Pakistan holds key rate at 11 percent as Mideast conflict overshadows growth push

Pakistan holds key rate at 11 percent as Mideast conflict overshadows growth push
The emblem of the State Bank of Pakistan during a news conference in Karachi, Pakistan, on Monday, Jan. 23, 2023. (Getty Images/ File)
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Updated 16 June 2025

Pakistan holds key rate at 11 percent as Mideast conflict overshadows growth push

Pakistan holds key rate at 11 percent as Mideast conflict overshadows growth push
  • Central bank maintains cautious stance as heightened geopolitical tensions, volatile global oil prices add new inflation risks 
  • Bank paused its easing cycle in March, following cumulative cuts totaling 1,000 basis points from a record high of 22 percent

ISLAMABAD: Pakistan’s central bank kept its key policy rate unchanged at 11 percent on Monday, maintaining a cautious stance as heightened geopolitical tensions and volatile global oil prices add new risks to inflation and the fragile external sector.

A Reuters poll released earlier on Monday had shown analysts revising their expectations for a rate cut in light of Israel’s military strikes on Iran that began on Friday and have since intensified, pushing up global commodity prices.

“The [Monetary Policy] Committee noted some potential risks to the external sector amidst the sustained widening in the trade deficit and weak financial inflows. Moreover, some of the proposed FY26 budgetary measures may further widen the trade deficit by increasing imports,” the central bank said, announcing its decision to leave the rate unchanged.

“In this regard, the Committee deemed today’s decision appropriate to sustain the macroeconomic and price stability.” 

Inflation in Pakistan has slowed markedly since peaking at around 40 percent in May 2023. However, last month it rose to 3.5 percent year-on-year, above the finance ministry’s projection of up to 2 percent, partly due to the fading of favorable base effects. The central bank projects average inflation between 5.5 percent and 7.5 percent for the fiscal year ending this month.

The bank paused its easing cycle in March, following cumulative cuts totaling 1,000 basis points from a record high of 22 percent, and resumed it with a 100-basis-point reduction in May.

Monday’s meeting came days after the government presented a tight annual budget, which increased defense spending by 20 percent but reduced overall expenditure by 7 percent. It projects GDP growth at 4.2 percent for the next fiscal year, up from a provisional estimate of 2.7 percent for the current year.

The MPC noted that despite the widening trade deficit, the current account remained broadly balanced in April, and foreign exchange reserves rose to $11.7 billion as of June 6 after the completion of the first review under the International Monetary Fund’s Extended Fund Facility.

Revised budget estimates show the primary surplus at 2.2 percent of GDP for FY25, up from 0.9 percent last year, with a higher target of 2.4 percent for the upcoming fiscal year.

Global oil prices have rebounded sharply, driven by the evolving Middle East crisis and some easing of US-China trade tensions, the MPC noted.

“Taking stock of these developments and potential risks, the Committee assessed that the real interest rate remains adequately positive to stabilize inflation within the target range of 5–7 percent,” the statement said.

It added that timely foreign inflows, planned fiscal consolidation, and structural reforms remained essential to maintain macroeconomic stability and achieve sustainable growth.


Pakistan’s privatization authority clears key step in First Women Bank transaction with UAE

Pakistan’s privatization authority clears key step in First Women Bank transaction with UAE
Updated 10 October 2025

Pakistan’s privatization authority clears key step in First Women Bank transaction with UAE

Pakistan’s privatization authority clears key step in First Women Bank transaction with UAE
  • Authority has recommended a reference price for the bank’s sale to the federal cabinet in a meeting
  • Officials say the move is likely to attract foreign investment, boost confidence in privatization drive

KARACHI: Pakistan’s Privatization Commission has cleared a key procedural step in the sale of its majority stake in the First Women Bank Limited (FWBL) to a United Arab Emirates (UAE) entity, recommending a reference price to the federal cabinet for approval, the finance ministry said on Friday.

The move comes as Islamabad pushes ahead with long-delayed asset sales under its broader economic reform and fiscal stabilization agenda.

Established in 1989, the FWBL was conceived as a development-oriented financial institution to promote women’s economic participation and financial inclusion.

It was set up to address the limited access women had to formal banking channels and to provide them with tailored credit, savings and entrepreneurship services.

“The Privatization Commission (PC) Board, in its 240th meeting held under the chairmanship of Mr. Muhammad Ali, Chairman, Privatization Commission, has recommended a Reference Price for the privatization of First Women Bank Limited (FWBL) to the Cabinet Committee on Inter-Governmental Commercial Transactions (CCoIGCT),” the statement said.

“This decision marks an important step toward finalization of the Government-to-Government (G2G) process,” it added.

“FWBL, incorporated in 1989, is 82.64 percent owned by the Government of Pakistan and is currently being negotiated with the nominated entity of the Government of the United Arab Emirates (UAE) under the Inter-Governmental Commercial Transactions Act, 2022.”

The bank, whose mandate centered on empowering women through access to credit, savings and entrepreneurship opportunities, has seen its profitability decline in recent years, with its growth trajectory under strain.

The government moved to divest its stake in the institution earlier this year amid consistent pressure from the International Monetary Fund (IMF) under a $7 billion loan program to reduce the state’s footprint in the economy.

“Successful completion of the process would not only attract fresh foreign direct investment into the country but also enhance investor confidence in Pakistan’s broader privatization program,” the statement said.


Pakistan begins work on e-Parliament to modernize legislative system

Pakistan begins work on e-Parliament to modernize legislative system
Updated 10 October 2025

Pakistan begins work on e-Parliament to modernize legislative system

Pakistan begins work on e-Parliament to modernize legislative system
  • Initiative aims to digitize National Assembly proceedings for greater efficiency, accessibility
  • Speaker Ayaz Sadiq says members will access legislative documents and sessions digitally

ISLAMABAD: Pakistan’s National Assembly Speaker Sardar Ayaz Sadiq announced the beginning of a digitization process to establish an e-Parliament, aimed at modernizing the country’s legislative system, state media reported on Friday.

An e-Parliament system uses digital tools and platforms to make legislative work more efficient, transparent and accessible. Such systems typically include features like digitized records, online sessions, e-voting and citizen engagement portals.

Under the e-Parliament system, National Assembly members will be able to access the Order of the Day, the Constitution, Rules of Business and other legislative documents digitally on their designated iPads from anywhere, according to the Associated Press of Pakistan (APP).

“Once members start using the new digital system, the practice of placing paper documents on their desks will be discontinued,” APP quoted Sadiq as saying.

“A help desk has been set up at the gate where members can configure their passwords and collect their iPads.”

Pakistan has been shifting toward digitization through initiatives like the Digital Nation Pakistan program, online National Database and Registration Authority services and e-offices in federal ministries to modernize governance.

The e-Parliament system was widely adopted by different countries around the world during the COVID-19 pandemic, according to the Inter-Parliamentary Union, a global body uniting national parliaments to promote democracy and peace. 


Pakistan to add three oil tankers by year-end as part of national shipping fleet expansion

Pakistan to add three oil tankers by year-end as part of national shipping fleet expansion
Updated 10 October 2025

Pakistan to add three oil tankers by year-end as part of national shipping fleet expansion

Pakistan to add three oil tankers by year-end as part of national shipping fleet expansion
  • Government has issued fresh tenders for 12 additional vessels as part of the expansion plan
  • Official statistics show over 90 percent of the country’s imports and exports are transported by sea

ISLAMABAD: Pakistan plans to add three new oil tankers to its national shipping fleet by the end of this year, the maritime affairs minister said on Friday, as the government seeks to expand the Pakistan National Shipping Corporation’s (PNSC) capacity and reduce reliance on foreign carriers.

Prime Minister Shehbaz Sharif directed authorities earlier this year to lease new ships to expand the PNSC fleet, aiming to reduce the roughly $4 billion annual foreign exchange burden on sea-based trade. Pakistan’s maritime sector plays a vital role in the economy, with more than 90 percent of the country’s imports and exports transported by sea.

“The PNSC has decided to expand its fleet to 15 vessels, with three oil tankers to be added by December this year,” Maritime Affairs Minister Muhammad Junaid Anwar Chaudhry said in a statement. “Our target is to operate a 30-vessel fleet by 2026.”

Chaudhry said the new ships would be named MT Karachi, MT Lahore, and MT Quetta, adding that approval had been granted for their purchase and fresh tenders issued for 12 more vessels.

The expansion is part of a broader effort to strengthen Pakistan’s maritime logistics and enhance trade links with other countries, including members of the East African Community. In February, Pakistan and Bangladesh also decided to begin passenger and cargo shipping services between the two countries. 


Taliban accuse Pakistan of ‘violating Kabul’s sovereign territory’

Taliban accuse Pakistan of ‘violating Kabul’s sovereign territory’
Updated 10 October 2025

Taliban accuse Pakistan of ‘violating Kabul’s sovereign territory’

Taliban accuse Pakistan of ‘violating Kabul’s sovereign territory’
  • The Taliban say Pakistan hit a market in Paktika, calling it an ‘unprecedented’ act
  • The statement comes a day after two powerful explosions shook central Kabul city

KABUL: The Taliban government accused Pakistan on Friday of bombing a border town and “violating Kabul’s sovereign territory,” a day after two late-night blasts were heard in the capital.

“Pakistan violated Afghanistan’s airspace, bombing a civilian market in the Marghi area of Paktika near the Durand Line and also violating Kabul’s sovereign territory,” the Defense Ministry said in a post on social media.

“This is an unprecedented, violent, and heinous act in the history of Afghanistan and Pakistan,” it added.

“If the situation becomes more tense after these actions, the consequences will be attributed to the Pakistani army,” the statement said.

Two powerful explosions shook central Kabul city on Thursday evening, AFP journalists heard.

Pakistan’s military spokesman, in a televised press conference on Friday, did not directly answer when questioned if Pakistan was responsible for the attacks.

“To safeguard Pakistani lives and properties, what measures need to be taken will be taken,” General Ahmed Sharif Chaudhry told reporters in the city of Peshawar.


Pakistan, Afghanistan trade warnings after reported airstrikes, cross-border militant attacks

Pakistan, Afghanistan trade warnings after reported airstrikes, cross-border militant attacks
Updated 10 October 2025

Pakistan, Afghanistan trade warnings after reported airstrikes, cross-border militant attacks

Pakistan, Afghanistan trade warnings after reported airstrikes, cross-border militant attacks
  • Pakistani military accuses Kabul of harboring militants, vows to take necessary action to defend its borders
  • Afghan defense ministry alleges Pakistani forces bombed a market in Paktika and violated Kabul’s airspace

ISLAMABAD: Pakistan and Afghanistan traded sharp warnings on Friday after Kabul accused Islamabad of violating its airspace and bombing a border town while the Pakistani military vowed to do “whatever is necessary” to defend its territorial integrity.

Pakistan has long accused Afghanistan of allowing the use of its soil and India of backing militant groups to carry outattacks against Pakistan. Kabul and New Delhi both deny the allegation.

The military spokesman, Lt. Gen. Ahmed Sharif Chaudhry, held a lengthy news conference in the northwestern Pakistani city of Peshawar, citing the threat of cross-border militancy only days after the killing of at least a dozen Pakistani soldiers, including three officers, in the Khyber Pakhtunkhwa (KP) province that borders Afghanistan.

His media interaction came after reports of airstrikes in the Afghan capital, Kabul, that purportedly sought to target Noor Wali Mehsud, the Pakistani Taliban chief.

“We just ask them [the Afghan authorities] for an extremely fair, just thing that, ‘do not let your soil become a haven for non-state actors and terrorist groups,’” Chaudhry said at the media briefing.

“For the safety of the life and property of the people of Pakistan, for the territorial integrity of Pakistan, we are doing and we will continue to do whatever is necessary.”

He said Pakistani security forces have been conducting over 40 operations against militants on a daily basis, which have resulted in the killing of more than 900 militants so far this year.

More than 300 Pakistani security personnel have also died in these operations, he added.

Chaudhry lamented a lack of implementation of all 14 points of the National Action Plan, a comprehensive strategy devised in 2014 to eradicate militant violence, other than the one stressing kinetic operations against militants.

He was particularly critical of the KP administration, run by jailed former Pakistani prime minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party, while attributing the surge in militancy in the province to governance challenges.

“Governance gaps and poor policy implementation have allowed militants and their facilitators to find space [to generate violence], forcing the armed forces to fill the void with their blood and sacrifice,” he said.

Khan has recently dismissed the chief minister of KP, Ali Amin Gandapur, for allowing military operations in the province.

The PTI founding leader has repeatedly called on the KP administration to hold direct talks with Kabul to ensure peace in the province.

The military spokesman criticized the approach, urging the KP government to focus on protecting its people instead of “begging Afghanistan” for security.

“If every problem could be solved through dialogue, no wars would have been fought,” he said.

Chaudhry emphasized that the state would not be held hostage by those facilitating militants.

“No one will be permitted to barter away the rights or future of the people of KP for personal gain,” he said.

Responding to his criticism, Zulfi Bukhari, a close aide to ex-premier Khan, said, “the sensible path is to bring on board the largest stakeholder with the public’s mandate in KP, to craft a comprehensive strategy to dismantle terror networks while protecting civilians.”

“We pray for our brave martyrs and urge our leaders to choose strategy over spectacle,” he added.

AFGHAN REFUGEES

During his media interaction, the military spokesman also defended Pakistan’s decision to repatriate Afghan refugees.

The country launched its deportation drive in 2023 after a string of deadly suicide attacks in which it said several Afghan nationals were found to be involved.

“In 2014, it was unanimously decided to repatriate Afghan refugees, and the same decision was reaffirmed in 2021,” he said.

“So where did this idea come from that they should not be sent back?” he continued, while referring to Khan’s opposition to the idea.

He reiterated that there were militant safe havens in Afghanistan, while pointing out that modern weapons used by radical outfits were also contributing to the intensity of the militant violence in the country.

Meanwhile, the Afghan defense ministry said in a social media message that Pakistani forces had “targeted a civilian market in the Margha area of Paktika province” near the international border and also “violated the airspace over the capital, Kabul.”

The ministry called the strikes “unprecedented, violent, and reprehensible,” warning that “regardless of how critical the situation becomes, the consequences will fall on the Pakistani army.”

However, the foreign office in Islamabad said in its weekly media briefing Pakistan has consistently prioritized diplomacy while dealing with Afghanistan, even in the face of persistent threats emanating from militant hideouts and sanctuaries in that country.

It also urged Kabul to ensure that Afghan “territory is not used as a launch pad for terrorist activities against Pakistan.”

Pakistan has struggled to contain a surge in militancy in KP since a fragile truce between the government and the Pakistani Taliban, or the Tehreek-e-Taliban Pakistan (TTP), broke down in Nov. 2022.

The TTP, which is a separate group but is viewed by Pakistani officials as an ally of the Afghan Taliban, has been behind some of the deadliest attacks in Pakistan since the late 2000s.

Islamabad launched multiple military operations over the last two decades to push back TTP fighters and other militants, but officials say they have managed to regroup in the rugged, mountainous northwest during their monthslong truce with the government.