Good afternoon,

Today’s news: Globally, updates from Gaza and Ukraine. Locally, Moody’s upgrades Pakistan to Caa1, FinMin flags Rs 5.89tr SOE losses & plans privatization, and KP launches Bajaur anti-terror op.

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Around The World

Updates from Gaza. Gaza City has come under intense air attack, as Israeli forces prepare to launch an operation to take over the strip. Israeli forces also killed at least 39 Palestinians across Gaza since dawn, including 19 aid seekers. The UK, EU, Australia, Canada, and Japan issued a statement, urging action to reverse starvation and demanding "immediate, permanent and concrete steps" to facilitate the entry of aid to Gaza.

Meanwhile, Israeli PM Netanyahu hinted that ceasefire efforts in Gaza are now focused on a deal that would release the remaining hostages all at once, rather than in phases. Arab officials said last week that mediators Egypt and Qatar were preparing for a new deal that would include the release of all hostages in one go in return for a lasting ceasefire and withdrawal of Israeli forces.

News from Ukraine. Ukrainian President Zelenskyy said that Russian President Putin wants Ukraine to withdraw from the remaining 30% of the Donetsk region that it controls as part of a ceasefire deal, a proposal the leader categorically rejected.  Small groups of Russian troops have pierced parts of Ukraine’s defenses in the Donetsk region as Russia attempts to snatch as much territory as possible ahead of the meeting between Putin and Trump on Friday.

Additionally, Zelenskyy is joining European leaders in talks aimed at increasing pressure on Trump to side with Ukraine during Friday's summit. In an online call with Trump today, the leaders are expected to reiterate that no decisions should be taken without Ukraine, including changing its borders by force.

Pakistan

A win is a win. Moody’s Ratings has upgraded Pakistan’s local and foreign currency ratings to Caa1 from Caa2, with a stable outlook, citing an improving external position, stronger fiscal performance, and progress on reforms under the IMF Extended Fund Facility. The agency noted rising foreign exchange reserves, better revenue collection, and narrowing budget deficits, though debt affordability remains one of the weakest globally, and the external position is fragile. Pakistan’s ability to meet its $24–25 billion annual external financing needs in the coming years depends on sustained IMF-backed reforms and timely partner financing.

Meanwhile, Finance Minister Muhammad Aurangzeb hinted at a possible policy rate cut later this year amid slowing inflation and stable economic indicators, though decisions remain with the SBP and MPC. 

Deficit drama. FinMin Aurangzeb told the Senate that losses of state-owned enterprises (SOEs) have reached nearly Rs. 5.89 trillion in the first half of FY 2024-25—almost half the country’s annual revenue—calling the situation alarming and announcing that eight SOEs will be privatised this year. He said steps like pension reforms, appointing private-sector board chairs, and expanding public-private partnerships aim to curb losses, while three power distribution companies are already in the privatisation process. 

Cleaning up. KP Chief Minister Ali Amin Khan Gandapur told the provincial cabinet that security forces launched a targeted operation in Bajaur after talks between a jirga and terrorists failed, stressing terrorism would not be tolerated, civilian casualties were unacceptable, and no forced displacement was authorised. Section 144 was imposed for locals’ safety, and a camp for voluntarily displaced persons was approved, along with compensation for victims of the Tirah incident.

What Else Is Happening?

💲AI start-up Perplexity has made a surprise $34.5bn takeover bid for Google's Chrome internet browser. The offer comes as a US federal judge is expected to issue a ruling that could see Google being ordered to break up its search business.

🍟Fast-food chain McDonald’s Japan canceled a Happy Meal campaign that came with coveted Pokémon cards, apologizing after resellers rushed to buy the meals and then discarded the food, leaving trash outside stores.