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ISLAMABAD: Prime Minister Shehbaz Sharif has warned that Pakistan will not compromise on its water rights, describing every drop of the country’s water as a “red line” and cautioning India against any move that threatens Pakistan’s sovereignty, security or access to water. Addressing a ceremony in Islamabad following the inauguration of a monument commemorating Pakistan’s recent military success, the prime minister said India had demonstrated its disregard for regional peace by unilaterally suspending the Indus Waters Treaty. He said Pakistan desired peace and stability in the region but would not interpret its commitment to peace as a sign of weakness. “Pakistan stands for peace with honour and dignity,” the prime minister said, adding that the country had emerged as a factor of stability in the region. Referring to the military confrontation with India in May 2025, Shehbaz Sharif praised the armed forces for their role and said the country’s response had demonstrated Pakistan’s determination to defend its territorial integrity and national interests. The prime minister specifically commended Field Marshal Syed Asim Munir for his leadership, while also highlighting the contributions of the Pakistan Air Force and Pakistan Navy under their respective chiefs. He said the performance of the armed forces during the conflict had become a lasting part of the country’s history and represented a victory not only for the military but for the entire Pakistani nation. “This victory belongs to the people of Pakistan and its armed forces,” he said, describing the achievement as a source of national pride. Shehbaz Sharif maintained that Pakistan did not seek confrontation with any country. However, he stressed that Islamabad would respond firmly if its sovereignty or security were challenged in the future. He said the events of May 2025 had sent a clear message to the international community about Pakistan’s military capabilities and national resolve. According to the prime minister, the conflict had significantly strengthened Pakistan’s standing and demonstrated that any attempt to undermine the country’s sovereignty would carry serious consequences. Turning specifically to the water dispute, Shehbaz Sharif criticised India’s decision to suspend the Indus Waters Treaty, calling the move unilateral and unlawful. He warned that Pakistan’s water resources could not be treated as a bargaining tool and said Islamabad would defend its water interests. “Every drop of Pakistan’s water is a red line,” the prime minister declared, warning that if India failed to reconsider its position, Pakistan would respond directly. The prime minister’s remarks come amid heightened tensions between the two nuclear-armed neighbours, with water rights emerging as a particularly sensitive issue alongside longstanding disputes over security and regional stability. Shehbaz Sharif reiterated that Pakistan preferred dialogue and peace but would remain prepared to protect its national interests. He said the country’s policy was based on maintaining peace without compromising dignity, sovereignty or security. He further said the lessons of the May 2025 confrontation should not be forgotten and warned that any future miscalculation against Pakistan would invite a stronger response.
ISLAMABAD: Pakistan closed the financial year 2025-26 with a primary budget surplus of around Rs3.6 trillion, marking the third consecutive year of a surplus and allowing the country to comfortably meet a key fiscal condition agreed with the International Monetary Fund (IMF). The improvement came despite the government falling short of its tax collection targets, with stronger petroleum levy receipts, tighter expenditure controls and lower-than-expected debt servicing costs helping offset the revenue shortfall. According to the latest fiscal operations data released by the Ministry of Finance, the unadjusted primary surplus reached Rs3.63 trillion, equivalent to 2.6% of the country’s gross domestic product (GDP). The figure was approximately Rs464 billion higher than the IMF’s target of Rs3.16 trillion. The primary balance is considered an important indicator under Pakistan’s IMF programme because it measures the government’s fiscal position before interest payments on public debt. The latest figures indicate that the government maintained fiscal discipline despite continued pressure on revenues and expenditure. Overall fiscal deficit below target Pakistan’s overall budget deficit, after accounting for provincial cash surpluses, stood at approximately Rs3.3 trillion during FY2025-26. This was around Rs1.7 trillion lower than the amount initially projected in the federal budget. The federal government’s own deficit was recorded at Rs4.8 trillion, also significantly below the budgeted level. The better-than-expected outcome was primarily attributed to lower interest payments, stronger petroleum levy receipts and restrained development expenditure. Interest payments were around Rs1.3 trillion below the amount originally allocated in the budget. The government also collected approximately Rs101 billion more than its petroleum levy target, while federal development spending remained Rs82 billion below the initially approved allocation. The fiscal improvement also contributed to a moderation in the growth of public debt. Public debt increased by around 7% during the year, bringing some relief after several years of double-digit debt expansion. Provinces narrowly miss IMF cash surplus target The four provincial governments collectively generated a cash surplus of around Rs1.45 trillion during the fiscal year. Although the amount fell marginally short of the IMF’s combined requirement, the shortfall was only around Rs14 billion. Punjab contributed the largest share, recording a cash surplus of approximately Rs914 billion. Sindh posted a surplus of around Rs350 billion, followed by Khyber-Pakhtunkhwa with Rs165 billion and Balochistan with approximately Rs21 billion. Provincial governments, meanwhile, performed slightly better on revenue collection. Their combined tax receipts exceeded the IMF condition by around Rs18 billion, with collections crossing Rs1.2 trillion. FBR misses tax target Despite the overall improvement in the fiscal position, tax collection remained a major area of concern. The Federal Board of Revenue collected approximately Rs13 trillion during FY2025-26, falling nearly Rs1 trillion short of the IMF’s revised target. FBR tax receipts increased by about 11% compared with the previous year. However, this increase was broadly in line with nominal GDP growth, indicating that the tax-to-GDP ratio remained largely unchanged at around 10.3%. The figures suggest that additional revenue expected from new taxation and enforcement measures did not fully materialise. The government had anticipated around Rs700 billion in additional revenue from such measures. Non-tax revenue also remained below expectations by approximately Rs63 billion. Total non-tax receipts stood close to Rs5.1 trillion, including around Rs2.4 trillion in profits transferred by the central bank. Petroleum levy becomes key revenue source A major contributor to the stronger fiscal outcome was the petroleum levy. Collections under the petroleum levy climbed to around Rs1.567 trillion, representing an increase of approximately 28% over the previous year. The amount was also Rs101 billion above the target agreed with the IMF. The additional collection effectively represented roughly 25 days of petroleum price relief at a levy rate of Rs80 per litre on petrol and high-speed diesel. For the current financial year, the government has committed to collecting approximately Rs1.7 trillion through the petroleum levy. Meeting this objective is expected to require maintaining the levy at around Rs80 per litre, subject to the applicable petroleum pricing mechanism and market conditions. Development spending remains restrained The government’s fiscal consolidation strategy also affected development expenditure. Federal development spending was recorded at around Rs918 billion, approximately Rs82 billion below the originally approved budget allocation. However, the amount was still around Rs100 billion higher than the subsequently revised allocation. The figures reflect the government’s efforts to contain expenditure and prioritise fiscal targets amid pressure from debt servicing and revenue mobilisation. Debt servicing costs fall Lower-than-expected debt servicing provided another significant boost to the government’s fiscal position. The Ministry of Finance reported that debt servicing remained around Rs6.95 trillion during the year, compared with the budgeted amount of approximately Rs8.2 trillion. The government attributed the savings to tight fiscal management, improved cash handling and the early retirement of around Rs1.9 trillion in domestic debt. These measures helped reduce domestic debt servicing costs by nearly Rs1.97 trillion compared with the original estimates. Statistical discrepancy highlighted The fiscal operations report also identified a statistical discrepancy of around Rs853 billion across the federal and provincial accounts. According to the Ministry of Finance, the discrepancy was linked largely to changes in cash balances and differences in the recording and reporting of financial data. The negative discrepancy indicated that cash inflows were higher than recorded outflows. At the federal level, the discrepancy stood at approximately Rs448 billion. The ministry attributed the difference mainly to changes in commercial bank deposits as well as variations in reporting and accounting adjustments involving the State Bank of Pakistan, FBR and Economic Affairs Division. Provincial accounts showed a combined statistical discrepancy of approximately Rs405 billion. Punjab accounted for around Rs266 billion, Khyber-Pakhtunkhwa Rs95 billion, Balochistan Rs72 billion and Sindh around Rs28 billion. The ministry said movements in commercial bank deposits were among the principal factors behind the provincial differences. IMF review ahead The improved fiscal performance is expected to strengthen Pakistan’s position ahead of the next IMF assessment. An IMF mission is expected to visit Islamabad in the third week of September to review Pakistan’s economic performance during the previous fiscal year. The mission is also expected to
LONDON: Global oil prices moved higher on Friday and remained on course for weekly gains as fresh threats from the United States to maintain an indefinite naval blockade of Iran heightened concerns over the security of crude shipments from the Middle East. Brent crude futures gained $1.43, or 1.64%, to reach $88.50 a barrel by 0810 GMT. US West Texas Intermediate (WTI) crude also advanced, rising $1.56, or 1.92%, to $82.81 a barrel. The latest rally reflected growing market anxiety that the conflict in the region could persist for an extended period, potentially placing further pressure on one of the world’s most important oil supply routes. Bjarne Schieldrop, chief analyst at SEB Research, said the prospect of prolonged US pressure on Iran had increased uncertainty in the oil market. He noted that the latest developments offered little indication of a quick return to normal conditions in the region. US pressure raises supply concerns Oil markets reacted strongly after the United States warned on Thursday that its naval blockade of Iran could continue indefinitely while Washington considers additional economic measures against Tehran. US Treasury Secretary Scott Bessent said the administration was preparing further measures aimed at increasing economic pressure on Iran, signalling that Washington could take steps beyond those already announced. The comments added to concerns that tensions between the United States and Iran could remain elevated, making it more difficult for shipping and energy companies to operate normally in the region. Schieldrop said expectations for a rapid restoration of regular shipping through the Strait of Hormuz had weakened significantly as a result of the latest developments. The waterway is particularly important to global energy markets. Before the current conflict began in late February, roughly one-fifth of the world’s daily oil and liquefied natural gas supplies passed through the Strait of Hormuz. Any prolonged disruption could therefore have consequences far beyond the Middle East, potentially affecting crude availability, transportation costs and fuel prices in major consuming markets. Strait of Hormuz traffic under pressure Shipping activity through the strategic waterway declined below the monthly average toward the end of the week as tensions increased and both sides issued competing claims regarding control of the passage. The situation escalated further on Thursday when two vessels belonging to Abu Dhabi National Oil Company were attacked while travelling through the strait, according to the UAE’s state news agency WAM. The UAE government condemned the incident and attributed the attack to Iran, adding another layer of uncertainty for commercial shipping operators using the vital route. Market participants are closely monitoring developments in the strait because even a partial disruption could force vessels to take longer and more expensive alternative routes. Demand outlook limits oil gains Despite the immediate supply concerns, expectations of weaker global oil demand growth are acting as a counterweight to the price rally. Recent forecasts from the Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) have pointed towards slower growth in oil consumption, suggesting that demand may not be strong enough to absorb a prolonged increase in prices without affecting economic activity. US inventory data also provided a bearish signal. American crude stockpiles recorded their biggest weekly increase in more than three and a half years, indicating that supplies in the world’s largest oil-consuming economy remain relatively comfortable. Norbert Rucker, head of economics and next-generation research at Julius Baer, said recent reports from the IEA and US Energy Information Administration showed that oil storage levels were holding up better than markets had initially feared. According to Rucker, stronger-than-expected inventories could eventually put downward pressure on crude prices if geopolitical risks ease. For now, however, the possibility of further escalation between Washington and Tehran is keeping traders focused on supply risks. The market is expected to remain highly sensitive to developments surrounding the Strait of Hormuz, particularly any signs of prolonged restrictions on tanker movements. Analysts said the direction of oil prices in the coming sessions would depend on whether geopolitical tensions intensify further or whether diplomatic efforts succeed in restoring more predictable shipping and energy flows from the region.
KARACHI: State Bank of Pakistan (SBP) Governor Jameel Ahmad has said the central bank will continue to prioritise price stability, structural reforms and the creation of a business-friendly economic environment aimed at boosting productivity, exports and employment. Addressing a flag-hoisting ceremony held at the SBP headquarters in Karachi to mark Pakistan’s 79th Independence Day, Governor Ahmad said the country had made notable progress towards macroeconomic stability over the past year. He attributed the improvement to disciplined fiscal and monetary policies, better economic management and continued efforts to strengthen financial and economic institutions. Inflation remains within medium-term range Speaking about the inflation outlook, the SBP governor said average inflation during fiscal year 2025-26 stood at 7.1 percent. He said the central bank believed that the prevailing monetary policy stance was appropriate for keeping inflation within its medium-term target range of 5 to 7 percent. According to Ahmad, the current policy framework also provides sufficient space for economic activity to continue, while supporting investment and employment generation. The governor said maintaining price stability would remain a central objective of the SBP as Pakistan seeks to move from short-term stabilisation towards sustained economic expansion. Growth expected to strengthen Ahmad said Pakistan’s economy recorded growth of 3.7 percent in FY26, reflecting the impact of improved macroeconomic conditions and greater fiscal and monetary discipline. Looking ahead, he projected economic growth in the range of 3.5 to 4.5 percent during FY27. He described the outlook as encouraging, saying the economy was gradually moving towards a more sustainable growth path after going through a difficult period of economic stabilisation. The governor stressed that maintaining policy discipline would be important to ensure that the gains achieved in recent years translate into durable economic development. Remittances strengthen external position The SBP chief also highlighted improvements in Pakistan’s external sector, particularly the performance of workers’ remittances. He said overseas Pakistanis had demonstrated confidence in the country by sending record amounts of money home, with remittances surpassing $41 billion during FY26. The inflow is expected to increase further, with remittances projected to reach around $44 billion in FY27, according to the governor. Ahmad said stronger remittance inflows, combined with a relatively low current account deficit, had helped improve Pakistan’s foreign exchange position. The country’s foreign exchange reserves reached $18.4 billion by the end of FY26, while the SBP expects reserves to rise above $21 billion during FY27. He said strengthening the external position would help improve economic resilience and provide greater capacity to withstand external shocks. SBP pushes digital transformation The governor also outlined measures taken by the central bank to modernise Pakistan’s financial infrastructure and expand the use of digital payment channels. He pointed to the successful launch of PRISM+, saying the upgraded payment and settlement infrastructure had brought Pakistan’s large-value payment system closer to international standards. The system has improved the speed, security and efficiency of large-value payments and settlements, he said. Ahmad added that SBP initiatives aimed at encouraging digital payments had resulted in a substantial increase in the use of electronic channels. Retail digital transactions increased from approximately 10 billion to 12 billion over the past year, reflecting growing adoption of technology across the financial system. According to the governor, the shift towards digital payments is more than a technological development. It is also contributing to greater documentation, transparency and efficiency within the economy. Self-reliance and institutions vital for progress Governor Ahmad said Pakistan’s long-term economic success would depend not only on financial and monetary policies but also on stronger institutions, economic self-reliance, respect for the rule of law and national unity. He emphasised that the country’s journey towards sustainable development required continued commitment and collective efforts from institutions, businesses and citizens. While acknowledging the progress achieved during the past year, he cautioned that Pakistan continued to face economic challenges that required sustained attention, policy consistency and determination. He said the objective should now be to convert the gains from economic stabilisation into a durable foundation for investment, productivity, exports and employment. The governor reaffirmed that the SBP would continue playing its role in supporting monetary and financial stability while contributing to broader efforts aimed at improving the welfare of the Pakistani people.
ISLAMABAD: The federal government has increased prices of both petrol and high-speed diesel (HSD), citing adjustments under the country’s petroleum pricing mechanism. According to a notification issued by the Petroleum Division of the Ministry of Energy, the price of petrol has gone up by 45 paisa per litre, while high-speed diesel has become Rs1.16 more expensive per litre. Following the latest revision, petrol will now cost Rs325.43 per litre, compared with the previous rate of Rs324.98. The price of high-speed diesel has risen from Rs382.79 to Rs383.95 per litre. The revised rates were determined after the Oil and Gas Regulatory Authority (OGRA) reviewed petroleum product prices in line with the government’s pricing framework, which takes international oil market movements and other relevant costs into account. The latest increase comes shortly after the previous price review, when the government raised the HSD rate by 54 paisa per litre while reducing petrol prices by 94 paisa per litre. The new prices will apply from Friday, August 14, as the government continues its periodic adjustments to petroleum rates in response to changes in global energy markets and domestic cost factors.