For the first time, Khyber Pakhtunkhwa unveils $6.3 billion budget ahead of federal government

Newly elected members take oath at the provincial legislature of Pakistan's Khyber Pakhtunkhwa (KP) Assembly in Peshawar on February 28, 2024. (AFP/File)
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Updated 24 May 2024
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For the first time, Khyber Pakhtunkhwa unveils $6.3 billion budget ahead of federal government

  • Critics say the move will further deepen the trust deficit between the provincial and federal authorities
  • KP finance minister says the province did not get its due share in revenue, faced $499.08 million deficit

PESHAWAR: For the first time in history, Pakistan’s northwestern Khyber Pakhtunkhwa (KP) province on Friday announced its budget of Rs1,754 billion ($6.3 billion) before the federal government, with one of its senior officials justifying the move on the basis of provincial autonomy.

The KP government is led by former prime minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party, whose administration in Islamabad was ousted from power following a parliamentary no-confidence vote in April 2022.

Since then, its leadership has struggled to stay politically afloat, with many of its members, including Khan, being incarcerated for several months in multiple legal cases. The PTI is now in the opposition at the center, where its lawmakers frequently clash with members of the treasury benches in a deeply polarized environment.

Speaking to Arab News, KP finance minister’s media officer, Anwar Khan Khattak, said a province could present its own budget after the 18th amendment, which ensures autonomy to all federating units.

“We are not in competition either with provinces or the federal government,” he said. “We have our own exclusivity in terms of governance. That’s why we took a lead in presenting our budget.”

“A province only needs the federal government’s assistance in achieving tax targets,” he added.

However, Asmat Shah, a Peshawar-based journalist and expert on economic affairs, said provinces presented their budget after the federal government, saying the KP government’s decision to do the opposite would only widen the trust deficit with the administration in Islamabad.

“The only logic I see behind KP’s move to present the budget before the federal government is that it wants to demonstrate efficiency to its voters,” he maintained. “Secondly, the PTI-led government wants to show the masses it is not dependent on the federal authorities while making critical decisions.”

Criticizing the budget itself, Shah said that the provincial government should have allocated more funds for security, education and health sectors, which were badly affected due to years of militancy in the region.

Earlier, KP’s finance minister Aftab Alam unveiled the budget in the provincial assembly.

“The total outlay of the budget is Rs1,754 billion,” he said. “Mr. Speaker, development expenditures have a lead role for people’s prosperity and development of the province. Development expenditure not only enhances people’s life standard but creates job opportunities to move the economy in tandem. Rs416.30 billion ($1.49 billion) has been allocated for development expenditures for the fiscal budget 2024-25.”

Alam also criticized the federal authorities for not providing the province’s due share in revenue.

“Mr. Speaker, it is to be mentioned that following the merger of erstwhile tribal districts into KP, the province has a total Rs262 billion ($940.72 million) annual share in the NFC [National Finance Commission] award but the province has received only Rs123 billion ($441.64 million),” he added. “Keeping in view this, KP is facing an annual deficit of Rs139 billion ($499.08 million).”


Five Pakistani soldiers killed in IED blast in northwestern Pakistan

Updated 21 June 2024
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Five Pakistani soldiers killed in IED blast in northwestern Pakistan

  • IED explosion targeted security forces vehicle in northwestern Kurram district, says army 
  • President Asif Ali Zardari condemns blast, resolves to uproot “terrorism” from Pakistan 

ISLAMABAD: Five Pakistani soldiers were killed in an improvised explosive device (IED) blast in northwestern Pakistan on Friday, the army’s media wing said, as Islamabad grapples with rising militancy in the country’s western provinces bordering Afghanistan.
The IED blast targeted the vehicle carrying security forces personnel in Kurram district in Pakistan’s Khyber Pakhtunkhwa (KP) province, the Inter-Services Public Relations (ISPR) said in a statement.
The army said that a sanitization operation was being carried out in the area to eliminate any “terrorists” there, vowing to bring the perpetrators of the act to book.
“Security forces of Pakistan are determined to eliminate the menace of terrorism and such sacrifices of our brave soldiers further strengthen our resolve,” the ISPR said.
President Asif Ali Zardari strongly condemned the blast, state-run Associated Press of Pakistan (APP) said in a report. The president appreciated the martyrs’ sense of duty and patriotism, and the role of security forces in eradicating militancy from the country.
“He expressed the resolve to uproot the terrorism from the country’s soil, saying that the operations of the law enforcement agencies would continue till complete elimination of the menace,” APP reported.
Islamabad blames the uptick in attacks on neighboring Afghanistan, saying Pakistani Taliban, or the Tehreek-e-Taliban Pakistan (TTP) leaders have taken refuge there and run camps to train militants to launch attacks inside Pakistan. Kabul has previously said rising violence in Pakistan is a domestic issue for Islamabad and it does not allow militants to operate on its territory.
The TTP has been waging a war against the state to try to overthrow the government for nearly two decades. It wants to run Pakistan as an Islamic state governed by its own harsh interpretation of Islamic laws.


Pakistani government’s coalition allies distance themselves from ‘tax-heavy’ budget in parliamentary debate

Updated 21 June 2024
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Pakistani government’s coalition allies distance themselves from ‘tax-heavy’ budget in parliamentary debate

  • Dr. Farooq Sattar, a lawmaker of government ally MQM-P, demands a more “people-friendly” budget
  • PPP lawmakers confirm no breakthrough reached with ruling party PML-N on budget differences

ISLAMABAD: The government’s key coalition allies criticized its tax-heavy federal budget during a parliamentary session on Friday, urging authorities to adopt “people-friendly” policies as Islamabad’s hopes the document will prove instrumental in securing another International Monetary Fund (IMF) bailout package.
Pakistan’s parliament kicked off the debate into the federal budget on Thursday, with opposition party Sunni Ittehad Council (SIC) labelling the government’s move to present the budget as “economic terrorism” against the people. Islamabad has set an ambitious tax revenue generation target of about Rs13 trillion ($46.55 billion) in the budget, which was presented on June 12 by Finance Minister Muhammad Aurangzeb.
When the budget debate resumed in the National Assembly on Friday, the government’s key coalition allies distanced themselves from the taxes imposed in the finance bill, calling on authorities to levy them on landlords and the affluent class rather than the salaried group.
“If sanity fails to prevail and a public-friendly budget is not prepared, then this traditional budget is going to be the biggest threat to the country’s security,” Dr. Farooq Sattar, a senior lawmaker of the government’s coalition partner, Muttahida Quami Movement-Pakistan, (MQM-P) said during the parliamentary session.
He said the budget signaled that the status quo continued to wield power in Pakistan.
Meanwhile, Pakistan Peoples Party (PPP) lawmaker Shazia Marri confirmed that no breakthrough had been reached in talks held between the ruling Pakistan Muslim League-Nawaz (PML-N) party and the PPP’s senior leadership on their differences regarding the budget.
PPP Chairman Bilawal Bhutto-Zardari led a high-level delegation of his party to meet Prime Minister Shehbaz Sharif and the government’s senior leadership on Thursday. The two sides attempted to iron out their differences over the federal budget.
The PPP has accused the government of ignoring its recommendations in the budget. While not a member of the federal cabinet, the PPP voted for Sharif in the prime minister’s election and forms the government in Pakistan’s southern Sindh province. The PML-N-led government requires the PPP’s votes for the budget to pass.
After the meeting between the two sides ended on Thursday, a handout issued by the Prime Minister’s Office (PMO) said both sides had agreed to form committees to work out their differences over the budget.
Speaking during the National Assembly session on Friday, Marri pointed out that the government’s ministers had not attended the session.
“Relevant ministers must be present in the house during budget session,” Marri said, adding that her party was reluctant to participate in such sessions till it resolved its differences with the government on the budget.
Another PPP leader Sharmila Faruqi said both parties’ relevant committees would hold meetings to reach a consensus on the budget before voting on the finance bill takes place next week.
“Not much of a breakthrough, subsequent meetings to follow,” Faruqi told Arab News about the meeting between the two sides. “PML-N must honor its commitments to PPP.”
Meanwhile, SIC lawmaker Sajid Khan criticized the government for imposing heavy taxes in the budget on medicines and food items.
“The government should reopen border with Afghanistan from Angoor Ada [town in northwestern Pakistan] to resume trade and business activities,” he recommended.
Khan said the government should review tax measures and allocate a special budget for the development of the erstwhile tribal regions bordering Afghanistan.
“The government should allocate the promised 3 percent of the National Finance Award for the development of the tribal regions,” he said.


ADB, Pakistan sign $250 million loan agreement for investment in infrastructure, services

Updated 21 June 2024
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ADB, Pakistan sign $250 million loan agreement for investment in infrastructure, services

  • Loan to help drive investments in infrastructure, services through public-private partnerships
  • ADB has committed over $52 billion in public and private sector loans and grants since 1966

KARACHI: The Asian Development Bank (ADB) and Pakistan on Friday signed an agreement for a $250 million loan that would help drive sustainable investments in the country’s infrastructure and services sectors, the Pakistan chapter of the bank confirmed.
The ADB announced on June 5 that it had approved a $250 million policy-based loan to help drive investments in Pakistan’s infrastructure and services sector through public-private partnerships (PPPs).
“ADB Country Director for Pakistan Yong Ye and Secretary Economic Affairs Division of Pakistan Kazim Niaz today signed the agreement for $250 million policy-based loan,” ADB Pakistan wrote on social media platform X.
In its earlier press statement on June 5, ADB said its PPP program supports the implementation of government policies to create a fiscally affordable environment for public-private partnerships, apart from promoting economic growth. 
“The reforms will facilitate efficient infrastructure planning and promote sustainable development practices in infrastructure projects, such as climate risk screening and gender considerations in project feasibility assessments and PPP contracts,” ADB Director-General for Central and West Asia Yevgeniy Zhukov had said.
The regional development bank has committed over $52 billion to Pakistan, one of its founding members, since 1966 in public and private sector loans, grants, and other forms of financing to promote inclusive economic growth in the country.
In December 2023, the ADB approved three projects totaling $658.8 million to improve Pakistan’s domestic resource mobilization, rehabilitate schools damaged by the devastating August 2022 floods, and enhance agricultural productivity to improve food security.


Pakistan’s benchmark index posts nearly 100% growth in a year, hits 80,000 barrier

Updated 21 June 2024
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Pakistan’s benchmark index posts nearly 100% growth in a year, hits 80,000 barrier

  • Benchmark KSE 100 index hits all-time high at 80,059.87 level during intraday trading
  • Analysts say surge due to investors’ optimism about Pakistan securing another IMF loan

KARACHI: Pakistan’s key stock index hit an all-time high of 80,000 points on Friday, with data showing the benchmark index posted a growth of nearly 100 percent in a year, as analysts attributed the recent surge to optimistic investors confident Islamabad will extract another bailout package from the International Monetary Fund (IMF).
The benchmark KSE 100 index crossed the key psychological barrier of 80,000 points to hit an all-time high of 80,059.87 points. This is an almost 100 percent increase recorded in the benchmark index since June 21, 2023.
However, following the profit-taking at higher levels— a situation where buyers sell shares at higher prices to gain maximum profit— the index dropped to 78,169 points during trading and closed at 78,810.49 points.
The index figure at the close shows that the benchmark has posted a growth of 96 percent in a year, according to the Pakistan Stock Exchange’s (PSX) data.
“Positive sentiments, led by a tax-laden budget which investors feel will help in getting IMF’s long-term loan, have tossed the index above the 80,000 level which was 40,000 a year back,” Muhammad Sohail, CEO of Topline Securities, told Arab News.
Pakistan’s Finance Minister Muhammad Aurangzeb presented the $67.76 billion federal budget for the fiscal year 2024-25 in parliament on June 12. Analysts expect the budget will play a pivotal role in Pakistan’s negotiations with the IMF to unlock yet another loan from the international lender.
Islamabad has set an ambitious tax revenue generation target of about Rs13 trillion ($46.55 billion) for the year fiscal year 2025 in the budget. The tax collection target has been increased more than 40 percent from the target for the current fiscal year, which ends on June 30.
Pakistan equity investors also celebrated the government’s move to refrain from an anticipated increase in capital gains tax (CGT) and tax on dividend income. In addition, the taxes imposed on the real estate sector will also make the stock market an attractive destination for investment, analysts said.
“Before the budget, there was a rumor in the Pakistan stock market that capital gains tax and tax on dividends is going to be increased,” Shehryar Butt, portfolio manager at Darson Securities said. “But after the budget, those taxes were not imposed. That was positive for the market.”
Butt said the budget presented by the incumbent government seemed to be as per the IMF’s directions and expectations. 
“It is very likely that Pakistan will get a longer program of IMF after presentation of the budget and it has also been marked by international rating agencies including Fitch,” Butt noted, adding that global financial institutions are optimistic about Pakistan achieving its revenue collection target.
Analysts hope the stock market will continue to perform strongly and the KSE 100 index will add another 10,000 points in the coming days.
“Factors that would support the bullish sentiments at the stock market in coming days include inflation and the monetary policy easing,” Tahir Abbas, head of research at Arif Habib Limited, said.
Abbas said average annual inflation is expected to be around 12-12.5 percent while interest rates are expected to decline from the current 20.5 percent figure to around 16 percent in a year.
“Based on these factors we expect that the KSE 100 index would hover around the 88,000 level by the end current year,” he said.


Pakistan bans public gatherings in largest province as ex-PM Khan’s party announces protests

Updated 21 June 2024
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Pakistan bans public gatherings in largest province as ex-PM Khan’s party announces protests

  • Khan’s Pakistan Tehreek-e-Insaf party called for nationwide protests on Friday to demand his release from prison
  • Punjab government imposes ban on public gatherings, rallies, protests, sit-ins and demonstrations for seven days

ISLAMABAD: Pakistan’s Punjab government imposed a ban on all kinds of public gatherings throughout the province on Friday after jailed former prime minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party called for nationwide protests to demand his release.
In a video statement earlier this week, PTI leader and former National Assembly speaker Asad Qaiser urged Khan supporters to come out on the streets across the nation on Friday to demand Khan’s release from prison.
The former prime minister has been in jail since August 2023 after he was convicted by a local court on corruption charges. Khan denies the allegations, saying they are politically motivated to keep him and the PTI away from Pakistani politics.
“It has been observed that in view of the prevailing law and order situation and security threats, any gathering/ assembly is likely to provide soft targets to terrorists and miscreants,” a notification issued by the Punjab Home Department said.
“Which not only pose serious security threats but is also likely to cause threat to public at peace and order as well as inconvenience to public at large.”
The notification said the government was imposing Section 144, which empowers the administration to ban any activity in the general interest of the public for a specific time period, across Punjab for a period of seven days.
The notification said assemblies, gatherings, sit-ins, rallies, processions, demonstrations, protests and other such activities have been prohibited across the province effective immediately.
PTI leader Raoof Hasan criticized Punjab government’s “shameful” decision in a post on social media platform X.
“It reflects how mortified they are of the person of @ImranKhanPTI & his vision of an independent & sovereign Pakistan where its people would become the true arbiters of their fate,” Hasan wrote.
Khan’s tensions with the government and Pakistan’s powerful military came to a head on May 9 2023 when angry supporters took to the streets and attacked government and military installations following his brief detention in a land corruption case.
The move sparked a nationwide crackdown launched by the government against Khan’s party which saw several PTI leaders and supporters rounded up in jails. Many Khan aides announced parting ways with him following the crackdown on his party. Pakistan’s military announced it would try those involved in the May 9 violence in military courts.
Khan initially said the protests were a natural reaction by his supporters but later distanced himself from it, blaming Pakistan’s intelligence agencies for instigating the riots. Pakistan’s military and government rubbished his allegations.