Pakistan urges urgent water reforms as India tensions escalate, climate risks mount

Shida drinks directly from a water well as temperatures soar above 48°C (118°F) during a heatwave in Daska, located in the Sialkot District of Punjab province, in Pakistan, June 10, 2025. (REUTERS)
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Updated 11 June 2025
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Pakistan urges urgent water reforms as India tensions escalate, climate risks mount

  • In the outgoing fiscal year, government completed 34 of 59 water-related projects at a cumulative cost of $1.06 billion
  • Additional $368 million had been allocated for continued investment in ongoing schemes, finance minister says

ISLAMABAD: Pakistan must overhaul its water management system “on a war footing,” Finance Minister Muhammad Aurangzeb said on Tuesday, as the country grapples with intensifying climate threats and renewed tensions with neighboring India over transboundary river flows.

Hostility between nuclear-armed neighbors Pakistan and India is high after they struck a ceasefire on May 10 following their most intense military confrontation in decades. The latest escalation, in which the two countries’ militaries traded missile, drones and artillery fire, was sparked after India accused Pakistan of supporting militants who attacked dozens of tourists in Indian-administered Kashmir on April 22, killing 26. Islamabad denies involvement.

Following the attack, Delhi unilaterally “put in abeyance” the Indus Waters Treaty of 1960, which governs the usage of the Indus river system. The accord has not been revived despite the rivals agreeing on a ceasefire on May 10.

Delivering the federal budget speech for fiscal year 2025–26, the finance minister said India’s decision to suspend the decades-old water sharing mechanism had added urgency to the longstanding issue of water security. 

“In recent days, following the Pakistan-India war, India has threatened to block the waters meant for Pakistan. India is trying to use water as a weapon. I want to make it clear that water is vital to Pakistan’s survival and no stoppage in this regard will be tolerated,” Aurangzeb told parliament during the budget speech. 

“At the same time, it is essential that we expand our water reservoirs on a war footing. The government, despite its limited resources, will ensure the implementation of its water reservoir projects.”

Islamabad had said after India suspended the Indus Waters Treaty that it considered any attempt to stop or divert the flow of water belonging to Pakistan to be an “act of war.”

About 80 percent of Pakistani farms depend on the Indus system, as do nearly all hydropower projects serving the country of some 250 million.

Despite resource constraints, Aurangzeb said the government was committed to expanding its storage capacity and revamping its water infrastructure, adding that a detailed implementation plan would be announced in the coming days.

The minister also described climate change as an “existential threat” to Pakistan, saying the country was among the most affected nations due to its impact.

Aurangzeb said the government had given significant attention to climate finance in the last 16 months and issued green sukuk not only to lower its carbon footprint but also provide investors with a chance to support environmental initiatives.

Aurangzeb cited Pakistan’s 2018 National Water Policy as the foundation for a renewed push to manage water resources more efficiently and equitably.

Among key goals, he said, was expanding water storage by 10 million acre-feet, increasing water-use efficiency by 30 percent and deploying real-time discharge monitoring systems to reduce wastage, which is currently estimated at 33 percent.

He also said in the outgoing fiscal year, the government completed 34 of 59 water-related projects at a cumulative cost of Rs295 billion ($1.06 billion).

An additional Rs102 billion ($368 million) had been allocated for continued investment in ongoing schemes, the finance minister added. 


Pakistan stocks hit record high on hopes of rate cut, improved US ties

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Pakistan stocks hit record high on hopes of rate cut, improved US ties

  • Benchmark index gains 2,662 points, or 1.44 percent, to close at an all-time high of 187,761 points
  • Engro, UBL, Hub Power, Fauji Fertilizer, Meezan Bank and Service Industries added 1,554 points to index

ISLAMABAD: The Pakistan Stock Exchange (PSX) hit a record high as it surpassed the 187,500-point mark on Monday, with analysts citing improving ties with the United States and expectations of an imminent interest rate cut.

The benchmark KSE-100 index gained 2,662.86 points, or 1.44 percent, to close at an all-time high of 187,761.69 points, up from the previous close of 185,098.83 points, according to PSX data.

The stock gains came a day after President Donald Trump invited Prime Minister Shehbaz Sharif to join the so-called “Board of Peace” for Gaza, amid increasing Pakistan-US diplomatic and economic engagement since Trump’s rise to presidency.

“Falling government bond yields and improving Pakistan-US relations played a catalyst role in record close at PSX,” Ahsan Mehanti, chief executive officer of Arif Habib Commodities, told Arab News.

Meanwhile, Karachi-based market research firm Topline Securities said bulls extended their rally as hopes of a rate cut by the State Bank of Pakistan (SBP) fueled investor sentiment.

“Investor sentiment remained upbeat, largely fueled by rising expectations of an imminent interest rate cut,” it said in a post on X. “Market participants increasingly priced in a 50bps reduction in the upcoming monetary policy, which kept buying interest alive and underpinned broad-based gains.”

In December, the SBP cut its key policy rate by 50 basis points to 10.5 percent, resuming monetary easing after four meetings in a move that surprised many despite International Monetary Fund guidance to keep policy “appropriately tight” to anchor inflation expectations.

Engro Holdings Limited (ENGROH), United Bank Limited (UBL), Hub Power Company Limited (HUBC), Fauji Fertilizer Company Limited (FFC), Meezan Bank Limited (MEBL) and Service Industries Limited (SRVI) collectively added 1,554 points to the benchmark index on Monday, according to Topline Securities.

“Total market volumes stood at 1,195 million shares, while the value of shares traded amounted to Rs63.7 billion,” the research firm said. “[Bank Makramah Limited] BML led the volume chart, emerging as the most actively traded stock with 246 million shares.”