Good afternoon,

Today’s news: Globally, the new Pope, the UK-US trade deal, and Trump makes nice with the Houthis. Locally, Pakistan denies cross-border aggression, the IMF board meets today for the first assessment of the $7 billion bailout, and the federal budget for the next fiscal year is set to be presented on June 2.

☕ Grab your chaye, let’s go.

P.S. First time reading? Subscribe here for free.

Around The World

Papa, don’t preach. After one of the fastest papal conclaves ever, Chicago native and Villanova University grad Robert Francis Prevost was elected as the next pope, becoming the first American to lead the world’s 1.4 billion Catholics. The 69-year-old Prevost took the name Leo XIV. In his address to the Vatican crowd, Leo XIV emphasized peace and the need to build bridges. He also celebrated his first Mass today, the day after being elected pontiff.

Small steps. President Donald Trump announced a trade agreement with Britain that will roll back US tariffs on British steel, aluminum, and automobiles, gaining increased access to British markets for American exports, creating a $5bn (£3.8bn) opportunity for exports. Trump said the 10% baseline tariff on global imports would remain in place. 

There are no details in the deal about advanced tech like quantum computing or the UK’s digital services tax. This deal could also only have a small impact on the US economy, as the UK is not even in the US’ top five biggest trading partners and represented just 2.9% of American trade last quarter.

Et tu, Donald? Israeli Prime Minister Benjamin Netanyahu has vowed to “defend ourselves alone” against Yemen’s Houthi rebels after Trump struck a deal with the Iran-backed group, without informing Israel in advance. The US deal was announced hours after the Israeli military carried out major strikes against Yemen’s international airport and other facilities in response to a Houthi attack on Israel’s main airport. 

According to Trump, the US would halt an ongoing military campaign against the Houthis in exchange for the group stopping its attacks on US interests in the region. The Houthis acknowledged the agreement but made it clear their attacks on Israel would continue.

Pakistan

Lot’s in the air. Deputy Prime Minister and Foreign Minister Ishaq Dar, alongside DG ISPR Lt Gen Ahmed Sharif Chaudhry, strongly denied Indian allegations of cross-border aggression (mentioned in yesterday’s statement by India), calling recent events part of a "dangerous game" by New Delhi. Dar stated that India had fired three projectiles into its territory near Amritsar and was attempting to frame Pakistan for the incident. He called the move “deeply insidious,” asserting that Pakistan had not launched any drone strikes or targeted civilian areas in Indian Punjab. Dar further revealed that a fourth projectile, also fired from India, violated Pakistani airspace but was intercepted and destroyed near Dinga in Punjab by Pakistan’s air defense system. 

Meanwhile, Reuters reported that the recent dogfight between Pakistan’s Chinese-made J-10 jets and India’s French-made Rafale fighters is being closely analyzed by militaries worldwide. U.S. officials told Reuters that Pakistan likely used Chinese-made J-10 jets—and possibly PL-15 missiles—to down at least two Indian aircraft, though this remains unconfirmed.

Dealing with it. The IMF executive board is scheduled to meet today to review the first assessment of Pakistan’s $7 billion bailout program. The meeting is expected to approve a $1 billion disbursement and finalize a new $1.3 billion loan under the Resilience and Sustainability Facility, aimed at climate adaptation. This comes as we navigate a fragile economic recovery, having repaid or rolled over most of the $26 billion in foreign debt due this year. Islamabad expects foreign exchange reserves to rise to $14 billion by the end of next month with the help of planned inflows. The successful completion of a short-term IMF program last year has helped rebuild trust with the lender, after a history of delays and incomplete deals. While today's board meeting is largely procedural (following a staff-level agreement), it is a key step in efforts to stabilize the economy and attract further investment.

What’s in my bag? The federal budget for the next fiscal year is set to be presented on June 2, with a significant 16% reduction in the development allocation, which will total Rs. 921 billion. This cut is expected to result in the closure of around 200 ongoing development projects. Planning Minister Ahsan Iqbal revealed that the Ministry of Finance’s indicative budget ceiling (IBC) of Rs. 921 billion is substantially lower than the Rs. 2.9 trillion requested by the Planning Commission, based on the development needs of various ministries. Iqbal expressed concern over the reduced allocation, emphasizing that it would impede the proper funding of key projects, leading to delays and cost escalations. He noted that the lack of adequate funds would also hinder foreign-funded projects, which require rupee cover. Read more here.

What Else Is Happening?

🏏The Indian Premier League - the world's richest cricket tournament - has been paused for a week amid escalating tensions with Pakistan. Officials decided this after a match was abandoned as military exchanges between the two countries continued for a third day.

🌚The first samples of Moon rock brought back to Earth in nearly 50 years have arrived in the UK on loan from China. China collected the rocks on its Chang'e 5 space mission in 2020 when it landed on a volcanic area called Mons Rümker, today described as "more precious than gold dust".