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Express Tribune
3 days ago
- Politics
- Express Tribune
Weaponising water: India's destabilising role in South Asia
Listen to article India's aggressive and unilateral approach to regional geopolitics, exemplified by its suspension of the Indus Waters Treaty (IWT), is a stark reminder of its willingness to prioritise hegemonic ambitions over regional stability. This weaponisation of shared natural resources highlights India's increasing disregard for international norms and raises critical questions about its commitment to sustainable and cooperative regional development. India also failed to present credible evidence linking Pakistan to the Pahalgam incident and instead used unfounded allegations to portray Pakistan as a scapegoat while rationalising its own escalating hostility. Such actions further obstruct dialogue and hamper regional cooperation. Meanwhile, Pakistan has consistently advocated for a fair and neutral investigation into the Pahalgam incident, showing its commitment to justice and transparency. Even in the face of aerial provocations and civilian casualties, Pakistan refrained from retaliation until it was left with no choice. India seems to be using unfounded accusations to strategically target Pakistan internationally and deflect from its internal issues, like human rights abuses in Kashmir and anti-Muslim violence in India. It much prefers hostility and dominance over constructive engagement and peacebuilding. South Asia is already one of the most water-stressed regions in the world, facing climate change, resource shortages and economic inequality. The IWT once ensured fair distribution of water between India and Pakistan, but India's decision to weaken this treaty now threatens Pakistan's agricultural sector, which supports over 70% of its population. Cutting water supplies worsens Pakistan's food security and hinders climate adaptation while also setting a dangerous precedent for powerful nations to weaponise shared resources. Such actions sow mistrust, making regional cooperation even harder. India's actions reveal a deep contradiction in its foreign policy. On one hand, it wants to be seen as a global leader in climate action and international cooperation, aiming to be a vishwaguru (global teacher). While on the other, its divisive regional behaviour reflects selfishness and power plays. This double standard damages India's global reputation and weakens its moral authority on climate justice and sustainable development. Global response to this crisis has been disappointing. While Pakistan's procurement of $1.4 billion from the IMF's Resilience and Sustainability Facility is a positive step for climate adaptation, India's IWT violation barely faces accountability. Global inaction sends a dangerous message: powerful nations can break treaties without consequences. This ultimately encourages similar behaviour elsewhere and weakens international systems. South Asia now stands at a crucial moment. The region can either continue down a path of conflicts fuelled by resource disputes or work together to find common solutions. The South Asian Water Security Initiative (SAWSI), building on the principles of the IWT, could promote fair water sharing, joint efforts to combat climate change, and better regional stability. But it can only succeed if India changes steps away from its current aggressive policies and takes on the role of a responsible leader, working for mutual trust and shared progress. Otherwise, water conflicts even risk causing global instability. Water has always been a symbol of life and growth, sustaining civilisations for millennia. Its weaponisation risks destroying that legacy and deepening divisions across South Asia. The international community must recognise the gravity of this crisis and hold India accountable for its actions, prioritising peace over political gain. India must also rethink its priorities and let go of its hegemonic ambitions, embracing a future built on collaboration and coexistence. Only then can it restore its credibility and ensure a more peaceful and prosperous South Asia.
Business Recorder
4 days ago
- Business
- Business Recorder
Budget: time for respite & reform
Pakistan has shown signs of overall stabilisation, supported by improved fiscal performance, strengthened external account, and receding inflation. Revenue Mobilization and restrained current spending have contributed to a narrower fiscal deficit and a surplus primary balance. The current account registered a higher surplus, driven by remittances and export growth, while reserves have improved, and the exchange rate remains stable, aligned with the market. Inflation has reduced to its lowest level, creating space for a more supportive monetary policy in upcoming months. Although overall industrial activity remained weak. However, automobiles and export-oriented sub-sectors showed an impressive performance. Social protection and climate finance initiatives are progressing, reinforcing the path toward inclusive and sustainable growth. Economic Update & Outlook- April – 2025, Government of Pakistan, Ministry of Finance The budget for fiscal year (FY) 2025–26, to be presented on June 10, 2025, is set against a backdrop of critical reforms, macroeconomic recovery, and renewed commitments to fiscal discipline. The International Monetary Fund (IMF), concluding its staff visit of Islamabad, headed by Nathan Porter, has provided a direction for budget formulation and broader economic restructuring. Engaged in serious dialogue and detailed consultations with Pakistan's federal and provincial authorities, the IMF mission outlined contours of the new fiscal framework, macroeconomic objectives, and structural reforms. The mission acknowledged satisfactory progress and laid out stringent conditions under the US$ 7 billion 37-month Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) programmes. IMF's EFF programme's primary objective is to achieve a primary surplus of 1.6 percent of GDP in FY2026 through robust revenue generation and prioritized expenditure, urging on enhancement in tax compliance, broadening of tax base and rationalization of fiscal spending. The strategic framework agreed upon during this mission now defines the configurations of Pakistan's forthcoming budget, making it a cornerstone of economic recovery and international confidence. IMF's recommendations centered on revenue generation without undermining inclusive growth. Emphasis on expanding the tax base through policy and administrative measures echoed the need to transition from narrow, burdensome taxation to a more equitable and growth-oriented regime. The Pakistani authorities were advised to limit untargeted subsidies, curtail wasteful expenditures, and ensure targeted social protection. The IMF reinforced the importance of sound macroeconomic policies including maintaining a tight and data-driven monetary stance. State Bank of Pakistan's (SBP's) objective to keep inflation at a minimum level was endorsed, and a flexible exchange rate regime was deemed critical to managing external shocks and rebuilding reserve buffers. Focus on energy sector reform also featured prominently, particularly addressing ineptitudes in tariff structures, reducing system losses, and ensuring cost-recovery pricing. The fiscal framework was required not only to meet debt sustainability metrics but also to enable pro-investment policies that promote long-term economic stability and job creation. IMF's reform recommendations aligned with Pakistan's economic data reveals both progress and persisting structural flaws. April 2025 Economic Update issued by the Ministry of Finance offers insight into these dynamics. The macroeconomic indicators have shown signs of recovery. Improved revenue performance, moderated inflation, and current account surplus suggest that the economy is gradually transitioning from a crisis management phase to a recovery path. Fiscal deficit for Jul-Feb FY2025 declined to 2.2 percent of GDP, while primary surplus stood at 3 percent of GDP, indicating prudent fiscal management. Revenue receipts grew by 43.3 percent year-on-year, with a substantial 73 percent surge in non-tax revenues. The Federal Board of Revenue (FBR) collected, after blocking refunds and taking advances not yet due, Rs. 8.45 trillion during Jul-Mar FY2025, reflecting a 25.9 percent increase (sic) as compared to corresponding period of last year. These improvements offer fiscal space that can be strategically directed towards productive expenditure. The monetary side remains cautiously supportive. Inflation, which stood at 20.7 percent in March 2024, declined sharply to 0.7 percent year-on-year by March 2025, a multi-decade low. Decline in inflation provides policy room for easing monetary conditions, potentially reducing interest burden and supporting credit flows to the private sector. SBP's foreign exchange reserves reached US$10.6 billion as of April 2025, contributing to total reserves of US$15.7 billion. The current account posted a US$1.9 billion surplus, supported by export recovery and a record US$28 billion in remittances. These figures highlight a restored balance of payments discipline and reduced reliance on external borrowing. The industrial sector presents a mixed picture. Large-scale manufacturing (LSM) output remained under pressure with a decline of 1.9 percent in Jul-Feb FY2025. However, segments such as textiles, apparel, and petroleum products showed resilience. The automobile sector registered significant growth in production, indicating that selective industrial recovery is underway. Cement exports grew by 28.1 percent despite weak domestic demand. These sectoral trends underline the importance of targeted incentives and consistent energy supply to stimulate broader industrial revival. The agricultural sector, often overlooked in fiscal prioritization, displayed its strength during the Rabi season. Wheat was cultivated on over 22 million acres with an estimated output of 27.9 million tonnes. Agricultural credit disbursement rose by 15.4 percent while imports of agricultural machinery surged by 40.5 percent. The above trends in agricultural sector reflect early success in mechanization and access to input, supporting the argument for increased public investment in rural productivity. Data from the update supports IMF's call to expand the agricultural tax net, which remains a politically sensitive but economically necessary reform. The external sector's performance supports confidence. Exports rose 7.7 percent to US$24.7 billion, led by garments and textiles, while IT exports surged by 23.7 percent to US$2.8 billion. Remittance inflows showed robust growth from key corridors such as Saudi Arabia and the United Arab Emirates (UAE). Foreign direct investment (FDI) increased by 14 percent, reaching US$1.6 billion, primarily in financial services, energy, oil and gas. Stock exchange index crossed 117,000 points in March, driven by positive investor sentiment. These trends reflect growing market confidence, aided by macroeconomic stabilisation and policy predictability. IMF's emphasis on rebuilding investor confidence is thus partially validated by these developments. IMF's concern about energy sector inefficiencies is well-placed. The high cost of power generation, transmission losses, and circular debt accumulation have long undermined competitiveness. The budget must respond with a roadmap for tariff rationalization, elimination of cross-subsidies, and improved governance of distribution companies. Power sector reforms must go beyond pricing to address theft, billing inefficiencies, and lack of investment in renewable energy. IMF's emphasis for cost recovery-based pricing and legislative changes for levies must be operationalized in this budget cycle. Resilience of the social protection system was also recognized. The government spent Rs 347 billion under Benazir Income Support Programme (BISP) during Jul-Feb FY2025, representing an 82.6 percent increase over the previous year reflecting the commitment to shielding vulnerable households, in line with IMF's directions on protecting priority expenditures. Continuity of inflation-linked transfers under the Kafaalat programme must be embedded in the budgetary framework. Integration of digital tools in welfare delivery should be expanded to improve targeting and transparency. The budget must now transform these policy directions and macroeconomic signals into actionable proposals. Priority should be broadening tax base through digitization and enforcement. The FBR should diligently enforce digital invoicing, inter-agency data sharing, and AI-based risk profiling to enhance compliance. The large undocumented segments in retail, real estate, and agriculture must be brought under the tax net. Simplification of tax procedures, reduction in litigation, and automation of refunds will improve compliance and reduce resistance. The second priority should be providing relief to the salaried class. Inflation has eroded real incomes, and relief must be extended through upward revision of tax slabs and introduction of indexation. The withholding and advance tax mechanisms must be streamlined to prevent excess collection and delays in refund. The burden of indirect taxes such as General Sales Tax (GST) disproportionately affects fixed-income households. Reduction of sales tax rates, particularly on essential items and utilities, must be considered. The fiscal space generated by non-tax revenues and improved FBR performance offers room for targeted tax relief. The third priority is energy sector reform. The budget should announce a timeline for tariff rebasing, reduction of subsidies, and modernization of grid infrastructure. Investment in smart metering and solar integration must be scaled up to reduce technical losses. The use of petroleum levy must be linked to infrastructure investment in the energy sector rather than general revenue needs. Structural bottlenecks in the energy sector directly affect industry competitiveness and must be addressed holistically. The fourth priority is stimulating GDP growth through public development spending and private investment. The Public Sector Development Programme must prioritize high-yield projects with employment impact, especially in transport, housing, and rural connectivity. Private sector participation in infrastructure through public-private partnerships should be incentivized via fiscal guarantees and tax relief. The budget must facilitate credit to small and medium enterprises (SMEs) through interest subvention and guarantee schemes. The government should allocate funds for technology parks, export clusters, and skill training to support job creation and competitiveness. The fifth priority is building external resilience. The budget must aim to support export diversification through sector-specific incentives and simplification of export procedures. Foreign exchange reserves should be improved by retaining remittance inflows through formal channels via attractive saving instruments. The incentives for FDI should include tax holidays, contract enforcement guarantees, and repatriation ease. The Board of Investment must be allocated resources for aggressive outreach and facilitation. The sixth priority must be institutional reform. The budget must include allocations for digitization of land records, integration of National Database & Registration Authority (NADRA) with economic databases and strengthening of regulatory bodies. The anti-corruption agencies must be funded to improve accountability in public spending. IMF's insistence for governance diagnostics must translate into budgetary measures that strengthen institutions and restore public trust. Budget for FY2025–26 should not be merely a fiscal document, but a test of political will and administrative capability. IMF's confidence, validated by completion of the first EFF review and RSF approval, presents a unique window for reforms. The economic data shows promise, but the transition from stabilisation to growth requires sustained effort. The public expects meaningful relief, the markets expect clarity, and the international community expects reform. The budget must deliver all three. The government has an opportunity to use this budget as a platform for transformation. Clarity of priorities, alignment with global institutions, and responsiveness to domestic needs can together chart a sustainable economic path. The time for incrementalism is over. The moment calls for ambition, discipline, and action. The future of Pakistan's economy may well be written in the pages of the FY2025–26 budget. (Huzaima Bukhari & Dr Ikramul Haq, lawyers and partners of Huzaima & Ikram, are Adjunct Faculty at Lahore University of Management Sciences (LUMS), members Advisory Board and Visiting Senior Fellows of Pakistan Institute of Development Economics (PIDE) and Abdul Rauf Shakoori is a corporate lawyer) Copyright Business Recorder, 2025
Business Recorder
26-05-2025
- Business
- Business Recorder
Aurangzeb says budget to exhibit ‘bold initiatives'
ISLAMABAD: The federal government is preparing to introduce bold measures in the upcoming budget with a focus on strategic direction, Finance Minister Muhammad Aurangzeb said Monday. While addressing an event organised by Karandaaz Pakistan and Pakistan Banks Association (PBA) here, the finance minister said that budget is not just about revenue and expenditure, it has to provide the strategic direction of where the economy is, and where it is heading. He added that rather than making the math work, the government intends to make the budget document more strategic. Govt to introduce 'bold measures' in the upcoming budget, says Aurangzeb The federal budget for FY2025-26 will be presented on June 10, 2025. Meanwhile, the Pakistan Economic Survey 2024-25 will be released on June 9, 2025. Talking about the recent escalation of tensions between Pakistan and India, Aurangzeb said that these are very tense moments. The entire nation has rightly celebrated the way our armed forces and political leadership have stood up against the aggression. Aurangzeb shared that efforts were made to derail Pakistan's engagement with the International Monetary Fund (IMF). He said, there was no stone left unturned in terms of ensuring that the meeting with the IMF does not happen. If the meeting does happen, then these items are not on the agenda, whether it is the second tranche under the Extended Fund Facility (EFF) and the $1.3 billion under the Resilience and Sustainability Facility (RSF). However, we are beyond that, and our case was discussed and decided on merit. He said the unity shown by the nation against recent aggression is the same unity needed on the economic front. On macroeconomic stability, Aurangzeb emphasised the need to avoid repeating past mistakes. He said that we have achieved macroeconomic stability in yesteryears and in the previous decades as well, but we have squandered the opportunity. Because it is easy to get into a sugar rush, i.e. pump liquidity into the market, go for consumption-led growth, which triggers balance of payment and FX issues. He said that to break away from the boom and bust cycle, Pakistan needs to stay the course in terms of structural reforms. Aurangzeb shared that the government remains committed to simplifying the tax return filing process for the salaried class. '70-80 per cent of the salaried class do not necessarily hold equity or income portfolios, why should they fill 140-150 measures? 'We are trying to bring it down to nine items, five on the wealth and four on the income tax side.' He said the government wants to implement the simplified process by the end of September. On the SoE reforms, the finance minister admitted that this is one area where we did not do well last year. He said that the government remains committed to accelerating reforms in this sector. He confirmed the PIA transaction has been relaunched and expressed optimism about its completion. On debt servicing, Aurangzeb said in the ongoing fiscal the government debt servicing cost has decreased by Rs1 trillion. 'Next year, we are going to restructure/reorganize our debt management office along the modern lines,' he said. The finance minister was of the view that the ongoing structural reforms would put Pakistan's economy 'on a path of sustainable growth'. Aurangzeb expressed optimism about Pakistan's long-term economic trajectory. Our economy has crossed the $400 billion level. This shows we are moving in the right direction but to become a $3 trillion economy by 2047, we need to mitigate two existential issues, i.e. population and climate. He said four out of the six points under the 10-year Country Partnership Framework inked with the World Bank deal with climate and population. Speaking about the importance of the initiative, Syed Salim Raza, chairperson Karandaaz, said: 'Karandaaz is proud to support Pakistan's financial sector as it transitions toward purpose-driven finance. This training is part of our broader commitment to building the institutional capacity required to align with global investment standards and deliver measurable development outcomes. By strengthening local capabilities in impact measurement and sustainable finance, we are laying the foundation for a more inclusive and resilient financial system.' Addressing the participants, Director Development BHC Islamabad Jo Moir stated, 'This training underscores BHC's long-term engagement with Pakistan's financial sector. A decade ago, we supported the creation of Karandaaz as a special purpose impact finance vehicle. Today, it serves as a lighthouse for the sector, demonstrating scalable models for inclusive and sustainable finance.' The workshop is being led by Alex MacGillivray, executive director at the JIM Foundation and a globally recognised expert in impact measurement. With a career spanning development finance institutions and advisory work international impact investors, MacGillivray has delivered a highly practical curriculum that blended theory with real-world applications. 'The idea was to move beyond traditional credit models and introduce a more purposeful financing approach, one that drives measurable outcomes alongside financial returns,' said MacGillivray. 'With the right institutional momentum and leadership, Pakistan can play a key role in the global impact investing movement.' The training is covering a comprehensive range of topics, including strategic intent, impact governance, portfolio-level impact design, impact at exit and independent validation. Participants are engaging in interactive case studies, peer learning sessions, and scenario-based exercises aimed at translating concepts into actionable strategies. Articulating the sector's commitment to sustainable finance, Muneer Kamal, CEO and Secretary General PBA, said, 'Pakistan's banking sector must lead from the front as we transition towards a more sustainable and impact-driven financial ecosystem. This partnership with MoF and Karandaaz reflects PBA's commitment to strengthening sectoral readiness and aligning capital with long-term national priorities.' This training reinforces the commitment by MoF, Karandaaz and PBA's ongoing efforts to strengthen institutional capabilities in Pakistan's financial sector and support the country's transition toward sustainable, impact-oriented finance. As global standards for responsible investing continue to evolve, Karandaaz remains committed to equipping local actors with the tools and knowledge needed to access and manage development capital effectively. Copyright Business Recorder, 2025
Express Tribune
26-05-2025
- Business
- Express Tribune
Servicemen, civilians to get equal pay raise
Finance Minister Muhammad Aurangzeb said on Monday that there was no proposal in the budget to increase salaries of the armed forces more than the civilian government employees and assured that the nation's defence needs would be fully met. In a media interaction after attending a seminar, the finance minister also said that India did not leave any stone unturned to derail Pakistan's $7 billion package but it could not succeed. "There is so far no such proposal" for increasing the defence salaries more than that of the civilian employees, the finance minister said, responding to a question. The statement clears the air after rumours swirled suggesting that the government was considering significant increase in the salaries of the armed forces. The government is considering a proposal to increase salaries in the range of 6% to 10% due to low single digit inflation rate. While responding to another question, Aurangzeb said that whatever support the government could provide for meeting the defence needs would be fully provided. "This is about meeting the needs of the country, not just meeting the needs of the armed forces of Pakistan," he added. The finance minister also talked about malicious Indian designs to choke Pakistan's external financing. "There is immense support by the IMF despite the kind of efforts [India made] to derail the IMF programme," he said and added that had there been shortcomings in the implementation of the programme, there would have been some problems. Pakistan's case was discussed and approved on merit, because it met all the quantitative and structural benchmarks, he said. "These are very tense moments. The entire nation has rightly celebrated the way our armed forces and political leadership have stood up against aggression," he continued. "There was no stone left unturned in terms of ensuring that the meeting with the IMF does not happen and if the meeting does happen, then these items are not on the agenda, whether it's the second tranche under the Extended Fund Facility or the $1.3 billion under the Resilience and Sustainability Facility (RSF)," the minister said. "However, we are beyond that, and our case was discussed and decided on merit." Addressing an event, organized by the Karandaaz Pakistan and the Pakistan Banks Association (PBA) in Islamabad, Aurangzeb said that the federal government was preparing to introduce "bold measures" in the upcoming budget with a focus on strategic direction. "We are going to bring some bold measures during the budget for FY 2025-26," he said. He said that rather than making the math work, the government intended to make the budget document more strategic. The federal budget for FY 2025-26 will be presented on June 10, 2025 and the Economic Survey will be launched a day earlier. To yet another question about the delay in concluding IMF talks, the finance minister said that the IMF talks would continue next week virtually, but the main discussions had already taken place. He said that the government had achieved macroeconomic stability in the past too but "we have squandered" the opportunity. "Because it is easy to get into a sugar rush, ie pump liquidity into the market, go for consumption-led growth," which triggered balance of payment and FX issues, he said. To break away from the boom and bust cycle, Aurangzeb said, Pakistan needed to stay the course in terms of structural reforms. He stressed that the government remained committed to simplifying tax return filing process for the salaried class. He added that 70 to 80% of the salaried class did not necessarily hold equity or income portfolios and they should not be required to fill 150 columns. "We are trying to bring it down to nine items, five on the wealth and four on the income tax side." The minister added that the government wanted to implement a simplified process by the end of September. The finance minister admitted that the government could not perform well on the state-owned enterprises reform in the last year but hoped that the agenda would be expedited in the new fiscal year. He said that the PIA transaction had been launched again and expressed optimism about its completion. On debt servicing, Aurangzeb said that in the ongoing fiscal the government debt servicing cost had decreased by Rs1 trillion but stated that it was not a success, as the reduction was because of reduction in the interest rates. "Next year, we are going to restructure and reorganise the debt management office along modern lines," he said. Aurangzeb termed the country's economy crossing the $400 billion mark as a matter of satisfaction. "Our economy has crossed the $400 billion level. This shows we're moving in the right direction", he added. But he argued that to become a $3 trillion economy by 2047, Pakistan needed to tackle the challenges of 2.6% population growth rate and climate change.
Business Recorder
26-05-2025
- Business
- Business Recorder
Aurangzeb says IMF case approved ‘on merit' despite disruption attempts
Finance Minister Muhammad Aurangzeb on Monday said that efforts were made, albeit unsuccessfully, to derail Pakistan's engagement with the International Monetary Fund (IMF). 'There was no stone left unturned in terms of ensuring that the meeting [with the IMF] does not happen. 'If the meeting does happen, than these items are not on the agenda, whether it's the second tranche under the Extended Fund Facility (EFF) and the $1.3 billion under the Resilience and Sustainability Facility (RSF). 'However, we are beyond that, and our case was discussed and decided on merit.' Aurangzeb made these remarks while talking about the recent escalation of tensions between Pakistan and India, during an event organised by Karandaaz Pakistan and Pakistan Banks Association (PBA) in Islamabad. 'These are very tense moments. The entire nation has rightly celebrated the way our armed forces and political leadership have stood up against the aggression,' he said, adding that the unity shown by the nation against recent aggression is the same unity needed on the economic front. Just days earlier, the IMF stated that its Executive Board approved funding for Pakistan after it 'met all the targets' under the EFF programme. 'In the case of Pakistan, our Board found that Pakistan had indeed met all of the targets,' said Julie Kozack, the IMF's spokesperson, on Thursday. 'It had made progress on some of the reforms, and for that reason, the Board went ahead and approved the programme,' she said. Earlier this month, the IMF Executive Board approved the first review of the 37-month, $7-billion EFF) for Pakistan. The Fund's Executive Board also approved the authorities in Islamabad's request for an arrangement under the RSF, giving Pakistan access to around $1.4 billion.
