Pakistan

In the wake of heightened Indo-Pakistani tensions following a deadly terror attack in Pahalgam that claimed 26 civilian lives, cultural exchanges between the two nations have become increasingly fraught. Amid this climate, celebrated Indian actor and singer Diljit Dosanjh finds himself at the center of controversy for co-starring with Pakistani actress Hania Aamir in the upcoming film Sardaar Ji 3. The decision to release the film internationally, bypassing India entirely, has further fueled criticism.

India has prolonged its ban on Pakistani aircraft operating within its airspace by an additional month, extending the closure until July 24, 2025. This move forms part of a series of stringent retaliatory measures initiated in response to the April 22 Pahalgam terror attack that claimed 26 lives. Pakistan has reciprocated by similarly extending its airspace closure against Indian flights through the same date.

India’s decision to halt trade with Pakistan in the wake of the Pahalgam terror attack has abruptly suspended the export of Himalayan Pink Salt across the border, affecting a key trade channel. Despite the setback, Pakistan’s salt exporters are seizing the opportunity to diversify into new global markets. With rising global demand and premium retail pricing, producers are ramping up exports to China, the United States, and Europe, while pursuing Geographical Indication (GI) recognition to protect and promote the product's Pakistani origin.

Indian funds held in Swiss banks surged to 3.5 billion Swiss francs (approximately Rs. 37,600 crore) in 2024, marking a threefold increase over the previous year. This dramatic rise, driven largely by interbank and institutional holdings, follows a significant drop in 2023 and rekindles public interest in the long-debated issue of alleged black money. However, official data from the Swiss National Bank (SNB) and the Bank for International Settlements (BIS) indicate that this surge is not reflective of personal undisclosed wealth.

In a significant move aimed at reinforcing its financial stability, Pakistan has secured a USD 1 billion five-year syndicated term financing facility, backed by a partial guarantee from the Asian Development Bank (ADB). The facility, structured with both Islamic and conventional tranches, marks Pakistan's re-entry into the Middle Eastern financial market after more than two years. This landmark transaction, supported by prominent regional banks and international financial institutions, reflects growing confidence in Pakistan's macroeconomic trajectory and recent fiscal reforms.

Pakistan's Finance Minister Muhammad Aurangzeb has unveiled the country’s federal budget for the fiscal year 2025-26, with a notable 20% increase in defence spending, bringing the total allocation to PRs 2,550 billion (USD 9 billion). This move comes in response to the escalating tensions between Pakistan and India, particularly following the April 2022 Pahalgam terror attack and subsequent military actions. The budget also highlights a 4.2% GDP growth target and ambitious fiscal policies, including an 8.95% increase in the tax collection goal.

In a significant financial update, the Pakistani government has raised the monthly salaries of the National Assembly speaker and the Senate chairman to Rs 1.3 million, reflecting a substantial increase from the earlier figure of Rs 205,000. The salary revision, retroactively effective from January 1, 2025, also includes an additional 50% temporary allowance. This adjustment follows a broader salary hike for federal ministers, ministers of state, and advisers, who have seen their monthly pay climb to Rs 519,000.

In the lead-up to Eid al-Adha, Pakistan’s Ahmadiyya community faced intensified repression, with authorities in Punjab and Sindh imposing strict restrictions on their religious observances. Police reportedly compelled Ahmadis to sign affidavits pledging not to perform ritual sacrifices or other Islamic rites, under threat of fines up to Rs. 500,000. This development underscores the ongoing systemic persecution of the 2 million-strong minority, constitutionally declared non-Muslim and criminalized under Ordinance XX.

India has raised strong objections over the Asian Development Bank’s (ADB) decision to approve an USD 800 million loan to Pakistan. The Indian government expressed concerns that the funds could be misused to bolster Pakistan’s military spending, particularly in light of its increasing defense budget, declining tax-to-GDP ratio, and lack of meaningful economic reforms. While the ADB’s loan aims to enhance fiscal sustainability and public financial management in Pakistan, India insists on stringent safeguards to ensure the funds are not diverted for military purposes.

In a pivotal move to support Pakistan’s economic reform agenda, the Asian Development Bank (ADB) has sanctioned an $800 million financing package aimed at fortifying fiscal sustainability and modernizing public financial management. The assistance comprises a $300 million policy-based loan and a groundbreaking $500 million policy-based guarantee—ADB’s first of its kind. These funds will facilitate structural reforms focused on enhancing tax policy, compliance, expenditure efficiency, and private sector development.