KARACHI: As Pakistan is expected to use the International Monetary Fund’s loan facility to steer the country out of prevailing economic crisis, economists believe the country will have to bear the brunt of being on the Financial Action Task Force (FATF) gray list.
Imran Khan, the next prime minister of Pakistan in line, promises to work on human development in the country but his party faces tough economic challenges and is left only with the option to move to the IMF.
Pakistan was put on list of “Jurisdictions with strategic deficiencies,” known as the gray list, by the money laundering and terrorism-financing watchdog FATF. It was listed on June 29, 2018. The country has been on the list twice, in 2008 and 2012.
“Pakistan has been put on gray list of FATF, which means the IMF loan will be extended at higher interest rates and the burden will again be shifted on to the vulnerable and tax-paying class,” Dr. Ayub Mehar, research economist at Asian Development Bank Institute, told Arab News.
There is no question of the IMF denying loans to Pakistan by IMF because it is responsible for the fund to facilitate the member country, Mehar said. Pakistan can avail under special drawing rights up to $2.8 billion from the IMF.
The IMF program’s condition may include expenditure cuts as part of government austerity, which in turn will affect the economically vulnerable class in Pakistani society. “The IMF comes with its own assessment of the country but it largely depends on the extent to which the government can effectively negotiate terms with the fund,”, Dr. Asad Sayeed, research economist at the Institute of Development and Economic Alternatives, told Arab News.
As part of its expenditure cut, the government is likely to withdraw subsidies being given to the poor segment. “Whenever the expenditure cut is talked about, it is always viewed by which segment is going to bear the brunt. It will depend how the government is going to protect the interest of the poor, middle-class segments,” Dr. Sayeed noted.
The economists believe Khan’s government will have to confront a huge current account deficit, caused by trade and fiscal deficits, and the instability of the national currency which has been devalued for the fourth time since December 2017. “The IMF will call for further devaluation of the Pak rupee and expenditure cuts which means the country will have to compromise on the its development spending,” Muzzamil Aslam, senior economist and CEO of EFG-Hermes Pakistan, told Arab News.
The rising imports have increased the current account deficit of Pakistan to a historic high of $18 billion during the last fiscal year, which continues to exert pressure on the Pak rupee against other currencies following the huge demand/supply gap. Pakistan imported $60.9 billion worth of goods while its export stood at only $23.22 billion during the last fiscal year, FY18.
Mehar noted: “Other factors such as less inflow of foreign direct investment have also played a crucial role in the weakening of Pakistan’s foreign exchange reserves, which have gone down to $9 billion.”
As the external financing gap keeps rising — it is expected to be remain at $17 to $18 billion during the current fiscal year, FY19 — the country needs substantial external inflows to fulfil its international obligations. “Pakistan needs $10 to $15 billion for external debt servicing alone within the next 16 months,” Muzzamil Aslam said.
Economists say the PTI government will have to take tough economic decisions at home while negotiating for a new IMF bailout program. Tax net expansion, privatization or restructuring of loss-making public sector entities, ease of doing business, and supply of energy without interruption are areas that an incoming government will have to focus on.
Imran Khan’s development promises may face setback if economy keeps worsening, warn economists
Imran Khan’s development promises may face setback if economy keeps worsening, warn economists
- IMF may extend loans at higher rates, vulnerable segment to bear the brunt
- Pakistan needs $10-15 billion for debt servicing within next 16 months
Ex-PM Imran Khan party says wife, key aide not under arrest as Pakistan launches ‘operation’
- Local media widely reported vehicles carrying Bushra Khan and Gandapur left Islamabad and entered Khyber Pakhtunkhwa
- Interior minister says PM has ruled out talks with protesters demanding ex-PM Imran Khan’s release, six including four troops killed
ISLAMABAD: A spokesperson for jailed ex-premier Imran Khan said on Tuesday Bushra Khan, the former PM’s wife, and key party leader Ali Amin Gandapur, who were leading demonstrations in Islamabad to demand Khan’s release, had left a protest caravan but were safe amid widespread media reports they had been arrested.
At least six people, including four paramilitary soldiers and two protesters, were killed during clashes between security forces and protesters who made it on Monday night to the edge of Islamabad’s highly fortified red zone, home to key government and diplomatic buildings, before being pushed back by hundreds of security forces, according to Khan’s Pakistan Tehreek-e-Insaf (PTI) party.
“We are trying to secure Bushra Bibi and Ali Amin for the next few hours because we have credible sources that the law enforcement plans to arrest them with a heavy hand,” Sayed Zulfikar Abbas Bukhari, a spokesman for the PTI party told Arab News when asked if Bushra and Gandapur had left the protest caravan. He confirmed they had not been arrested.
Bukhari declined to disclose where the two protest leaders were but confirmed that their protest caravan, which was nearing the D-Chowk public square in the red zone, had been pushed further back to the capital’s Chongi 26 area by “hundreds” of security officials.
Two security officials, declining to be named, told Arab News an “operation” had been launched against the PTI protest, declining further details.
Pakistani local media widely reported that police chased cars carrying Bushra and Gandapur, but their vehicles entered Khyber Pakhtunkhwa, a northwestern province where PTI is in power and where the federal government does not have jurisdiction.
Supporters of Khan’s PTI on Tuesday reached D-Chowk for a “do or die” sit-in that they say will go on until Khan is freed from prison.
The former premier has been jailed since August last year and faces a slew of charges from corruption to terrorism that he says are politically motivated to keep him behind bars and away from politics.
Speaking to reporters, Interior Minister Mohsin Naqvi ruled out talks with protesters.
“In today’s meeting, the clear-cut decision of the prime minister and others is that there will be no talks with these protesters,” Naqvi said after Prime Minister Shehbaz Sharif met his cabinet and other top officials on Tuesday evening.
Information Minister Ataullah Tarar said the government had agreed to offer the protesters space on the outskirts of Islamabad to hold their protest and would have facilitated them in their activities.
“But why do they want to go to D-Chowk?” the information minister asked. “Because they want to cause damage to the life and property of Islamabad’s citizens. They have among them Afghan nationals, terrorists, dacoits.”
In a message shared with supporters from jail by his team, Khan, 72, urged his followers to stay peaceful but to stand firm till the end.
“My message for my team is to fight until the last ball is bowled. We will not back down until our demands are met!”
LOCKDOWN
As thousands of rally goers left for Islamabad on Sunday in protest caravans, authorities shut down major highways leading to the capital and used shipping containers to block major roads and streets inside the city. Mobile Internet links and apps like WhatsApp have been down since the weekend and schools have been closed for several days in the capital and the nearby garrison city of Rawalpindi.
Last week, the district administration also banned public gatherings in Islamabad for two months, and on Monday, the interior ministry invoked Article 245, calling in the army to maintain law and order.
On Tuesday afternoon, protest leader Ali Amin Gandapur urged protesters to camp at the D-Chowk square and not advance further into the red zone.
“D-Chowk means D-Chowk,” the chief minister told supporters from atop a truck en route to the public square. “Beyond that, as long as Imran Khan’s orders, Imran Khan’s instructions are not given, we will not go beyond that area and we will respect his instructions.”
Amnesty International called on the Pakistan government to protect and ensure the rights of protesters and “immediately rescind the ‘shoot-on-sight’ orders that provide undue and excessive powers to the military.”
“The severe restrictions on assembly, movement and mobile and Internet services as well as arbitrary detentions of thousands of protesters across Pakistan, particularly in Islamabad, are a grave violation of the rights to freedom of peaceful assembly, movement and expression,” the rights group said on X.
Pakistan urges World Bank support on economic reforms, development agenda
- IMF approved a $7 billion bailout loan for Pakistan in September that comes with a tough economic reforms agenda
- IMF is pushing Pakistan to continue prudent fiscal and monetary policies, mobilize revenue from untapped tax bases
ISLAMABAD: Minister for Finance Muhammad Aurangzeb met World Bank Country Director Najy Benhassine on Tuesday and urged the international lender to support Pakistan in its economic reforms and development agenda, Radio Pakistan reported.
The talks in Islamabad came less than two months after the IMF approved a $7 billion bailout loan for Pakistan that is attached to tough economic reforms. The IMF is pushing Pakistan to continue prudent fiscal and monetary policies, and to mobilize revenue from untapped tax bases.
Pakistan’s $350 billion economy has struggled for decades with boom-and-bust cycles, needing 23 IMF bailouts since 1958.
“During the meeting, the Finance Minister highlighted the importance of collaboration with the World Bank to support Pakistan’s economic reforms and development agenda,” Radio Pakistan reported. “The Finance Minister reiterated the government’s commitment to fiscal discipline, sustainable growth, and efficient resource utilization.”
The discussions focused on the establishment of a robust and transparent tax policy framework to enhance revenue mobilization and improve compliance while ensuring equitable taxation, the report said.
The World Bank team also offered technical assistance to streamline the budget-making process, adopt modern practices to improve transparency and accountability in public financial management, and put in place an effective debt management mechanism to ensure fiscal sustainability and reduce risks.
Issues related to the Agricultural Income Tax Regime and GST harmonization in coordination with provinces and an enhanced focus on the active role of the National Tax Council also came under discussion.
“The Finance Minister expressed gratitude for the World Bank’s support and reaffirmed the government’s resolve to implement reforms aimed at sustainable economic progress,” the reported said, adding that the World Bank officials reiterated the lender’s commitment to assisting Pakistan in addressing economic challenges and achieving its developmental objectives.
The IMF, which approved the new bailout in September, has said the program will require “sound policies and reforms” to strengthen macroeconomic stability and address structural challenges alongside “continued strong financial support from Pakistan’s development and bilateral partners.”
The IMF said in its statement on approving the loan that Pakistan had taken key steps to restore economic stability with consistent policy implementation under the 2023-24 standby arrangement.
It added that growth had rebounded to 2.4 percent and inflation has receded significantly, falling to single digits, amid appropriately tight fiscal and monetary policies.
A contained current account and calm foreign exchange market conditions have allowed the rebuilding of reserve buffers, and the central bank of Pakistan has been able to reduce interest rates by 700 bps since June in four consecutive cuts.
Despite this progress, Pakistan’s vulnerabilities and structural challenges remain formidable and the tax base remains too narrow.
The South Asian country is the IMF’s fifth-largest debtor, owing the Fund $6.28 billion as of July 11, according to the lender’s data.
Islamabad district commissioner denies reports of fuel shortages amid opposition protest
- Major roads and highways leading to the capital have been sealed off since last week when PTI party launched protest march on Sunday
- Oil Tanker Contractors Association says closed routes had stalled the delivery of petrol to several parts of Punjab province and Islamabad
KARACHI: The Deputy Commissioner of Islamabad on Tuesday rejected reports of fuel shortages after an oil tankers association said the supply of petrol to the federal capital and several cities in Pakistan’s eastern Punjab province had been “severely affected” due to a protest march being led by an opposition party.
Major roads and highways leading to the capital have been sealed off since last week when the Pakistan Tehreek-e-Insaf (PTI) party of jailed former premier Imran Khan launched a protest ‘long march’ to Islamabad on Sunday. The city has been in complete lockdown since, with shipping containers used to block major roads and streets inside Islamabad also.
“Reports of petroleum products crisis in the city are baseless and unfounded,” District Magistrate Irfan Nawaz Memon wrote on X. “There is a sufficient stock of petroleum products at petrol pumps.”
In a statement released on Tuesday, the Oil Tanker Contractors Association had said closed routes had stalled the delivery of petrol to several parts of Punjab, Pakistan’s most populous province, and Islamabad.
“Routes to Islamabad, Rawalpindi and North Punjab are closed due to which supply from petrol tankers is severely affected,” association spokesperson Noman But said in a statement. “Thousands of tankers are waiting for the route to open.”
Butt said petrol had not been supplied to Gujranwala, Jhelum, Sialkot and Kharian districts in Punjab for the last three days, while supply to Islamabad, Kohala and the northern city of Gilgit was also affected.
“Petrol has run out at pumps in many cities,” he added.
Khan’s party aims to pressure the government to release him from jail. He has been in prison since August 2023 on a slew of charges he says are politically motivated. The party is also protesting against what it says was rigging in the Feb. 8 general elections and calling on the government to roll back the recently passed 26th constitutional amendment, which the PTI says is an attack of judicial independence. The government denies this.
PTI supporters broke through barricades and clashed with police as they marched on the capital late on Monday evening, with Interior Minister Mohsin Naqvi saying three paramilitary troops and one policeman had been killed in clashes.
The PTI said in a statement two of its supporters were confirmed dead while over 30 were wounded.
Pakistan rules out talks with protesters demanding ex-PM Khan’s release, six killed
- Topping demands of Khan’s Pakistan Tehreek-e-Insaf party is release of all its leaders, including Khan
- Interior ministry says four troops killed in clashes with protesters, PTI says two supporters dead
ISLAMABAD: Interior Minister Mohsin Naqvi on Tuesday ruled out talks with protesters who are holding a sit-in in Islamabad to demand the release of jailed former Prime Minister Imran Khan after four security officials and two demonstrators were killed in clashes.
Hundreds of supporters of Khan’s Pakistan Tehreek-e-Insaf (PTI) on Tuesday reached the D-Chowk public square in Islamabad’s heavily fortified red zone, home to parliament, key government installations, luxury hotels, embassies and the offices of foreign organizations. Protest leaders, including Khan’s wife Bushra Khan and Ali Amin Gandapur, who is the chief minister of the Khyber Pakhtunkhwa province where the PTI is in power, have said this is a “do or die” sit-in that will go on until Khan is freed from prison. The former premier has been jailed since August last year and faces a slew of charges from corruption to terrorism that he says are politically motivated to keep him behind bars and away from politics.
PTI supporters broke through barricades and clashed with police as they marched on the capital late on Monday evening, with Interior Minister Naqvi saying three paramilitary troops and one policeman had been killed in clashes. The PTI said in a statement two of its supporters were confirmed dead while over 30 were wounded, the worst political violence seen in months in the South Asian nation of 241 million people.
“In today’s meeting, the clear cut decision of the prime minister and others is that there will be no talks with these protesters,” Naqvi said after Prime Minister Shehbaz Sharif met his cabinet and other top officials.
Information Minister Ataullah Tarar said the government had agreed to offer the protesters a place on the outskirts of Islamabad to hold their protest and would have facilitated them in their activities.
“But why do they want to go to D-Chowk?” the information minister asked. “Because they want to cause damage to the life and property of Islamabad’s citizens. They have among them Afghan nationals, terrorists, dacoits.”
In a message shared with supporters from jail by his team, Khan, 72, urged his followers to stay peaceful but to stand firm till the end.
“My message for my team is to fight until the last ball is bowled. We will not back down until our demands are met!”
LOCKDOWN
As thousands of rally goers left for Islamabad on Sunday in protest caravans, authorities shut down major highways leading to the capital and used shipping containers to block major roads and streets inside the city. Mobile Internet links and apps like WhatsApp have been down since the weekend and schools have been closed for several days in the capital and the nearby garrison city of Rawalpindi.
Last week, the district administration also banned public gatherings in Islamabad for two months, and on Monday, the interior ministry invoked Article 245, calling in the army to maintain law and order.
A round of the federal capital by Arab News on Tuesday afternoon showed that all entry and exit points of the city had been sealed again with shipping containers shortly after protesters removed them to enter the city. The Srinagar Highway, the main artery connecting the Punjab and Khyber Pakhtunkhwa provinces, was littered with stones that protesters had reportedly hurled at security personnel on their way to D-Chowk.
Local residents of Rawalpindi and Islamabad could be seen distributing food and water among protesters on the Srinagar Highway while helicopters hovered above.
Protest leader Ali Amin Gandapur, whose caravan had still not reached D-Chowk by Tuesday evening, urged protesters to camp at the square and not advance further into the red zone.
“D-Chowk means D-Chowk,” the chief minister told supporters from atop a truck en route to the public square. “Beyond that, as long as Imran Khan’s orders, Imran Khan’s instructions are not given, we will not go beyond that area and we will respect his instructions.”
Amnesty International called on the Pakistan government to protect and ensure the rights of protesters and “immediately rescind the ‘shoot-on-sight’ orders that provide undue and excessive powers to the military.”
“The severe restrictions on assembly, movement and mobile and Internet services as well as arbitrary detentions of thousands of protesters across Pakistan, particularly in Islamabad, are a grave violation of the rights to freedom of peaceful assembly, movement and expression,” the rights group said on X.
Pakistani conglomerate Descon announces local incorporation in Saudi Arabia
- Pakistan’s Descon Engineering operates in the engineering, power and chemical sectors
- It has a long-standing strategic partnership with the Olayan Saudi Holding Company
KARACHI: Pakistan’s Descon Engineering, which operates in the engineering, power and chemical sectors, on Tuesday announced the incorporation of Descon Engineering Arabia, a registered entity in the Kingdom of Saudi Arabia, in partnership with its long-standing strategic partner, Olayan Saudi Holding Company (OSHCO.)
OSHCO is a Saudi-based diversified business enterprise with commercial and industrial operations spread across Saudi Arabia and the wider Middle East and North Africa regions. The company’s portfolio includes more than 25 companies operating in five sectors, namely, food and beverages, restaurants, health and personal care, information and communications technology (ICT), and energy.
Descon, a group of companies headquartered in the eastern Pakistani city of Lahore, is active in UAE, Qatar, Saudi Arabia, Kuwait, Oman, Iraq, and South Africa.
“This significant development reaffirms Descon’s continued commitment to the Kingdom and highlights its focus on localization within Saudi Arabia,” Descon said in a statement.
“Through Descon Engineering Arabia, the company is further expanding its regional footprint, reinforcing its position as a trusted and established service provider dedicated to meeting the needs of customers across the Kingdom.”
The company said the “new chapter” had strengthened its resolve to make a broader global impact, ensuring enhanced value delivery to clients in Saudi Arabia, while supporting the development of local talent and capacity building.
“As we establish Descon Engineering Arabia in partnership with OSHCO, we reaffirm our commitment to the Kingdom of Saudi Arabia and its vision for sustainable growth. This step represents a deepening of our long-standing relationship with the region, enabling us to deliver tailored solutions while contributing to local talent development and capacity building,” Taimur Saeed, CEO of Descon Engineering, said.
“We look forward to fostering stronger collaborations and continuing to serve the Kingdom with the reliability and expertise that have defined our journey for nearly five decades.”
Through Descon Engineering Arabia, Descon Engineering is positioned to deliver even greater value, continuing its “dedication to excellence and local growth” for customers in Saudi Arabia and the region, the company added.
