And they are also the reason for Pakistan's downfall, had Pakistan more control over their proxies or didn't made them in Afghanistan... things wouldn't be this bad. If at that time we somehow convinced USA that Pakistan is way more important than Afghanistan due to access to sea and could be next target for Soviets, they would have spent billions in improving Pakistan's army, economy and securing our borders. But Zia Ul Haq had more ambitions of controlling Afghanistan however we have little control over Afghan Taliban even now. Attacks on Pakistan has accelerated under Afghan Taliban via TTP. Zia ul Haq ruined our country alot. We could have recovered from others, even from Zulfiqar Bhutto's policies but what Zia did led us to having these security issues increasing significantly over time and wrecking our economy.
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How did Pakistan's economy perform during Imran Khan's era?
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And they are also the reason for Pakistan's downfall, had Pakistan more control over their proxies or didn't made them in Afghanistan... things wouldn't be this bad. If at that time we somehow convinced USA that Pakistan is way more important than Afghanistan due to access to sea and could be next target for Soviets, they would have spent billions in improving Pakistan's army, economy and securing our borders. But Zia Ul Haq had more ambitions of controlling Afghanistan however we have little control over Afghan Taliban even now. Attacks on Pakistan has accelerated under Afghan Taliban via TTP. Zia ul Haq ruined our country alot. We could have recovered from others, even from Zulfiqar Bhutto's policies but what Zia did led us to having these security issues increasing significantly over time and wrecking our economy.
https://twitter.com/StateBank_Pak/status/1438539254813036547
Reserves are improving despite them pumping 1.2$ billion in market.
Hasina has kicked the Army out of domestic and foreign affairs, and Bangladesh's economy has taken off like a rocket. India has shown zero interest in taking over Bangladesh or destroying it, it would have even less interest in taking over Pakistan.
It is true that Pakistan's forex reserves have increased by about $10 billion from $14 billion in 2019 to $24 billion in 2021...
but... total external debt has increased by $24 billion from $98 billion to $122 billion during the same time period.
Obviously these trends are not sustainable and expect massive currency devaluation followed by hyper-inflation in the future.
IK has made negative progress over the last 3 years in developing modern industries needed to increase exports. His support for the Taliban and praise for OBL has worsened the perception of Pakistan among Western investors.
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ISLAMABAD: With some subdued downward risks, Fitch Ratings on Monday forecast Pakistan’s economic growth at 4.2 per cent — against the government’s target of 4.8pc — in the current fiscal year (FY22) owing to supportive monetary and fiscal conditions and improving vaccination rates.
The New York-based agency — one of the three major global rating agencies — noted that net exports would contribute negatively to headline growth as imports would outpace export growth. “Improving vaccination rates will buoy private consumption growth while supportive monetary and fiscal conditions will serve as tailwinds for gross fixed capital formation,” it said.
The rating agency said the risk to the growth outlook was weighted to the downside. On the domestic front, given the more virulent delta strain in the community, amid a still low percentage of the population that are fully vaccinated, a strong resurgence in Covid-19 infections could weigh heavily on growth.
On the external front, heightened security threats posed by radical groups such as the Taliban could lead to social instability and the destruction of infrastructure. This might weigh on the country’s gross fixed capital outlook and exporting capabilities as businesses become hesitant to invest in capacity building infrastructure.
Agency notes improving vaccination rates will boost private consumption growth
The growth forecast accounts for the occasional tightening of Covid-19 restriction measures due to the still elevated number of domestic cases. This comes as Pakistan grapples with its fourth wave of Covid-19 outbreaks. Nevertheless, with the government likely to continue with its “smart-lockdown” strategy instead of imposing a nationwide lockdown, the agency did not expect Pakistan’s growth trajectory to be severely curtailed.
Fitch revised its forecast for private consumption to grow by 3.6pc in FY22 compared to 3.4pc previously. While this still represented a slowdown from the 7.4pc in FY21 due to waning base effects, improving vaccination rates will buoy consumer sentiment, facilitating a recovery in consumer spending, it said.
As of September 12, 22.8pc of the population has received at least one dose of the vaccine with 9.6pc of the population fully vaccinated. Although still far from achieving herd immunity (approximately at least 70pc of the population fully vaccinated), these figures represent about a seven-fold increase since June.
It said the country’s consumer confidence rose in July, coming in at 44.1, its highest reading since September 2019 (pre-pandemic levels). As a sign of recovering demand, purchases of major items like passenger vehicle sales have surpassed pre-pandemic levels. Additionally, expectation for still strong remittance growth amid a stronger economic growth outlook in the Gulf Cooperation Council (GCC) economies and the European Union, will also support private consumption.
The agency also revised up its forecast for the gross fixed capital formation (GFCF) growth to 8pc in FY22 from 7.2pc previously. GFCF will be driven by improving domestic and external demand outlooks alongside supportive monetary and fiscal conditions. The country’s business confidence survey by the State Bank of Pakistan (SBP) recorded its highest ever levels in June since its inception, reflecting optimism surrounding the business outlook of Pakistan.
Accommodative monetary policy, coupled with disbursements from the SBP’s Temporary Economic Refinance Facility (TERF) will further serve as tailwinds for capacity enhancing investments as the SBP expected 67pc growth in TERF loan disbursements this fiscal year.
Increased development spending by the government will be another catalyst for growth in this component as the FY22 budget represented 61pc increase in the Public Sector Development Programme allocations when compared with FY21.
Meanwhile, the rating agency also revised up forecast for government consumption growth to register at 4.3pc in FY22 from previous forecast of 3.5pc. The government consumption will also be boosted by subsidies to the power sector, to ameliorate the country’s circular debt.
It forecast the imports to rebound more strongly than exports. Imports will be supported by increased demand for vaccines with the government recently committing $1.1bn to procure Covid-19 vaccines. Additionally, the improving economic outlook will likely see a rebound in consumer spending and increased demand for capital goods.
Finally, with petroleum products accounting for approximately 18pc of total imports value in FY21, elevated fuel prices will further increase Pakistan’s imports bill. The agency forecast Brent crude oil prices to average $72 per barrel in 2021 and $69 in 2022 from $43.20 per barrel in 2020. Hence, it highlighted 8pc growth in imports for FY22, a revision upwards from our previous expectation of 5pc growth.
Published in Dawn, September 21st, 2021
The New York-based agency — one of the three major global rating agencies — noted that net exports would contribute negatively to headline growth as imports would outpace export growth. “Improving vaccination rates will buoy private consumption growth while supportive monetary and fiscal conditions will serve as tailwinds for gross fixed capital formation,” it said.
The rating agency said the risk to the growth outlook was weighted to the downside. On the domestic front, given the more virulent delta strain in the community, amid a still low percentage of the population that are fully vaccinated, a strong resurgence in Covid-19 infections could weigh heavily on growth.
On the external front, heightened security threats posed by radical groups such as the Taliban could lead to social instability and the destruction of infrastructure. This might weigh on the country’s gross fixed capital outlook and exporting capabilities as businesses become hesitant to invest in capacity building infrastructure.
Agency notes improving vaccination rates will boost private consumption growth
The growth forecast accounts for the occasional tightening of Covid-19 restriction measures due to the still elevated number of domestic cases. This comes as Pakistan grapples with its fourth wave of Covid-19 outbreaks. Nevertheless, with the government likely to continue with its “smart-lockdown” strategy instead of imposing a nationwide lockdown, the agency did not expect Pakistan’s growth trajectory to be severely curtailed.
Fitch revised its forecast for private consumption to grow by 3.6pc in FY22 compared to 3.4pc previously. While this still represented a slowdown from the 7.4pc in FY21 due to waning base effects, improving vaccination rates will buoy consumer sentiment, facilitating a recovery in consumer spending, it said.
As of September 12, 22.8pc of the population has received at least one dose of the vaccine with 9.6pc of the population fully vaccinated. Although still far from achieving herd immunity (approximately at least 70pc of the population fully vaccinated), these figures represent about a seven-fold increase since June.
It said the country’s consumer confidence rose in July, coming in at 44.1, its highest reading since September 2019 (pre-pandemic levels). As a sign of recovering demand, purchases of major items like passenger vehicle sales have surpassed pre-pandemic levels. Additionally, expectation for still strong remittance growth amid a stronger economic growth outlook in the Gulf Cooperation Council (GCC) economies and the European Union, will also support private consumption.
The agency also revised up its forecast for the gross fixed capital formation (GFCF) growth to 8pc in FY22 from 7.2pc previously. GFCF will be driven by improving domestic and external demand outlooks alongside supportive monetary and fiscal conditions. The country’s business confidence survey by the State Bank of Pakistan (SBP) recorded its highest ever levels in June since its inception, reflecting optimism surrounding the business outlook of Pakistan.
Accommodative monetary policy, coupled with disbursements from the SBP’s Temporary Economic Refinance Facility (TERF) will further serve as tailwinds for capacity enhancing investments as the SBP expected 67pc growth in TERF loan disbursements this fiscal year.
Increased development spending by the government will be another catalyst for growth in this component as the FY22 budget represented 61pc increase in the Public Sector Development Programme allocations when compared with FY21.
Meanwhile, the rating agency also revised up forecast for government consumption growth to register at 4.3pc in FY22 from previous forecast of 3.5pc. The government consumption will also be boosted by subsidies to the power sector, to ameliorate the country’s circular debt.
It forecast the imports to rebound more strongly than exports. Imports will be supported by increased demand for vaccines with the government recently committing $1.1bn to procure Covid-19 vaccines. Additionally, the improving economic outlook will likely see a rebound in consumer spending and increased demand for capital goods.
Finally, with petroleum products accounting for approximately 18pc of total imports value in FY21, elevated fuel prices will further increase Pakistan’s imports bill. The agency forecast Brent crude oil prices to average $72 per barrel in 2021 and $69 in 2022 from $43.20 per barrel in 2020. Hence, it highlighted 8pc growth in imports for FY22, a revision upwards from our previous expectation of 5pc growth.
Published in Dawn, September 21st, 2021
Manunited18
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You do realise imran is almost 70, it's asking to much for him to turn around a ravaged state with corruption that is rife to the core.
Gharib Aadmi
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Yes he is too old to make Pakistan Switzerland. However he can still do alot of good. I have no hope in any leader but him right now.
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KSE-100 dives over 1,000 points in intra-day trading
Massive selloff comes on back of interest rate hike
Expectations of further hike in interest rate going forward took a toll on market sentiment.
The Pakistan Stock Exchange took a hammering on Wednesday and plunged over 1,000 points in intra-day trading as hike of 25 basis points in the benchmark interest rate by the State Bank of Pakistan to 7.25% dented investor sentiments.
In addition, the market expects further monetary tightening in Pakistan as signaled by the central bank in its monetary policy announcement on Monday.
Moreover, the slide in global markets on the back of possible default by China’s property giant Evergrande also contributed to the dip.
At 1:07 PM, the KSE-100 index was trading at 44,909.1 points after a fall of 1,099.75 points of 2.39%.
Speaking to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said that the prime reason behind the steep decline in KSE-100 index is the increase in benchmark interest rate.
“The State Bank of Pakistan has taken a step towards monetary tightening and investor sentiments took a hit because they expect it to deepen further,” he said.
Echoing his views, AA Gold Commodities Director Adnan Agar said that hike in benchmark interest rate shattered the spirits of market participants which could be gauged from the battering being experienced by the KSE-100 index.
Expectations of further hike in interest rate going forward took a toll on market sentiment, he said.
“Besides, global stock markets are on a downtrend for past two to three due to risk of default by Chinese Evergrande group and uncertainty over US monetary policy decision due later during the day,” he said. “Both these factors fuelled sell off at the local bourse.”
https://www.news18.com/cricketnext/news/bcci-extends-deadline-to-purchase-tender-for-new-ipl-teams-to-october-10-4229822.html
Massive selloff comes on back of interest rate hike
Expectations of further hike in interest rate going forward took a toll on market sentiment.
The Pakistan Stock Exchange took a hammering on Wednesday and plunged over 1,000 points in intra-day trading as hike of 25 basis points in the benchmark interest rate by the State Bank of Pakistan to 7.25% dented investor sentiments.
In addition, the market expects further monetary tightening in Pakistan as signaled by the central bank in its monetary policy announcement on Monday.
Moreover, the slide in global markets on the back of possible default by China’s property giant Evergrande also contributed to the dip.
At 1:07 PM, the KSE-100 index was trading at 44,909.1 points after a fall of 1,099.75 points of 2.39%.
Speaking to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said that the prime reason behind the steep decline in KSE-100 index is the increase in benchmark interest rate.
“The State Bank of Pakistan has taken a step towards monetary tightening and investor sentiments took a hit because they expect it to deepen further,” he said.
Echoing his views, AA Gold Commodities Director Adnan Agar said that hike in benchmark interest rate shattered the spirits of market participants which could be gauged from the battering being experienced by the KSE-100 index.
Expectations of further hike in interest rate going forward took a toll on market sentiment, he said.
“Besides, global stock markets are on a downtrend for past two to three due to risk of default by Chinese Evergrande group and uncertainty over US monetary policy decision due later during the day,” he said. “Both these factors fuelled sell off at the local bourse.”
https://www.news18.com/cricketnext/news/bcci-extends-deadline-to-purchase-tender-for-new-ipl-teams-to-october-10-4229822.html
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The Asian Development Bank (ADB) has projected Pakistan's Gross Domestic Product (GDP) growth to reach 4 per cent in the fiscal year 2021-22 (FY22) as business activity gradually resumed in the second year of the Covid-19 pandemic.
According to the Asian Development Outlook 2021, the growth forecast witnessed recovery in private investment as consumer confidence and business actively improved amid the ongoing vaccination rollout and various economic stimulus measures announced in the budget for 2021-22.
The report noted that investment was expected to strengthen as global sentiment improves and the International Monetary Fund-supported stabilisation program continues to progress.
On the supply side, the outlook for agriculture is encouraging in view of the government’s ambitious Agriculture Transformation Plan.
"The plan aims to achieve food security for a growing population by expanding land under cultivation, revamping extension services, boosting water-use efficiency, developing postharvest storage and food processing plants, augmenting bank credit, and introducing the ‘Kissan Card’ as a digital wallet for the direct and swift transfer of subsidies for seed, pesticides, and fertiliser."
Similarly, steady normalisation of global merchandise trade, improved market sentiment and stronger business and consumer confidence was expected from the continuing rollout of Covid-19 vaccination programme and an accommodative monetary policy, according to the report.
It also said that enhanced growth in agriculture and industry and an expected improvement in domestic demand were projected to raise growth in the services sector which will add to improvement in growth in FY22.
"Inflationary pressures will likely come from ongoing economic recovery and rising global oil prices but should be tempered by expenditure reform and the government's commitment not to borrow directly from the central bank."
The ADB report said the risk of inflation being higher than forecast derived from any unusual increase in oil prices or from potential currency depreciation in the wake of any early winding down of the ongoing IMF programme.
The fiscal deficit is projected to narrow to the equivalent of 6.9pc of the GDP in FY22, which is still higher than the target set earlier under a medium-term fiscal consolidation program supported by the IMF.
"Growth in revenue is projected to accelerate with the rapid pickup in domestic economic activity and higher imports," the report said.
Expenditure is also projected to rise in FY22 as the government has budgeted substantial increases in subsidies and in social and development spending to protect the vulnerable and fortify growth and economic recovery.
Pakistan’s public debt outlook is sustainable in the medium term. "With primary and fiscal deficits, high borrowing costs, and currency depreciation, public external debt reached $95.2 billion in the fiscal year 2021," the report said.
However, the government has been implementing a medium-term debt strategy for fiscal years 2020-2023.
"The maturity structure of public debt has improved by re-profiling public debt into longer-term instruments. With strong economic growth prospects for FY22 and beyond, public debt remains on a downward path over the medium term," it said.
As domestic demand picks up and international oil prices rise, the current account deficit is seen widening to the equivalent of 1.5pc of GDP in the fiscal year 2022.
Likewise, export growth is expected to accelerate, supported by a projected upturn in economic activity in Pakistan’s major trade partners.
Exports will further benefit from continued initiatives to reduce the cost of doing business and especially from the government’s newly introduced export facilitation scheme, which allows the duty- and tax-free acquisition of inputs: intermediate goods, plant, and machinery.
Imports are expected to rise in the fiscal year 2022 in response to domestic economic recovery, higher international oil prices, and rationalisation of customs and regulatory duties in the budget of the fiscal year 2022-23.
The report further said remittances were likely to remain elevated, supported by the ‘Roshan Digital Accounts’ initiative, and would continue to narrow the current account deficit.
According to the Asian Development Outlook 2021, the growth forecast witnessed recovery in private investment as consumer confidence and business actively improved amid the ongoing vaccination rollout and various economic stimulus measures announced in the budget for 2021-22.
The report noted that investment was expected to strengthen as global sentiment improves and the International Monetary Fund-supported stabilisation program continues to progress.
On the supply side, the outlook for agriculture is encouraging in view of the government’s ambitious Agriculture Transformation Plan.
"The plan aims to achieve food security for a growing population by expanding land under cultivation, revamping extension services, boosting water-use efficiency, developing postharvest storage and food processing plants, augmenting bank credit, and introducing the ‘Kissan Card’ as a digital wallet for the direct and swift transfer of subsidies for seed, pesticides, and fertiliser."
Similarly, steady normalisation of global merchandise trade, improved market sentiment and stronger business and consumer confidence was expected from the continuing rollout of Covid-19 vaccination programme and an accommodative monetary policy, according to the report.
It also said that enhanced growth in agriculture and industry and an expected improvement in domestic demand were projected to raise growth in the services sector which will add to improvement in growth in FY22.
"Inflationary pressures will likely come from ongoing economic recovery and rising global oil prices but should be tempered by expenditure reform and the government's commitment not to borrow directly from the central bank."
The ADB report said the risk of inflation being higher than forecast derived from any unusual increase in oil prices or from potential currency depreciation in the wake of any early winding down of the ongoing IMF programme.
The fiscal deficit is projected to narrow to the equivalent of 6.9pc of the GDP in FY22, which is still higher than the target set earlier under a medium-term fiscal consolidation program supported by the IMF.
"Growth in revenue is projected to accelerate with the rapid pickup in domestic economic activity and higher imports," the report said.
Expenditure is also projected to rise in FY22 as the government has budgeted substantial increases in subsidies and in social and development spending to protect the vulnerable and fortify growth and economic recovery.
Pakistan’s public debt outlook is sustainable in the medium term. "With primary and fiscal deficits, high borrowing costs, and currency depreciation, public external debt reached $95.2 billion in the fiscal year 2021," the report said.
However, the government has been implementing a medium-term debt strategy for fiscal years 2020-2023.
"The maturity structure of public debt has improved by re-profiling public debt into longer-term instruments. With strong economic growth prospects for FY22 and beyond, public debt remains on a downward path over the medium term," it said.
As domestic demand picks up and international oil prices rise, the current account deficit is seen widening to the equivalent of 1.5pc of GDP in the fiscal year 2022.
Likewise, export growth is expected to accelerate, supported by a projected upturn in economic activity in Pakistan’s major trade partners.
Exports will further benefit from continued initiatives to reduce the cost of doing business and especially from the government’s newly introduced export facilitation scheme, which allows the duty- and tax-free acquisition of inputs: intermediate goods, plant, and machinery.
Imports are expected to rise in the fiscal year 2022 in response to domestic economic recovery, higher international oil prices, and rationalisation of customs and regulatory duties in the budget of the fiscal year 2022-23.
The report further said remittances were likely to remain elevated, supported by the ‘Roshan Digital Accounts’ initiative, and would continue to narrow the current account deficit.
b.lesner
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KARACHI: Pakistani currency hit a new all-time low of Rs169.60 against the US dollar in the inter-bank market on Monday in the wake of mounting pressure of import payments on the back of a surge in commodity prices in global markets and the tumultuous geopolitical situation in Afghanistan.
Scheduled talks between the International Monetary Fund (IMF) and Pakistan to resume $6 billion loan programme are not seen as a strong reason behind the downward trend in the rupee, but the expected successful conclusion of the discussion is projected to end volatility in the currency.
Since the rupee has achieved equilibrium against the US dollar a few days ago, the recent drop in its value is unsustainable and short-lived.
“Panic buying of dollar has caused the rupee’s slide,” Ismail Iqbal Securities Head of Research Fahad Rauf said while talking to The Express Tribune.
“The rupee volatility will end with successful conclusion of talks between Pakistan and the IMF in October,” said Arif Habib Limited Head of Research Tahir Abbas.
The fresh decline of the rupee came on the day the benchmark Brent crude price hit a three-year high of nearly $80 per barrel in the international market.
With a fresh drop of Rs0.52 (or 0.31%) on Monday, the rupee has depreciated 7.65% (or Rs12.06) since the start of the current fiscal year on July 1, 2021, revealed data of the State Bank of Pakistan.
The rupee has maintained its downward trend since hitting 22-month high of Rs152.27 against the greenback in May 2021. Since then, the currency has lost 11.38% (or Rs17.33). Market speculation suggests that exporters have stopped selling dollars in the inter-bank market on rumours that the rupee will fall to around Rs200. “We see rupee trading in the range of Rs165-170 over the next six months,” Rauf said.
The rapidly transforming geopolitical situation in the region, following the end of US war in Afghanistan and the return of Taliban, is also impacting the rupee. “Any change in the political setup in Kabul directly or indirectly impacts Islamabad and its economy,” Abbas said.
A leading businessman added that Afghanistan was a huge source of dollar inflows into Pakistan when the US and NATO forces were present in the neighbouring country because they spent millions of dollars per month.
“This supply has vanished following the return of US and NATO forces back to their homelands at the end of the war,” he said.
Abbas and Rauf said that the forthcoming talks between Pakistan and the IMF were no solid reason for the rupee depreciation.
The rupee-dollar parity is not part of the talks because the central bank has opted for a flexible exchange rate to let market forces decide per dollar value of the rupee keeping in view the demand and supply of the foreign currency.
“Pakistan has clearly stated that it will resume the IMF programme,” Abbas said, adding that a successful resumption of the IMF loan programme would stabilise the rupee value at around current levels.
It will not only support the release of $1 billion in IMF loan tranche but will also open new avenues of global financing for the country.
“In case, the two sides fail to find a middle ground and talks end on an unsuccessful note, the rupee may cross several limits on the downside,” he added.
He said that the government and the central bank were jointly taking corrective measures to ensure growth of the economy. Imposition of regulatory duties on imports, 100% submission of import payment at the time of opening of letters of credit and restrictions on luxury car financing will address imbalances in the economy and support growth.
Rauf said that the real effective exchange rate (REER) - Pakistan’s cost of trade with the world - had improved to 97 points from over 102 points a couple of months ago. “This suggests the rupee will consolidate around current levels.”
Scheduled talks between the International Monetary Fund (IMF) and Pakistan to resume $6 billion loan programme are not seen as a strong reason behind the downward trend in the rupee, but the expected successful conclusion of the discussion is projected to end volatility in the currency.
Since the rupee has achieved equilibrium against the US dollar a few days ago, the recent drop in its value is unsustainable and short-lived.
“Panic buying of dollar has caused the rupee’s slide,” Ismail Iqbal Securities Head of Research Fahad Rauf said while talking to The Express Tribune.
“The rupee volatility will end with successful conclusion of talks between Pakistan and the IMF in October,” said Arif Habib Limited Head of Research Tahir Abbas.
The fresh decline of the rupee came on the day the benchmark Brent crude price hit a three-year high of nearly $80 per barrel in the international market.
With a fresh drop of Rs0.52 (or 0.31%) on Monday, the rupee has depreciated 7.65% (or Rs12.06) since the start of the current fiscal year on July 1, 2021, revealed data of the State Bank of Pakistan.
The rupee has maintained its downward trend since hitting 22-month high of Rs152.27 against the greenback in May 2021. Since then, the currency has lost 11.38% (or Rs17.33). Market speculation suggests that exporters have stopped selling dollars in the inter-bank market on rumours that the rupee will fall to around Rs200. “We see rupee trading in the range of Rs165-170 over the next six months,” Rauf said.
The rapidly transforming geopolitical situation in the region, following the end of US war in Afghanistan and the return of Taliban, is also impacting the rupee. “Any change in the political setup in Kabul directly or indirectly impacts Islamabad and its economy,” Abbas said.
A leading businessman added that Afghanistan was a huge source of dollar inflows into Pakistan when the US and NATO forces were present in the neighbouring country because they spent millions of dollars per month.
“This supply has vanished following the return of US and NATO forces back to their homelands at the end of the war,” he said.
Abbas and Rauf said that the forthcoming talks between Pakistan and the IMF were no solid reason for the rupee depreciation.
The rupee-dollar parity is not part of the talks because the central bank has opted for a flexible exchange rate to let market forces decide per dollar value of the rupee keeping in view the demand and supply of the foreign currency.
“Pakistan has clearly stated that it will resume the IMF programme,” Abbas said, adding that a successful resumption of the IMF loan programme would stabilise the rupee value at around current levels.
It will not only support the release of $1 billion in IMF loan tranche but will also open new avenues of global financing for the country.
“In case, the two sides fail to find a middle ground and talks end on an unsuccessful note, the rupee may cross several limits on the downside,” he added.
He said that the government and the central bank were jointly taking corrective measures to ensure growth of the economy. Imposition of regulatory duties on imports, 100% submission of import payment at the time of opening of letters of credit and restrictions on luxury car financing will address imbalances in the economy and support growth.
Rauf said that the real effective exchange rate (REER) - Pakistan’s cost of trade with the world - had improved to 97 points from over 102 points a couple of months ago. “This suggests the rupee will consolidate around current levels.”
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As Pakistan keeps running current account deficits and exports don't increase due to the lack of development of modern industries, it is inevitable that the currency will keep depreciating over the long-term.
PKR has gone from 125 3 years ago to 170 now. Expect it to fall to 185 in a year and over 200 in a couple of years. IMF is not inclined to keep lending money to a country that keeps running a CAD, and the PKR will have to keep depreciating to curb imports.
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The Pakistan Stock Exchange experienced a hammering on Wednesday and the KSE-100 index dived over 1,200 points in intra-day trading as threat of sanctions by US shattered the market sentiment.
On Tuesday, a group of high-profile US senators moved a bill in the US Senate seeking imposition of sanctions on the Afghan Taliban that could also potentially extend to Pakistan.
Besides, there was no respite for the local currency as it crossed Rs170 mark against the green back in inter-bank market and traded at around Rs172 per dollar in the open market.
At 12:33 PM, the KSE-100 index was trading at 44,316.27 points after a fall of 958.66 points or 2.12%.
Speaking to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said that the dip was driven by geo political concerns and the threat of US sanctions on Pakistan.
Federal ministers of Pakistan have condemned the bill which circulated in the US Senate on Tuesday, he said. He was of the view that fall in the value of rupee had little to no impact on the direction of the market.
Echoing his views, Alpha Beta Core CEO Khurram Schehzad stated that geo-political concerns, particularly at a time when the International Monetary Fund is due to review Pakistan’s economy, hammered the KSE-100 index and dragged it downward.
He added that statements by US had the potential to influence the direction of the market as well as impact the upcoming review of Pakistan by IMF for the release of sixth tranche.
“In addition, investors’ panic over the drop in rupee against the US dollar is also being reflected through the plunge in the market,” he said.
On Tuesday, a group of high-profile US senators moved a bill in the US Senate seeking imposition of sanctions on the Afghan Taliban that could also potentially extend to Pakistan.
Besides, there was no respite for the local currency as it crossed Rs170 mark against the green back in inter-bank market and traded at around Rs172 per dollar in the open market.
At 12:33 PM, the KSE-100 index was trading at 44,316.27 points after a fall of 958.66 points or 2.12%.
Speaking to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said that the dip was driven by geo political concerns and the threat of US sanctions on Pakistan.
Federal ministers of Pakistan have condemned the bill which circulated in the US Senate on Tuesday, he said. He was of the view that fall in the value of rupee had little to no impact on the direction of the market.
Echoing his views, Alpha Beta Core CEO Khurram Schehzad stated that geo-political concerns, particularly at a time when the International Monetary Fund is due to review Pakistan’s economy, hammered the KSE-100 index and dragged it downward.
He added that statements by US had the potential to influence the direction of the market as well as impact the upcoming review of Pakistan by IMF for the release of sixth tranche.
“In addition, investors’ panic over the drop in rupee against the US dollar is also being reflected through the plunge in the market,” he said.
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Fitch Ratings revised down its forecasts for the Pakistani rupee on Thursday for both this year and next due to a variety of factors including an increased flow of US dollars into neighbouring Afghanistan.
Fitch’s forecast for the rupee’s average rate this year is now 164 to the US dollar compared with 158 previously. For 2022, Fitch now expects an average rate of 180 versus a previous forecast of 165.
“Our expectation for the currency to weaken further is based on Pakistan’s worsening terms of trade, tighter US monetary policy, alongside the flow of US dollars out of Pakistan and into Afghanistan,” it said.
The Pakistani rupee has been sliding steadily since May. It was at 170.50 to the dollar on Thursday, more than 10% weaker than its peak in May of 150.95.
Analysts say the rupee has been hit by consistently high demand for dollars due to the country’s current account deficit while the Afghan situation is increasing pressure.
Pakistan’s Stock Exchange also fell nearly 3% this week on fears that a bill moved in the US Senate seeking to impose sanctions on the Taliban that could potentially extend to Pakistan.
Over the long term, tightening US monetary policy alongside higher structural inflation relative to the United States would weaken the rupee against the dollar, Fitch said.
It said, however, that the undervaluation of the Pakistani rupee on a real effective exchange rate basis would limit excessive weakness in the currency.
Fitch’s forecast for the rupee’s average rate this year is now 164 to the US dollar compared with 158 previously. For 2022, Fitch now expects an average rate of 180 versus a previous forecast of 165.
“Our expectation for the currency to weaken further is based on Pakistan’s worsening terms of trade, tighter US monetary policy, alongside the flow of US dollars out of Pakistan and into Afghanistan,” it said.
The Pakistani rupee has been sliding steadily since May. It was at 170.50 to the dollar on Thursday, more than 10% weaker than its peak in May of 150.95.
Analysts say the rupee has been hit by consistently high demand for dollars due to the country’s current account deficit while the Afghan situation is increasing pressure.
Pakistan’s Stock Exchange also fell nearly 3% this week on fears that a bill moved in the US Senate seeking to impose sanctions on the Taliban that could potentially extend to Pakistan.
Over the long term, tightening US monetary policy alongside higher structural inflation relative to the United States would weaken the rupee against the dollar, Fitch said.
It said, however, that the undervaluation of the Pakistani rupee on a real effective exchange rate basis would limit excessive weakness in the currency.
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Pakistan and the International Monetary Fund (IMF) are set to resume talks for the revival of a $6 billion derailed programme next week, in which both the sides would try to find a middle ground on the contentious issue of increase in electricity prices.
The five-day round of technical discussions will virtually begin on October 4, with the IMF team joining from Doha, Qatar. Sources said that Finance Minister Shaukat Tarin was keen to conclude the parleys on a positive note during face-to-face meetings with the top IMF management in Washington on October 15.
The IMF has not yet shown its willingness for the face-to-face meetings and instead proposed virtual meetings for October 13 to 15. Therefore, the schedule of the policy-level talks remains tentative and it will be finalised next week, according to finance ministry sources.
The policy level talks are coinciding with the annual IMF-WB meetings that will take place from October 11 to 17th. The Pakistan’s embassy in Washington and the State Bank of Pakistan (SBP) governor are trying to get dates from the IMF top management for a physical meeting.
The finance ministry did not respond to a question whether the October 13-15 round in Washington would also be held virtually. The ministry also did not respond to another question regarding Pakistan’s request for a meeting with the IMF managing director.
Finance Minister Tarin has already announced that he would visit Washington from October 12 to 17 to hold talks with the top IMF management on the sidelines of the annual meetings.
The sources said that during recent interaction, the finance ministry showed some leniency in accepting the IMF’s demands, as the four-month deadlock in talks was proving costly for the government, which is heavily dependent on the foreign loans to remain afloat.
One indication was that the finance minister, who had not met the local IMF staff, held a long meeting with the Resident Representative Teresa Daban two weeks ago. But they said that the real test will be during the policy-level talks over the questions of increasing electricity prices, reducing the circular debt and the central bank autonomy.
The sources said that IMF’s local staff also wanted to revive the programme and recently hinted at giving some space to the government, subject to the condition that it was also provided face saving.
The IMF resident representative is completing her stint in Pakistan next month and would be replaced by Esther Ruiz, who was on a week-long introductory visit to Pakistan.
The successful conclusion of the talks would facilitate immediate disbursement of $1 billion by the IMF.
READ IMF asks govt to do away with subsidies
Pakistan and the IMF had signed the $6 billion deal in July 2019 but the programme was derailed in January 2020 and restored briefly in March this year before again going off the track in June. From June to August there were no serious discussions between the two sides.
Another crucial question that will be decided in the coming two weeks is whether Pakistan wants to exit from the IMF programme at its original schedule of September 2022 or it needs extension to get the remaining $4 billion loan.
So far, the inclination is that the government wants the IMF to advance the disbursement calendar and increase the size of the loan tranches. Pakistan has budgeted over Rs400 billion or $3.1 billion from the IMF in this fiscal year and its disbursement is only possible with the completion of the remaining reviews.
The sources said that there was also some back paddling on the state-owned enterprises law on the part of Pakistan, which is creating confusion in the IMF circles.
During recent interactions, the IMF conveyed that Pakistan would have to increase power tariffs, as the staff could not budge from its position taken before the management and the IMF board.
In June this year, Tarin told a parliamentary committee that there were two outstanding issues of introducing Rs150 billion worth of personal income tax and Rs4.95 per unit increase in electricity prices. Tarin said the IMF had demanded that the government should increase Rs1.39 per unit price in June and Rs3.56 per unit in July.
The PTI government has already increased the average power tariff by over 40% or Rs4.72 per unit to Rs16.44 in the last three years, according to the energy ministry. Tarin said on Friday that the government would put other proposals before the IMF instead of only relying on tariff increase.
The power sector circular debt has jumped to Rs2.324 trillion as of July 31, 2021, which is more than double as compared to three years ago, despite increasing electricity prices.
The assessment of Pakistan’s gross financing needs was another critical area amid a 373% increase in current account deficit during July-August this year as compared to the same period of the last year.
The IMF would also like to see fiscal and monetary tightening policies to be adopted by Pakistan to reverse the increase in public debt and external sector stability.
The finance minister wants to attain a growth rate of over 6% but the government is now considering a sustainable economic growth rate to avoid a repeat of the 2017-18 situation.
Both the sides will also hold Article-IV discussions, which are broader in scope and will allow the IMF to have a detailed review beyond the scope of the conditions agreed for the 6th review of the economy, the sources added.
The last Article-IV review had been completed in 2017, which had heavily focused on Pakistan’s economic and commercial ties with China in addition to gauging the future stability of the economy.
The five-day round of technical discussions will virtually begin on October 4, with the IMF team joining from Doha, Qatar. Sources said that Finance Minister Shaukat Tarin was keen to conclude the parleys on a positive note during face-to-face meetings with the top IMF management in Washington on October 15.
The IMF has not yet shown its willingness for the face-to-face meetings and instead proposed virtual meetings for October 13 to 15. Therefore, the schedule of the policy-level talks remains tentative and it will be finalised next week, according to finance ministry sources.
The policy level talks are coinciding with the annual IMF-WB meetings that will take place from October 11 to 17th. The Pakistan’s embassy in Washington and the State Bank of Pakistan (SBP) governor are trying to get dates from the IMF top management for a physical meeting.
The finance ministry did not respond to a question whether the October 13-15 round in Washington would also be held virtually. The ministry also did not respond to another question regarding Pakistan’s request for a meeting with the IMF managing director.
Finance Minister Tarin has already announced that he would visit Washington from October 12 to 17 to hold talks with the top IMF management on the sidelines of the annual meetings.
The sources said that during recent interaction, the finance ministry showed some leniency in accepting the IMF’s demands, as the four-month deadlock in talks was proving costly for the government, which is heavily dependent on the foreign loans to remain afloat.
One indication was that the finance minister, who had not met the local IMF staff, held a long meeting with the Resident Representative Teresa Daban two weeks ago. But they said that the real test will be during the policy-level talks over the questions of increasing electricity prices, reducing the circular debt and the central bank autonomy.
The sources said that IMF’s local staff also wanted to revive the programme and recently hinted at giving some space to the government, subject to the condition that it was also provided face saving.
The IMF resident representative is completing her stint in Pakistan next month and would be replaced by Esther Ruiz, who was on a week-long introductory visit to Pakistan.
The successful conclusion of the talks would facilitate immediate disbursement of $1 billion by the IMF.
READ IMF asks govt to do away with subsidies
Pakistan and the IMF had signed the $6 billion deal in July 2019 but the programme was derailed in January 2020 and restored briefly in March this year before again going off the track in June. From June to August there were no serious discussions between the two sides.
Another crucial question that will be decided in the coming two weeks is whether Pakistan wants to exit from the IMF programme at its original schedule of September 2022 or it needs extension to get the remaining $4 billion loan.
So far, the inclination is that the government wants the IMF to advance the disbursement calendar and increase the size of the loan tranches. Pakistan has budgeted over Rs400 billion or $3.1 billion from the IMF in this fiscal year and its disbursement is only possible with the completion of the remaining reviews.
The sources said that there was also some back paddling on the state-owned enterprises law on the part of Pakistan, which is creating confusion in the IMF circles.
During recent interactions, the IMF conveyed that Pakistan would have to increase power tariffs, as the staff could not budge from its position taken before the management and the IMF board.
In June this year, Tarin told a parliamentary committee that there were two outstanding issues of introducing Rs150 billion worth of personal income tax and Rs4.95 per unit increase in electricity prices. Tarin said the IMF had demanded that the government should increase Rs1.39 per unit price in June and Rs3.56 per unit in July.
The PTI government has already increased the average power tariff by over 40% or Rs4.72 per unit to Rs16.44 in the last three years, according to the energy ministry. Tarin said on Friday that the government would put other proposals before the IMF instead of only relying on tariff increase.
The power sector circular debt has jumped to Rs2.324 trillion as of July 31, 2021, which is more than double as compared to three years ago, despite increasing electricity prices.
The assessment of Pakistan’s gross financing needs was another critical area amid a 373% increase in current account deficit during July-August this year as compared to the same period of the last year.
The IMF would also like to see fiscal and monetary tightening policies to be adopted by Pakistan to reverse the increase in public debt and external sector stability.
The finance minister wants to attain a growth rate of over 6% but the government is now considering a sustainable economic growth rate to avoid a repeat of the 2017-18 situation.
Both the sides will also hold Article-IV discussions, which are broader in scope and will allow the IMF to have a detailed review beyond the scope of the conditions agreed for the 6th review of the economy, the sources added.
The last Article-IV review had been completed in 2017, which had heavily focused on Pakistan’s economic and commercial ties with China in addition to gauging the future stability of the economy.
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Pakistani currency hit a new all-time low of Rs170.8 against the US dollar in the inter-bank market on Monday as demand for the foreign currency stood higher compared to its supply in the wake of increase in import payments, rising global commodity prices and worsening financial situation in Afghanistan.
The rupee recorded a fresh depreciation of 0.19% (or Rs0.32) on Monday, the day when the Pakistan Bureau of Statistics (PBS) reported that the country’s import bill remained perched at higher levels at $6.47 billion in September 2021.
There was a jump of $1 billion in import payments as they hit an all-time high of $6.59 billion in August compared to $5.57 billion in the previous month.
The rupee has depreciated a cumulative 1.55% (or Rs2.61) since surpassing the 13-month-old record low of Rs168.43 two weeks ago on September 20, according to the central bank data.
“The rupee has maintained its downward movement on panic buying of dollar by importers following a notable surge in the import bill and increase in commodity prices in global markets,” Taurus Securities Head of Research Mustafa Mustansir said while talking to The Express Tribune.
The worsening of financial crisis in Afghanistan also took a toll on the Pakistani rupee.
“Reports suggest that Afghan importers are arranging dollars from Pakistan’s open and black markets since the US has denied the Taliban access to Afghanistan’s foreign exchange reserves,” he said.
The real effective exchange rate (REER) - the cost of Pakistan’s trade with the world - has improved to 97 points compared to over 102 points a couple of months ago.
“REER suggests that the Pakistani currency stands at a fair value against global currencies these days. However, speculative elements are not allowing the rupee a respite from the continued slide,” he said.
The rupee recorded a fresh depreciation of 0.19% (or Rs0.32) on Monday, the day when the Pakistan Bureau of Statistics (PBS) reported that the country’s import bill remained perched at higher levels at $6.47 billion in September 2021.
There was a jump of $1 billion in import payments as they hit an all-time high of $6.59 billion in August compared to $5.57 billion in the previous month.
The rupee has depreciated a cumulative 1.55% (or Rs2.61) since surpassing the 13-month-old record low of Rs168.43 two weeks ago on September 20, according to the central bank data.
“The rupee has maintained its downward movement on panic buying of dollar by importers following a notable surge in the import bill and increase in commodity prices in global markets,” Taurus Securities Head of Research Mustafa Mustansir said while talking to The Express Tribune.
The worsening of financial crisis in Afghanistan also took a toll on the Pakistani rupee.
“Reports suggest that Afghan importers are arranging dollars from Pakistan’s open and black markets since the US has denied the Taliban access to Afghanistan’s foreign exchange reserves,” he said.
The real effective exchange rate (REER) - the cost of Pakistan’s trade with the world - has improved to 97 points compared to over 102 points a couple of months ago.
“REER suggests that the Pakistani currency stands at a fair value against global currencies these days. However, speculative elements are not allowing the rupee a respite from the continued slide,” he said.
This is rubbish. As long as external debt increases, imports increase and exports don’t enough to keep up, PKR will keep depreciating.
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The Pakistan Tehreek-e-Insaf (PTI) government has planned to raise debt worth Rs5.87 trillion by offering sovereign securities to commercial banks over the next three months, according to the central bank.
The funds to be raised through the issuance of treasury bills (T-bills) and Pakistan Investment Bonds (PIBs) would be partially utilised to pay off the maturing debt of Rs5.15 trillion. However, they will also add a net Rs720 billion to the public debt portfolio in the three months from October to December 2021.
The planned borrowing will be expensive in the wake of an uptick of 25 basis points in the benchmark policy rate of the central bank in September 2021 and will increase the debt burden on the nation.
“An increase of one percentage point in the benchmark interest rate increases interest payment (debt servicing) by Rs180 billion,” Economist Dr Ashfaque Hasan Khan said.
Besides, Rs1.8 trillion had been added to the foreign debt component of the total public debt because of rupee depreciation over the past five months, said Khan, who is also the Dean and Professor at National University of Sciences and Technology (NUST).
The rupee has depreciated by Rs18.53 from the 22-month peak of Rs152.28 touched in May 2021. The local currency closed at Rs170.8 against the greenback on Tuesday.
The breakdown of the planned fresh borrowing suggests that the government will borrow Rs5.05 trillion by issuing three to 12-month T-bills against maturing papers of Rs5.1 trillion from October to December 2021.
Similarly, it will raise Rs300 billion by floating three to 30-year PIBs (at a fixed rate of return) against the maturity of previously issued bonds worth Rs55 billion during the three months.
Govt to borrow Rs4.8tr from commercial banks
It will borrow an additional Rs225 billion through the issuance of three to five-year PIBs at a floating (variable) interest rate against zero maturity as the floating rate bonds are relatively new.
“The issuance of government debt securities at a floating rate is aimed at reducing the cost of borrowing,” Pak-Kuwait Investment Company Head of Research Samiullah Tariq said the other day.
The government is also gradually replacing its short-term debt (T-bills) with long-term borrowing (PIBs).
“This measure is aimed at making the debt profile sustainable, getting enough time to implement economic reforms and overcoming the challenge of increasing tax collection by the time long-term papers of up to 30 years reach maturity,” he said.
The government will utilise the net new debt of Rs720 billion to finance its budget expenditure including development projects like roads and dams under the Public Sector Development Programme (PSDP).
It will also partially finance its defence requirements and issue funds to different ministries in the form of debt.
The government will finance its expenditures through the debt because tax revenue collection has remained low compared to the immediate requirement for funds for the ongoing fiscal year 2021-22.
The government has set the economic growth target at 4.8% for the current fiscal year. It has announced a budget of Rs8.5 trillion for the purpose.
The outlay is supposed to be financed through the targeted revenue collection of Rs5.82 trillion and borrowing worth Rs3.42 trillion.
The government has set the fiscal deficit target at Rs3.42 trillion (or 6.3% of GDP) for the current fiscal year against 7% last year.
It aims to collect 17.4% higher tax revenue through the Federal Board of Revenue (FBR) to Rs5.82 trillion in FY22 compared to Rs4.96 trillion in FY21.
Published in The Express Tribune, October 6th, 2021.
The funds to be raised through the issuance of treasury bills (T-bills) and Pakistan Investment Bonds (PIBs) would be partially utilised to pay off the maturing debt of Rs5.15 trillion. However, they will also add a net Rs720 billion to the public debt portfolio in the three months from October to December 2021.
The planned borrowing will be expensive in the wake of an uptick of 25 basis points in the benchmark policy rate of the central bank in September 2021 and will increase the debt burden on the nation.
“An increase of one percentage point in the benchmark interest rate increases interest payment (debt servicing) by Rs180 billion,” Economist Dr Ashfaque Hasan Khan said.
Besides, Rs1.8 trillion had been added to the foreign debt component of the total public debt because of rupee depreciation over the past five months, said Khan, who is also the Dean and Professor at National University of Sciences and Technology (NUST).
The rupee has depreciated by Rs18.53 from the 22-month peak of Rs152.28 touched in May 2021. The local currency closed at Rs170.8 against the greenback on Tuesday.
The breakdown of the planned fresh borrowing suggests that the government will borrow Rs5.05 trillion by issuing three to 12-month T-bills against maturing papers of Rs5.1 trillion from October to December 2021.
Similarly, it will raise Rs300 billion by floating three to 30-year PIBs (at a fixed rate of return) against the maturity of previously issued bonds worth Rs55 billion during the three months.
Govt to borrow Rs4.8tr from commercial banks
It will borrow an additional Rs225 billion through the issuance of three to five-year PIBs at a floating (variable) interest rate against zero maturity as the floating rate bonds are relatively new.
“The issuance of government debt securities at a floating rate is aimed at reducing the cost of borrowing,” Pak-Kuwait Investment Company Head of Research Samiullah Tariq said the other day.
The government is also gradually replacing its short-term debt (T-bills) with long-term borrowing (PIBs).
“This measure is aimed at making the debt profile sustainable, getting enough time to implement economic reforms and overcoming the challenge of increasing tax collection by the time long-term papers of up to 30 years reach maturity,” he said.
The government will utilise the net new debt of Rs720 billion to finance its budget expenditure including development projects like roads and dams under the Public Sector Development Programme (PSDP).
It will also partially finance its defence requirements and issue funds to different ministries in the form of debt.
The government will finance its expenditures through the debt because tax revenue collection has remained low compared to the immediate requirement for funds for the ongoing fiscal year 2021-22.
The government has set the economic growth target at 4.8% for the current fiscal year. It has announced a budget of Rs8.5 trillion for the purpose.
The outlay is supposed to be financed through the targeted revenue collection of Rs5.82 trillion and borrowing worth Rs3.42 trillion.
The government has set the fiscal deficit target at Rs3.42 trillion (or 6.3% of GDP) for the current fiscal year against 7% last year.
It aims to collect 17.4% higher tax revenue through the Federal Board of Revenue (FBR) to Rs5.82 trillion in FY22 compared to Rs4.96 trillion in FY21.
Published in The Express Tribune, October 6th, 2021.
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The stock market staged a handsome rally on Wednesday and skyrocketed over 1,000 points in intra-day trading owing to bullish activity in global markets coupled with positive growth forecast of Pakistan by the International Monetary Fund (IMF).
Earlier this week, the IMF projected Pakistan’s economy to grow at 4% during the ongoing fiscal year 2021-22 and also endorsed last fiscal year’s economic growth estimates of 3.9%.
At 2:51 PM, the KSE-100 index was trading at 44,276.43 points after a surge of 1,054.65 points of 2.44%.
Speaking to The Express Tribune, Arif Habib Corporation Managing Director and CEO Ahsan Mehanti said that optimistic growth projections by IMF rejuvenated investor interest at the bourse and triggered a rally.
“Moreover, the jump in international oil price to near all time high and uptrend in global stock markets also fuelled bullish trading at the local bourse,” he said. “In addition, foreign inflows have started entering Pakistan once again.”
Mehanti said that foreign inflows had declined over the past few days.
AA Gold Commodities Director Adnan Agar said that the news of Pakistan paying back $1 billion foreign debt was hailed by investors and aided the uptrend.
“Pakistan’s capacity to make such a huge payment in a timely manner was cherished by the market participants and it acted as a positive trigger,” he said.
Furthermore, the market had fallen drastically over the past few days and a recovery was expected sooner or later, the analyst said.
Earlier this week, the IMF projected Pakistan’s economy to grow at 4% during the ongoing fiscal year 2021-22 and also endorsed last fiscal year’s economic growth estimates of 3.9%.
At 2:51 PM, the KSE-100 index was trading at 44,276.43 points after a surge of 1,054.65 points of 2.44%.
Speaking to The Express Tribune, Arif Habib Corporation Managing Director and CEO Ahsan Mehanti said that optimistic growth projections by IMF rejuvenated investor interest at the bourse and triggered a rally.
“Moreover, the jump in international oil price to near all time high and uptrend in global stock markets also fuelled bullish trading at the local bourse,” he said. “In addition, foreign inflows have started entering Pakistan once again.”
Mehanti said that foreign inflows had declined over the past few days.
AA Gold Commodities Director Adnan Agar said that the news of Pakistan paying back $1 billion foreign debt was hailed by investors and aided the uptrend.
“Pakistan’s capacity to make such a huge payment in a timely manner was cherished by the market participants and it acted as a positive trigger,” he said.
Furthermore, the market had fallen drastically over the past few days and a recovery was expected sooner or later, the analyst said.
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PM Imran launches Kisan Portal for 'voiceless farmers'
Says Kisan card will enable small farmers receive subsidies for soil, pesticides and other emergencies
Prime Minister (PM) Imran Khan launched the Kisan Portal on Friday, under the Pakistan Citizen’s Portal, to "help raise the voice of small, voiceless farmers".
Addressing the launching ceremony in Islamabad, the premier said that the government was helping small farmers because "when you help them, you help all of Pakistan.”
He explained that the Kisan card would enable small farmers to get direct subsidies, and directly receive money for subsidised soil and pesticides as well as in cases of emergencies.
“Small farmers will now have insurance that will enable banks to give them credit, which they did not do in the past,” he added.
PM Imran stated that labourers and farmers are the hardest working people in society who have to endure all weathers and face a myriad of issues, adding that helping them will make the Almighty happy.
“It is our duty to help them. More than 90% of farmers are small farmers whose voices do not reach us, do not reach those in power or those in cities,” the PM said, adding that these small farmers have to work hard, face difficulties and oppression.
“Our government has led a tehreek (movement) of insaf (justice),” the premier said, alluding to his party’s name – the Pakistan Tehreek-e-Insaf. He maintained that it is the weak who need justice most.
The prmier emphasised that it was important to help small farmers as they must sell their products in the market for cheaper, and sell more produce as opposed to big farmers who are able to store their crops.
He reiterated that small farmers work the hardest and face several difficulties which is why he wanted to “help and uplift them”.
According to the premier, the PTI government wanted to give farmers full compensation for their product - the money that they can put towards their land, thus increasing crop yield.
“What you are seeing right now is just a small amount of justice, they are only getting paid what they deserve. However, we still have to help them a lot,” he maintained.
PM Imran also emphasised the importance of research – such as seed development – claiming that production cannot be increased without it.
Read Scrapped projects leave livestock farmers in turmoil
“We used to have the Faisalabad Agriculture University which produced high-quality research, but as less money was spent on it, the research ended,” he said, adding that countries that spend on research have better produce.
The PM lamented over the state of the dairy industry, stating that it “pained” him that Pakistan imported dry milk despite having an abundance of cattle.
“It is so easy to increase the yield; we simply have not conducted research or worked hard,” he said.
He also discussed the ongoing water problem, claiming that water needed to be stored to be used by farmers, adding that no one thought about storing water.
“Dams are being built in the country after 50 years; they will be built in the Sulaiman and Karakoram Mountain ranges,” he said.
“We need to use our minds, employ modern techniques, and increase water reservoirs instead of using techniques that we have been using since Mohenjodaro,” he added.
The prime minister further stated that the Sehat card – which allows every family to have Rs1,000,000 for health insurance – will greatly benefit all small farmers.
The premier briefly mentioned that imports have grown 53% in the past year alone and that the "temporary" pressure on the rupee was because Pakistan imported things such as wheat, sugar, palm oil and lentils.
“We are trying to produce the things we import,” he said.
PM Imran maintained that we need to increase food production by helping farmers, as our population is also increasing.
According to the PM office, this portal will help farmers resolve their issues on a priority basis.
A total of 123 dashboards have been set up at the federal and provincial levels under the ‘Kisan Portal’.
https://tribune.com.pk/story/2324894/pm-imran-launches-kisan-portal-for-voiceless-farmers
Says Kisan card will enable small farmers receive subsidies for soil, pesticides and other emergencies
Prime Minister (PM) Imran Khan launched the Kisan Portal on Friday, under the Pakistan Citizen’s Portal, to "help raise the voice of small, voiceless farmers".
Addressing the launching ceremony in Islamabad, the premier said that the government was helping small farmers because "when you help them, you help all of Pakistan.”
He explained that the Kisan card would enable small farmers to get direct subsidies, and directly receive money for subsidised soil and pesticides as well as in cases of emergencies.
“Small farmers will now have insurance that will enable banks to give them credit, which they did not do in the past,” he added.
PM Imran stated that labourers and farmers are the hardest working people in society who have to endure all weathers and face a myriad of issues, adding that helping them will make the Almighty happy.
“It is our duty to help them. More than 90% of farmers are small farmers whose voices do not reach us, do not reach those in power or those in cities,” the PM said, adding that these small farmers have to work hard, face difficulties and oppression.
“Our government has led a tehreek (movement) of insaf (justice),” the premier said, alluding to his party’s name – the Pakistan Tehreek-e-Insaf. He maintained that it is the weak who need justice most.
The prmier emphasised that it was important to help small farmers as they must sell their products in the market for cheaper, and sell more produce as opposed to big farmers who are able to store their crops.
He reiterated that small farmers work the hardest and face several difficulties which is why he wanted to “help and uplift them”.
According to the premier, the PTI government wanted to give farmers full compensation for their product - the money that they can put towards their land, thus increasing crop yield.
“What you are seeing right now is just a small amount of justice, they are only getting paid what they deserve. However, we still have to help them a lot,” he maintained.
PM Imran also emphasised the importance of research – such as seed development – claiming that production cannot be increased without it.
Read Scrapped projects leave livestock farmers in turmoil
“We used to have the Faisalabad Agriculture University which produced high-quality research, but as less money was spent on it, the research ended,” he said, adding that countries that spend on research have better produce.
The PM lamented over the state of the dairy industry, stating that it “pained” him that Pakistan imported dry milk despite having an abundance of cattle.
“It is so easy to increase the yield; we simply have not conducted research or worked hard,” he said.
He also discussed the ongoing water problem, claiming that water needed to be stored to be used by farmers, adding that no one thought about storing water.
“Dams are being built in the country after 50 years; they will be built in the Sulaiman and Karakoram Mountain ranges,” he said.
“We need to use our minds, employ modern techniques, and increase water reservoirs instead of using techniques that we have been using since Mohenjodaro,” he added.
The prime minister further stated that the Sehat card – which allows every family to have Rs1,000,000 for health insurance – will greatly benefit all small farmers.
The premier briefly mentioned that imports have grown 53% in the past year alone and that the "temporary" pressure on the rupee was because Pakistan imported things such as wheat, sugar, palm oil and lentils.
“We are trying to produce the things we import,” he said.
PM Imran maintained that we need to increase food production by helping farmers, as our population is also increasing.
According to the PM office, this portal will help farmers resolve their issues on a priority basis.
A total of 123 dashboards have been set up at the federal and provincial levels under the ‘Kisan Portal’.
https://tribune.com.pk/story/2324894/pm-imran-launches-kisan-portal-for-voiceless-farmers
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Pakistani currency plummeted by a staggering Rs2.02 (or 1.2%) against the US dollar to a record low of Rs173.2 during intra-day trading in the inter-bank market on Monday.
"The uncertainty regarding resumption of the International Monetary Fund (IMF) loan programme mounted pressure on rupee," Taurus Securities Head of Research Mustafa Mustansir said while taking to The Express Tribune.
The rupee had closed at Rs171.18 on Friday, according to the data from the State Bank of Pakistan (SBP).
The local currency nosedived on conflicting reports pertaining to the ongoing talks between Pakistan and the International Monetary Fund (IMF).
"Although the Ministry of Finance has stated that talks are headed in the positive direction, market rumours point towards roadblocks in optimistic conclusion of the discussion," he said.
Successful negotiations would allow Pakistan to resume IMF's $6 billion loan programme which is on hold since June.
This is for the second time that Pakistan and IMF are holding talks to resume the programme.
As a pre-condition to revive the bailout program, Pakistan has already increased the power tariff by Rs1.37 per unit.
"Clarity on the talks would stabilise rupee," Mustansir said.
The rupee has declined by a substantial 13.75% (or Rs20.93) against the greenback in the past five months compared to the 22-month high value of Rs152.27 recorded in May.
"The uncertainty regarding resumption of the International Monetary Fund (IMF) loan programme mounted pressure on rupee," Taurus Securities Head of Research Mustafa Mustansir said while taking to The Express Tribune.
The rupee had closed at Rs171.18 on Friday, according to the data from the State Bank of Pakistan (SBP).
The local currency nosedived on conflicting reports pertaining to the ongoing talks between Pakistan and the International Monetary Fund (IMF).
"Although the Ministry of Finance has stated that talks are headed in the positive direction, market rumours point towards roadblocks in optimistic conclusion of the discussion," he said.
Successful negotiations would allow Pakistan to resume IMF's $6 billion loan programme which is on hold since June.
This is for the second time that Pakistan and IMF are holding talks to resume the programme.
As a pre-condition to revive the bailout program, Pakistan has already increased the power tariff by Rs1.37 per unit.
"Clarity on the talks would stabilise rupee," Mustansir said.
The rupee has declined by a substantial 13.75% (or Rs20.93) against the greenback in the past five months compared to the 22-month high value of Rs152.27 recorded in May.
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Shares at PSX soar as IMF talks move forward
Shares at the Pakistan Stock Exchange (PSX) soared on Wednesday buoyed by talks with the International Monetary Fund (IMF) moving forward.
The benchmark KSE-100 index was up by 802.72 points, or 1.8 per cent, by 1:20pm.
Head of Foreign Institutional Sales at Next Capital Limited, Muhammad Faizan, said the bullish trend was owed to better-than-expected current account deficit figures as well as the "positive news flow" from the IMF.
"It was a relief rally after the multiple stresses of the past few weeks. We have moved closer to the International Monetary Fund programme and there is an expectation that the episode of recent political noise will be resolved amicably," Intermarket Securities Executive Director Raza Jafri said.
"Also, the United States sending an ambassador to Pakistan after a long gap is possibly being viewed positively," he added.
On the sustainability of the recent upsurge, Jafri was of the view that it should continue in the near term.
The PSX had remained under pressure on Monday because of the delay in the conclusion of negotiations between the government and the IMF.
However, the stock market rallied on Wednesday following the return of Adviser to the Prime Minister on Finance and Revenue, Shaukat Tarin, to Washington to join the ongoing IMF discussions.
In Washington, Jihad Azour, director of IMF Middle East and Central Asia Department, told journalists on Tuesday that the talks between the Fund and the Pakistan government on the sixth review of the $6 billion Extended Fund Facility (EFF) had progressed to a "very good step".
"The IMF mission to Pakistan and the authorities are currently in the process of the discussion around the sixth review of the programme. And the discussions are progressing around the various pillars of the programme and the measures that the government of Pakistan is currently contemplating," he told the news briefing.
"The progress has gone [towards] a very good step and the mission, with the authorities, are going through the various details," he added.
https://www.dawn.com/news/1653003/shares-at-psx-soar-as-imf-talks-move-forward
Shares at the Pakistan Stock Exchange (PSX) soared on Wednesday buoyed by talks with the International Monetary Fund (IMF) moving forward.
The benchmark KSE-100 index was up by 802.72 points, or 1.8 per cent, by 1:20pm.
Head of Foreign Institutional Sales at Next Capital Limited, Muhammad Faizan, said the bullish trend was owed to better-than-expected current account deficit figures as well as the "positive news flow" from the IMF.
"It was a relief rally after the multiple stresses of the past few weeks. We have moved closer to the International Monetary Fund programme and there is an expectation that the episode of recent political noise will be resolved amicably," Intermarket Securities Executive Director Raza Jafri said.
"Also, the United States sending an ambassador to Pakistan after a long gap is possibly being viewed positively," he added.
On the sustainability of the recent upsurge, Jafri was of the view that it should continue in the near term.
The PSX had remained under pressure on Monday because of the delay in the conclusion of negotiations between the government and the IMF.
However, the stock market rallied on Wednesday following the return of Adviser to the Prime Minister on Finance and Revenue, Shaukat Tarin, to Washington to join the ongoing IMF discussions.
In Washington, Jihad Azour, director of IMF Middle East and Central Asia Department, told journalists on Tuesday that the talks between the Fund and the Pakistan government on the sixth review of the $6 billion Extended Fund Facility (EFF) had progressed to a "very good step".
"The IMF mission to Pakistan and the authorities are currently in the process of the discussion around the sixth review of the programme. And the discussions are progressing around the various pillars of the programme and the measures that the government of Pakistan is currently contemplating," he told the news briefing.
"The progress has gone [towards] a very good step and the mission, with the authorities, are going through the various details," he added.
https://www.dawn.com/news/1653003/shares-at-psx-soar-as-imf-talks-move-forward
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So the government is going to IMF twice in one election cycle. That’s unbelievable. But it’s Pakistan so what’s new?
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This is the same bailout. The IMF is going to given Pakistan the money over 3 years to see if Pakistan will make reforms, instead of giving all money upfront.
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In a major development, the government is considering imposing a federal tax on agricultural income to meet a demand by the International Monetary Fund (IMF) and legal experts say it is possible without amending the Constitution.
The proposal has been discussed between Pakistan and the IMF and a draft of the legal amendment has also been prepared, sources told The Express Tribune.
The sources added that the tax authorities have told the IMF that the legal amendment could be introduced in the 4th Tax Laws Amendment Ordinance.
The global lender has asked Pakistan to impose additional taxes including withdrawing sales tax exemptions by November 1 if Islamabad is keen to revive the $6 billion stalled programme.
The Express Tribune reported last week that Pakistan and the IMF had failed to reach a staff-level agreement within the schedule.
The finance adviser also rushed back to Washington on Tuesday, but then he, along with the finance secretary, left Washington on Thursday due to a disagreement on many sticking points.
Till filing of this story, the IMF did not issue a formal press statement about the outcome of the 6th review talks, which was initially expected to be released on October 15.
The sources said that during the review talks, a major demand by the IMF was to bring the agricultural sector under the federal tax domain.
However, the two sides were unable to agree upon the memorandum for economic policies (MEFP).
“The agricultural income can be brought into the federal tax net without a constitutional amendment,” Federal Law and Justice Minister Farogh Naseem told The Express Tribune.
The Federal Board of Revenue (FBR) chairman and the finance adviser have already taken up the issue with the law minister.
However, it is unclear as to whether or not Prime Minister Imran Khan would clear the proposal amid the increasing political and economic instability in the country.
Under the 1973 Constitution, the federal government could not impose tax on agricultural income as the matter fell in the provincial domain.
However, the provincial governments, over a period of time, shied away from the matter due to the influence of landlords.
The sources said the federal government in consultation with the law ministry has found a solution where the federal income tax can be imposed on the agricultural income by only amending the Income Tax Ordinance of 2001.
They said the tax authorities were considering restricting the definition of agricultural income to only income from “crops” by amending section 41 of the income tax law.
This would essentially bring income from rent on agricultural property and from livestock and fish farming under the domain of the federal income tax, they added.
The farm sector has a 19.2% share in the economy, according to the Economic Survey of Pakistan 2020-21. “Out of that, the share of crops production was only 4.6% of the Gross Domestic Product [GDP].
By amending the definition, the government can effectively tax 80% of the untaxed agriculture sector, the sources said.
Under the federal legislative list’s entry 47, “taxes on income other than agricultural income” are the domain of the federation.
However, Article 260 1 (a) of the Constitution read that the “agricultural income” defined for the purposes of the law relating to income tax -- which in this case is the Income Tax Ordinance of 2001.
The agricultural and the services sectors remained highly under-taxed that has put the burden on the manufacturing and the salaried class in addition to heavy indirect taxation.
The sources said that in the tax year 2021, people declared about Rs90 billion in their annual income tax returns.
Even by excluding one-fourth of it on account of income from crops, nearly Rs70 billion would fall under the domain of the federal income tax.
According to the FBR’s assessment, at least Rs120 billion additional annual incomes could be generated from the agricultural sector in the initial years.
Section 41 of the Income Tax Ordinance of 2001 read: “Agricultural income derived by a person shall be exempt from tax under this Ordinance, including from any rent or revenue derived by a person from land which is situated in Pakistan and is used for agricultural purposes; any income derived by a person from land situated in Pakistan from, the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by such person to render the produce raised or received by the person fit to be taken to market; or the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by such person, in respect of which no process has been performed other than a process of the nature described in sub-clause (ii); or any income derived by a person from any building owned and occupied by the receiver of the rent or revenue of any land described in clause or any building occupied by the cultivator, or the receiver of rent-in-kind, of any land in respect of which, or the produce of which, any operation specified in sub-clauses (ii) or (iii) of clause (b) is carried on.”
In August this year, FBR Chairman Dr Mohammad Ashfaq had sought provinces’ cooperation to catch big landlords, who had evaded taxes by declaring agriculture as the source of their income. The FBR chairman made the move after it came to light that more than 161,000 people declared their farm income of Rs79 billion in their federal tax returns.
In the tax year of 2020, a total of 161,069 filers countrywide declared an income of Rs79 billion from the agricultural source and claimed tax exemption.
In the tax year of 2020, about 128,550 people of Punjab declared Rs51.4 billion in farm income exempted from the federal income tax.
“I suspect that a bulk of such income has not discharged the provincial income tax liability,” Dr Ashfaq wrote to the Punjab finance minister.
According to the FBR, nearly 25,000 landlords from Sindh had claimed an income of Rs23.2 billion exempted from the federal income tax.
In K-P and Balochistan, 6,140 and 1,500 agriculturists had claimed an income of Rs2.7 billion and Rs1.5 billion exempted from federal tax domain, respectively.
However, the FBR did not receive any assistance from the provincial governments.
The proposal has been discussed between Pakistan and the IMF and a draft of the legal amendment has also been prepared, sources told The Express Tribune.
The sources added that the tax authorities have told the IMF that the legal amendment could be introduced in the 4th Tax Laws Amendment Ordinance.
The global lender has asked Pakistan to impose additional taxes including withdrawing sales tax exemptions by November 1 if Islamabad is keen to revive the $6 billion stalled programme.
The Express Tribune reported last week that Pakistan and the IMF had failed to reach a staff-level agreement within the schedule.
The finance adviser also rushed back to Washington on Tuesday, but then he, along with the finance secretary, left Washington on Thursday due to a disagreement on many sticking points.
Till filing of this story, the IMF did not issue a formal press statement about the outcome of the 6th review talks, which was initially expected to be released on October 15.
The sources said that during the review talks, a major demand by the IMF was to bring the agricultural sector under the federal tax domain.
However, the two sides were unable to agree upon the memorandum for economic policies (MEFP).
“The agricultural income can be brought into the federal tax net without a constitutional amendment,” Federal Law and Justice Minister Farogh Naseem told The Express Tribune.
The Federal Board of Revenue (FBR) chairman and the finance adviser have already taken up the issue with the law minister.
However, it is unclear as to whether or not Prime Minister Imran Khan would clear the proposal amid the increasing political and economic instability in the country.
Under the 1973 Constitution, the federal government could not impose tax on agricultural income as the matter fell in the provincial domain.
However, the provincial governments, over a period of time, shied away from the matter due to the influence of landlords.
The sources said the federal government in consultation with the law ministry has found a solution where the federal income tax can be imposed on the agricultural income by only amending the Income Tax Ordinance of 2001.
They said the tax authorities were considering restricting the definition of agricultural income to only income from “crops” by amending section 41 of the income tax law.
This would essentially bring income from rent on agricultural property and from livestock and fish farming under the domain of the federal income tax, they added.
The farm sector has a 19.2% share in the economy, according to the Economic Survey of Pakistan 2020-21. “Out of that, the share of crops production was only 4.6% of the Gross Domestic Product [GDP].
By amending the definition, the government can effectively tax 80% of the untaxed agriculture sector, the sources said.
Under the federal legislative list’s entry 47, “taxes on income other than agricultural income” are the domain of the federation.
However, Article 260 1 (a) of the Constitution read that the “agricultural income” defined for the purposes of the law relating to income tax -- which in this case is the Income Tax Ordinance of 2001.
The agricultural and the services sectors remained highly under-taxed that has put the burden on the manufacturing and the salaried class in addition to heavy indirect taxation.
The sources said that in the tax year 2021, people declared about Rs90 billion in their annual income tax returns.
Even by excluding one-fourth of it on account of income from crops, nearly Rs70 billion would fall under the domain of the federal income tax.
According to the FBR’s assessment, at least Rs120 billion additional annual incomes could be generated from the agricultural sector in the initial years.
Section 41 of the Income Tax Ordinance of 2001 read: “Agricultural income derived by a person shall be exempt from tax under this Ordinance, including from any rent or revenue derived by a person from land which is situated in Pakistan and is used for agricultural purposes; any income derived by a person from land situated in Pakistan from, the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by such person to render the produce raised or received by the person fit to be taken to market; or the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by such person, in respect of which no process has been performed other than a process of the nature described in sub-clause (ii); or any income derived by a person from any building owned and occupied by the receiver of the rent or revenue of any land described in clause or any building occupied by the cultivator, or the receiver of rent-in-kind, of any land in respect of which, or the produce of which, any operation specified in sub-clauses (ii) or (iii) of clause (b) is carried on.”
In August this year, FBR Chairman Dr Mohammad Ashfaq had sought provinces’ cooperation to catch big landlords, who had evaded taxes by declaring agriculture as the source of their income. The FBR chairman made the move after it came to light that more than 161,000 people declared their farm income of Rs79 billion in their federal tax returns.
In the tax year of 2020, a total of 161,069 filers countrywide declared an income of Rs79 billion from the agricultural source and claimed tax exemption.
In the tax year of 2020, about 128,550 people of Punjab declared Rs51.4 billion in farm income exempted from the federal income tax.
“I suspect that a bulk of such income has not discharged the provincial income tax liability,” Dr Ashfaq wrote to the Punjab finance minister.
According to the FBR, nearly 25,000 landlords from Sindh had claimed an income of Rs23.2 billion exempted from the federal income tax.
In K-P and Balochistan, 6,140 and 1,500 agriculturists had claimed an income of Rs2.7 billion and Rs1.5 billion exempted from federal tax domain, respectively.
However, the FBR did not receive any assistance from the provincial governments.
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Pakistan has borrowed $3.1 billion in the past three months, including money for vaccine procurements, amid its requests to the International Monetary Fund (IMF) to relax the spending ceiling by around $2 billion for expenditures on mitigation of coronavirus disease.
The request for upward adjustment of the budget limit ceiling by around Rs352 billion or $2 billion is part of the fiscal adjusters that the government sought during recently held negotiations against the primary budget deficit target for the fiscal year 2021-22.
The government sought the relaxation for both the procurements of vaccines and other coronavirus-related mitigation measures, said the sources. They said that the IMF was seeking disclosure of terms of the vaccine procurements.
The discussions also held on the government’s request to also allow non-vaccine procurement expenditure outside the new primary deficit target, said the sources. It was not clear whether the IMF also agreed to book the non-vaccine procurement expenditure over and above the primary budget deficit target.
The fiscal consolidation remained the primary objective of the IMF during the third round of talks for the conclusion of the 6th policy review. The government faced difficulties in convincing the IMF to relax the ceiling for the COVID-19 spending and enhance the current sovereign guarantees limit of Rs2.7 trillion, according to the sources.
They said that the IMF wanted to instead reduce the sovereign guarantee's ceiling and did not agree to give non-capital expenditures related guarantees, said the sources.
The Express Tribune contacted Secretary Finance Yusuf Khan, who is also the official spokesman of the Finance Ministry, for the version. However, he declined to give his version.
Read More: Govt seeks hike in power tariff to salvage IMF package
There seems to be some confusion within the Finance Ministry about who would talk to the media after hiring a spokesman for the former Finance Minister Shaukat Tarin.
Officially, the secretary of finance remains the spokesman. Neither the finance ministry nor the IMF has given any clarity about the outcomes of the 6th review talks, which according to the schedule should have been concluded by October 15th.
Under the $6 billion programme, the IMF sets an upper limit on the maximum government spending through various measures, mainly the primary budget deficit or surplus target. It allows relaxation or further tightens the target by upward and downward adjusting the ceiling through various adjusters like Covid-19 spending.
The IMF had set a condition to conduct an audit of $1.4 billion money that it had given for COVID-19 spending and make the report public by May 2021. But the Ministry of Finance has withheld the release of the report, giving rise to suspicion about any wrongdoing.
Meanwhile, the government has obtained $3.1 billion gross foreign loans during the July-September quarter of the fiscal year 2021-22, according to the Ministry of Economic Affairs. The borrowings were higher by $470 million or 17% compared with the loans taken during the same period of the last fiscal year.
The $3.1 billion worth of gross foreign loans is exclusive of the borrowing made through the highly expensive Naya Pakistan Certificates that is being secured at up to 7% interest rate in dollar terms for only one year.
The economic affairs ministry data showed that the government took another $145 million loan from the Asian Development Bank for procurement of vaccines.
About three-fourths of the officially declared disbursement or $2.3 billion were on account of budgetary support and oil procurements, which meant no asset was created using the loans and the money be paid back by obtaining more loans.
An amount of $457.5 million was received in foreign commercial loans during the first quarter. The government borrowed $61 million from Ajman Bank, $215 million from Dubai Bank and another $181 million from Standard Chartered Bank, London, according to the economic affairs ministry.
The government took $446 million in loans from the Islamic Development Bank for crude oil imports. The IDB crude oil-related disbursements remained low at only $33 million in September after its new trade finance facility could not be made operational.
The Asian Infrastructure Investment Bank released $38 million for project financing.
The bilateral loans disbursements remained quite low at only $110 million in the first quarter, including $73.4 million by China.
Amongst the multilateral development partners, mainly the Asian Development Bank (ADB) disbursed $460 million in loan during the first quarter, including money for vaccine procurements.
Due to increasing reliance on loans to increase the foreign exchange reserves and finance the budget deficit, the cost of debt servicing has gone up significantly. The steep rupee devaluation has also made the matters worse for the government, as the devaluation has already notionally added Rs1.6 trillion in the stock of external public debt level as of June this year.
The State Bank of Pakistan report revealed that during the first three years of its tenure, the Pakistan Tehreek-e-Insaf (PTI) government added Rs14.9 trillion to the public debt, which was 60% more than the debt stock in June 2018.
The World Bank released $642 million in three months, including a withheld loan of $400 million under the Programme for Affordable Clean Energy (PACE) after the government approved a new power generation expansion plan under the loan condition.
The total disbursements by the multilateral lenders amounted to $1.6 billion in three months as against the annual target of $5.3 billion, according to the Economic Affairs Ministry.
The request for upward adjustment of the budget limit ceiling by around Rs352 billion or $2 billion is part of the fiscal adjusters that the government sought during recently held negotiations against the primary budget deficit target for the fiscal year 2021-22.
The government sought the relaxation for both the procurements of vaccines and other coronavirus-related mitigation measures, said the sources. They said that the IMF was seeking disclosure of terms of the vaccine procurements.
The discussions also held on the government’s request to also allow non-vaccine procurement expenditure outside the new primary deficit target, said the sources. It was not clear whether the IMF also agreed to book the non-vaccine procurement expenditure over and above the primary budget deficit target.
The fiscal consolidation remained the primary objective of the IMF during the third round of talks for the conclusion of the 6th policy review. The government faced difficulties in convincing the IMF to relax the ceiling for the COVID-19 spending and enhance the current sovereign guarantees limit of Rs2.7 trillion, according to the sources.
They said that the IMF wanted to instead reduce the sovereign guarantee's ceiling and did not agree to give non-capital expenditures related guarantees, said the sources.
The Express Tribune contacted Secretary Finance Yusuf Khan, who is also the official spokesman of the Finance Ministry, for the version. However, he declined to give his version.
Read More: Govt seeks hike in power tariff to salvage IMF package
There seems to be some confusion within the Finance Ministry about who would talk to the media after hiring a spokesman for the former Finance Minister Shaukat Tarin.
Officially, the secretary of finance remains the spokesman. Neither the finance ministry nor the IMF has given any clarity about the outcomes of the 6th review talks, which according to the schedule should have been concluded by October 15th.
Under the $6 billion programme, the IMF sets an upper limit on the maximum government spending through various measures, mainly the primary budget deficit or surplus target. It allows relaxation or further tightens the target by upward and downward adjusting the ceiling through various adjusters like Covid-19 spending.
The IMF had set a condition to conduct an audit of $1.4 billion money that it had given for COVID-19 spending and make the report public by May 2021. But the Ministry of Finance has withheld the release of the report, giving rise to suspicion about any wrongdoing.
Meanwhile, the government has obtained $3.1 billion gross foreign loans during the July-September quarter of the fiscal year 2021-22, according to the Ministry of Economic Affairs. The borrowings were higher by $470 million or 17% compared with the loans taken during the same period of the last fiscal year.
The $3.1 billion worth of gross foreign loans is exclusive of the borrowing made through the highly expensive Naya Pakistan Certificates that is being secured at up to 7% interest rate in dollar terms for only one year.
The economic affairs ministry data showed that the government took another $145 million loan from the Asian Development Bank for procurement of vaccines.
About three-fourths of the officially declared disbursement or $2.3 billion were on account of budgetary support and oil procurements, which meant no asset was created using the loans and the money be paid back by obtaining more loans.
An amount of $457.5 million was received in foreign commercial loans during the first quarter. The government borrowed $61 million from Ajman Bank, $215 million from Dubai Bank and another $181 million from Standard Chartered Bank, London, according to the economic affairs ministry.
The government took $446 million in loans from the Islamic Development Bank for crude oil imports. The IDB crude oil-related disbursements remained low at only $33 million in September after its new trade finance facility could not be made operational.
The Asian Infrastructure Investment Bank released $38 million for project financing.
The bilateral loans disbursements remained quite low at only $110 million in the first quarter, including $73.4 million by China.
Amongst the multilateral development partners, mainly the Asian Development Bank (ADB) disbursed $460 million in loan during the first quarter, including money for vaccine procurements.
Due to increasing reliance on loans to increase the foreign exchange reserves and finance the budget deficit, the cost of debt servicing has gone up significantly. The steep rupee devaluation has also made the matters worse for the government, as the devaluation has already notionally added Rs1.6 trillion in the stock of external public debt level as of June this year.
The State Bank of Pakistan report revealed that during the first three years of its tenure, the Pakistan Tehreek-e-Insaf (PTI) government added Rs14.9 trillion to the public debt, which was 60% more than the debt stock in June 2018.
The World Bank released $642 million in three months, including a withheld loan of $400 million under the Programme for Affordable Clean Energy (PACE) after the government approved a new power generation expansion plan under the loan condition.
The total disbursements by the multilateral lenders amounted to $1.6 billion in three months as against the annual target of $5.3 billion, according to the Economic Affairs Ministry.
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- 217,977
A new World Bank report has confirmed that the State Bank of Pakistan pumped $1.2 billion to defend a weakening rupee and also underlined that the government’s decision to impose regulatory duties would not solve the current account deficit problem.
The Pakistan Development Update – the flagship biannual report – released on Thursday, also shed light on the reason behind why Pakistan’s exports were not increasing despite massive currency depreciation.
“The rupee has already depreciated by 8.1% against the dollar since end-June 2021, and between mid-June to early September, the central bank used $1.2 billion in reserves in an attempt to mitigate disorderly exchange rate adjustments,” according to the WB report.
On September 15, The Express Tribune had reported that the central bank threw $1.2 billion to defend the rupee, which was also contrary to the stated policies of the central bank, International Monetary Fund (IMF) and finance ministry, as all the three institutions claim that the rupee value is determined by market forces.
Read: State Bank of Pakistan reserves hit all-time high of $20.15b
The central bank reserves are built by taking expensive foreign loans like floating the Eurobond and issuing the expensive Naya Pakistan Certificates. The $1.2 billion injection was equal to $1.2 billion annual oil facility that Pakistan secured from Saudi Arabia this week.
Sources told The Express Tribune that the central bank continued pumping dollars in the market in the remainder period of September to first half of October and the quantum of intervention was double than in any single month.
The WB said that given that external public debt is a third of the total public debt stock, the depreciation of the rupee has also implications for public debt, which is already at 90.7% of the gross domestic product. It added that Pakistan remained vulnerable to public debt related shocks.
The WB attributed the rupee depreciation to widening trade deficit, downgrading Pakistan’s stock market by MSCI, increasing likelihood of global monetary tightening and the Afghan crisis.
The report discussed in detail Pakistan’s current account deficit problem, which it said was stemming from low exports rather than from higher import bill.
Due to strengthened domestic demand, imports have grown much higher than exports in recent months, leading to a large trade deficit, the WB said.
The key factors that are hindering exports are high effective import tariff rates, limited availability of long-term financing for firms to expand export capacity, inadequate provision of market intelligence services for exporters, and low productivity of Pakistani firms, the WB said.
The increasing use of regulatory duties is not going to be an effective tool to contain the trade deficit due to limited share of non-essential goods of hardly 9% to 10% in the import basket, Gonzalo Varela, the senior economist in the macroeconomics, trade and investment global practice of the WB, said. He said that 80% of the exports are of productive purposes.
By imposing regulatory duties, the imports cannot be fixed but the revenues would surely increase, Varela said. The increase in exports relative to the rupee depreciation is slow due to inflation and low demand from trading partners, he added.
In long term, 1% depreciation of the inflation-adjusted exchange rate should increase exports by half percentage points, the trade economist said. The regulatory duties have become much prevalent in recent years and as a result the average import tariffs in Pakistan have gone up to 20%, Varela said.
The WB has projected the current account deficit to widen to 1.9% of the GDP in this fiscal year. The deficit was almost three times more than the last fiscal year in terms of size of the economy.
The current account deficit will taper down due to the impact of the exchange rate, Zehra Aslam, the WB economist, said.
The WB said that a key factor driving the trade imbalance is the declining export competitiveness. The share of exports in GDP has been declining since the turn of the century, from 16% in 1999 to 10% in 2020. This falling export share has implications for foreign exchange, jobs, and productivity growth.
The main causes of the falling exports are high effective import tariff rates and limited export market access that tend to discourage exports. Second, the supporting services for exporters are inadequate, especially those for long-term financing of capacity expansions and market intelligence services to secure new export contracts. Third, the low productivity of Pakistani firms hinders them from successfully competing in global markets, according to the WB.
The report underlined that the SBP’s decision to add 114 items to the list of import products that require 100% cash margins would also be ineffective. This will increase firms’ financial costs and acts as a non-tariff barrier to imports, the WB said.
Pakistan’s import bill is not particularly large when benchmarked against comparator countries, nor is its composition tilted towards luxury or even consumer goods.
As a percentage of the GDP, imports of goods and services stood at 17% in 2020, below Bangladesh’s 19%, Egypt’s 21%, or Vietnam’s 103%, all Pakistan’s peers in the size of economy. In terms of composition, Pakistan’s merchandise imports are mainly for industrial or commercial use.
The WB said that these items are already facing very high import duties and further increases will not curb their consumption substantially, as demand is relatively inelastic. Third, the import content of domestically produced substitutes is high, and therefore any substitution away from imported and into domestic luxury goods will likely lead to an increase in imports of parts and components to produce the domestic versions.
“Thus, instead of achieving the intended goal, these measures exacerbate the already pronounced anti-export bias of Pakistan’s trade policy and add uncertainty by increasing the likelihood of sudden policy changes that affect firms’ cost structures,” according to the WB.
But the WB said that with limited external buffers and elevated financing needs, the rapidly growing imports and wider trade deficit have heightened external risks and resulted in pressures on the exchange rate and consequently reserves.
The long-term decline in exports as a share of the GDP has implications for the country’s foreign exchange, jobs, and productivity growth. Therefore, confronting core challenges that are necessary for Pakistan to compete in global markets is an imperative for sustainable growth,” Derek Chen, the senior economist of the WB, said.
The WB has recommended gradually reducing effective rates of protection through a long-term tariff rationalisation strategy to encourage exports, reallocate export financing away from working capital and into capacity expansion through the Long-Term Financing Facility.
The Pakistan Development Update – the flagship biannual report – released on Thursday, also shed light on the reason behind why Pakistan’s exports were not increasing despite massive currency depreciation.
“The rupee has already depreciated by 8.1% against the dollar since end-June 2021, and between mid-June to early September, the central bank used $1.2 billion in reserves in an attempt to mitigate disorderly exchange rate adjustments,” according to the WB report.
On September 15, The Express Tribune had reported that the central bank threw $1.2 billion to defend the rupee, which was also contrary to the stated policies of the central bank, International Monetary Fund (IMF) and finance ministry, as all the three institutions claim that the rupee value is determined by market forces.
Read: State Bank of Pakistan reserves hit all-time high of $20.15b
The central bank reserves are built by taking expensive foreign loans like floating the Eurobond and issuing the expensive Naya Pakistan Certificates. The $1.2 billion injection was equal to $1.2 billion annual oil facility that Pakistan secured from Saudi Arabia this week.
Sources told The Express Tribune that the central bank continued pumping dollars in the market in the remainder period of September to first half of October and the quantum of intervention was double than in any single month.
The WB said that given that external public debt is a third of the total public debt stock, the depreciation of the rupee has also implications for public debt, which is already at 90.7% of the gross domestic product. It added that Pakistan remained vulnerable to public debt related shocks.
The WB attributed the rupee depreciation to widening trade deficit, downgrading Pakistan’s stock market by MSCI, increasing likelihood of global monetary tightening and the Afghan crisis.
The report discussed in detail Pakistan’s current account deficit problem, which it said was stemming from low exports rather than from higher import bill.
Due to strengthened domestic demand, imports have grown much higher than exports in recent months, leading to a large trade deficit, the WB said.
The key factors that are hindering exports are high effective import tariff rates, limited availability of long-term financing for firms to expand export capacity, inadequate provision of market intelligence services for exporters, and low productivity of Pakistani firms, the WB said.
The increasing use of regulatory duties is not going to be an effective tool to contain the trade deficit due to limited share of non-essential goods of hardly 9% to 10% in the import basket, Gonzalo Varela, the senior economist in the macroeconomics, trade and investment global practice of the WB, said. He said that 80% of the exports are of productive purposes.
By imposing regulatory duties, the imports cannot be fixed but the revenues would surely increase, Varela said. The increase in exports relative to the rupee depreciation is slow due to inflation and low demand from trading partners, he added.
In long term, 1% depreciation of the inflation-adjusted exchange rate should increase exports by half percentage points, the trade economist said. The regulatory duties have become much prevalent in recent years and as a result the average import tariffs in Pakistan have gone up to 20%, Varela said.
The WB has projected the current account deficit to widen to 1.9% of the GDP in this fiscal year. The deficit was almost three times more than the last fiscal year in terms of size of the economy.
The current account deficit will taper down due to the impact of the exchange rate, Zehra Aslam, the WB economist, said.
The WB said that a key factor driving the trade imbalance is the declining export competitiveness. The share of exports in GDP has been declining since the turn of the century, from 16% in 1999 to 10% in 2020. This falling export share has implications for foreign exchange, jobs, and productivity growth.
The main causes of the falling exports are high effective import tariff rates and limited export market access that tend to discourage exports. Second, the supporting services for exporters are inadequate, especially those for long-term financing of capacity expansions and market intelligence services to secure new export contracts. Third, the low productivity of Pakistani firms hinders them from successfully competing in global markets, according to the WB.
The report underlined that the SBP’s decision to add 114 items to the list of import products that require 100% cash margins would also be ineffective. This will increase firms’ financial costs and acts as a non-tariff barrier to imports, the WB said.
Pakistan’s import bill is not particularly large when benchmarked against comparator countries, nor is its composition tilted towards luxury or even consumer goods.
As a percentage of the GDP, imports of goods and services stood at 17% in 2020, below Bangladesh’s 19%, Egypt’s 21%, or Vietnam’s 103%, all Pakistan’s peers in the size of economy. In terms of composition, Pakistan’s merchandise imports are mainly for industrial or commercial use.
The WB said that these items are already facing very high import duties and further increases will not curb their consumption substantially, as demand is relatively inelastic. Third, the import content of domestically produced substitutes is high, and therefore any substitution away from imported and into domestic luxury goods will likely lead to an increase in imports of parts and components to produce the domestic versions.
“Thus, instead of achieving the intended goal, these measures exacerbate the already pronounced anti-export bias of Pakistan’s trade policy and add uncertainty by increasing the likelihood of sudden policy changes that affect firms’ cost structures,” according to the WB.
But the WB said that with limited external buffers and elevated financing needs, the rapidly growing imports and wider trade deficit have heightened external risks and resulted in pressures on the exchange rate and consequently reserves.
The long-term decline in exports as a share of the GDP has implications for the country’s foreign exchange, jobs, and productivity growth. Therefore, confronting core challenges that are necessary for Pakistan to compete in global markets is an imperative for sustainable growth,” Derek Chen, the senior economist of the WB, said.
The WB has recommended gradually reducing effective rates of protection through a long-term tariff rationalisation strategy to encourage exports, reallocate export financing away from working capital and into capacity expansion through the Long-Term Financing Facility.
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<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Acc to World Bank estimates based on int poverty line of $1.90 PPP 2011 per day, poverty incidence has fallen to 4.8% in FY21 from 5.3% in FY20; & is expected to continue downwards to 4.0% by FY23. This is result of our policies of productivity-led growth to create employment.</p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1454069883516375045?ref_src=twsrc%5Etfw">October 29, 2021</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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The Pakistan Stock Exchange skyrocketed over 900 points on Monday and surpassed 47,000 point barrier in intra-day trading as return to old trading system rejuvenated investor interest.
Late on Saturday, the Pakistan Stock Exchange announced to temporarily revert to the previous trading system (KATS) after material issues emerged in the Jade Trading Terminal (JTT) of the new trading system (NTS), implemented by the bourse on previous Monday (October 25).
Moreover, optimism over assistance from Saudi Arabia lent further support to the rally. The market also weighed sentiment on the expected announcement of resumption of the International Monetary Fund (IMF) bailout programme by the government.
At 1:25 PM, the KSE-100 index was trading at 47,143.04 points after a gain of 958.33 points or 2.07%.
Speaking to The Express Tribune, Arif Habib Limited Head of Research Tahir Abbas said that stock market had been trading under capacity for the past few days due to lack of developments in talks with IMF and political unrest in the country.
“The market is rallying on the back of normalisation of political situation coupled with timely assistance from Saudi Arabia for Pakistan,” he said. “Besides, rapid appreciation in rupee against the US dollar is also contributing to the rise.”
According to market rumours, Pakistan is nearing an agreement with IMF to revive the bailout, he pointed out.
He added that the combination of positive newsflows had bolstered investor interest and they were making fresh investments.
Finally, the return to KATS trading system sent the market soaring. Problems in the new trading system had limited gains in the past week.
“The new system had several issues and trade volumes remained on the lower side last week which had subdued investor spirits,” he said. “Owing to the technical problems, the index was unable to surge to its actual potential when Saudi Arabia made the upbeat announcement therefore part of the uptrend is stemming from the facilitation extended by the Middle Eastern nation.”
Although the shift to the previous trading system is temporary but it proved vital in lifting the market, the analyst said.
Late on Saturday, the Pakistan Stock Exchange announced to temporarily revert to the previous trading system (KATS) after material issues emerged in the Jade Trading Terminal (JTT) of the new trading system (NTS), implemented by the bourse on previous Monday (October 25).
Moreover, optimism over assistance from Saudi Arabia lent further support to the rally. The market also weighed sentiment on the expected announcement of resumption of the International Monetary Fund (IMF) bailout programme by the government.
At 1:25 PM, the KSE-100 index was trading at 47,143.04 points after a gain of 958.33 points or 2.07%.
Speaking to The Express Tribune, Arif Habib Limited Head of Research Tahir Abbas said that stock market had been trading under capacity for the past few days due to lack of developments in talks with IMF and political unrest in the country.
“The market is rallying on the back of normalisation of political situation coupled with timely assistance from Saudi Arabia for Pakistan,” he said. “Besides, rapid appreciation in rupee against the US dollar is also contributing to the rise.”
According to market rumours, Pakistan is nearing an agreement with IMF to revive the bailout, he pointed out.
He added that the combination of positive newsflows had bolstered investor interest and they were making fresh investments.
Finally, the return to KATS trading system sent the market soaring. Problems in the new trading system had limited gains in the past week.
“The new system had several issues and trade volumes remained on the lower side last week which had subdued investor spirits,” he said. “Owing to the technical problems, the index was unable to surge to its actual potential when Saudi Arabia made the upbeat announcement therefore part of the uptrend is stemming from the facilitation extended by the Middle Eastern nation.”
Although the shift to the previous trading system is temporary but it proved vital in lifting the market, the analyst said.
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The inflation rate jumped to 9.2% in October 2021 - the highest in four months - due to government-induced policies that led to a double-digit increase in prices of non-perishable food items, electricity and transport groups.
The Consumer Price Index (CPI) swelled 9.2% in October over the same month of last year, the Pakistan Bureau of Statistics (PBS) reported on Monday.
It was for the first time in the past five months that the inflation rate jumped above 9%, beating expectations of the Ministry of Finance.
Alarmingly, the Wholesale Price Index (WPI) inflation skyrocketed 21.2%, indicating that prices would remain high in the coming months. The WPI rose mainly because of a massive increase in prices of textile and apparels, metal products, other transport goods, food, beverages and leather products.
Last Thursday, the Ministry of Finance predicted a “downward resumption” of inflation from October and beyond, and stated that the inflation rate was “expected to settle below the level observed in September”.
The deviation in the inflation path suggests that prices have gone out of the control of the government, which has not yet fulfilled its promise to reduce prices of ghee by Rs45 to Rs290 per kg by slashing duties and taxes.
Finance Adviser Shaukat Tarin and Planning Minister Asad Umar had announced that taxes and duties would be reduced to cut the boiling cooking oil and ghee prices in the country.
Prices of the commodities, which have a direct bearing on the daily lives of people, increased further. However, the government continued to defend itself by quoting prices of goods in other countries by comparing with Pakistani currency, which is the worst performing currency in the region. The CPI-based inflation accelerated to 9.6% in urban areas but marginally came down to 8.7% in villages and towns, according to the PBS.
It was mainly because of increase in prices of non-food items owing to the government’s decision to increase administrative prices of electricity and petroleum products. The non-food inflation surged 9.7% in urban areas and 10% in rural areas last month, according to the national data collecting agency.
The pace of food inflation slowed down to 9.4% in cities from 10.8% and in villages and towns to 7.9% from the previous level of 9.1% due to decrease in prices of perishable goods. However, the prices of non-perishable goods jumped significantly as people still waited for the government’s decision to reduce prices of cooking oil, sugar and wheat flour.
The surge in prices came amid a sharp fall in the value of the rupee in past three months to Rs170.3 to a dollar on Monday. On May 3, the rupee had traded at Rs153.36 to a dollar, which lost Rs17.2, or 11% of its value, in just five months.
The reduction in the rupee value is pushing up the cost of every imported commodity including wheat, sugar, cooking oil, crude oil and raw material for industries.
Core inflation - calculated by excluding food and energy items - further inched up to 6.7% in urban and rural areas last month, reported the national data collecting agency.
The food group saw 8.3% increase in prices in October compared to the same month a year ago despite 10.8% reduction in prices of perishable goods. The non-perishable food items prices soared 12.3% last month.
The PBS stated that vegetable ghee prices increased over 43%, mustard oil 42%, cooking oil 40%, chicken 34.7%, pulse masoor 17.6%, meat over 17%, fruits 15.8%, wheat flour 13%. Tarin had promised to bring down the prices of both cooking oil and wheat flour.
The PBS reported that the milk rates also jumped to 9.5%.
However, tomatoes prices reduced nearly half followed by 29% reduction in prices of pulse moong onions and Potatoes down by 19%.
Inflation rate for the housing, water, electricity, gas and fuel group - having one-fourth weight in the basket - increased to 12% last month -a double digit increase due to the government’s decision to increase prices of electricity by 32%.
Published in The Express Tribune, November 2nd, 2021.
The Consumer Price Index (CPI) swelled 9.2% in October over the same month of last year, the Pakistan Bureau of Statistics (PBS) reported on Monday.
It was for the first time in the past five months that the inflation rate jumped above 9%, beating expectations of the Ministry of Finance.
Alarmingly, the Wholesale Price Index (WPI) inflation skyrocketed 21.2%, indicating that prices would remain high in the coming months. The WPI rose mainly because of a massive increase in prices of textile and apparels, metal products, other transport goods, food, beverages and leather products.
Last Thursday, the Ministry of Finance predicted a “downward resumption” of inflation from October and beyond, and stated that the inflation rate was “expected to settle below the level observed in September”.
The deviation in the inflation path suggests that prices have gone out of the control of the government, which has not yet fulfilled its promise to reduce prices of ghee by Rs45 to Rs290 per kg by slashing duties and taxes.
Finance Adviser Shaukat Tarin and Planning Minister Asad Umar had announced that taxes and duties would be reduced to cut the boiling cooking oil and ghee prices in the country.
Prices of the commodities, which have a direct bearing on the daily lives of people, increased further. However, the government continued to defend itself by quoting prices of goods in other countries by comparing with Pakistani currency, which is the worst performing currency in the region. The CPI-based inflation accelerated to 9.6% in urban areas but marginally came down to 8.7% in villages and towns, according to the PBS.
It was mainly because of increase in prices of non-food items owing to the government’s decision to increase administrative prices of electricity and petroleum products. The non-food inflation surged 9.7% in urban areas and 10% in rural areas last month, according to the national data collecting agency.
The pace of food inflation slowed down to 9.4% in cities from 10.8% and in villages and towns to 7.9% from the previous level of 9.1% due to decrease in prices of perishable goods. However, the prices of non-perishable goods jumped significantly as people still waited for the government’s decision to reduce prices of cooking oil, sugar and wheat flour.
The surge in prices came amid a sharp fall in the value of the rupee in past three months to Rs170.3 to a dollar on Monday. On May 3, the rupee had traded at Rs153.36 to a dollar, which lost Rs17.2, or 11% of its value, in just five months.
The reduction in the rupee value is pushing up the cost of every imported commodity including wheat, sugar, cooking oil, crude oil and raw material for industries.
Core inflation - calculated by excluding food and energy items - further inched up to 6.7% in urban and rural areas last month, reported the national data collecting agency.
The food group saw 8.3% increase in prices in October compared to the same month a year ago despite 10.8% reduction in prices of perishable goods. The non-perishable food items prices soared 12.3% last month.
The PBS stated that vegetable ghee prices increased over 43%, mustard oil 42%, cooking oil 40%, chicken 34.7%, pulse masoor 17.6%, meat over 17%, fruits 15.8%, wheat flour 13%. Tarin had promised to bring down the prices of both cooking oil and wheat flour.
The PBS reported that the milk rates also jumped to 9.5%.
However, tomatoes prices reduced nearly half followed by 29% reduction in prices of pulse moong onions and Potatoes down by 19%.
Inflation rate for the housing, water, electricity, gas and fuel group - having one-fourth weight in the basket - increased to 12% last month -a double digit increase due to the government’s decision to increase prices of electricity by 32%.
Published in The Express Tribune, November 2nd, 2021.
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Exports of the country recorded a growth of 17.5% and reached $2.471 billion in October 2021 against $2.104 billion in the corresponding month of previous year, announced Adviser to Prime Minister on Commerce Abdul Razak Dawood.
“This is the highest-ever export number in any October in our history,” he stated in a tweet on Monday. However, the adviser noted that foreign shipments fell short of the target of $2.6 billion for October 2021.
He pointed out that the country’s exports grew 25% to $9.468 billion during July-October 2021 compared to $7.576 billion in the same period of previous year.
The PM aide highlighted that Pakistan had fixed a target to ship merchandise worth $9.6 billion abroad in the four-month period.
Moving on to import figures, he revealed that they jumped 64% to $24.99 billion in July-October 2021 compared to $15.19 billion in the corresponding months of 2020.
According to the adviser, about 40% of this increase was driven by investment (in capital goods, raw material and intermediate goods), which indicated expansion and enhanced activity in the industrial sector.
The remaining 60% of imports comprised petroleum products, coal and gas (34%), vaccines (11%) and food (8%).
“Most of this is inelastic in nature,” he noted. “In absolute terms, the net increase in imports over this period is $9.801 billion.”
Out of the total, consumer goods amounted to $239 million, food items $823 million and capital goods $1.6 billion.
Topline Securities Head of Research Atif Zafar told The Express Tribune that the robust export figure for October 2021 would ease concerns over the balance of payments, however, he stressed the need for further improvement in that regard.
“Trade deficit in the month under review is estimated at about $3.77 billion,” he said. “Some improvement was seen over last month as imports declined 5% compared to September 2021.”
He was of the view that the government should clearly mention the quantity and value of vaccines imported every month. Citing the reason for that, he stated that imports of vaccine were funded by international agencies, therefore, the deficit was slightly misleading.
Arif Habib Limited Head of Research Tahir Abbas noted that the trade deficit contracted 10.5% on a month-on-month basis, indicating a slight betterment on the external front.
The measures taken by the State Bank of Pakistan (SBP) and the government to curb the inward shipments of luxury and non-essential goods are expected to start reflecting in the import figures soon, which will narrow down the trade deficit.
Union of Small and Medium Enterprises (Unisame) President Zulfikar Thaver emphasised that despite the upbeat trade data, inflation was on the higher side due to hoarders and profiteers, who created artificial shortage of commodities.
“Inflation is also caused by a surge in the cost of production and expensive logistics,” said Thaver. “At one point, we were talking about a strategic export policy to steer export surplus.”
Moving on to imports, he lamented that Pakistan began ordering wheat from abroad to meet domestic demand.
He pointed out that the country imported medicines which were either not manufactured locally or produced in a lower quantity compared to demand.
The government is focusing on enhancing exports. In this regard, the second Pakistan-Africa Trade Development Conference will be held in Nigeria later this month.
It will focus on geographical diversification of Pakistan’s exports. A single-country exhibition will also be held at the same time.
So far, 113 Pakistani companies from textile, cosmetics, leather, food, pharmaceutical, tractor manufacturing and electrical appliances sectors have confirmed their participation in the event.
Dawood will lead Pakistan’s delegation and the country’s firms will exhibit their products in the single-country exhibition and hold business-to-business meetings.
Published in The Express Tribune, November 2nd, 2021.
“This is the highest-ever export number in any October in our history,” he stated in a tweet on Monday. However, the adviser noted that foreign shipments fell short of the target of $2.6 billion for October 2021.
He pointed out that the country’s exports grew 25% to $9.468 billion during July-October 2021 compared to $7.576 billion in the same period of previous year.
The PM aide highlighted that Pakistan had fixed a target to ship merchandise worth $9.6 billion abroad in the four-month period.
Moving on to import figures, he revealed that they jumped 64% to $24.99 billion in July-October 2021 compared to $15.19 billion in the corresponding months of 2020.
According to the adviser, about 40% of this increase was driven by investment (in capital goods, raw material and intermediate goods), which indicated expansion and enhanced activity in the industrial sector.
The remaining 60% of imports comprised petroleum products, coal and gas (34%), vaccines (11%) and food (8%).
“Most of this is inelastic in nature,” he noted. “In absolute terms, the net increase in imports over this period is $9.801 billion.”
Out of the total, consumer goods amounted to $239 million, food items $823 million and capital goods $1.6 billion.
Topline Securities Head of Research Atif Zafar told The Express Tribune that the robust export figure for October 2021 would ease concerns over the balance of payments, however, he stressed the need for further improvement in that regard.
“Trade deficit in the month under review is estimated at about $3.77 billion,” he said. “Some improvement was seen over last month as imports declined 5% compared to September 2021.”
He was of the view that the government should clearly mention the quantity and value of vaccines imported every month. Citing the reason for that, he stated that imports of vaccine were funded by international agencies, therefore, the deficit was slightly misleading.
Arif Habib Limited Head of Research Tahir Abbas noted that the trade deficit contracted 10.5% on a month-on-month basis, indicating a slight betterment on the external front.
The measures taken by the State Bank of Pakistan (SBP) and the government to curb the inward shipments of luxury and non-essential goods are expected to start reflecting in the import figures soon, which will narrow down the trade deficit.
Union of Small and Medium Enterprises (Unisame) President Zulfikar Thaver emphasised that despite the upbeat trade data, inflation was on the higher side due to hoarders and profiteers, who created artificial shortage of commodities.
“Inflation is also caused by a surge in the cost of production and expensive logistics,” said Thaver. “At one point, we were talking about a strategic export policy to steer export surplus.”
Moving on to imports, he lamented that Pakistan began ordering wheat from abroad to meet domestic demand.
He pointed out that the country imported medicines which were either not manufactured locally or produced in a lower quantity compared to demand.
The government is focusing on enhancing exports. In this regard, the second Pakistan-Africa Trade Development Conference will be held in Nigeria later this month.
It will focus on geographical diversification of Pakistan’s exports. A single-country exhibition will also be held at the same time.
So far, 113 Pakistani companies from textile, cosmetics, leather, food, pharmaceutical, tractor manufacturing and electrical appliances sectors have confirmed their participation in the event.
Dawood will lead Pakistan’s delegation and the country’s firms will exhibit their products in the single-country exhibition and hold business-to-business meetings.
Published in The Express Tribune, November 2nd, 2021.
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PM announces Rs120b subsidy programme amid rising inflation
Premier Imran Khan says economic package to benefit 20 million families to pass difficult times
Prime Minister Imran Khan said on Wednesday that the inflation ratio in Pakistan remained only 9 per cent during the current year while it increased up to 50 per cent in other countries.
“The media and the opposition need to analyse whether prices in the country increased due to domestic reasons or rather due to a global inflation,” he said while quoting the Global Commodity Index.
The premier added that the analysts need to maintain a balance in their analysis, given the exponential global inflation figures.“Nonetheless, the government is striving to keep the prices under control and it is doing its bit.”
Admitting that inflation was proving to be a burden for the masses, PM Imran promised that the prices of commodities will decrease after winter.
Economic programme
PM said that the federal and provincial governments combined are about to put forth an economic uplift program for the downtrodden people.
"We are offering a Rs120 billion subsidy programme to benefit 20 million families to enable them to buy the essential commodities of ghee,m flour and flour from any of their local shops during the next six months."This, he added, will help them pass the difficult time, until the prices across the global decrease.
“What can I say about the opposition as criticism is all what they are supposed to do but I urge the media to analyse the situation properly,” he said.
Through the said relief package, the masses will be able to avail a 30 per cent discount on the three essential commodities from any of their local shops.
The Ehsaas programmes, he added, running separately amount to Rs260 billion.
Petrol prices
The prime minister said that the price of petrol will have to be increased further due to the global rise in prices.
“If we don’t increase the price of petrol, the debt on the country will continue to increase,” he said, adding, “Oil prices globally increased by up to 100 per cent.”
To substantiate his point, PM Imran quoted the price of petrol in the neighbouring countries, specially India and Bangladesh, where he said petrol is available for Rs250 per litre and Rs200 per litre, respectively.
Kamyab Pakistan programme
“Under the Kamyab Pakistan programme, Rs1,400 billion have been set aside for 4 million families to provide them interest-free loans.”
The programme is based on helping the families build their homes while it would also help each farmer invest Rs0.5 million on their land.
It would also help provide skill training to one member of every family and ensure a livelihood for them.
“An associated programme is Kamyam Jawan Programme, under which Rs30 billion have already been provided for 22,000 small businesses and skill training to 0.2 million people.”
“It includes 6 million scholarships and school stipends amounting to Rs47 billion,” he said and added that it is the biggest scholarship programme in the country’s history.
The premier promised to provide health insurance to every family in Pakistan. “The programme is already underway in Khyber-Pakhtunkhwa whereas every family in Punjab will have the health cards until March next year.”
"We are, at the moment, working on bringing the programme to the rest of the country," he maintained.
Via : https://tribune.com.pk/story/232765...RCMHZFeS1HVnpTSTdlOXdJV19VSmJRbzRROVktUFZYUlI
Premier Imran Khan says economic package to benefit 20 million families to pass difficult times
Prime Minister Imran Khan said on Wednesday that the inflation ratio in Pakistan remained only 9 per cent during the current year while it increased up to 50 per cent in other countries.
“The media and the opposition need to analyse whether prices in the country increased due to domestic reasons or rather due to a global inflation,” he said while quoting the Global Commodity Index.
The premier added that the analysts need to maintain a balance in their analysis, given the exponential global inflation figures.“Nonetheless, the government is striving to keep the prices under control and it is doing its bit.”
Admitting that inflation was proving to be a burden for the masses, PM Imran promised that the prices of commodities will decrease after winter.
Economic programme
PM said that the federal and provincial governments combined are about to put forth an economic uplift program for the downtrodden people.
"We are offering a Rs120 billion subsidy programme to benefit 20 million families to enable them to buy the essential commodities of ghee,m flour and flour from any of their local shops during the next six months."This, he added, will help them pass the difficult time, until the prices across the global decrease.
“What can I say about the opposition as criticism is all what they are supposed to do but I urge the media to analyse the situation properly,” he said.
Through the said relief package, the masses will be able to avail a 30 per cent discount on the three essential commodities from any of their local shops.
The Ehsaas programmes, he added, running separately amount to Rs260 billion.
Petrol prices
The prime minister said that the price of petrol will have to be increased further due to the global rise in prices.
“If we don’t increase the price of petrol, the debt on the country will continue to increase,” he said, adding, “Oil prices globally increased by up to 100 per cent.”
To substantiate his point, PM Imran quoted the price of petrol in the neighbouring countries, specially India and Bangladesh, where he said petrol is available for Rs250 per litre and Rs200 per litre, respectively.
Kamyab Pakistan programme
“Under the Kamyab Pakistan programme, Rs1,400 billion have been set aside for 4 million families to provide them interest-free loans.”
The programme is based on helping the families build their homes while it would also help each farmer invest Rs0.5 million on their land.
It would also help provide skill training to one member of every family and ensure a livelihood for them.
“An associated programme is Kamyam Jawan Programme, under which Rs30 billion have already been provided for 22,000 small businesses and skill training to 0.2 million people.”
“It includes 6 million scholarships and school stipends amounting to Rs47 billion,” he said and added that it is the biggest scholarship programme in the country’s history.
The premier promised to provide health insurance to every family in Pakistan. “The programme is already underway in Khyber-Pakhtunkhwa whereas every family in Punjab will have the health cards until March next year.”
"We are, at the moment, working on bringing the programme to the rest of the country," he maintained.
Via : https://tribune.com.pk/story/232765...RCMHZFeS1HVnpTSTdlOXdJV19VSmJRbzRROVktUFZYUlI
1. I think it is inflation rate and not inflation ratio.
2. Which country is inflation 50%? Inflation rate is 5.5% in both India and Bangladesh, two countries he mentioned.
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Prime Minister Imran Khan said on Sunday that there is an "unprecedented" hike in the commodity prices across the globe as a result of the Covid-induced lockdowns, but Pakistan still "fared relatively much better".
As Pakistan grapples with high inflation, the premier shared a YouTube video made by a government spokesperson that claimed that Pakistan's economic indicators were positive despite a record increase in the prices of essential items.
In the video, the spokesperson of the finance minister, Muzzamil Aslam, claimed that those who were criticising the crashing economy had nothing substantive in their criticism. He said it was true the prices of basic essentials witnessed an unprecedented hike, but this was due to an increase in prices across the globe.
The spokesperson claimed that economic indicators were showing an upward trend. As per Aslam, Food and Agriculture Organisation (FAO) in its report said that during Sept-Oct, there was 3.9 per cent increase in food inflation.
He said the World Cereal Index increased by 3.2 per cent, adding that edible oil prices witnessed 9.6pc hike in Oct. There was a 2.6pc increase in the prices of dairy products in Oct, he quoted the report as saying.
He claimed that Pakistan's economy was progressing despite all these hurdles. According to the government official, Pakistan's exports "fared worse during the past eight years". However, in October, exports showed a 17.5pc increase; whereas, in July-Oct, they increased by 25pc, he added.
According to the spokesperson, Pakistan's textile exports in the first months of the ongoing financial year stand at $6 billion. He said Pakistan's exports may reach $35 billion this year due to record increase in textile exports.
Speaking about taxes, he said tax collection witnessed a "37 per cent increase" due to an "increase in income". He said there was 81 per cent increase in the cotton crop output. He said non-oil imports also decreased 12.5pc during October.
He said 12.25pc increase in industrial growth was witnessed in August, adding that the companies also registered 21pc increase in profits. He said there will be record production of sugar this year. The spokesperson said the prices of food items will be brought down very soon as well.
According to the government spokesperson, the government cannot control the price hike in the international market as all it can do is "reduce taxes".
As Pakistan grapples with high inflation, the premier shared a YouTube video made by a government spokesperson that claimed that Pakistan's economic indicators were positive despite a record increase in the prices of essential items.
In the video, the spokesperson of the finance minister, Muzzamil Aslam, claimed that those who were criticising the crashing economy had nothing substantive in their criticism. He said it was true the prices of basic essentials witnessed an unprecedented hike, but this was due to an increase in prices across the globe.
The spokesperson claimed that economic indicators were showing an upward trend. As per Aslam, Food and Agriculture Organisation (FAO) in its report said that during Sept-Oct, there was 3.9 per cent increase in food inflation.
He said the World Cereal Index increased by 3.2 per cent, adding that edible oil prices witnessed 9.6pc hike in Oct. There was a 2.6pc increase in the prices of dairy products in Oct, he quoted the report as saying.
He claimed that Pakistan's economy was progressing despite all these hurdles. According to the government official, Pakistan's exports "fared worse during the past eight years". However, in October, exports showed a 17.5pc increase; whereas, in July-Oct, they increased by 25pc, he added.
According to the spokesperson, Pakistan's textile exports in the first months of the ongoing financial year stand at $6 billion. He said Pakistan's exports may reach $35 billion this year due to record increase in textile exports.
Speaking about taxes, he said tax collection witnessed a "37 per cent increase" due to an "increase in income". He said there was 81 per cent increase in the cotton crop output. He said non-oil imports also decreased 12.5pc during October.
He said 12.25pc increase in industrial growth was witnessed in August, adding that the companies also registered 21pc increase in profits. He said there will be record production of sugar this year. The spokesperson said the prices of food items will be brought down very soon as well.
According to the government spokesperson, the government cannot control the price hike in the international market as all it can do is "reduce taxes".
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- Oct 2, 2004
- Runs
- 217,977
Prime Minister Imran Khan has “dropped” a plan to make a telephone call to the managing director of the International Monetary Fund (IMF), which the government had decided last week to seek the official’s intervention to remove barriers to the revival of $6 billion deal.
The proposal had been floated amid the government’s decision to re-introduce some fundamental changes in the already approved draft of the State Bank of Pakistan amendment Bill 2021, sources told The Express Tribune.
The government requested the IMF to let it make some more changes in the bill, including keeping the option of borrowings from the central bank open and retaining finance secretary on the board of the SBP, sources said.
The approval of the SBP amendment Bill 2021 and introduction of the finance bill in the National Assembly to bring mini-budget remain two biggest stumbling blocks in the way of the revival of the $6 billion bailout package.
Sources told The Express Tribune that Prime Minister Khan and Finance Adviser Shaukat Tarin had discussed the proposal to make a telephone call to IMF Managing Director Kristalina Georgieva.
The purpose of the telephone call was to seek Kristalina’s intervention to soften condition on approval of the SBP bill, the sources noted.
“There is no need for a telephone call to the managing director of the IMF,” the finance adviser told The Express Tribune on Monday when he was requested to comment whether a call had been made to the managing director last week.
Usually, the IMF issues a statement or tweets about an interaction between the managing director and the head of a government.
Sources maintained that the government instead shared a list of new amendments that it now wants to bring in the SBP amendment Bill 2021.
The federal cabinet approved the SBP Bill on March 9, 2021 but without reading it. In March, The Express Tribune had raised the issue of giving absolute autonomy to the central bank and approval of the bill by the federal cabinet without even studying it.
In addition to terming half a dozen already approved clauses “unconstitutional”, the finance ministry suggested some more fundamental changes in the bill.
Law Minister Farogh Naseem had conveyed Pakistan’s legal position on the SBP Bill to the IMF last week, which created ripples at the IMF headquarter.
The IMF took time to absorb the disclosure that some of the changes already made in the bill were in fact unconstitutional.
In a major change, after earlier agreeing to permanently close the door of borrowing from the SBP, the government has now again suggested the IMF that it wanted to retain this option, sources said. The law minister told the IMF that under the constitution the federal government has the authority to borrow money.
The federal government has not been borrowing from the central bank under the IMF programme but it is now reluctant to give a legal cover to this temporary ban, in place since July 2019. Sources said that the IMF Mission Chief Ernest Rigo last week refused to accept this demand.
The ban on borrowing from the central bank has left the government at the mercy of commercial banks that in recent week have been demanding an interest rate that is significantly higher than the key policy rate of 7.25%.
The IMF is now expected to give its final position on the proposed new amendments. The government is running against time to achieve the goal of approval of $1 billion loan tranche by December 17.
Sources said government has showed its intention to retain the Monetary and Fiscal Policies
Coordination Board, which is an important statutory forum to align the monetary and fiscal policies of the country. As per the approved bill, the government had earlier agreed to abolish this board.
Sources said the government now also wanted to retain the finance secretary on the board of the central bank, which it earlier had agreed to withdraw.
The approval of the amendment bill was the condition that was hampering a deal between Pakistan and the IMF for $1 billion loan tranche, Tarin revealed last week.
Last week, the law minister had told the IMF about clauses that the federal cabinet had approved as part of attempts to give absolute autonomy without accountability but were unconstitutional provisions.
These are related to a mechanism for removal of the SBP governor, allowing him to appear before parliament by bypassing Finance Division, giving absolute immunity to the governor, and others from any kind of investigation and limiting parliament’s powers to amend the SBP law in the future.
The proposal had been floated amid the government’s decision to re-introduce some fundamental changes in the already approved draft of the State Bank of Pakistan amendment Bill 2021, sources told The Express Tribune.
The government requested the IMF to let it make some more changes in the bill, including keeping the option of borrowings from the central bank open and retaining finance secretary on the board of the SBP, sources said.
The approval of the SBP amendment Bill 2021 and introduction of the finance bill in the National Assembly to bring mini-budget remain two biggest stumbling blocks in the way of the revival of the $6 billion bailout package.
Sources told The Express Tribune that Prime Minister Khan and Finance Adviser Shaukat Tarin had discussed the proposal to make a telephone call to IMF Managing Director Kristalina Georgieva.
The purpose of the telephone call was to seek Kristalina’s intervention to soften condition on approval of the SBP bill, the sources noted.
“There is no need for a telephone call to the managing director of the IMF,” the finance adviser told The Express Tribune on Monday when he was requested to comment whether a call had been made to the managing director last week.
Usually, the IMF issues a statement or tweets about an interaction between the managing director and the head of a government.
Sources maintained that the government instead shared a list of new amendments that it now wants to bring in the SBP amendment Bill 2021.
The federal cabinet approved the SBP Bill on March 9, 2021 but without reading it. In March, The Express Tribune had raised the issue of giving absolute autonomy to the central bank and approval of the bill by the federal cabinet without even studying it.
In addition to terming half a dozen already approved clauses “unconstitutional”, the finance ministry suggested some more fundamental changes in the bill.
Law Minister Farogh Naseem had conveyed Pakistan’s legal position on the SBP Bill to the IMF last week, which created ripples at the IMF headquarter.
The IMF took time to absorb the disclosure that some of the changes already made in the bill were in fact unconstitutional.
In a major change, after earlier agreeing to permanently close the door of borrowing from the SBP, the government has now again suggested the IMF that it wanted to retain this option, sources said. The law minister told the IMF that under the constitution the federal government has the authority to borrow money.
The federal government has not been borrowing from the central bank under the IMF programme but it is now reluctant to give a legal cover to this temporary ban, in place since July 2019. Sources said that the IMF Mission Chief Ernest Rigo last week refused to accept this demand.
The ban on borrowing from the central bank has left the government at the mercy of commercial banks that in recent week have been demanding an interest rate that is significantly higher than the key policy rate of 7.25%.
The IMF is now expected to give its final position on the proposed new amendments. The government is running against time to achieve the goal of approval of $1 billion loan tranche by December 17.
Sources said government has showed its intention to retain the Monetary and Fiscal Policies
Coordination Board, which is an important statutory forum to align the monetary and fiscal policies of the country. As per the approved bill, the government had earlier agreed to abolish this board.
Sources said the government now also wanted to retain the finance secretary on the board of the central bank, which it earlier had agreed to withdraw.
The approval of the amendment bill was the condition that was hampering a deal between Pakistan and the IMF for $1 billion loan tranche, Tarin revealed last week.
Last week, the law minister had told the IMF about clauses that the federal cabinet had approved as part of attempts to give absolute autonomy without accountability but were unconstitutional provisions.
These are related to a mechanism for removal of the SBP governor, allowing him to appear before parliament by bypassing Finance Division, giving absolute immunity to the governor, and others from any kind of investigation and limiting parliament’s powers to amend the SBP law in the future.
uberkoen
ODI Debutant
- Joined
- Nov 2, 2011
- Runs
- 9,985
There's a lot of overseas Pakistani's here who are commenting about the recent increase in oil prices as well as inflation and defending the current government by saying it's a global phenomena.
However, they fail to understand what such increase means for the people of Pakistan and why it hits them worse then countries in Europe or North America. A guy who gets to his job via a motorcycle has no other option available to him. The fuel price hits him directly. If the government had setup and continued developing the infrastructure projects which were initiated by the previous government then this person would have an alternative and wouldn't directly be hit by these increasing prices.
These people fail to understand that In US inflation means you cant afford fruits as a side. In Pakistan it means you have to skip meals.
Also, compare the inflation rates in different countries to understand exactly how badly it is impacting Pakistan
https://tradingeconomics.com/country-list/inflation-rate?continent=world
However, they fail to understand what such increase means for the people of Pakistan and why it hits them worse then countries in Europe or North America. A guy who gets to his job via a motorcycle has no other option available to him. The fuel price hits him directly. If the government had setup and continued developing the infrastructure projects which were initiated by the previous government then this person would have an alternative and wouldn't directly be hit by these increasing prices.
These people fail to understand that In US inflation means you cant afford fruits as a side. In Pakistan it means you have to skip meals.
Also, compare the inflation rates in different countries to understand exactly how badly it is impacting Pakistan
https://tradingeconomics.com/country-list/inflation-rate?continent=world
street cricketer
Test Debutant
- Joined
- Oct 14, 2015
- Runs
- 15,677
- Post of the Week
- 7
Damn, didn't realise inflation was this bad in Turkey. Seems to be at 20%.
JaDed
Test Star
- Joined
- May 5, 2014
- Runs
- 39,142
Turkey is an extremely bad state currently , right time to visit imo.
Very informative table, thanks for the link.
Turkish Lira has lost 65% of its value against the US dollar in the last 5 years. I did look into buying a beachfront condo there, but was unsure about the legal protections offered to property holders.
- Joined
- Oct 2, 2004
- Runs
- 217,977
With the persistent delay in resumption of International Monetary Fund’s (IMF) $6 billion loan programme for Pakistan, the rupee dived for the fourth consecutive day on Thursday and fell to a two-week low of Rs174.19 against the US dollar in the inter-bank market.
The rupee is just Rs1.08 away from the all-time low of Rs175.27 hit two weeks ago on October 26, according to data of the State Bank of Pakistan (SBP).
With a fresh drop of 0.72% (or Rs1.26) on Thursday, the rupee has lost a total of 2.48% (or Rs4.22) against the greenback compared to the five-week high of Rs169.97 recorded on November 3.
The free fall of the rupee, however, sent gold prices soaring for the sixth consecutive day. The precious metal soared Rs3,300 to a two-week high at Rs129,100 per tola (11.66 grams).
“Prolonged delay in the resumption of IMF programme is taking a toll on the rupee,” Ismail Iqbal Securities Head of Research Fahad Rauf said while speaking to The Express Tribune.
The delay has raised questions whether the IMF would resume the programme or Pakistan would opt to quit it as “chances for which are next to nothing,” he said. “The uncertain situation has sparked volatility in the rupee.”
Reports suggest that Pakistan has fulfilled almost all IMF conditions including the increase in power tariff. However, the two sides are yet to reach an agreement on the condition of autonomy for the SBP.
The government has informed the IMF that it lacked the two-thirds majority in parliament needed to secure approval of the SBP amendment bill. The IMF is expected to consider the government’s position.
The Asian Development Bank (ADB) has also announced that it will play its role in resuming the IMF programme.
Earlier on October 26, the rupee hit an all-time low of Rs175.27 against the US dollar. Later, it recovered to Rs169.97 by November 3 in the wake of Saudi Arabia’s announcement of a $4.2 billion assistance package for Pakistan.
On the other hand, expectations about the revival of IMF programme also lent support, Rauf recalled.
Under the ongoing cycle of depreciation, the rupee may return to the all-time low of Rs175.27 and remain there until the next loan tranche is approved by the IMF.
The real effective exchange rate (REER) – Pakistan’s cost of trade with the world – would move to 93-94 points once the rupee “depreciates to around Rs175, which means that the currency has become notably undervalued.”
“The rupee shedding its value beyond Rs175 will be unlikely if the IMF announces resumption of the programme,” he said.
“The currency will drop to Rs190 in case the global lender delays the matter for another three to six months,” he said.
Pak-Kuwait Investment Company Head of Research Samiullah Tariq said that the rupee was losing ground due to higher demand for dollars to pay for imports and its lower supply.
Pakistan’s current account deficit remained high mainly on the back of a ballooning import bill. “A current account deficit of over $500 million a month is unaffordable. It will keep denting the rupee’s value,” he said.
The current account deficit stood above $1 billion a month in the first three months (July-September) of the ongoing fiscal year 2021-22.
Gold surges
The bullion is short of just Rs1,900 from its record high of Rs132,000 registered two weeks ago.
“The uptrend in the precious metal in global markets multiplied the price of the commodity in local markets as demand for the metal is met through imports,” AA Gold Commodities Director Adnan Agar said.
Gold maintained uptrend in international market on the back of US reporting 30-year high inflation at 6.2% on Wednesday. Investors may opt for profit taking at current levels, he said.
Published in The Express Tribune, November 12th, 2021.
The rupee is just Rs1.08 away from the all-time low of Rs175.27 hit two weeks ago on October 26, according to data of the State Bank of Pakistan (SBP).
With a fresh drop of 0.72% (or Rs1.26) on Thursday, the rupee has lost a total of 2.48% (or Rs4.22) against the greenback compared to the five-week high of Rs169.97 recorded on November 3.
The free fall of the rupee, however, sent gold prices soaring for the sixth consecutive day. The precious metal soared Rs3,300 to a two-week high at Rs129,100 per tola (11.66 grams).
“Prolonged delay in the resumption of IMF programme is taking a toll on the rupee,” Ismail Iqbal Securities Head of Research Fahad Rauf said while speaking to The Express Tribune.
The delay has raised questions whether the IMF would resume the programme or Pakistan would opt to quit it as “chances for which are next to nothing,” he said. “The uncertain situation has sparked volatility in the rupee.”
Reports suggest that Pakistan has fulfilled almost all IMF conditions including the increase in power tariff. However, the two sides are yet to reach an agreement on the condition of autonomy for the SBP.
The government has informed the IMF that it lacked the two-thirds majority in parliament needed to secure approval of the SBP amendment bill. The IMF is expected to consider the government’s position.
The Asian Development Bank (ADB) has also announced that it will play its role in resuming the IMF programme.
Earlier on October 26, the rupee hit an all-time low of Rs175.27 against the US dollar. Later, it recovered to Rs169.97 by November 3 in the wake of Saudi Arabia’s announcement of a $4.2 billion assistance package for Pakistan.
On the other hand, expectations about the revival of IMF programme also lent support, Rauf recalled.
Under the ongoing cycle of depreciation, the rupee may return to the all-time low of Rs175.27 and remain there until the next loan tranche is approved by the IMF.
The real effective exchange rate (REER) – Pakistan’s cost of trade with the world – would move to 93-94 points once the rupee “depreciates to around Rs175, which means that the currency has become notably undervalued.”
“The rupee shedding its value beyond Rs175 will be unlikely if the IMF announces resumption of the programme,” he said.
“The currency will drop to Rs190 in case the global lender delays the matter for another three to six months,” he said.
Pak-Kuwait Investment Company Head of Research Samiullah Tariq said that the rupee was losing ground due to higher demand for dollars to pay for imports and its lower supply.
Pakistan’s current account deficit remained high mainly on the back of a ballooning import bill. “A current account deficit of over $500 million a month is unaffordable. It will keep denting the rupee’s value,” he said.
The current account deficit stood above $1 billion a month in the first three months (July-September) of the ongoing fiscal year 2021-22.
Gold surges
The bullion is short of just Rs1,900 from its record high of Rs132,000 registered two weeks ago.
“The uptrend in the precious metal in global markets multiplied the price of the commodity in local markets as demand for the metal is met through imports,” AA Gold Commodities Director Adnan Agar said.
Gold maintained uptrend in international market on the back of US reporting 30-year high inflation at 6.2% on Wednesday. Investors may opt for profit taking at current levels, he said.
Published in The Express Tribune, November 12th, 2021.
- Joined
- Oct 2, 2004
- Runs
- 217,977
Pakistan’s exports to nine regional countries posted a growth of 31.56 per cent while imports grew by nearly 43pc in the first quarter of current fiscal year (1QFY22) from a year ago, latest data released by the State Bank of Pakistan showed.
The country’s exports to Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan and the Maldives account for a small amount of $946.218 million — just 13.5pc of Pakistan’s total global exports of $6.997 billion in 1QFY22.
China tops the list of countries in terms of Pakistan’s exports to its neighbours, leaving other populous countries India and Bangladesh behind. Pakistan carried out its border trade with the farther neighbours including Nepal, Sri Lanka, Bhutan, Bangladesh and Maldives via sea only.
On the other hand, imports from these countries edged up to $4.128bn in July-September this year against $2.894bn over the corresponding period last year, an increase of 42.6pc. As a result of huge imports, Pakistan’s trade deficit with the region expanded during the period under review.
Pakistan’s exports to China posted positive growth in July-Sept FY22. The bulk of the regional exports share, which accounts for 59pc, is with China while the remaining is for eight countries. Pakistan’s exports to China posted a growth of 69.7pc to $559.158 million in the first three months of this year from $329.421m in FY21. The increase in export proceeds was noted in the post-Covid period, especially the exports of rice.
Imports up 43pc during the period
Contrary to this, imports from China grew 43.6pc to $4.012bn during the period under review against $2.793bn over the last year. The bulk of 97.1pc imports is coming from China alone while remaining imports are from other eight countries.
Pakistan’s exports to Afghanistan posted a negative growth of 39.17pc to $127.647m in FY22 from $209.868m in the same period in FY21. The decline in exports to Afghanistan is mainly due to uncertainty in the post-Taliban takeover of Kabul and subsequent issues in banking channels. Till a few years ago, Afghanistan was the second major export destination for Pakistan after the United States.
Imports from Afghanistan posted growth of 88.49pc to $33.589m against $17.820m over the last year mainly driven by higher arrivals of essential kitchen items including tomatoes, potatoes and onions as well as fresh and dried fruits. In the post-Taliban period, government has facilitated imports at Torkham as well as Chaman border stations especially of essential food items including fruits and vegetables.
The country’s exports to India plunged 90.4pc to $0.099m this year from $1.035m in FY21. The imports from India dipped 14.9pc to $42.502m against $49.947m over the last year. The government has suspended trade relations with New Delhi. Since the arrival of Covid-19 pandemic, the government has only allowed import of pharmaceutical products from India.
Pakistan’s exports to Iran at the official channel were not recorded in the first three months of the current fiscal year. Most of the trade with Tehran is carried out through informal channels via the border areas of Balochistan. No imports were made from Tehran during the period under review.
Exports to Bangladesh increased 37.57pc to $175.389m in the first three months of FY22 from $127.487m. Imports from Dhaka posted growth of 43.96pc to $17.446m this year against $12.118m over the last year.
Published in Dawn, November 14th, 2021
The country’s exports to Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan and the Maldives account for a small amount of $946.218 million — just 13.5pc of Pakistan’s total global exports of $6.997 billion in 1QFY22.
China tops the list of countries in terms of Pakistan’s exports to its neighbours, leaving other populous countries India and Bangladesh behind. Pakistan carried out its border trade with the farther neighbours including Nepal, Sri Lanka, Bhutan, Bangladesh and Maldives via sea only.
On the other hand, imports from these countries edged up to $4.128bn in July-September this year against $2.894bn over the corresponding period last year, an increase of 42.6pc. As a result of huge imports, Pakistan’s trade deficit with the region expanded during the period under review.
Pakistan’s exports to China posted positive growth in July-Sept FY22. The bulk of the regional exports share, which accounts for 59pc, is with China while the remaining is for eight countries. Pakistan’s exports to China posted a growth of 69.7pc to $559.158 million in the first three months of this year from $329.421m in FY21. The increase in export proceeds was noted in the post-Covid period, especially the exports of rice.
Imports up 43pc during the period
Contrary to this, imports from China grew 43.6pc to $4.012bn during the period under review against $2.793bn over the last year. The bulk of 97.1pc imports is coming from China alone while remaining imports are from other eight countries.
Pakistan’s exports to Afghanistan posted a negative growth of 39.17pc to $127.647m in FY22 from $209.868m in the same period in FY21. The decline in exports to Afghanistan is mainly due to uncertainty in the post-Taliban takeover of Kabul and subsequent issues in banking channels. Till a few years ago, Afghanistan was the second major export destination for Pakistan after the United States.
Imports from Afghanistan posted growth of 88.49pc to $33.589m against $17.820m over the last year mainly driven by higher arrivals of essential kitchen items including tomatoes, potatoes and onions as well as fresh and dried fruits. In the post-Taliban period, government has facilitated imports at Torkham as well as Chaman border stations especially of essential food items including fruits and vegetables.
The country’s exports to India plunged 90.4pc to $0.099m this year from $1.035m in FY21. The imports from India dipped 14.9pc to $42.502m against $49.947m over the last year. The government has suspended trade relations with New Delhi. Since the arrival of Covid-19 pandemic, the government has only allowed import of pharmaceutical products from India.
Pakistan’s exports to Iran at the official channel were not recorded in the first three months of the current fiscal year. Most of the trade with Tehran is carried out through informal channels via the border areas of Balochistan. No imports were made from Tehran during the period under review.
Exports to Bangladesh increased 37.57pc to $175.389m in the first three months of FY22 from $127.487m. Imports from Dhaka posted growth of 43.96pc to $17.446m this year against $12.118m over the last year.
Published in Dawn, November 14th, 2021
street cricketer
Test Debutant
- Joined
- Oct 14, 2015
- Runs
- 15,677
- Post of the Week
- 7
The bolded numbers are interesting.
1. The trade equation between India and Pakistan looks like it has a huge disparity. Basically Pakistan imports nearly 500 times more worth of goods from India than India imports from Pakistan. Even accounting for the population difference, this looks like a huge imbalance in trade.
2. The second one is more interesting. Pakistan exports nearly 10 times more to Bangladesh than vice versa which is interesting for me because I thought the trade balance would be the other way round with Bangladesh having a healthier and more export oriented economy (textiles) than Pakistan. Wonder what are the type of commodities Pakistan exports to Bangladesh and vice versa.
The 500X disparity for India-Pakistan trade is misleading. Actually both numbers are very small to the point of being irrelevant. Indian exports (goods and services) amount to about $450 billion a year, so exports to Pakistan are 0.01% of total exports. "The [PTI] government has suspended trade relations with New Delhi." Essentially trade between the two countries has been reduced to something Pakistan cannot do without, that is pharma products from India. 90% of vaccines for children in Pakistan are imported from India.
More interesting is Pakistan's trade with China. "Pakistan’s exports to China posted a growth of 69.7pc to $559.158 million in the first three months of this year from $329.421m in FY21. The increase in export proceeds was noted in the post-Covid period, especially the exports of rice. Contrary to this, imports from China grew 43.6pc to $4.012bn during the period under review against $2.793bn over the last year."
As you can see from the numbers above, Pakistan runs a large trade deficit with China and exports commodities like rice. This is a very adverse trade relationship. India too has a similar trade deficit with China, though not quite as adverse.
street cricketer
Test Debutant
- Joined
- Oct 14, 2015
- Runs
- 15,677
- Post of the Week
- 7
Why does Bangladesh have an adverse trade balance with Pakistan though?
- Joined
- Oct 2, 2004
- Runs
- 217,977
Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin sees a definite role of speculators in devaluation of the rupee beyond Rs170 against the US dollar in the inter-bank market, asking the central bank to play its role in the matter.
Pakistan and the International Monetary Fund (IMF) have renegotiated to soften conditions to resume the $6 billion loan programme and almost reached an agreement to resume it. The IMF would soon announce the resumption of the programme. Besides, Pakistan has inked an agreement with Saudi Arabia that was a must to receive the promised $3 billion deposits into the State Bank of Pakistan's account from the kingdom.
To recall, the rupee hit an all-time low of Rs175.73 against the greenback in the inter-bank market on Friday, according to the central bank's data. It plunged to Rs178 in the open market.
"You are asking, is there any element of speculation in the rupee’s devaluation. It definitely is … speculators are taking it [dollar] up," Tarin said while talking to the media persons after performing the groundbreaking ceremony of Naya Nazimabad Hospital on Sunday.
The prevailing real effective exchange rate (REER) – Pakistan's cost of trade with the world – at around 93, 94-point suggests "the rupee should stay around Rs166-170 these days," he said.
"Rupee has become undervalued. Speculators have taken [unduly pocketed] Rs8-9 a dollar," he said.
Besides, Afghanis are buying dollars from Pakistani markets and transferring them to their country. "We have to fix it," he said.
He said the rupee would partially recover against the US dollar once the IMF announces resumption of the loan programme. "The speculators would take a hit (of Rs8-9) once the IMF programme resumes.
"I have asked the State Bank the [rupee-dollar exchange] rate should move both sides. Otherwise, speculators would play [manipulate]."
He said Pakistan's previous economic team has "gotten their hands cut in March", when they last time negotiated with the IMF to resume its programme. "We (Pakistan) have said no to a number of IMF conditions. You will see it [programme] has significantly been improved."
Earlier, while addressing the audience at the ceremony, Tarin said a persistent delay in resumption of the IMF loan programme is creating uncertainty. Pakistan and the IMF have almost reached an agreement to resume the programme for which the two sides are engaged for over a month now.
"I cannot announce it, but the IMF would [announce resumption of the programme]. You will hear the good news soon. This will remove the uncertainty," Tarin said.
He said he was aware that sugar hoarding had caused the “price of the sweetener to shoot up to the skies” in the country. "Hoarding is a big issue. We will confiscate hoarding, arrest hoarders and pay 10% to those who would inform about the boarding. I will announce in a few days … whistleblower would get 10%."
He said he had asked the Competition Commission of Pakistan (CCP) to check cartelisation in edible oil and ghee industry.
"I monitor edible oil price myself. They have doubled in international markets and yet to come down. But you are right, cartelisation is there, I have asked the CCP to check it in the ghee industry," he said.
"We have to strengthen the CCP because there are numerous things we have asked. They delayed it [strengthening] due to cumbersome procedures. We have to fix that. Whenever there is cartelisation, there should be immediate action. We speak more and act less."
He said the petroleum prices have doubled to $85 per barrel in the international market and the government has no option but to pass the increase on to local consumers if prices maintain an upward trend in future.
"We have reduced sales tax on petrol to 1.6% to keep it affordable as compared to 17% in the recent past. We have no room now to absorb the increase. We have to pass the increase in price on to local consumers if the upward momentum continues in the international market."
He said Pakistan would achieve economic growth of over 5% in the current fiscal year 2022. “Collection of revenue in taxes has gained momentum and remained higher than the set target. Current account deficit is also under control and foreign exchange reserves are rising.”
Imports would be 25% of the GDP, while exports would be around 10%. The imports are being financed through export earnings and through inflows of workers' remittances and Roshan Digital Accounts (RDA), he said.
Pakistan and the International Monetary Fund (IMF) have renegotiated to soften conditions to resume the $6 billion loan programme and almost reached an agreement to resume it. The IMF would soon announce the resumption of the programme. Besides, Pakistan has inked an agreement with Saudi Arabia that was a must to receive the promised $3 billion deposits into the State Bank of Pakistan's account from the kingdom.
To recall, the rupee hit an all-time low of Rs175.73 against the greenback in the inter-bank market on Friday, according to the central bank's data. It plunged to Rs178 in the open market.
"You are asking, is there any element of speculation in the rupee’s devaluation. It definitely is … speculators are taking it [dollar] up," Tarin said while talking to the media persons after performing the groundbreaking ceremony of Naya Nazimabad Hospital on Sunday.
The prevailing real effective exchange rate (REER) – Pakistan's cost of trade with the world – at around 93, 94-point suggests "the rupee should stay around Rs166-170 these days," he said.
"Rupee has become undervalued. Speculators have taken [unduly pocketed] Rs8-9 a dollar," he said.
Besides, Afghanis are buying dollars from Pakistani markets and transferring them to their country. "We have to fix it," he said.
He said the rupee would partially recover against the US dollar once the IMF announces resumption of the loan programme. "The speculators would take a hit (of Rs8-9) once the IMF programme resumes.
"I have asked the State Bank the [rupee-dollar exchange] rate should move both sides. Otherwise, speculators would play [manipulate]."
He said Pakistan's previous economic team has "gotten their hands cut in March", when they last time negotiated with the IMF to resume its programme. "We (Pakistan) have said no to a number of IMF conditions. You will see it [programme] has significantly been improved."
Earlier, while addressing the audience at the ceremony, Tarin said a persistent delay in resumption of the IMF loan programme is creating uncertainty. Pakistan and the IMF have almost reached an agreement to resume the programme for which the two sides are engaged for over a month now.
"I cannot announce it, but the IMF would [announce resumption of the programme]. You will hear the good news soon. This will remove the uncertainty," Tarin said.
He said he was aware that sugar hoarding had caused the “price of the sweetener to shoot up to the skies” in the country. "Hoarding is a big issue. We will confiscate hoarding, arrest hoarders and pay 10% to those who would inform about the boarding. I will announce in a few days … whistleblower would get 10%."
He said he had asked the Competition Commission of Pakistan (CCP) to check cartelisation in edible oil and ghee industry.
"I monitor edible oil price myself. They have doubled in international markets and yet to come down. But you are right, cartelisation is there, I have asked the CCP to check it in the ghee industry," he said.
"We have to strengthen the CCP because there are numerous things we have asked. They delayed it [strengthening] due to cumbersome procedures. We have to fix that. Whenever there is cartelisation, there should be immediate action. We speak more and act less."
He said the petroleum prices have doubled to $85 per barrel in the international market and the government has no option but to pass the increase on to local consumers if prices maintain an upward trend in future.
"We have reduced sales tax on petrol to 1.6% to keep it affordable as compared to 17% in the recent past. We have no room now to absorb the increase. We have to pass the increase in price on to local consumers if the upward momentum continues in the international market."
He said Pakistan would achieve economic growth of over 5% in the current fiscal year 2022. “Collection of revenue in taxes has gained momentum and remained higher than the set target. Current account deficit is also under control and foreign exchange reserves are rising.”
Imports would be 25% of the GDP, while exports would be around 10%. The imports are being financed through export earnings and through inflows of workers' remittances and Roshan Digital Accounts (RDA), he said.
Like you mentioned in your earlier post, Bangladesh's major export is textiles. Pakistan's major export is also textiles, so Bangladesh doesn't export textiles to Pakistan.
Similarly, Pakistan doesn't export textiles to Bangladesh, but what does it export? I am guessing some of $175 million exports from Pakistan to Bangladesh could be "Optical, technical, medical apparatus" of which Pakistan exports $380 million a year.
https://www.worldstopexports.com/pakistans-top-10-exports/
Also, as Bangladesh is getting richer quickly, it may be increasing its imports from Pakistan of low-tech items like "Cereals", "Fruits and Nuts" etc.
Also note that Bangladesh's total imports are about $60 billion, so imports from Pakistan are small at around 0.2% of total imports. Trade between Pakistan and Bangladesh is not well developed.
https://www.macrotrends.net/countries/BGD/bangladesh/imports
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The recovery of the rupee against the US dollar continued on Wednesday as it gained Rs1.13, or 0.65%, in the inter-bank market and closed at Rs173.76.
According to the State Bank of Pakistan (SBP), the rupee had closed at Rs174.89 to a dollar on Tuesday.
Earlier on November 12, the rupee dipped to an all-time low at Rs175.73 against the greenback owing to a deadlock in talks between Pakistan and the International Monetary Fund (IMF) over the resumption of $6 billion loan programme.
Speaking to The Express Tribune, Ismail Iqbal Securities Head of Research Fahad Rauf highlighted that upbeat statement of Adviser to Prime Minister on Finance Shaukat Tarin about the revival of IMF programme in the next few days triggered the rupee’s recovery.
“Moreover, with the end of a joint parliamentary session on Wednesday, the public got much-needed political clarity,” he said. “The turbulence has ended and political normalisation is expected.”
He pointed out that the rescheduling of monetary policy meeting to an earlier date by the central bank signalled compliance with the IMF’s conditions and “the market now expects the resumption of Extended Fund Facility very soon”.
On the other hand, gold price fell by Rs2,850 to Rs122,000 per tola. Cumulatively, the gold price has decreased by Rs7,100 since touching all-time high of Rs129,100 on November 11, 2021.
Published in The Express Tribune, November 18th, 2021.
According to the State Bank of Pakistan (SBP), the rupee had closed at Rs174.89 to a dollar on Tuesday.
Earlier on November 12, the rupee dipped to an all-time low at Rs175.73 against the greenback owing to a deadlock in talks between Pakistan and the International Monetary Fund (IMF) over the resumption of $6 billion loan programme.
Speaking to The Express Tribune, Ismail Iqbal Securities Head of Research Fahad Rauf highlighted that upbeat statement of Adviser to Prime Minister on Finance Shaukat Tarin about the revival of IMF programme in the next few days triggered the rupee’s recovery.
“Moreover, with the end of a joint parliamentary session on Wednesday, the public got much-needed political clarity,” he said. “The turbulence has ended and political normalisation is expected.”
He pointed out that the rescheduling of monetary policy meeting to an earlier date by the central bank signalled compliance with the IMF’s conditions and “the market now expects the resumption of Extended Fund Facility very soon”.
On the other hand, gold price fell by Rs2,850 to Rs122,000 per tola. Cumulatively, the gold price has decreased by Rs7,100 since touching all-time high of Rs129,100 on November 11, 2021.
Published in The Express Tribune, November 18th, 2021.
transparent opacity
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The market had expected a hike in interest rate after the central bank pushed back the monetary policy committee meeting by one week.
The inflation reading for October spiked close to 9.2% which was higher than the central bank’s projection of 7-9% inflation for the year.
The SBP hinted in monetary policy statement for September that it might increase the policy rate to achieve mildly positive real interest rates over time.
It is pertinent to mention that inflation remains elevated and real interest rate stands at a negative 2% at present.
Besides, the commercial banks are demanding notably high yields (rate of return) against investment in government papers like T-bills and Pakistan Investment Bonds (PIBs).
The central bank made it clear through a brief press statement that the monetary policy meeting is aimed at removing uncertainty about “inflation and balance of payments (Pakistan’s capacity to make international payments) in the market”.
Earlier, due to the lockdown imposed to contain the spread of Covid-19 in the country, the SBP had aggressively slashed the benchmark interest rate by 625 basis points from March to June 2020 to 7%.
The monetary policy is an effective tool with the central bank that is used to curb inflation. The SBP announces a target rate every two months, which serves as the benchmark for overnight funds in the interbank market.
The policy rate is revised up or down or kept unchanged in relation to the inflation reading and economic activities. Low inflation leads to a reduction in the policy rate in a bid to ramp up economic activities and vice versa.
https://tribune.com.pk/story/233016...RCMHZFeS1HVnpTSTdlOXdJV19VSmJRbzRROVktUFZYUlI
The inflation reading for October spiked close to 9.2% which was higher than the central bank’s projection of 7-9% inflation for the year.
The SBP hinted in monetary policy statement for September that it might increase the policy rate to achieve mildly positive real interest rates over time.
It is pertinent to mention that inflation remains elevated and real interest rate stands at a negative 2% at present.
Besides, the commercial banks are demanding notably high yields (rate of return) against investment in government papers like T-bills and Pakistan Investment Bonds (PIBs).
The central bank made it clear through a brief press statement that the monetary policy meeting is aimed at removing uncertainty about “inflation and balance of payments (Pakistan’s capacity to make international payments) in the market”.
Earlier, due to the lockdown imposed to contain the spread of Covid-19 in the country, the SBP had aggressively slashed the benchmark interest rate by 625 basis points from March to June 2020 to 7%.
The monetary policy is an effective tool with the central bank that is used to curb inflation. The SBP announces a target rate every two months, which serves as the benchmark for overnight funds in the interbank market.
The policy rate is revised up or down or kept unchanged in relation to the inflation reading and economic activities. Low inflation leads to a reduction in the policy rate in a bid to ramp up economic activities and vice versa.
https://tribune.com.pk/story/233016...RCMHZFeS1HVnpTSTdlOXdJV19VSmJRbzRROVktUFZYUlI
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The country’s current account continued to deteriorate and posted over $5 billion deficit during the first four months of current fiscal year (FY22), mainly due to higher import bill.
Economists said rising commodity prices on international front and strong domestic activity kept the current account deficit elevated. “Rising goods import bill has largely contributed in the higher current account deficit,” they added.
The State Bank of Pakistan (SBP) Friday reported that current account posted $5.084 billion deficit in July-Oct of FY22 against $1.313 billion surplus in corresponding period of last fiscal year (FY21). The Monetary Policy Committee (MPC) of SBP sensing the risk to external account on Friday also increased key policy rate by 150 basis points to 8.75 percent.
On a month-on-months basis, the current account deficit widened to $1.66 billion in October 2021 compared to $1.13 billion in September 2021 due to high energy prices and an uptick in services imports, despite some moderation in non-energy imports.
Monetary policy: SBP raises key interest rate by 150 basis points, takes it to 8.75%
There was also a moderate month-on-month decline in exports and remittances. Current account deficit is likely to stay on the higher side in coming days as Pakistan’s imports continue to increase and commodity prices move upward in the world market.
With the current trend, the SBP is expecting that the current account deficit for FY22 is likely to modestly exceed the previous forecast of 2-3 percent of GDP.
With over 100 percent increase, goods trade deficit surged to $13.803 billion mark in July-Oct of FY22 compared to $6.79 billion in corresponding period of last fiscal year.
According to the SBP, services sector posted a $1.042 million deficit with $2.1 billion exports and $3.1 billion imports during July-Oct of FY22. During the period under review, primary income payments stood at $1.964 billion as against receipts of $245 million.
The cumulative deficit of trade, services and income rose to $16.294 billion during the first four months of this fiscal year as against $9.437 billion for the same period last year.
https://www.brecorder.com/news/4013...count-posts-5bn-deficit-on-higher-import-bill
Economists said rising commodity prices on international front and strong domestic activity kept the current account deficit elevated. “Rising goods import bill has largely contributed in the higher current account deficit,” they added.
The State Bank of Pakistan (SBP) Friday reported that current account posted $5.084 billion deficit in July-Oct of FY22 against $1.313 billion surplus in corresponding period of last fiscal year (FY21). The Monetary Policy Committee (MPC) of SBP sensing the risk to external account on Friday also increased key policy rate by 150 basis points to 8.75 percent.
On a month-on-months basis, the current account deficit widened to $1.66 billion in October 2021 compared to $1.13 billion in September 2021 due to high energy prices and an uptick in services imports, despite some moderation in non-energy imports.
Monetary policy: SBP raises key interest rate by 150 basis points, takes it to 8.75%
There was also a moderate month-on-month decline in exports and remittances. Current account deficit is likely to stay on the higher side in coming days as Pakistan’s imports continue to increase and commodity prices move upward in the world market.
With the current trend, the SBP is expecting that the current account deficit for FY22 is likely to modestly exceed the previous forecast of 2-3 percent of GDP.
With over 100 percent increase, goods trade deficit surged to $13.803 billion mark in July-Oct of FY22 compared to $6.79 billion in corresponding period of last fiscal year.
According to the SBP, services sector posted a $1.042 million deficit with $2.1 billion exports and $3.1 billion imports during July-Oct of FY22. During the period under review, primary income payments stood at $1.964 billion as against receipts of $245 million.
The cumulative deficit of trade, services and income rose to $16.294 billion during the first four months of this fiscal year as against $9.437 billion for the same period last year.
https://www.brecorder.com/news/4013...count-posts-5bn-deficit-on-higher-import-bill
The services sector is where it becomes very clear what ails Pakistan's economy. Services is a relatively low investment needed sector where a country like Pakistan with abundant human capital (capable workers) should be doing well.
Compare it to India which has similar human capital, and has a services sector surplus of $83 billion.
https://www.financialexpress.com/ec...-momentum-imports-grow-surplus-falls/2016744/
If you deflate by the population ratio, Pakistan should still be producing a services surplus of $83 billion/7 = ~$14 billion. Instead it has a deficit of $1 billion.
Forget about building a road to connect West China to the sea, instead figure out what exactly is lacking and how to develop the services sector and Pakistan's economy can progress.
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A largely sympathetic article from New York Times.
And the top 5 readers comments:
1. Pakistan is adding almost 6 million more mouths to feed each year within its borders. Almost all of those additional humans are desperately poor.
As long as Pakistan continues down this road of mindless population growth nothing will fix its economic woes.
The Saudi Crown Prince can help bail a bit more water with cash assistance, but the Pakistani ship is sinking under its own weight of way too many people.
2. The IMF needs to stop propping us all of the governments of the Third World who spend a massive amount of their economic resources on weapons of death and war,
and then demand that the remainder of the world have to pay for their basic needs, and promptly give them vaccines and unlimited medical care resources, so that civil wars go on for generations and military leaders rule failed states, and attack their neighbors for more wealth, to purchase arms of war.
Enough Already !!!
3. In Pakistan, every policy and program is planned and executed under the direction of Pakistan's army, the real decision maker in the country. Imran Khan is just a front to placate and keep up the facade of democracy. Any meaningful salvation on the economic and social front in short term or long term is unlikely until the civilian government gets a free hand to run the country. Sooner that happens, faster would be Pakistan's ability to achieve its true potential.
4. Pakistan cannot afford to help its people while funding terrorism against India, the Taliban and nuclear weapons--it is similar to the US defense budget on steroids.
5. Imran Khan is a supporter of Taliban and controlled by the Pakistani army.
The corruption of his closest associates has been exposed in the Pandora papers and some have resigned.
Reporters without Borders called him “a press freedom predator “ and he has been criticized by his own country’s reporters.
But of course, blaming India and focusing on the enmity and supporting terrorists in Kashmir seems to be main preoccupation of Pakistan’s politicians rather than focusing on improving the lives of the people and bringing peace in the region.
And the top 5 readers comments:
1. Pakistan is adding almost 6 million more mouths to feed each year within its borders. Almost all of those additional humans are desperately poor.
As long as Pakistan continues down this road of mindless population growth nothing will fix its economic woes.
The Saudi Crown Prince can help bail a bit more water with cash assistance, but the Pakistani ship is sinking under its own weight of way too many people.
2. The IMF needs to stop propping us all of the governments of the Third World who spend a massive amount of their economic resources on weapons of death and war,
and then demand that the remainder of the world have to pay for their basic needs, and promptly give them vaccines and unlimited medical care resources, so that civil wars go on for generations and military leaders rule failed states, and attack their neighbors for more wealth, to purchase arms of war.
Enough Already !!!
3. In Pakistan, every policy and program is planned and executed under the direction of Pakistan's army, the real decision maker in the country. Imran Khan is just a front to placate and keep up the facade of democracy. Any meaningful salvation on the economic and social front in short term or long term is unlikely until the civilian government gets a free hand to run the country. Sooner that happens, faster would be Pakistan's ability to achieve its true potential.
4. Pakistan cannot afford to help its people while funding terrorism against India, the Taliban and nuclear weapons--it is similar to the US defense budget on steroids.
5. Imran Khan is a supporter of Taliban and controlled by the Pakistani army.
The corruption of his closest associates has been exposed in the Pandora papers and some have resigned.
Reporters without Borders called him “a press freedom predator “ and he has been criticized by his own country’s reporters.
But of course, blaming India and focusing on the enmity and supporting terrorists in Kashmir seems to be main preoccupation of Pakistan’s politicians rather than focusing on improving the lives of the people and bringing peace in the region.
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For the first time ever, Pakistan’s total debt and liabilities have crossed Rs50.5 trillion, an addition of Rs20.7 trillion under the current government alone, revealed the official figures released on Wednesday.
The State Bank of Pakistan (SBP) released the debt figures till September 2021, a day after Prime Minister Imran Khan described the increasing debt as a “national security issue”.
Figures showed that the total debt and public debt situation deteriorated during the tenure of current Pakistan Tehreek-e-Insaf (PTI) government.
Pakistan’s total debt and liabilities jumped to the record Rs50.5 trillion at the end of September 2021, an addition of Rs20.7 trillion in the past 39 months. There was an increase of nearly 70% in total debt of the country.
In June 2018, every Pakistani owed Rs144,000, which increased to Rs235,000 by September 2021, an additional burden of Rs91,000 or 63% during PTI’s tenure.
Like its predecessor, the PTI government too is running on foreign and domestic loans and has failed to enhance revenues to such levels where its debt burden can be reduced.
The situation is no different when it comes to the public debt, which is the direct responsibility of the federal government.
The government has added Rs16.5 trillion to the public debt during its tenure, which was equal to 165% of the debt the previous Pakistan Muslim League-Nawaz (PML-N) government acquired in five years.
The public debt increased to Rs41.5 trillion by September this year, an addition of Rs16.5 trillion during PTI’s tenure. Total public debt increased 66% from July 2018 to September 2021, showed the official bulletin.
The addition of Rs16.5 trillion to the public debt in the past 39 months was equal to what the last two governments of Pakistan Peoples Party (2008-2013) and PML-N (2013-2018) added in 10 years.
With the addition from fiscal year 2018-19 to September 2021, the total public debt as of June 30, 2021 increased to Rs41.5 trillion, or 77% of GDP, the central bank reported.
The PTI government added, on average, Rs14 billion a day to the public debt, which was more than double the daily average addition of Rs5.8 billion by the PML-N government.
When the PML-N government completed its five-year term, the total public debt stood at Rs24.95 trillion, or 72.5% of GDP.
In February 2019, PM Khan had vowed to bring the public debt down to Rs20 trillion. He had been very critical of the economic policies followed by the previous PPP and PML-N governments and had set up the Debt Inquiry Commission to investigate the reasons behind the addition of Rs18 trillion to the debt stock in 10 years. Despite completion of the inquiry, the premier has withheld the release of the report.
The accumulation of debt is a direct result of the gap between expenditures and revenues, which is widening due to the inelasticity of debt servicing and defence needs and the Federal Board of Revenue’s (FBR) failure to enhance tax collection significantly.
Under the IMF’s loan condition, the government will cut the contingency grants budget by Rs50 billion and the Public Sector Development Programme by Rs200 billion, which will slow down the journey towards development.
Debt breakdown
The federal government’s total domestic debt increased to Rs26.4 trillion, an addition of Rs10 trillion or 61% since June 2018. At the end of PML-N’s tenure, the domestic debt stood at Rs16.4 trillion.
The external debt of the federal government increased 77% to Rs13.8 trillion in the past 39 months. There was a net increase of Rs6 trillion in the external debt, largely due to currency depreciation and building of foreign currency reserves through borrowing.
At the end of PML-N’s tenure, the external debt had stood at Rs7.8 trillion.
The Rs13.8 trillion of external government debt does not include loans obtained for building forex reserves and under the currency swap arrangements. These loans are the responsibility of the central bank.
The steep currency depreciation also contributed to the federal government’s debt. By September 2021, the rupee-dollar parity stood at Rs170.37. In June 2018, the value of the dollar was equal to Rs121.54, showing a massive depreciation of nearly Rs49 or 41%. The current parity is around Rs175.
Total external debt and liabilities, which were $95.2 billion in June 2018, jumped to a record high of $127 billion, an addition of $32 billion under the PTI government. During the five-year tenure of the PML-N, the total increase in the external debt was $34 billion.
The external public debt, which is the direct responsibility of the federal government, increased from $75.3 billion in June 2018 to $99.7 billion in September this year, an addition of $24.4 billion.
The IMF debt, which was $6.1 billion three years ago, jumped to $7.1 billion by September this year, according to the central bank.
The direct consequence of the growing debt pile is a huge increase in the cost of debt servicing.
In June 2018, the country spent $7.5 billion in external debt repayment and its servicing. This cost increased to $13.4 billion by June this year, a surge of 79% in three years. But repayments are being made by signing new loans.
Published in The Express Tribune, November 25th, 2021.
The State Bank of Pakistan (SBP) released the debt figures till September 2021, a day after Prime Minister Imran Khan described the increasing debt as a “national security issue”.
Figures showed that the total debt and public debt situation deteriorated during the tenure of current Pakistan Tehreek-e-Insaf (PTI) government.
Pakistan’s total debt and liabilities jumped to the record Rs50.5 trillion at the end of September 2021, an addition of Rs20.7 trillion in the past 39 months. There was an increase of nearly 70% in total debt of the country.
In June 2018, every Pakistani owed Rs144,000, which increased to Rs235,000 by September 2021, an additional burden of Rs91,000 or 63% during PTI’s tenure.
Like its predecessor, the PTI government too is running on foreign and domestic loans and has failed to enhance revenues to such levels where its debt burden can be reduced.
The situation is no different when it comes to the public debt, which is the direct responsibility of the federal government.
The government has added Rs16.5 trillion to the public debt during its tenure, which was equal to 165% of the debt the previous Pakistan Muslim League-Nawaz (PML-N) government acquired in five years.
The public debt increased to Rs41.5 trillion by September this year, an addition of Rs16.5 trillion during PTI’s tenure. Total public debt increased 66% from July 2018 to September 2021, showed the official bulletin.
The addition of Rs16.5 trillion to the public debt in the past 39 months was equal to what the last two governments of Pakistan Peoples Party (2008-2013) and PML-N (2013-2018) added in 10 years.
With the addition from fiscal year 2018-19 to September 2021, the total public debt as of June 30, 2021 increased to Rs41.5 trillion, or 77% of GDP, the central bank reported.
The PTI government added, on average, Rs14 billion a day to the public debt, which was more than double the daily average addition of Rs5.8 billion by the PML-N government.
When the PML-N government completed its five-year term, the total public debt stood at Rs24.95 trillion, or 72.5% of GDP.
In February 2019, PM Khan had vowed to bring the public debt down to Rs20 trillion. He had been very critical of the economic policies followed by the previous PPP and PML-N governments and had set up the Debt Inquiry Commission to investigate the reasons behind the addition of Rs18 trillion to the debt stock in 10 years. Despite completion of the inquiry, the premier has withheld the release of the report.
The accumulation of debt is a direct result of the gap between expenditures and revenues, which is widening due to the inelasticity of debt servicing and defence needs and the Federal Board of Revenue’s (FBR) failure to enhance tax collection significantly.
Under the IMF’s loan condition, the government will cut the contingency grants budget by Rs50 billion and the Public Sector Development Programme by Rs200 billion, which will slow down the journey towards development.
Debt breakdown
The federal government’s total domestic debt increased to Rs26.4 trillion, an addition of Rs10 trillion or 61% since June 2018. At the end of PML-N’s tenure, the domestic debt stood at Rs16.4 trillion.
The external debt of the federal government increased 77% to Rs13.8 trillion in the past 39 months. There was a net increase of Rs6 trillion in the external debt, largely due to currency depreciation and building of foreign currency reserves through borrowing.
At the end of PML-N’s tenure, the external debt had stood at Rs7.8 trillion.
The Rs13.8 trillion of external government debt does not include loans obtained for building forex reserves and under the currency swap arrangements. These loans are the responsibility of the central bank.
The steep currency depreciation also contributed to the federal government’s debt. By September 2021, the rupee-dollar parity stood at Rs170.37. In June 2018, the value of the dollar was equal to Rs121.54, showing a massive depreciation of nearly Rs49 or 41%. The current parity is around Rs175.
Total external debt and liabilities, which were $95.2 billion in June 2018, jumped to a record high of $127 billion, an addition of $32 billion under the PTI government. During the five-year tenure of the PML-N, the total increase in the external debt was $34 billion.
The external public debt, which is the direct responsibility of the federal government, increased from $75.3 billion in June 2018 to $99.7 billion in September this year, an addition of $24.4 billion.
The IMF debt, which was $6.1 billion three years ago, jumped to $7.1 billion by September this year, according to the central bank.
The direct consequence of the growing debt pile is a huge increase in the cost of debt servicing.
In June 2018, the country spent $7.5 billion in external debt repayment and its servicing. This cost increased to $13.4 billion by June this year, a surge of 79% in three years. But repayments are being made by signing new loans.
Published in The Express Tribune, November 25th, 2021.
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ISLAMABAD: Prime Minister Imran Khan has described low exports as the biggest problem of the country “because no attention was paid on increasing exports”.
Addressing the launching ceremony “Soni Dharti Remittance Scheme” for overseas Pakistanis, on Thursday, the prime minister said that although exports are expected to be highest in the ongoing fiscal year these would still be very little compared to the other countries in the region.
He further stated that country faces balance of payment problem as soon as the economy started growing and consequently, the country has to borrow from the International Monetary Fund (IMF) for balance of payment support. This is the reason that the country has taken so many Fund programme.
The premier said that the government is focussing on industrialisation and there is good growth in large scale manufacturing (LSM) despite corona, adding that as long as exports do not increase, the gap between imports and exports would be filled by overseas Pakistanis remittance.
He said that the benefit of incentives being provided by the State Bank of Pakistan (SBP) to the overseas Pakistanis in sending remittances is becoming visible in the form of increase in remittances. From overseas Pakistanis most of the investment comes in the property sector, and Roshan Digital Account (RDA) allows them to make safe invest in real estate through banks and the government will give them additional incentives and exemptions on tax.
The prime minister said, “We should try to incentivise nine million Pakistanis living abroad for making investment in Pakistan through ease of doing business and facilitating them to send their money through banking channel. The overseas Pakistanis should be provided facilities and treated as VIP.”
Adviser to the Prime Minister on Finance Shaukat Tarin said that overseas Pakistanis, who have been helping the country to bridge gap between imports and exports through their remittance, would for the first time get reward through the scheme.
This is a small thanks to the overseas Pakistanis, the adviser added.
Governor SBP Reza Baqir said that the Central Bank’s target is to support the government policies and the new scheme being launched would target the overseas Pakistan like Roshan digital Account.
He said that overseas Pakistanis would be connected through provision of facilitates in remitting their remittances through banking channels and would get reward through “Soni Dharti Remittance Scheme”.
He said that the scheme has been designed for those overseas Pakistanis who do not have accounts or unable to open account.
Now this App would be of great help for them to send money from abroad.
Copyright Business Recorder, 2021
Addressing the launching ceremony “Soni Dharti Remittance Scheme” for overseas Pakistanis, on Thursday, the prime minister said that although exports are expected to be highest in the ongoing fiscal year these would still be very little compared to the other countries in the region.
He further stated that country faces balance of payment problem as soon as the economy started growing and consequently, the country has to borrow from the International Monetary Fund (IMF) for balance of payment support. This is the reason that the country has taken so many Fund programme.
The premier said that the government is focussing on industrialisation and there is good growth in large scale manufacturing (LSM) despite corona, adding that as long as exports do not increase, the gap between imports and exports would be filled by overseas Pakistanis remittance.
He said that the benefit of incentives being provided by the State Bank of Pakistan (SBP) to the overseas Pakistanis in sending remittances is becoming visible in the form of increase in remittances. From overseas Pakistanis most of the investment comes in the property sector, and Roshan Digital Account (RDA) allows them to make safe invest in real estate through banks and the government will give them additional incentives and exemptions on tax.
The prime minister said, “We should try to incentivise nine million Pakistanis living abroad for making investment in Pakistan through ease of doing business and facilitating them to send their money through banking channel. The overseas Pakistanis should be provided facilities and treated as VIP.”
Adviser to the Prime Minister on Finance Shaukat Tarin said that overseas Pakistanis, who have been helping the country to bridge gap between imports and exports through their remittance, would for the first time get reward through the scheme.
This is a small thanks to the overseas Pakistanis, the adviser added.
Governor SBP Reza Baqir said that the Central Bank’s target is to support the government policies and the new scheme being launched would target the overseas Pakistan like Roshan digital Account.
He said that overseas Pakistanis would be connected through provision of facilitates in remitting their remittances through banking channels and would get reward through “Soni Dharti Remittance Scheme”.
He said that the scheme has been designed for those overseas Pakistanis who do not have accounts or unable to open account.
Now this App would be of great help for them to send money from abroad.
Copyright Business Recorder, 2021
PTI has taken a record Rs20 trillion of loans in 39 months , taking Pakistan’s total debt to Rs 50 trillion.
In other words, PTI has taken 40% of Pakistan total’s loans in just 39 months.
I remember Khan saying he would rather commit suicide than to take loans.
In other words, PTI has taken 40% of Pakistan total’s loans in just 39 months.
I remember Khan saying he would rather commit suicide than to take loans.
Mamoon
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Imran has destroyed Pakistan’s economy because he has no idea what he is doing. There is no plan. 3.5 years on, all we have had are dumb decisions, excuses and blame-shifting.
Bewal Express
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Can you explain how you came to that figure? I hope you haven't just converted Dollars into a depreciated currency because that would be a little basic and would show badniyaati on your part, never mind a basic misunderstanding of how these things work.
Majority of the figures quoted in media by opposition are due to our currency depreciation. In real terms, the loan growth has slowed down during PTI government. Currency depreciation is responsible for majority of problems but something this government had no control over. For how long can you afford to artificially control Dollar rate with extremely low reserves.
Here is the news story.
https://tribune.com.pk/story/2330983/pakistans-debt-liabilities-cross-rs50tr
Why is it that if something goes wrong, you lot come up with a million excuses. Who is responsible for currency depreciation? The bucks stops at the current PTI government; they are in power and they are in with a very large mandate. All decisions are made by them, not by someone sitting in Uganda. We need to own it that Imran has been the most flop PM in Pakistan's history.
Savak
World Star
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You wanted the pti govt to burn through their remaining fx reserves to artificially control the ER like their pre decessors did?
Savak
World Star
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Also who says the pti govt is in with a very large mandate? Do they have a two thirds majority in parliament? They were only able to form a govt after getting some allies on board
Bewal Express
Test Star
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Firstly,the money borrowed is in Dollars and that's what they should be quoted and money borrowed on Rps should be quoted in Rps. If you quoted the real value( in rps) of what MS and the mafia borrowed, you would see that IK hasn't borrowed this ludicrous some you quoted.
The Rp is weak because Modis friend spent by some estimates spent $50bn of precious foreign reserves and kept an overvalued Rp which destroyed our economy, our exports were down to $23bn and imports at $60bn+. The exchange reflects an equilibrium of the demand and supply and has nothing to do with IK but reflects the value of your currency.
Manunited18
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How long before the Rp gets back to some sort of respectability level and strength.
Bewal Express
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Our exports need to hit 50bn and we then start to see the Rp around 150 or the oil price falls to $40. Our exports will rise as IK has done excellent work in terms of textiles and lots of investment has taken place but that will take time.
Bewal Express
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Tax collection is up and that is with a corrupt FBR, (and along with Punjab Police), and no real reform. Just imagine what our tax collection could be if this organisation was scrapped and good people, on good pay were hired. Its not possible to reform these mafia led organisations. But IK has introduced track and trace, an amazing and historic achievement.
Manunited18
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Good luck to Captain saab, the guy is so driven by extreme challenges.
Bewal Express
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The mafia has created a system where they fleece PK and live a life of luxury and the losers that support the mafia ask why Kaptaan hasnt sorted out the mess they created. These losers arent even ashamed that they are asking the question and are too stupid and dishonest to realise who created this mafia state.
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The inflation skyrocketed to 11.5% in November 2021 – the fastest pace in 21 months – due to government’s administrative decisions coupled with steep currency depreciation, which was making food, electricity and transport unaffordable for the common man.
The Consumer Price Index (CPI), on a month-on-month basis, jumped 3% - the highest monthly reading in the past 13-and-a-half years, reflecting a massive increase in prices.
The uncontrolled prices compelled on Tuesday the government employees to stage a sit-in in front of parliament. They demanded a further increase in their salaries to offset the impact of soaring prices.
The inflation rate surged 11.5% in November compared to the same month of previous year, the Pakistan Bureau of Statistics (PBS) reported on Tuesday – a day earlier than its periodic release. However, it subsequently removed the statement from its website.
The 11.5% annual inflation rate was the highest since February 2020, showed the statistics, dashing government expectations of keeping the index below 10%.
Last week, the central bank increased interest rate by 1.5 percentage point to 8.75% amid expectations that the rate would go up further in the next monetary policy meeting that the State Bank of Pakistan has convened on December 14.
More worryingly, the Wholesale Price Index (WPI) skyrocketed 27% in November, indicating that prices would remain very high in the coming months.
The WPI rose mainly because of a massive increase in prices of textile and apparels, metal products, transport goods, food, beverages and leather products.
A major criticism against former finance minister Dr Abdul Hafeez Shaikh was that he failed to control inflation.
The latest inflation reading suggests that prices have gone out of the control of the government, which has not yet fulfilled its promise to reduce ghee prices by Rs45 to Rs290 per kg by slashing duties and taxes.
Finance Adviser Tarin and Planning Minister Asad Umar had announced that taxes and duties would be reduced to cut the boiling cooking oil and ghee prices. Instead, the ghee prices have shot up to Rs390 to Rs400 per kg.
The CPI-based inflation accelerated to 12% in urban areas – the highest level since January 2020. The inflation rate swelled to 10.9% in villages and towns – the highest reading since March 2020, according to the PBS.
It was mainly because of increase in prices of non-food items owing to the government’s decision to increase prices of electricity and petroleum products. However, the government on Tuesday kept the petroleum product prices unchanged for the next 15 days.
Non-food inflation surged to 12% in urban areas and 13% in rural areas in November, according to the national data collecting agency.
The pace of food inflation accelerated to 11.9% in cities and to 8.6% in villages and towns. Prices of non-perishable goods jumped significantly as people still awaited the government’s decision to reduce prices of cooking oil, sugar and wheat flour.
The surge in prices came amid a sharp fall in the rupee’s value over the past three months to around Rs176 to a dollar. On May 3, the rupee had traded at Rs153.36 to a dollar, which lost Rs23, or 15% of its value, in just six months.
The reduction in the rupee’s value is pushing up the cost of every imported commodity including wheat, sugar, cooking oil, crude oil and raw material for industries.
Core inflation – calculated by excluding food and energy items –increased significantly to 7.6% in urban areas and 8.2% in rural areas last month, reported the national data collecting agency.
The core inflation-adjusted central bank’s real interest rate is still positive by 0.6%.
The food group saw 10.5% increase in prices in November compared to the same month a year ago despite 3.6% reduction in prices of perishable goods. Prices of non-perishable food items soared 13.6%.
PBS stated that vegetable ghee prices increased over 58%, mustard oil 57%, cooking oil 54%, meat 20%, wheat flour 19%, milk 12%, vegetables and butter 11% and wheat 10%.
Inflation rate for the housing, water, electricity, gas and fuel group – having one-fourth weight in the basket – increased 15% last month – a double-digit increase due to the government’s decision to increase prices of electricity by 48%.
Household requirement group prices increased 10.4% and transport group prices rose 24.4%, according to the PBS. Similarly, the dining cost at restaurants increased over 11%.
Shahid Kardar, former State Bank governor, said last week that inflation would be on average 11% in the current fiscal year and 14% during the remainder of the fiscal year after implementation of IMF’s prior actions.
The IMF is asking to introduce a mini-budget, increase electricity prices and enhance petroleum levy by another Rs20 per litre.
Average inflation during first five months (July-November) remained at 9.3% - far higher than the government’s target and projection made by the State Bank of Pakistan.
Published in The Express Tribune, December 1st, 2021.
The Consumer Price Index (CPI), on a month-on-month basis, jumped 3% - the highest monthly reading in the past 13-and-a-half years, reflecting a massive increase in prices.
The uncontrolled prices compelled on Tuesday the government employees to stage a sit-in in front of parliament. They demanded a further increase in their salaries to offset the impact of soaring prices.
The inflation rate surged 11.5% in November compared to the same month of previous year, the Pakistan Bureau of Statistics (PBS) reported on Tuesday – a day earlier than its periodic release. However, it subsequently removed the statement from its website.
The 11.5% annual inflation rate was the highest since February 2020, showed the statistics, dashing government expectations of keeping the index below 10%.
Last week, the central bank increased interest rate by 1.5 percentage point to 8.75% amid expectations that the rate would go up further in the next monetary policy meeting that the State Bank of Pakistan has convened on December 14.
More worryingly, the Wholesale Price Index (WPI) skyrocketed 27% in November, indicating that prices would remain very high in the coming months.
The WPI rose mainly because of a massive increase in prices of textile and apparels, metal products, transport goods, food, beverages and leather products.
A major criticism against former finance minister Dr Abdul Hafeez Shaikh was that he failed to control inflation.
The latest inflation reading suggests that prices have gone out of the control of the government, which has not yet fulfilled its promise to reduce ghee prices by Rs45 to Rs290 per kg by slashing duties and taxes.
Finance Adviser Tarin and Planning Minister Asad Umar had announced that taxes and duties would be reduced to cut the boiling cooking oil and ghee prices. Instead, the ghee prices have shot up to Rs390 to Rs400 per kg.
The CPI-based inflation accelerated to 12% in urban areas – the highest level since January 2020. The inflation rate swelled to 10.9% in villages and towns – the highest reading since March 2020, according to the PBS.
It was mainly because of increase in prices of non-food items owing to the government’s decision to increase prices of electricity and petroleum products. However, the government on Tuesday kept the petroleum product prices unchanged for the next 15 days.
Non-food inflation surged to 12% in urban areas and 13% in rural areas in November, according to the national data collecting agency.
The pace of food inflation accelerated to 11.9% in cities and to 8.6% in villages and towns. Prices of non-perishable goods jumped significantly as people still awaited the government’s decision to reduce prices of cooking oil, sugar and wheat flour.
The surge in prices came amid a sharp fall in the rupee’s value over the past three months to around Rs176 to a dollar. On May 3, the rupee had traded at Rs153.36 to a dollar, which lost Rs23, or 15% of its value, in just six months.
The reduction in the rupee’s value is pushing up the cost of every imported commodity including wheat, sugar, cooking oil, crude oil and raw material for industries.
Core inflation – calculated by excluding food and energy items –increased significantly to 7.6% in urban areas and 8.2% in rural areas last month, reported the national data collecting agency.
The core inflation-adjusted central bank’s real interest rate is still positive by 0.6%.
The food group saw 10.5% increase in prices in November compared to the same month a year ago despite 3.6% reduction in prices of perishable goods. Prices of non-perishable food items soared 13.6%.
PBS stated that vegetable ghee prices increased over 58%, mustard oil 57%, cooking oil 54%, meat 20%, wheat flour 19%, milk 12%, vegetables and butter 11% and wheat 10%.
Inflation rate for the housing, water, electricity, gas and fuel group – having one-fourth weight in the basket – increased 15% last month – a double-digit increase due to the government’s decision to increase prices of electricity by 48%.
Household requirement group prices increased 10.4% and transport group prices rose 24.4%, according to the PBS. Similarly, the dining cost at restaurants increased over 11%.
Shahid Kardar, former State Bank governor, said last week that inflation would be on average 11% in the current fiscal year and 14% during the remainder of the fiscal year after implementation of IMF’s prior actions.
The IMF is asking to introduce a mini-budget, increase electricity prices and enhance petroleum levy by another Rs20 per litre.
Average inflation during first five months (July-November) remained at 9.3% - far higher than the government’s target and projection made by the State Bank of Pakistan.
Published in The Express Tribune, December 1st, 2021.
Supply of foreign exchange is from exports, and exports are dependent upon economic development, specifically development of modern industries. Economic development has everything to do with the PM of the country, in fact for a country like Pakistan which is facing so many economic difficulties, economic development should be the most important work for the PM.
This is hilarious. For exports, what is needed is Foreign Direct Investment (FDI) as only foreign firms have the technology needed to create substantial new exports.
FDI has been dying thanks to IK's praise for the Taliban and constant verbal attacks on India.
"FDI drops 24% to $223m in October 2021"
https://www.geo.tv/latest/382675-fdi-drops-24-to-223m-in-october-2021
In contrast to Pakistan's approximately $2 billion FDI for 2020, Vietnam (with less than a half of Pakistan's population) received $28 billion FDI.
https://www.statista.com/statistics/1011555/vietnam-registered-fdi-capital/
I assume you are going to blame NS rather than IK for Pakistan's inability to attract FDI
No replies.
IK won't make the country friendly for FDI, and his supporters will keep blaming NS. In the 3.5 years there has been worsening of the environment for FDI, so FDI keeps falling. If IK had taken steps to improve the economic environment FDI should have shown an upward trend. He keeps saying it is important for Pakistan to increase exports, but is totally clueless about how to make it happen.
Last edited:
Mamoon
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[MENTION=142162]Napa[/MENTION]
Investing in a country is no different to personal investments. Smart investors invest when they see growth and stability.
Pakistan under the PTI government offers no growth and stability. Unfortunately for Imran and his supporters, being handsome is not a criteria for attracting investors.
Imran’s open patronage of a terrorist organization in Afghanistan as well as his blind eye towards the human rights abuses in China has completely diminished Pakistan’s chances of attracting FDI.
Investing in a country is no different to personal investments. Smart investors invest when they see growth and stability.
Pakistan under the PTI government offers no growth and stability. Unfortunately for Imran and his supporters, being handsome is not a criteria for attracting investors.
Imran’s open patronage of a terrorist organization in Afghanistan as well as his blind eye towards the human rights abuses in China has completely diminished Pakistan’s chances of attracting FDI.
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The Pakistan Stock Exchange (PSX) witnessed a massive selling pressure on Thursday as the benchmark KSE-100 index shed more than 2,000 points in intraday trading.
The market began its slide soon after opening at 45,369.14 points, with the benchmark KSE-100 index down 2,005 points, or 4.42 per cent, by 1:30pm. As per the PSX Rulebook, if the index goes five per cent above or below its last close and stays there for five minutes, trading in all securities is halted for a specified period.
Intermarket Securities' head of equities Raza Jafri cited the widening trade deficit as the reason behind the plunge, saying it will keep the rupee under pressure and lead to "aggressive" increases in the interest rate.
"However, it is important to keep in mind that authorities have already commenced macro-course correction while global commodities are coming down due to Omicron [variant of the coronavirus]. There may be an element of one-offs in November imports too and coming months may show better numbers," he added.
The downturn in the market may be treated as an opportunity, he said.
The view was also shared by CEO of Topline Securities Mohammad Sohail who said the "shocking" import bill in November, coupled with the central bank's "aggressive borrowing" in yesterday's T-bill auction were behind the nosedive.
Global trend
Meanwhile, AKY Securities Chief Executive Officer Amin Yousuf noted that stock markets across the world were bearish on the back of countries imposing restrictions to control the spread of the Omicron variant. A similar effect was also seen at the PSX, he added.
The hike in the interest rate by 125 basis points by the State Bank of Pakistan (SBP) during the auction of T-bills was also increasing investors' problems, Yousuf said. In addition, there was an expectation of further hike in the interest rate in the monetary policy announcement on December 14 because of which there was selling pressure in the market, he added.
Meanwhile, the US dollar soared to Rs176.30 in interbank market after gaining Rs1 in value.
Rise in trade deficit, inflation
A day earlier, the government released provisional data that showed trade deficit rose steeply by 162.4pc in the month of November, driven largely by more than triple increase in imports compared to exports from the country.
The reversing trend in trade deficit was witnessed for the fifth consecutive month as merchandise trade deficit reached $5.107 billion in November against $1.946bn over the corresponding month last year. This is the highest trade deficit recorded in a single month in terms of value.
Earlier this week, data released by the Pakistan Bureau of Statistics showed inflation edged up to 11.5pc from 9.2pc, the highest increase noted in the past 20 months influenced by a record hike in fuel prices in October.
The massive rupee depreciation fuelled import-led inflation. Inflation measured by the Consumer Price Index (CPI) increased to its highest level in 20 months — the period when global oil prices kept rising steadily undermining earlier gains.
DAWN
The market began its slide soon after opening at 45,369.14 points, with the benchmark KSE-100 index down 2,005 points, or 4.42 per cent, by 1:30pm. As per the PSX Rulebook, if the index goes five per cent above or below its last close and stays there for five minutes, trading in all securities is halted for a specified period.
Intermarket Securities' head of equities Raza Jafri cited the widening trade deficit as the reason behind the plunge, saying it will keep the rupee under pressure and lead to "aggressive" increases in the interest rate.
"However, it is important to keep in mind that authorities have already commenced macro-course correction while global commodities are coming down due to Omicron [variant of the coronavirus]. There may be an element of one-offs in November imports too and coming months may show better numbers," he added.
The downturn in the market may be treated as an opportunity, he said.
The view was also shared by CEO of Topline Securities Mohammad Sohail who said the "shocking" import bill in November, coupled with the central bank's "aggressive borrowing" in yesterday's T-bill auction were behind the nosedive.
Global trend
Meanwhile, AKY Securities Chief Executive Officer Amin Yousuf noted that stock markets across the world were bearish on the back of countries imposing restrictions to control the spread of the Omicron variant. A similar effect was also seen at the PSX, he added.
The hike in the interest rate by 125 basis points by the State Bank of Pakistan (SBP) during the auction of T-bills was also increasing investors' problems, Yousuf said. In addition, there was an expectation of further hike in the interest rate in the monetary policy announcement on December 14 because of which there was selling pressure in the market, he added.
Meanwhile, the US dollar soared to Rs176.30 in interbank market after gaining Rs1 in value.
Rise in trade deficit, inflation
A day earlier, the government released provisional data that showed trade deficit rose steeply by 162.4pc in the month of November, driven largely by more than triple increase in imports compared to exports from the country.
The reversing trend in trade deficit was witnessed for the fifth consecutive month as merchandise trade deficit reached $5.107 billion in November against $1.946bn over the corresponding month last year. This is the highest trade deficit recorded in a single month in terms of value.
Earlier this week, data released by the Pakistan Bureau of Statistics showed inflation edged up to 11.5pc from 9.2pc, the highest increase noted in the past 20 months influenced by a record hike in fuel prices in October.
The massive rupee depreciation fuelled import-led inflation. Inflation measured by the Consumer Price Index (CPI) increased to its highest level in 20 months — the period when global oil prices kept rising steadily undermining earlier gains.
DAWN
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The government’s efforts to enhance exports are bearing fruit as Pakistan’s foreign shipments soared to an all-time high in November, however, ballooning imports pose a risk to the country’s earnings.
In November 2021, Pakistan’s exports surged to $2.9 billion as compared to $2.17 billion in the same month of previous year, showing an increase of 33% year-on-year and 18% month-on-month, Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood revealed on his official Twitter handle on Wednesday.
“Our export target for the month (November) was $2.6 billion,” he said and highlighted that exports increased 27% on a year-on-year basis to $12.37 billion in the first five months (July-November) of current fiscal year.
Talking to The Express Tribune, Arif Habib Commodities CEO Ahsan Mehanti appreciated the growth trend and said that surging exports were a good sign for the economy, as they created employment, improved the gross domestic product (GDP) and fetched foreign exchange.
“As a result, the rupee is likely to stabilise given the soaring export numbers,” he said.
However, the CEO predicted that the country’s imports would swell as well in the face of raw material shortage. “Exports increased mainly because of rupee depreciation,” he remarked.
Echoing similar views, Pak-Kuwait Investment Company Head of Research Samiullah Tariq projected that imports would shoot up to around $7 billion, so the trade deficit would be close to $4 billion.
Endorsing the prediction, Arif Habib Limited Head of Research Tahir Abbas told The Express Tribune that assuming a trade deficit of around $4 billion and remittances of $2.5 billion, it was expected that the current account gap would touch $1.4 billion for November.
Topline Securities economist Atif Zafar said that export growth was good, but it was mostly driven by higher global commodity prices.
Although import figures had not been released yet, they were expected to touch $7 billion, which would result in a trade deficit of $4 billion. “It will be a record deficit,” he remarked.
Referring to data of the Ministry of Planning and the Pakistan Bureau of Statistics (PBS), economist Khurram Schehzad underlined that exports had increased in terms of value and not in terms of volume.
“It means global commodity prices are driving the value of exports, otherwise our export volumes are down,” he said, adding that exports would have actually declined had global prices not gone up.
On the flip side, imports were increasing significantly, which would widen the trade deficit, he said.
“Exports alone do not reflect anything. It is the entire net impact that matters by taking imports into account as well.”
“If monthly exports are the highest ever, imports may be the highest ever too,” Schehzad maintained.
Earlier in November, the adviser on commerce stated that the Ministry of Commerce was keeping a close watch on imports and there was a need to work closely with the State Bank of Pakistan (SBP) to curb imports of non-essential items.
He made these remarks while chairing a meeting held to discuss the import of goods during the current fiscal year and its impact on trade and current account deficits.
Meeting participants said that imports increased 64% to $24.99 billion during July-October 2021 against $15.19 billion in the same period of previous year.
In absolute terms, the net increase in imports over the four-month period was $9.801 billion.
It had been observed that around 40% of the increase was in investment-driven imports, such as raw material and intermediate goods, they said, adding that the increase indicated that industrial activity was picking up in the country.
The rise in the import of capital goods, including machinery, reflected industrial expansion, upgrade and setting up of new industrial units.
In the long run, these imports were important for economic growth and job creation, they highlighted.
When asked about the remaining 60% of imports, they said that the imports mainly consisted of energy (petroleum, coal and gas), which had a share of 34%, while vaccines had 11% share, food 8%, consumer goods 2% and others 5%.
Most of these imports were inelastic in nature, the meeting participants said.
The import of consumer goods consumed $239 million, food items $823 million, capital goods $1,620 million, raw material and intermediate goods $2,209 million, petroleum, coal and gas $3,364 million, vaccines $1,068 million and others $478 million.
Meeting participants highlighted that Pakistan’s non-energy import bill decreased 12.5%, or $624 million, in October 2021 compared to September 2021.
On the occasion, Dawood directed the officials attending the meeting to work closely with the SBP on curbing imports of non-essential goods.
Published in The Express Tribune, December 2nd, 2021.
In November 2021, Pakistan’s exports surged to $2.9 billion as compared to $2.17 billion in the same month of previous year, showing an increase of 33% year-on-year and 18% month-on-month, Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood revealed on his official Twitter handle on Wednesday.
“Our export target for the month (November) was $2.6 billion,” he said and highlighted that exports increased 27% on a year-on-year basis to $12.37 billion in the first five months (July-November) of current fiscal year.
Talking to The Express Tribune, Arif Habib Commodities CEO Ahsan Mehanti appreciated the growth trend and said that surging exports were a good sign for the economy, as they created employment, improved the gross domestic product (GDP) and fetched foreign exchange.
“As a result, the rupee is likely to stabilise given the soaring export numbers,” he said.
However, the CEO predicted that the country’s imports would swell as well in the face of raw material shortage. “Exports increased mainly because of rupee depreciation,” he remarked.
Echoing similar views, Pak-Kuwait Investment Company Head of Research Samiullah Tariq projected that imports would shoot up to around $7 billion, so the trade deficit would be close to $4 billion.
Endorsing the prediction, Arif Habib Limited Head of Research Tahir Abbas told The Express Tribune that assuming a trade deficit of around $4 billion and remittances of $2.5 billion, it was expected that the current account gap would touch $1.4 billion for November.
Topline Securities economist Atif Zafar said that export growth was good, but it was mostly driven by higher global commodity prices.
Although import figures had not been released yet, they were expected to touch $7 billion, which would result in a trade deficit of $4 billion. “It will be a record deficit,” he remarked.
Referring to data of the Ministry of Planning and the Pakistan Bureau of Statistics (PBS), economist Khurram Schehzad underlined that exports had increased in terms of value and not in terms of volume.
“It means global commodity prices are driving the value of exports, otherwise our export volumes are down,” he said, adding that exports would have actually declined had global prices not gone up.
On the flip side, imports were increasing significantly, which would widen the trade deficit, he said.
“Exports alone do not reflect anything. It is the entire net impact that matters by taking imports into account as well.”
“If monthly exports are the highest ever, imports may be the highest ever too,” Schehzad maintained.
Earlier in November, the adviser on commerce stated that the Ministry of Commerce was keeping a close watch on imports and there was a need to work closely with the State Bank of Pakistan (SBP) to curb imports of non-essential items.
He made these remarks while chairing a meeting held to discuss the import of goods during the current fiscal year and its impact on trade and current account deficits.
Meeting participants said that imports increased 64% to $24.99 billion during July-October 2021 against $15.19 billion in the same period of previous year.
In absolute terms, the net increase in imports over the four-month period was $9.801 billion.
It had been observed that around 40% of the increase was in investment-driven imports, such as raw material and intermediate goods, they said, adding that the increase indicated that industrial activity was picking up in the country.
The rise in the import of capital goods, including machinery, reflected industrial expansion, upgrade and setting up of new industrial units.
In the long run, these imports were important for economic growth and job creation, they highlighted.
When asked about the remaining 60% of imports, they said that the imports mainly consisted of energy (petroleum, coal and gas), which had a share of 34%, while vaccines had 11% share, food 8%, consumer goods 2% and others 5%.
Most of these imports were inelastic in nature, the meeting participants said.
The import of consumer goods consumed $239 million, food items $823 million, capital goods $1,620 million, raw material and intermediate goods $2,209 million, petroleum, coal and gas $3,364 million, vaccines $1,068 million and others $478 million.
Meeting participants highlighted that Pakistan’s non-energy import bill decreased 12.5%, or $624 million, in October 2021 compared to September 2021.
On the occasion, Dawood directed the officials attending the meeting to work closely with the SBP on curbing imports of non-essential goods.
Published in The Express Tribune, December 2nd, 2021.
Yes, investment in general and the most important form of investment (FDI from Western multinationals which has been absolutely essential in the development of modern industries) in particular happens when there is stability and growth.
FDI from Western firms in Pakistan is withering on the vine, while delusional PTI supporters believe that IK has increased investments in Pakistan.
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- 217,977
Prime Minister Imran Khan on Thursday appointed a new federal finance secretary – the sixth in three years – after the current one bowed out, leaving many crucial decisions on his successor including key appointments and guarding public purse ahead of next elections.
The government transferred finance secretary Yusuf Khan as he was reluctant to continue in the post due to differences on many policy and operational issues. Khan also wanted to work in a less stressful environment.
“Yusuf Khan is transferred and posted as Secretary of the Secretariat of the Council of Common Interests,” said a notification issued by the Establishment Division.
Khan remained the finance secretary for hardly six months. During the six-month stint, he had been unwilling to continue on many occasions, said sources.
The outgoing secretary also had differences of opinion on the Kamyab Pakistan Programme, which eventually led to a significant cut in the size of the programme and the amount of guarantees.
There was also pressure on Khan to give a budget to the Special Technology Zone Authority, which he refused without doing proper paperwork, said the sources.
They said there was another issue of working in the Q-Block as a team due to temperament issues of Finance Adviser Shaukat Tarin.
Khan was weak in terms of economic management but was a good administrator, said the sources.
Special Assistant to Prime Minister on Finance and Revenue Dr Waqar Masood Khan had played a role in posting Khan as the finance secretary. His predecessor Dr Kamran Afzal had served as finance secretary for just five months.
In Khan’s place, PM Khan has brought in Hamed Yaqoob Sheikh as new finance secretary. Sheikh was earlier serving as planning ministry secretary.
In May, when the government posted Khan as finance secretary, its first choice was Hamed Yaqoob Sheikh. Sheikh at that time preferred to serve in the planning ministry.
The government has posted Abdul Aziz Uqaili as the new secretary of the Planning Division.
Lack of stability in the economic team is causing uncertainty in the economic policy front. The stock market on Thursday had a bloodbath when the index dropped over 2,135 points after the market reacted to the news of a $7.85 billion monthly import bill and the government’s desperation to borrow at any cost from the banks.
Shaukat Tarin is the fourth de facto finance minister appointed by Prime Minister Imran Khan. Tarin’s first ad-hoc term for six months ended on October 16 after the government could not get him elected as a member of Parliament. Now, he will contest the Senate election from Khyber Pakhtunkhwa, scheduled to take place on December 20th.
The finance secretary has been transferred in the middle of the government’s efforts to implement pre-conditions set by the IMF for the revival of the $6 billion stalled programme. The secretary finance always plays a critical role in negotiations with the IMF, as all the technical level issues are sorted out at the level of the finance secretary.
Another challenge for the new finance secretary will be to make appointments in key departments on merit like Securities and Exchange Commission of Pakistan (SECP). The two positions of the commissioners SECP have already been vacant for the past many months.
The incumbent Chairman SECP Amir Khan is also going to complete his term in few days and the government has not yet advertised the position of the commissioner that will be vacant after the end of Amir’s tenure.
It has to be seen whether the new finance secretary will like to make fresh appointments in the SECP by following a transparent procedure.
Fiscal consolidation will be another challenge for Hamed Yaqoob Sheikh, as there will be increasing pressure on him to open public purse ahead of next general elections.
Published in The Express Tribune, December 3rd, 2021.
The government transferred finance secretary Yusuf Khan as he was reluctant to continue in the post due to differences on many policy and operational issues. Khan also wanted to work in a less stressful environment.
“Yusuf Khan is transferred and posted as Secretary of the Secretariat of the Council of Common Interests,” said a notification issued by the Establishment Division.
Khan remained the finance secretary for hardly six months. During the six-month stint, he had been unwilling to continue on many occasions, said sources.
The outgoing secretary also had differences of opinion on the Kamyab Pakistan Programme, which eventually led to a significant cut in the size of the programme and the amount of guarantees.
There was also pressure on Khan to give a budget to the Special Technology Zone Authority, which he refused without doing proper paperwork, said the sources.
They said there was another issue of working in the Q-Block as a team due to temperament issues of Finance Adviser Shaukat Tarin.
Khan was weak in terms of economic management but was a good administrator, said the sources.
Special Assistant to Prime Minister on Finance and Revenue Dr Waqar Masood Khan had played a role in posting Khan as the finance secretary. His predecessor Dr Kamran Afzal had served as finance secretary for just five months.
In Khan’s place, PM Khan has brought in Hamed Yaqoob Sheikh as new finance secretary. Sheikh was earlier serving as planning ministry secretary.
In May, when the government posted Khan as finance secretary, its first choice was Hamed Yaqoob Sheikh. Sheikh at that time preferred to serve in the planning ministry.
The government has posted Abdul Aziz Uqaili as the new secretary of the Planning Division.
Lack of stability in the economic team is causing uncertainty in the economic policy front. The stock market on Thursday had a bloodbath when the index dropped over 2,135 points after the market reacted to the news of a $7.85 billion monthly import bill and the government’s desperation to borrow at any cost from the banks.
Shaukat Tarin is the fourth de facto finance minister appointed by Prime Minister Imran Khan. Tarin’s first ad-hoc term for six months ended on October 16 after the government could not get him elected as a member of Parliament. Now, he will contest the Senate election from Khyber Pakhtunkhwa, scheduled to take place on December 20th.
The finance secretary has been transferred in the middle of the government’s efforts to implement pre-conditions set by the IMF for the revival of the $6 billion stalled programme. The secretary finance always plays a critical role in negotiations with the IMF, as all the technical level issues are sorted out at the level of the finance secretary.
Another challenge for the new finance secretary will be to make appointments in key departments on merit like Securities and Exchange Commission of Pakistan (SECP). The two positions of the commissioners SECP have already been vacant for the past many months.
The incumbent Chairman SECP Amir Khan is also going to complete his term in few days and the government has not yet advertised the position of the commissioner that will be vacant after the end of Amir’s tenure.
It has to be seen whether the new finance secretary will like to make fresh appointments in the SECP by following a transparent procedure.
Fiscal consolidation will be another challenge for Hamed Yaqoob Sheikh, as there will be increasing pressure on him to open public purse ahead of next general elections.
Published in The Express Tribune, December 3rd, 2021.
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https://unctad.org/webflyer/world-investment-report-2021
I would like you to read this and let me know your views.
Pakistan is not living in a vacuum.
Obviously there is some bias against PM Imran Khan so I don't expect a good answer but just try and be a bit balanced and not get carried away with the rest.
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The government on Thursday finalised a ‘mini-budget’ involving fiscal adjustments and expenditure cuts worth about Rs600 billion as part of an understanding with the International Monetary Fund (IMF) to cool down the over-heating economy.
The steps will serve to reverse the effects of the federal government’s ‘pro-growth budget’ for Fiscal Year 2022 adopted only five months ago, according to some analysts.
The steps are being described as the “prior actions” that will pave way for submission of Pakistan’s request to the IMF board for approval in the middle of January. The board’s approval will ensure the release of $1bn for the country.
Meanwhile, the government has removed Yusuf Khan from the position of finance secretary and appointed secretary of the Planning Division Hamid Yaqoob Sheikh in his place.
As part of the adjustments finalised, the government has decided to reduce spending under the Public Sector Development Programme by Rs200bn, with Rs50bn coming from decrease in general government expenditure.
On the other hand, the withdrawal of tax exemptions will earn around Rs350bn for the government.
The IMF actually wanted tax measures worth Rs700bn, including withdrawal of tax exemptions and revision of tax slabs. However, an understanding for the current fiscal year was reached only on withdrawal of tax exemptions of Rs350bn. The exemptions on food items, fertilisers and pesticides will remain.
The IMF had also asked for an increase in tax on provident fund and upward revision in salary slabs for tax. However, this proposal has been set aside for the time being.
A senior official in the finance ministry said a bill would ultimately be submitted to the National Assembly after vetting. It is being vetted in the law division, the official said, adding that it would then be placed before the cabinet for approval.
After the cabinet’s approval the bill would be laid in the parliament.
According to sources, the government has revised upwards the valuation rates in the real estate sector to 90 per cent of the market level for calculation of tax in 40 major cities of the country, including Karachi, Lahore, Peshawar and Islamabad.
The number of cities in the list was increased from 20 to 40 to increase the tax collection from transactions in the real estate sector.
Under the head of customs, the government has decided to consider imposing regulatory duty on import of electric vehicles to lower its import. In the budget the government had lowered duty on electric vehicles to encourage its use in the domestic market.
It has also been proposed that import of complete built unit (CBU) vehicles of all types be restricted by imposing across-the-board regulatory duties.
Similarly, imposition of federal excise duty on vehicles in CKD/SKD conditions is also under consideration, which amounts to more than 80pc of the total imports in the automobile sector. The CKD/SKD imports posted a massive increase in the month of November.
It has also been decided that the facility of corporate guarantees against disputed import duties be reversed. Now it will be replaced with a bank guarantee or pay order.
The PM’s adviser on finance also proposed imposition of regulatory duty on several non-essential and luxury items. At the same time, to discourage import of non-essential items, it has been decided that regulatory duty on 525 items be imposed. These items were already subject to 100pc cash margin, which did not help achieve the desired result of restricting the imports.
Under the cash margin, the importer will deposit 100pc value of import with the bank before processing of the case.
According to an official source, the commerce ministry is opposing the imposition of regulatory duties as well as cash margin on the plea that it will slow down the economy. However, the finance adviser is serious about implementing the decision.
The ministry said that import value is price-driven because of increase in global prices. The situation further deteriorated because of the highest-ever depreciation of the rupee.
The central bank is pushing for a cash margin proposal instead of managing the free float of the exchange rate, which leads to inflation and a high cost of energy in the country.
Published in Dawn, December 3rd, 2021
The steps will serve to reverse the effects of the federal government’s ‘pro-growth budget’ for Fiscal Year 2022 adopted only five months ago, according to some analysts.
The steps are being described as the “prior actions” that will pave way for submission of Pakistan’s request to the IMF board for approval in the middle of January. The board’s approval will ensure the release of $1bn for the country.
Meanwhile, the government has removed Yusuf Khan from the position of finance secretary and appointed secretary of the Planning Division Hamid Yaqoob Sheikh in his place.
As part of the adjustments finalised, the government has decided to reduce spending under the Public Sector Development Programme by Rs200bn, with Rs50bn coming from decrease in general government expenditure.
On the other hand, the withdrawal of tax exemptions will earn around Rs350bn for the government.
The IMF actually wanted tax measures worth Rs700bn, including withdrawal of tax exemptions and revision of tax slabs. However, an understanding for the current fiscal year was reached only on withdrawal of tax exemptions of Rs350bn. The exemptions on food items, fertilisers and pesticides will remain.
The IMF had also asked for an increase in tax on provident fund and upward revision in salary slabs for tax. However, this proposal has been set aside for the time being.
A senior official in the finance ministry said a bill would ultimately be submitted to the National Assembly after vetting. It is being vetted in the law division, the official said, adding that it would then be placed before the cabinet for approval.
After the cabinet’s approval the bill would be laid in the parliament.
According to sources, the government has revised upwards the valuation rates in the real estate sector to 90 per cent of the market level for calculation of tax in 40 major cities of the country, including Karachi, Lahore, Peshawar and Islamabad.
The number of cities in the list was increased from 20 to 40 to increase the tax collection from transactions in the real estate sector.
Under the head of customs, the government has decided to consider imposing regulatory duty on import of electric vehicles to lower its import. In the budget the government had lowered duty on electric vehicles to encourage its use in the domestic market.
It has also been proposed that import of complete built unit (CBU) vehicles of all types be restricted by imposing across-the-board regulatory duties.
Similarly, imposition of federal excise duty on vehicles in CKD/SKD conditions is also under consideration, which amounts to more than 80pc of the total imports in the automobile sector. The CKD/SKD imports posted a massive increase in the month of November.
It has also been decided that the facility of corporate guarantees against disputed import duties be reversed. Now it will be replaced with a bank guarantee or pay order.
The PM’s adviser on finance also proposed imposition of regulatory duty on several non-essential and luxury items. At the same time, to discourage import of non-essential items, it has been decided that regulatory duty on 525 items be imposed. These items were already subject to 100pc cash margin, which did not help achieve the desired result of restricting the imports.
Under the cash margin, the importer will deposit 100pc value of import with the bank before processing of the case.
According to an official source, the commerce ministry is opposing the imposition of regulatory duties as well as cash margin on the plea that it will slow down the economy. However, the finance adviser is serious about implementing the decision.
The ministry said that import value is price-driven because of increase in global prices. The situation further deteriorated because of the highest-ever depreciation of the rupee.
The central bank is pushing for a cash margin proposal instead of managing the free float of the exchange rate, which leads to inflation and a high cost of energy in the country.
Published in Dawn, December 3rd, 2021
It is a 280 page report. I did not read it all, but looked for and read summary, conclusions etc. Yes, investment has fallen due to the pandemic but the nations with investment friendly policies are receiving increased investments.
How much faith do you have in the UN and other international bodies like the WB and IMF to actually show a nation the path to development?
Every time a nation has an economic crisis, the prescription is the same "reduce subsidies, reduce government fiscal deficits (cut government expenditure) and devalue the currency". These are short term fixes and for a while they work, but after a few years another economic crisis happens and the same formula is repeated.
So which are the nations which do not have these repeated crisis? They are not nations taking economic advice from the UN, WB and IMF. They are nations like Malaysia, South Korea, Taiwan, China etc.
What have the successful nations done? They have removed government bureaucratic obstructions and given investors and entrepreneurs security.
What does the UNCTAD report say? "This is a major concern, because international investment flows are vital for sustainable development in the poorer regions of the world. Increasing investment to support a sustainable and inclusive recovery from the pandemic is now a global policy priority. This entails promoting investment in infrastructure and the energy transition, in resilience and in health care."
What are the buzz words being used? "sustainable development", "inclusive recovery", "global policy priority", "energy transition" etc.
These buzz words are essentially appealing for some handouts from rich nations. This is fine for the bureaucrats who work at the UN and WB, they get tax-free six figure dollar salaries to repeat these inanities. Does it matter to them that 5 or 10 years from now it will be the same situation all over again? No, they would be happily repeat or be retired by then.
The point is that Pakistan doesn't need handouts. It has a wealth of human capital. Indians are doing well in the US and Pakistani Punjabis (I have met a few) are not different from Indian Punjabis. Following UN prescriptions is just setting up a "rinse and repeat". The IMF has loaned money to Pakistan 22 times, each time asking for the same changes. Obviously at some point Pakistanis should ask themselves "if this isn't working we need to try something new".
I am an Indian, but I wish Pakistan well for 2 reasons. The first is I would rather have the poor get to a better life wherever they may be. The second is that if Pakistan chose a path of economic development it will also benefit India as it will reduce the low-level war that the two are fighting currently.
There are enough success stories of countries around the world (Malaysia, South Korea, Taiwan, China etc.). Pakistanis need to look at them rather than listening to what UN bureaucrats have to say.
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Sorry but I am prone to believing what experts in their respective fields tell me compared to someone who probably has an agenda themselves.
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