Category: 1. Pakistan

Moody’s Investors Service has upgraded the local and foreign-currency long-term deposit ratings of five leading Pakistani banks: Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank Limited (MCB), National Bank of Pakistan (NBP), and United Bank Limited (UBL).

The ratings have been raised to Caa1 from Caa2, reflecting an improved operating environment and the government’s enhanced capacity to support the financial sector.

The rating agency also upgraded the Baseline Credit Assessments (BCAs) and Adjusted BCAs for ABL, HBL, MCB, and UBL to caa1 from caa2, while NBP’s BCA was raised to caa2 from caa3. The outlook on the long-term deposit ratings for all five banks has been revised to stable from positive.

Driving Factors Behind the Upgrade

The upgrades follow Moody’s decision to raise Pakistan’s sovereign credit rating to Caa1 from Caa2, citing the country’s improving external position and progress in implementing reforms under the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) program.

“Our decision to upgrade Pakistani banks’ ratings reflects the country’s improving operating environment, the government’s enhanced capacity to support banks in times of need, and the banks’ own resilient financial performance,” Moody’s stated.

The agency also raised Pakistan’s Macro Profile to “Very Weak+” from “Very Weak,” underpinned by the country’s improving external position. However, Moody’s cautioned that Pakistan’s foreign exchange reserves remain critically low, emphasizing the importance of continued progress under the IMF program to unlock further financing.

Moody’s highlighted the resilience of Pakistani banks, noting their stable, deposit-based funding profiles, high liquidity buffers, and solid earnings capacity. The agency expects further improvements in the operating environment as inflation is projected to decline from 30.8% in 2023 to 12.6% in 2024. Additionally, the State Bank of Pakistan’s (SBP) series of interest rate cuts—from a peak of 22% in May 2024 to 11% by May 2025—will likely reduce borrowing costs, stimulate credit demand, and lower problem loans, particularly in the SME and consumer segments.

However, Moody’s warned of potential profitability pressures due to compressed net interest margins resulting from the rate cuts. Asset risks also remain elevated, given the government’s high liquidity and external vulnerability risks.

National Bank of Pakistan (NBP)

NBP’s BCA and Adjusted BCA were upgraded to caa2 from caa3, and its long-term deposit ratings were raised to Caa1 from Caa2. The bank’s strong deposit-funded profile and improved earnings generation capacity were key factors in the upgrade. However, NBP’s adjusted capital buffers remain modest, and its significant exposure to government securities poses elevated asset risks. The bank’s non-performing loans (NPLs) stood at 14.2% as of March 2025, well above the sector average.

Habib Bank Limited (HBL)

HBL’s BCA and Adjusted BCA were upgraded to caa1 from caa2, along with its long-term deposit ratings. The bank benefits from good liquidity buffers, a strong deposit-funded profile, and solid asset quality, with NPLs at 5.3% as of March 2025. However, its high exposure to government securities and modest adjusted capital buffers remain challenges.

United Bank Limited (UBL)

UBL’s BCA and Adjusted BCA were upgraded to caa1 from caa2, and its long-term deposit ratings were raised to Caa1. The bank’s stable deposit base, strong liquidity buffers, and moderate profitability were highlighted as strengths. However, UBL’s NPLs stood at 14.7% as of March 2025, following its acquisition of Silk Bank. Despite this, the NPLs are fully covered by loan loss provisions.

MCB Bank Limited (MCB)

MCB’s BCA and Adjusted BCA were upgraded to caa1 from caa2, with its long-term deposit ratings also raised to Caa1. The bank’s strong profitability, stable deposit base, and good liquidity buffers were noted as key strengths. However, high asset risks and modest adjusted capitalisation metrics remain areas of concern.

Allied Bank Limited (ABL)

ABL’s BCA and Adjusted BCA were upgraded to caa1 from caa2, and its long-term deposit ratings were raised to Caa1. The bank’s low NPL ratio of 1.6% as of March 2025, stable deposit-based funding, and ample liquidity buffers were highlighted as strengths. However, its modest adjusted capital buffers and high exposure to government securities remain challenges.

Outlook and Risks

The stable outlook on the banks’ long-term deposit ratings aligns with the stable outlook on Pakistan’s sovereign rating. It also reflects the banks’ solid loan loss provisions, capital buffers, and improving operating environment.

However, Moody’s warned that any downgrade in Pakistan’s sovereign rating or deterioration in the banks’ financial performance, particularly in asset quality, profitability, or capital adequacy, could lead to a downgrade in their ratings.

ISLAMABAD: The government on Tuesday announced that Prime Minister Shehbaz Sharif’s upcoming visit to China later this month will mark the formal launch of the second phase of the China­-Pakistan Economic Corr­idor (CPEC-II), focused on industrial cooperation, after a delay of about five years.

“Prime minister’s upcoming visit will mark the formal launch of CPEC Phase-II, with both sides expected to set clear priorities and agree on tangible, measurable outcomes,” said an official announcement quoting Planning Minister Ahsan Iqbal, focal person on the multi-billion-dollar bilateral initiative, as saying at a high-level meeting.

The meeting was convened to review preparations for the forthcoming session of the Joint Cooperation Committee (JCC) of CPEC, as well as the prime minister’s scheduled visit to Beijing.

While the JCC is expected to meet in October, official sources said the prime minister will travel to Beijing at the end of this month to attend the Shanghai Coope­ration Organisation (SCO) summit (Aug 31-Sept 1). On the sidelines, he is also expected to meet Chinese President Xi Jinping and Russian leader Vladimir Putin.

Both sides expected to set clear priorities, agree on tangible outcomes for the new phase

The planning minister stressed that the future of CPEC “must be anchored in quality rather than quantity,” emphasising that only carefully selected, high-impact projects should be advanced to ensure sustainability and institutional strengthening.

He also disclosed that during his recent visit to China, he had conveyed PM Shehbaz’s invitation to President Xi to visit Islamabad in 2026 to commemorate the 75th anniversary of diplomatic relations between Pakistan and China.

Underscoring the need to expand Pakistan’s trade and export footprint in China, the minister directed the authorities concerned to resolve visa processing delays on priority to facilitate genuine businesspersons. He also instructed the preparation of an outcome-focused plan to diversify exports, enhance industrial linkages, and maximise benefits from market access under CPEC.

On human resource development, Mr Iqbal highlighted the importance of utilising the 10,000 training opportunities offered by China across multiple sectors. He stressed the need for a transparent framework to ensure that the right people receive training aligned with institutional needs, enabling Pakistan to secure durable capacity-building gains.

The meeting also reviewed progress in priority areas, including the Multan-Sukkur Motorway, IT graduate training, computational infrastructure for artificial intelligence (AI), industrial relocation, industrial parks, mining, special economic zones, and agriculture.

It was decided to conduct data-driven studies on China’s industrial relocation trends and to map market segments where Pakistan has export strengths.

The minister noted that with China importing goods worth over $2 trillion annually, Pakistan should strategically aim to capture at least $30-50bn of this trade by building competitiveness and sectoral readiness.

He directed completion of an outcome-oriented study to identify high-potential export sectors, with the goal of creating an exportable surplus, attracting sustained investment, and strengthening the balance of payments over the medium term.

Calling for policy continuity and institutional reforms, the minister stressed the need for close engagement with the private sector, academia, and research institutions in areas such as industrial cooperation, technology, agriculture, energy, and human resource development.

According to projections, AI could contribute Rs24.9tr ($88.31bn) to Pakistan’s economy by 2030, raising the projected GDP of Rs171tr by 14.56pc. Agriculture, which makes up 24pc of GDP, could see 20+30pc productivity gains through AI-powered precision farming, while manufacturing and mining (15.1pc of GDP) may achieve 20-25pc improvements via automation.

Similarly, fintech (2pc) and the software industry (1.5pc) are projected to grow 20-30pc, while energy (3.8pc), defence (3.5pc), law & judiciary (1pc), and international collaborations (2pc) also hold 10-20pc growth potential, the minister said.

Published in Dawn, August 20th, 2025

ISLAMABAD: Chinese Foreign Minister Wang Yi will visit Islamabad to co-chair the sixth Pakistan-China Foreign Ministers’ Strategic Dialogue on Thursday, as Kabul hosts a trilateral meeting with Pakistan and China on counter-terrorism and other issues today.

“On August 20 of this year, Mr Wang Yi, a member of the political bureau of the Chinese ruling party and foreign minister, and Mr Ishaq Dar, deputy prime minister and foreign minister of Pakistan, will travel to Kabul to attend a trilateral meeting,” the Afghanistan foreign ministry said in a statement on Tuesday.

The discussions are expected to cover progress on earlier commitments, including counter-terrorism cooperation, extending the China-Pakistan Economic Corridor (CPEC) to Afghanistan, and strengthening regional trade and connectivity.

“The participants of the meeting are expected to exchange views on the future of relations based on common interests, mutual understanding, and broad cooperation,” the ministry said. The gathering, the first of its kind hosted in Afghanistan since the Taliban took control of Kabul, will bring together Wang, Dar and Afghan Acting Foreign Minister Amir Khan Muttaqi for a day-long dialogue.

Chinese diplomat to visit Islamabad on Thursday to co-chair high-level moot

Mr Wang will also hold bilateral meetings with senior Taliban leaders on political and economic cooperation. The last round of trilateral talks among the three countries’ foreign ministers was held in Beijing on May 21.

Islamabad visit

Following the Kabul meeting, the Chinese foreign minister is scheduled to travel to Islamabad to attend the Pakistan-China strategic dialogue on Aug 21, Dawn.com reported.

The fifth round of Strategic Dialogue in May 2024 was co-chaired by Foreign Minister Ishaq Dar and his Chinese counterpart Wang in Beijing.

According to the FO’s statement issued on Tuesday, “On the invitation of Deputy Prime Minister and Foreign Minister Senator Mohammad Ishaq Dar … Mr Wang Yi is visiting Islamabad for co-chairing the sixth Pakistan-China Foreign Ministers’ Strategic Dialogue on August 21, 2025.”

“The visit is part of the regular high-level exchanges between Pakistan and China to further deepen their ‘All-Weather Strategic Cooperative Partnership’, reaffirm support on the issues of respective core interests, enhance economic and trade cooperation, and reaffirm their joint commitment to regional peace, development and stability,” the statement added.

Last month, FM Dar met with Wang on the sidelines of the Shanghai Cooperation Organisation event, where they discussed and reaffirmed mutual support in core sectors, including agriculture, mining, industry and security.

Published in Dawn, August 20th, 2025

ISLAMABAD: The Federal Board of Revenue (FBR) has released a simplified electronic income tax return form for individual taxpayers for the tax year 2025.

The final form was notified through SRO1561 of 2025 after a 40-day consultation period, following the draft version’s release for public feedback on July 7 this year.

The new form is currently available only in English, while the Urdu version is still awaited despite earlier government announcements. Weeks of delay in finalising the form had created uncertainty among taxpayers, which was finally resolved with the notification of the final version.

The interactive return form incorporates an auto-fill system that integrates data on purchases, assets, and tax deductions at source, ultimately generating a single return upon completion. It consists of eight digital windows, each with one input column, designed for a step-by-step process.

For instance, entering an employer’s name in the first window automatically fills in tax deduction details. Withholding tax deductions linked to CNIC numbers will also appear on the form. Similarly, entering bank account details will display closing balances, while registered purchases linked to the filer’s CNIC will auto-populate, minimising manual entry.

The simplified return form is applicable to salaried individuals with additional rental income, as well as small businesses within a prescribed threshold. Taxpayers exceeding this threshold will be redirected to the standard filing process.

Through SRO1562 of 2025, the FBR has also introduced simplified electronic return forms for salaried individuals, associations of persons (AOPs), companies, and business professionals, with the aim of streamlining the filing process and enhancing transparency.

Under the Income Tax Ordinance, taxpayers must begin filing returns soon after the close of the tax year, with September 30 set as the deadline.

SRO1562 also makes it mandatory for owners of immovable properties abroad to file an “Electronic Foreign Income and Assets Declaration for Resident Individuals”. Resident taxpayers must now disclose details of foreign rental properties, business income, overseas assets, earnings, and bank accounts.

In addition, the FBR has notified separate electronic returns for non-residents with no Pakistan-source income, traders, small and medium enterprises (SMEs), and salaried taxpayers.

Final versions of the electronic return for manufacturers, traders, and SMEs have also been issued.

Published in Dawn, August 20th, 2025

Sudden and intense bursts of extreme rainfall are causing devastation across mountainous parts of South Asia, triggering flash floods, deadly mudflows and huge landslides that have washed out entire neighbourhoods and turned vibrant communities into heaps of mud and rubble.

In northwest Pakistan, ferocious floods have crashed through villages, killing at least 321 people in the space of 48 hours, local authorities reported Saturday.

More than ten villages in the Buner region of the Khyber Pakhtunkhwa province were devastated by flash flooding, and dozens of people are believed to still be trapped under the thick mud and debris.

In India-administered Kashmir, at least 60 people were killed and more than 200 were missing when walls of mud and water gushed through the Himalayan town of Chashoti on Friday, according to Reuters news agency. Earlier this month, another surge of flood water tore through a village in India’s mountainous Uttarakhand state, leaving at least four people dead.

Local authorities in both countries have said much of the deadly floods and landslides were triggered by sudden and violent bouts of torrential rain called cloudbursts.

Scientists say these extreme episodes of rain, be they cloudbursts or longer periods of torrential downpours, are set to get more frequent and ferocious in this ecologically fragile region as the climate crisis intensifies.

Here’s what to know.

Cloudbursts are sudden, highly localized downpours that can be destructive by the sheer volume of water they unleash in a short period of time, often triggering dangerous flash floods and landslides.

They occur in mountainous regions, especially during the monsoon season, when there is a lot of moisture in the air. The areas that have been inundated by destructive rains and floods in recent weeks are in the foothills of South Asia’s giant mountain ranges that are home to the world’s tallest peaks and glaciers.

Monsoonal air hits those mountains, rapidly cooling as it rises and condenses into dense clouds that can then unleash torrents.

The India Meteorological Department defines a cloudburst as having a rainfall rate over 100 mm (4 inches) per hour.

“The Himalayas, Karakoram, and Hindu Kush are especially vulnerable because of their steep slopes, fragile geology, and narrow valleys that funnel storm runoff into destructive torrents,” Roxy Mathew Koll, climate scientist at the Indian Institute of Tropical Meteorology, told CNN.

Residents in Pakistan’s hard-hit Salarzai described a torrent of mud and massive boulders that made the ground shake like an earthquake.

These extreme, localized bursts of rain are difficult to forecast.

“This is also a data-sparse region, whether we are studying cloudbursts or glacial outburst floods, making it harder to understand, monitor, and forecast these events,” said Koll.

“The storms are also too small and fast for precise prediction.”

The region’s high poverty levels, a lack of infrastructure and access to basic facilities are also barriers to communicating what little information is available to communities who live there.

“The bigger gap is not the technology gap, it’s the communication gap,” said Islamabad-based climate expert Ali Tauqeer Sheikh.

“Weaker governance and lack of early warning systems” in these regions have compounded the problem, he added.

Together with rampant deforestation and unplanned development, it’s a deadly combination.

“Because of very heavy deforestation, any torrential rain and cloudburst will result in landslides, mudslides, they’ll bring boulders and timber with them,” said Sheikh.

There are often heavy casualties because “a very high percentage of people live along the water bodies and the preparedness time is extremely limited,” he said.

Cloudbursts in the region have occurred with greater intensity and frequency in recent years, fuelled by record-shattering global temperatures.

Warmer air soaks up water like a sponge, and all this extra moisture can result in extreme rain and sudden downpours like cloudbursts, especially when that air meets the mountains.

“Warmer oceans are loading the monsoon with extra moisture, and a warmer atmosphere holds more water, fueling intense rainfall when moist air is forced up steep mountain slopes,” said Koll, from the Indian Institute of Tropical Meteorology.

During the southwest monsoon season, annual rains fall across parts of India, Pakistan, and Bangladesh brought by winds from the Indian Ocean and Arabian Sea, which have undergone rapid warming in recent years.

Before this year’s floods, prolonged heatwaves had baked the region.

“For each degree that’s higher than the average temperature, there’s 7% greater moisture in the air,” said Sheikh.

“If there’s a stronger heatwave in the South Asian subcontinent, in India or in Pakistan, we can assume the rainfall will be heavier.”

And melting glaciers are only adding to the disaster.

The massive ranges of the Himalayas and Karakoram region house thousands of glaciers, which are melting and losing mass at an increasingly rapid rate as the world warms.

“While glacial melt does not directly cause cloudbursts, it creates unstable lakes and fragile terrain that can worsen their impacts through floods and landslides,” Koll said.

Pakistan is responsible for less than 1% of the world’s planet-warming gases, European Union data shows, yet it is the most vulnerable nation to the climate crisis, according to the Global Climate Risk Index.

Climate change has already altered the landscape of the region.

“The monsoon itself is shifting under climate change, with longer dry spells punctuated by short, extreme bursts of rain — patterns that have already tripled heavy rainfall events across India in recent decades,” said Koll.

Pakistan suffered its most devastating monsoon season in recent times in 2022, when widespread flooding killed almost 2,000 people, displaced thousands and caused an estimated $40 billion in damage.

Deadly flooding has occurred every year since. A recent study found that rainfall that hit Pakistan between June and July this year was heavier because of the climate crisis.

In Pakistan, the timing, location and quantity of monsoon rains has shifted so that that “average rainfall seems to have decreased in Pakistan, but the frequency of torrential rains has increased,” said Sheikh.

Drought and flooding can impact the country in the same month during the monsoon, so water availability is becoming more uncertain in a country already suffering a severe water crisis. “That affects our food security and cropping patterns,” said Sheikh.

The devastation and financial toll wrought by the floods in Pakistan, India and Nepal this year is what the climate crisis looks like at about 1.2 degrees Celsius of global warming since industrialization.

But the world is on track for around 3 degrees Celsius of warming by the end of the century, as humans continue to burn planet-heating fossil fuels. And scientists warn every fraction of a degree of warming will worsen the impacts of the crisis.

The Himalayas, Karakoram and Hindu Kush regions span eight countries and extreme weather events in one have a knock-on effect in another.

It is “super critical” for the governments of these South Asian nations to come together, said Sheikh.

“We face the same set of problems, and there are similar solutions,” he said.

“But our ability to learn from each other and learn each other’s scientific knowledge, communal knowledge, is absolutely handicapped. And that is very damaging for us.”

But already fraught relations between Pakistan and India deteriorated to their lowest level in years in May when the two sides escalated a long-running conflict in Kashmir, leading India to suspend a key treaty that governs the sharing of the waters of the Indus river that flows through both countries.

“That’s why the Indus Water Treaty needs another lease of life to tackle emerging climate threats and challenges in the water sector,” he said.

For the millions of people who live downstream in India, Pakistan, Nepal and Bangladesh, building resiliency is key.

That means “avoiding settlements, construction, and mining in hazard zones, enforcing climate-resilient infrastructure, and strengthening early warning systems,” said Koll.

With remittances starting to dip, the current account has slipped back into deficit. The CAD stood at $254 million in July 2025 compared to a surplus of $355 million in the previous month. This $589 million swing is almost evenly split between a widening trade deficit and a decline in home remittances.

Imports are rising, up 8 percent month-on-month and 11 percent year-on-year to $5.4 billion in July 2025. It marks the fifth time in the past seven months that imports have exceeded $5 billion. The 12-month average now stands close to $5 billion—a new norm that is likely to grow as non-oil imports pick up with modest economic recovery. Detailed numbers are awaited, but current trends clearly suggest a broad increase in import demand. With oil prices easing, the import bill may stay manageable, but any commodity price rebound triggered by external shocks could pressure the external account.

Exports remain steady but insufficient to cover rising imports. Goods exports reached $2.7 billion in July, up 5 percent month-on-month and 16 percent year-on-year. However, exports are close to capacity. The rice windfall has passed, and textile exports show no immediate upside as the sector operates near full capacity.

A potential positive aspect lies in Trump’s tariffs: if Indian tariffs remain elevated at 50 percent, Pakistan could capture additional orders in home textiles. In garments and knitwear, however, Pakistan’s main competitors—Vietnam and Bangladesh—face no significant tariff disadvantages. The US is also negotiating on value-addition criteria, which could benefit Pakistan, since its import reliance for re-exports is lower than that of its competitors.

In the near term, though, exports are likely to hover around current levels. Services exports continue to perform well but remain too small to make a meaningful difference. Overall, the goods and services trade deficit widened to $2.7 billion, deteriorating 12 percent month-on-month and 8 percent year-on-year.

The standout performer last year was home remittances, which hit a record $38.3 billion and helped the current account swing to surplus. In July, however, inflows fell to $3.2 billion, down 6 percent from the prior month. Informal discussions with banks suggest inflows will remain subdued in August as well.

Last year’s higher inflows partly reflected extraordinary efforts by banks to attract remittances to finance their import commitments, as the SBP often restricts dollar purchases from other banks. Some larger banks incurred losses of Rs5–10 billion in the first half of CY25 and are unwilling to bear such costs again.

As a result, remittance growth is likely to remain muted, while rising imports will keep the current account in deficit, complicating the SBP’s efforts to raise forex reserves above $17 billion in FY26. The June-end target of $14 billion last year was achieved, with reserves reaching $14.5 billion, but they have since slipped slightly to $14.2 billion as the capital and financial accounts continue to show modest improvement.

A significant internet disruption hit Pakistan on Tuesday evening, severely impacting connectivity nationwide. According to global internet observatory NetBlocks, national internet access dropped to just 20% of normal levels.

“Metrics show a major disruption to internet connectivity across Pakistan with high impact to backbone operator PTCL; overall national connectivity is down to 20% of ordinary levels,” NetBlocks reported in a post on X.

The Pakistan Telecommunication Company Limited also shared a statement on X regarding the outage, saying, “We are currently facing data connectivity challenges on our PTCL and Ufone services. Our Teams are diligently working to restore the services as quickly as possible. We regret any inconvenience caused.”

The outage began late in the evening and affected multiple regions across the country. The disruption hindered business operations, banking transactions, and routine communication, triggering widespread concern and frustration on social media.