Pakistan passes tax-laden budget ahead of fresh IMF loan

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Pakistan's Finance Minister Muhammad Aurangzeb is addressing the National Assembly in Islamabad, Pakistan on June 28, 2024. (@NAofPakistan/X)
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People stand outside the Parliament house during a budget session in Islamabad on June 26, 2024. (AFP)
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Updated 28 June 2024
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Pakistan passes tax-laden budget ahead of fresh IMF loan

  • Finance bill passed ahead of Pakistan’s talks with IMF for loan of $6 billion to $8 billion
  • Government presented budget this month with challenging tax revenue target of $46.66 billion

ISLAMABAD: Pakistan’s parliament on Friday passed the government’s tax heavy finance bill for the coming fiscal year amid an annual inflation projection of up to 13.5 percent for June.

The bill comes ahead of more talks with the IMF for a loan of $6 billion to $8 billion to avert a debt default for Pakistan, the slowest growing economy in South Asia.

As the parliament moved to pass the bill clause by clause, Pakistan’s sovereign dollar bonds slid on Friday, Tradeweb data showed, with the 2031 maturity shedding 1.4 cents to trade at 78.69 cents on the dollar.

Finance Minister Muhammad Aurangzeb moved the finance bill in parliament, which was opened to seek amendments and debate by the ruling alliance led by Prime Minster Shehbaz Sharif and its opposition.

Speaker Sardar Ayaz Sadiq announced passing of the budget in a live TV telecast.

The government presented the national budget on June 12 with a challenging tax revenue target of 13 trillion rupees ($46.66 billion) for the year starting July 1, up about 40 percent from the current year, to strengthen the case for a new rescue deal with the International Monetary Fund (IMF).

The budget is gearing the country toward an era of sustainable and inclusive growth, said a finance ministry report issued on Friday, which projected annual consumer price inflation for June 2024 between 12.5 percent to 13.5 percent, up from 11.8 percent in May.

“The government was implementing various administrative, policy and relief measures to control inflationary pressures,” the report said.

The rise in the tax target is made up of a 48 percent increase in direct taxes and a 35 percent hike in indirect taxes over revised estimates of the current year. Non-tax revenue, including petroleum levies, is seen increasing by 64 percent.

The tax would increase to 18 percent on textile and leather products as well as mobile phones besides a hike in the tax on capital gains from real estate.

Workers will also get hit with more direct tax on income.

Opposition parties, mainly parliamentarians backed by the jailed former Prime Minister Imran Khan, have rejected the budget, saying it will be highly inflationary.

Pakistan has projected a sharp drop in its fiscal deficit for the new financial year to 5.9 percent of gross domestic product (GDP), from an upwardly revised estimate of 7.4 percent for the current year.

Pakistan’s central bank has also warned of possible inflationary effects from the budget, saying limited progress in structural reforms to broaden the tax base meant increased revenue must come from hiking taxes.

The upcoming year’s growth target has been set at 3.6 percent with inflation projected at 12 percent.


UN agencies report spike in Afghan arrests as nearly two million return from Pakistan

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UN agencies report spike in Afghan arrests as nearly two million return from Pakistan

  • UNHCR and IOM data show weekly spike in detentions, with Balochistan emerging as main hotspot
  • International rights groups say the deportation drive risks violating international protection obligations

ISLAMABAD: United Nations agencies for refugees and migration recorded a sharp rise in the arrest and detention of Afghan nationals in Pakistan since the beginning of the year, highlighting in a report this week that about two million Afghans have been repatriated to their country since late 2023.

According to a joint report released by the Office of the United Nations High Commissioner for Refugees (UNHCR) and the International Organization for Migration (IOM), the scale of the movement has gone up significantly.

“During the reporting period (4 – 10 January), a total of 1,726 Afghan nationals were arrested and detained, marking an 18 percent increase compared to the previous week,” the report said. “Cumulatively, from 15 September 2023 to 10 January 2026, 1,957,694 individuals have returned.”

The mass migration and deportation drive began on November 1, 2023, after Pakistani authorities announced a repatriation plan for “illegal immigrants,” mostly Afghans. The decision followed a spike in suicide bombings, which the Pakistani government said were carried out by Afghan nationals or by militants launching cross-border attacks from neighboring Afghanistan.
Islamabad has also blamed illegal Afghan immigrants and refugees for involvement in smuggling and other crimes, though Afghanistan denies the allegations.

In 2025, Pakistan expanded the scope of its deportation drive, moving beyond undocumented foreign nationals to include holders of Afghan Citizen Cards (ACC). The campaign was later extended to bearers of Proof of Registration (PoR) cards after their validity expired in June.

While PoR cards were meant to recognize Afghan refugees under a formal registration framework, ACCs were merely introduced to document Afghan nationality without conferring refugee status on those in possession of them.
“Out of all arrests and detentions during the reporting period ... ACC holders and undocumented Afghans represented 87 percent of the total rate of arrest and detentions, and PoR holders represented 13 percent,” the report said.

In addition to the arrests, the reporting period saw a marked increase in activity at the border. Between January 4 and January 10, 2026, alone, an estimated 19,666 Afghans returned through various crossing points including Torkham and Chaman, representing a 38 percent increase in returns and a 17 percent increase in deportations compared to the week prior.

The UN report noted that “fear of arrest remained the main reason for return among undocumented individuals and ACC holders (95 percent)” while PoR card holders cited “strict border entry requirements” as their primary driver for leaving.
Geographically, 73 percent of recent arrests occurred in Balochistan, with the Islamabad Capital Territory (ICT) also being a focal point with 16 percent of the total arrests following government directives for Afghans to relocate from the capital.

Earlier in January, Amnesty International renewed pressure on Islamabad, urging it to stop deportations.

“Amnesty International calls on the Pakistani authorities to halt the deportation of Afghan refugees and ensure that individuals with international protection needs are safeguarded as per international human rights law,” it said in an open letter addressed to Prime Minister Shehbaz Sharif.

Amnesty maintained Pakistan’s repatriation policy violated the principle of non-refoulement, which prohibits returning refugees to countries where they could face persecution or serious harm, and described the campaign as potentially “one of the largest forcible returns of refugees in modern history.”