Economic Revival
The State Bank of Pakistan has reduced the key policy rate by 100 basis points, from 12% to 11%, citing sharp reductions in inflation. However, a statement has cautioned, challenges persist for the economy from heightened global uncertainty surrounding trade tariffs and geopolitical developments, requiring a measured monetary policy stance.
Prepping for War
India will conduct mock civil defense drills this week to prepare for a potential conflict with Pakistan. According to the information ministry, the drills will include an evacuation plan and training of civilians on various measures to protect themselves in case of any hostile attack. The move comes amidst growing concerns about Delhi planning military aggression against Pakistan after the Pahalgam attack.
Safe Approach
Several international airlines, including Air France and Germany’s Lufthansa, have started avoiding Pakistani airspace “until further notice” as tensions persist between Pakistan and India, with both countries ramping up aerial patrols in recent days. The carriers have noted that the decision has resulted in longer flight times for some destinations.
Stepping Back
The Balochistan Home Department has withdrawn detention orders for 150 political workers and activists, but is continuing to detain Baloch Yakjehti Committee leader Mahrang Baloch and six others under a public order law. Baloch’s arrest under Section 3 of the Maintenance of Public Order had triggered protests across the province that have since ended without netting any gains.
Budgetary Allocations
Ruling coalition allies PPP and PMLN have agreed to an 18% hike in the defense budget amidst ongoing tensions with India as the government prepares to unveil the federal budget for FY2025-26 next month. However, development remains a key point of contention, with the government seeking to reduce it to maintain fiscal discipline and create a primary budget surplus double that of this year.
Water Shortages
The Indus River System Authority has warned that a 21% water shortage for the early Kharif season may rise to 70% in late Kharif amidst threats from India to deny Pakistan its rightful share after unilaterally holding in abeyance the Indus Water Treaty. As a first step, India has already reduced flow of the Chenab River, and started construction of additional infrastructure at the Baglihar Dam.
Travel Advisory
The United Kingdom has advised its citizens to avoid travel to Pakistan and India as the neighboring countries continue to face off after the Pahalgam attack that Delhi has attempted to link to Islamabad. The advisory specifically warns British citizens against traveling near the Pak-India border and the Line of Control over security concerns.
Primary Dispute
Pakistan has apprised the United Nations Security Council of ongoing tensions between Pakistan and India, stressing that lasting peace in South Asia is unattainable with resolving the core issue of Jammu and Kashmir. Ambassador Asim Iftikhar has also affirmed Islamabad’s serious reservations over Delhi’s actions following the Pahalgam incident.
Tax Net
In a bid to improve tax compliance, the federal government has authorized the stationing of tax officers at business premises to monitor production, stocks, supply of goods and rendering of services in the largely undocumented service sector. The move aims to target high-earning yet under-documented businesses such as restaurants, hotels, marriage halls, clinics, and foreign exchange dealers.
Blunt Warning
Army chief Gen. Asim Munir has warned that Pakistan will respond with its full military might if its sovereignty and territorial integrity are violated. Stressing that the country desires peace, he also underscored that foreign-sponsored terrorism remains the gravest threat to Balochistan’s security and development, adding such elements will not be allowed to succeed.