of a broader response involving a nuclear-armed partner. That uncertainty itself can reinforce deterrence, provided consultation mechanisms, command arrangements and red lines are eventually clarified.
Pakistan’s principal state-based threat remains India. Its other challenges—including attacks linked to the Pakistani Taliban, militancy operating from Afghan territory and insurgency in Balochistan—are grave but fall mainly within the domain of counterterrorism and internal security.
Islamabad has also alleged external support for certain militant networks, including from India and Israel other hostile actors, therefore the possibility of hybrid warfare designed to weaken Pakistan cannot be ignored.
The real test for the pact would come during a future India-Pakistan war. Saudi Arabia enjoys extensive economic and political relations with India, while Türkiye also has interests that extend beyond its partnership with Islamabad. Would Riyadh provide intelligence, logistics, financing, air defence or diplomatic support? Would it risk its relationship with New Delhi?
The treaty’s collective-defence formula is powerful, but it does not necessarily mean that every member must respond identically or automatically declare war. Even NATO’s Article 5 requires each ally to take such action as it considers necessary. The Mecca pact’s credibility will similarly depend on agreed procedures, operational planning, military integration and, above all, political will.
Nor should the alliance be framed as an anti-Iranian “Sunni bloc.” That description is analytically shallow and politically dangerous. It imports a sectarian narrative into an agreement whose signatories explicitly maintain that it is not directed against Iran or any other particular country.
Western and regional media extensively are using the Sunni label as convenient shorthand, but repeating it can deepen the very divisions that have repeatedly weakened the Muslim world. It risks presenting Sunni and Shia states as natural enemies, even though they share geography, economic interests, religious bonds and responsibility for regional stability.
Iran has demonstrated formidable missile, drone and asymmetric capabilities and has proven ability to impose severe costs on the combined military might of both the United States and Israel and their alliance in the Middle East and elsewhere in the entire world.
A confrontation between Iran and the combined forces of Pakistan, Türkiye and Saudi Arabia would devastate the region, rupture trade and energy routes, inflame sectarian tensions and serve none of the four countries.
The rational objective of the Mecca alliance should therefore be deterrence, collective security and strategic autonomy—not the creation of another front in the Iran war.
The wiser long-term course is to keep the pact open and eventually build a structured security dialogue with Iran. Immediate Iranian membership may be politically unrealistic while war and mistrust persist, but inclusion should remain a strategic objective.
Egypt and other regional countries could also participate in a broader security architecture based on non-aggression, collective consultation, protected shipping lanes, economic connectivity and respect for sovereignty.
The three signatories must also wage an intelligent information campaign. Through official statements, diplomatic outreach, legacy media, social platforms and other forms of communication, they should consistently reject the description of the agreement as a “Sunni NATO.”
They should explain that the pact is intended to protect its members from aggression regardless of the aggressor’s religious, sectarian or national identity. It must not be allowed to become an instrument for turning Muslim countries against one another.
The Mecca agreement will become historic only if it does more than redistribute fear. Properly developed, it can reduce dependence on outside powers, deter Israeli or other aggression, give Pakistan additional diplomatic weight and create the nucleus of an inclusive regional security system.
Mishandled as a sectarian coalition, however, it could produce precisely the confrontation it claims to prevent. Its success will therefore be measured not by how many enemies it names, but by how many wars it prevents.
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