ISLAMABAD: The International Monetary Fund and Pakistan reached a “staff level agreement” on Sunday for a $6 billion bailout package, the Fund said in a statement, following months of negotiations on a deal that aims to bolster Pakistan’s flagging economy and perilously low foreign exchange reserves.
The agreement marks a step forward for Pakistan’s new Prime Minister Imran Khan as he tries to find ways to fix the country’s finances and show his commitment to restructuring its moribund economy. But it also highlights a sense of urgency for Pakistan where the central bank has only about $8 billion left in reserves, enough to cover less than eight weeks of imports.
“The Pakistani authorities and the IMF team have reached a staff level agreement on economic policies that could be supported by a 39-month Extended Fund Arrangement (EFF) for about $6 billion,” the IMF said in a statement.
“This agreement is subject to IMF management approval and to approval by the Executive Board, subject to the timely implementation of prior actions and confirmation of international partners’ financial commitments.”
Pakistan has already once averted a balance of payments crisis in 2013 after securing a $5.3 billion IMF loan package, as well as an $11 billion package in 2008, which was suspended after economic and reform targets were missed.
Talks with the IMF began soon after Khan’s government was appointed last August but a package has been held up by differences over the pace and scale of reforms that Pakistan would be required to undertake.
The IMF has pressed Pakistan to improve tax revenue collection, bolster foreign currency reserves and narrow a current account deficit expected to top 5 percent of gross domestic product this year. The Fund has also pushed Pakistan to embrace a flexible rupee policy. Pakistani officials fear these steps will further hurt economic growth, cause of spike in the key interest rate and push the Pakistani rupee further down.
The IMF said on Sunday the new bailout package would support the Pakistani government’s ambitious macroeconomic and structural reform agenda during the next three years, including a push to improve public finances and reduce public debt through tax policy and administrative reforms.
“At the same time, a comprehensive plan for cost-recovery in the energy sectors and state-owned enterprises will help eliminate or reduce the quasi-fiscal deficit that drains scarce government resources,” the statement said.
These efforts, the Fund said, would create fiscal space for a substantial increase in social spending to strengthen social protection as well as in infrastructure and human capital development.
Outlining critical steps Pakistan needed to take in its fiscal strategy, the IMF said the upcoming budget, to be announced this month, would aim for a primary deficit of 0.6 percent of GDP supported by tax policy revenue mobilization measures to eliminate exemptions, curtail special treatments, and improve tax administration.
“This will be accompanied by prudent spending growth aimed at preserving essential development spending, scaling up the Benazir Income Support Program and improve targeted subsidies, with the goal of protecting the most vulnerable segments of society,” the IMF said. “The State Bank of Pakistan will focus on reducing inflation, which disproportionately affects the poor, and safeguarding financial stability.”
“A market-determined exchange rate will help the functioning of the financial sector and contribute to a better resource allocation in the economy,” the IMF said.
The IMF has an unhappy history with Pakistanis, many of whom see the package negatively. In the past, the government has failed to meet the terms of a previous package in 2008, and the country is still struggling to repay billions of dollars of debt from that and a subsequent package.
Khan’s government is also ideologically hostile to international financial assistance, and he campaigned before the election on a platform of economic autonomy but has since gone to the IMF as well as Saudi Arabia, UAE and China for bailouts.
Inflation at its highest in more than five years has shocked many Pakistanis who voted for Khan and his promise to eradicate poverty, create jobs and build an Islamic welfare state.
The central bank forecasts growth at 3.5 to 4 percent in the 12 months to end-June, well short of a government target of 6.2 percent. The IMF paints a gloomier picture, predicting Pakistani growth of 2.9 percent in 2019 and 2.8 percent the following year.
IMF says has agreed to $6 billion deal with Pakistan to support growth
IMF says has agreed to $6 billion deal with Pakistan to support growth
- Package will support government’s ambitious macroeconomic, structural reform agenda for three years
- IMF says upcoming Pakistan budget will aim for primary deficit of 0.6 percent of GDP
Smog drops from hazardous to unhealthy in Pakistan’s Lahore
- The city’s AQI index reached a daily average of 243, still considered ‘very unhealthy’
- Current pollution level is 10 times higher than what is deemed acceptable by WHO
ISLAMABAD: The air quality in Pakistan’s smog-choked city of Lahore on Sunday fell below the threshold considered “hazardous” for humans for the first time in two weeks.
The AQI index reached a daily average of 243, still “very unhealthy” but below the highest level of 300 considered “hazardous.”
The level of PM2.5 particles was also more than 10 times higher than the level deemed acceptable by the World Health Organization.
The city of 14 million people close to the border with India peaked at a record AQI of 1,110 on November 14.
Punjab, home to more than half of Pakistan’s 240 million people, closed schools in its major cities on November 6, and on Friday extended the closure to November 24.
It has also banned all outdoor sports in schools until January, and cracked down on polluting tuk-tuks, barbecues and construction sites in pollution hot spots across Lahore.
Seasonal crop burn-off by farmers on the outskirts of the city also contributes to toxic air the WHO says can cause strokes, heart disease, lung cancer and respiratory diseases.
Pakistan’s finance chief says PM Sharif will soon unveil ‘home-grown’ economic agenda
- Muhammad Aurangzeb calls the recent IMF visit part of ongoing talks, enhancing mutual trust
- The visit came weeks after the $7 billion loan approval, making observers think it was unusual
ISLAMABAD: Prime Minister Shehbaz Sharif will soon unveil a “home-grown agenda” for economic development, Finance Minister Muhammad Aurangzeb said on Sunday, as he informed that his interaction with a visiting International Monetary Fund (IMF) delegation last week went well, providing both sides an opportunity to enhance mutual trust.
The IMF delegation, led by Pakistan mission chief Nathan Porter, completed a five-day trip to the country during which it held wide-ranging conversations with the government.
The international lending organization approved a $7 billion loan for Pakistan in September, though it explicitly stated that the delegation’s visit was not part of the first review of the loan program, which is scheduled for the first quarter of 2025.
The IMF visit, which came just weeks after the loan’s approval, surprised observers who considered it unusual, though the finance minister described it as part of an ongoing dialogue between the two sides, noting that it resulted in a positive IMF statement.
Aurangzeb also said the government would specify its overall economic game plan in the next few days.
“The prime minister will soon share a home-grown agenda about how we are going to take forward our overall economic roadmap,” he said, without disclosing its details. “It has been very well syndicated with all the stakeholders.”
The minister emphasized that dealings between Pakistan and the IMF were completely transparent, with all agreed details available in the public domain. He noted the recent discussions with the IMF covered taxation and energy reforms, along with the privatization plan for state-owned enterprises and public finances.
“I welcomed this visit because this is an ongoing dialogue to ensure mutual credibility and trust,” he added. “We have shared our roadmap with them and explained how we are taking things forward.”
The finance minister said the two sides would continue to hold virtual talks, though he noted that he appreciated every opportunity to meet IMF officials face-to-face.
He also mentioned that discussions with the international lender included climate resilience and decarbonization, emphasizing that these issues had to be addressed alongside broader economic challenges rather than sequentially.
Pakistan has faced a prolonged economic crisis marked by rapid currency devaluation and dwindling foreign exchange reserves, which forced it to seek external financial assistance from friendly nations and global financial institutions.
The country has seen an improvement in its macroeconomic indicators in recent months, though it has yet to fully recover from its financial difficulties.
Reflecting on his visit to Washington for the World Bank and IMF meetings earlier this year, Aurangzeb described the discussions as productive.
“They gave us a platform to share with the comity of nations about how we turned the economy around in 14 months,” he said. “We also got an important message, which is that there is no room for complacency and we must stay the course [of stringent economic reforms].”
Pakistan’s IT minister calls for bridging gender digital divide in address to Qatar conference
- Shaza Fatima says access to technology and Internet is important to ensure women empowerment
- She says women will overcome social hurdles, join mainstream politics after greater digital access
ISLAMABAD: Pakistan’s State Minister for Information Technology Shaza Fatima on Sunday called for closing the gender divide in the digital world, emphasizing that women could be empowered by providing access to modern technology and Internet connectivity.
She made the remarks while virtually addressing a conference in Qatar focused on “Digitalization and Women in Politics.”
“In the modern era, it is essential for women to have access to technology and the Internet,” Fatima said during the event, according to an official statement. “Women can be empowered through the provision of digital devices and Internet access.”
The minister said the Pakistani government was taking active steps to eliminate the barriers women face in accessing mobile phones and information and communication technology.
“We are working on a Gender Digital Divide Policy to ensure women’s access to the digital economy,” she informed. “The Prime Minister’s Free Laptop Scheme plays a significant role in providing access to digital tools.”
The minister also highlighted ongoing efforts to develop a “smartphone for all” policy, underscoring how such initiatives could help women overcome social and economic challenges in entering politics.
“Women face social and economic hurdles in entering politics,” she noted. “Through digitalization, women can be empowered and brought into mainstream politics.”
The event underscored growing interactions between Pakistan and Qatar in the technology sector.
Islamabad has stepped up efforts to forge technological collaborations with Doha, sending its first IT delegation to Qatar last December to attract investment and explore opportunities for Pakistani software houses and freelance developers.
Qatar, like much of the Gulf region, is diversifying its economy with a strong focus on technology. From smart city initiatives to tech start-ups and events like the FIFA World Cup 2022, the country is rapidly advancing its technological capabilities.
Pakistan’s top officials have underscored the potential for bilateral collaboration in tech-related areas, with Prime Minister Shehbaz Sharif inviting Qatari investors to explore opportunities in various economic sectors during his visit to the Arab state last month.
Karachi gears up for premier defense expo next week amid heightened security measures
- Launched in 2000, IDEAS has become a key biennial event for the international defense industry
- The event will host over 550 exhibitors, including 340 global defense companies, from 55 countries
KARACHI: A senior government official in Pakistan’s southern Sindh province said on Sunday extraordinary security measures have been implemented for the country’s premier defense exhibition, which is scheduled to commence in Karachi next week.
The International Defense Exhibition and Seminar (IDEAS), held biennially since its inception under General (r) Pervez Musharraf’s administration in 2000, has grown into a key event for the defense sector.
This year’s exhibition, running from Tuesday to Friday, will host over 550 exhibitors, including 340 international defense companies, alongside more than 350 senior civil and military officials from 55 countries.
Sindh’s Home Minister, Zia-ul-Hassan Lanjar, told Arab News that police, Rangers and other law enforcement agencies are working in coordination to enforce heightened security measures in connection with the event.
“The police, Rangers, and other law enforcement agencies are united and alert on one platform to implement extraordinary security measures,” he said.
Karachi has faced significant security challenges, including a suicide bombing near Jinnah International Airport last month that killed two Chinese engineers and injured several others. The city also grapples with high street crime rates, with over 90,000 incidents reported in 2023, causing considerable hardship for residents.
Additionally, Karachi’s traffic conditions are notoriously poor, especially during rush hours, and are exacerbated by rain or high-profile events, leading to severe congestion and delays.
The provincial minister added that Karachi’s traffic police would ensure smooth movement for both domestic and international visitors by publicizing alternative routes and addressing traffic-related concerns.
To bolster security, local authorities have already fortified the Expo Center, the venue for the exhibition, with multiple layers of containers.
A day earlier, Brig. Ali Adil, Director of Coordination for IDEAS 2024, outlined the event’s diverse activities during a news conference, which include live demonstrations of cutting-edge defense technology, an international seminar and the IDEAS Tri-Services Karachi Show.
The event will also offer opportunities for networking through business-to-business and business-to-government engagements.
“IDEAS 2024 will bring together representatives of defense industries from around the world to showcase their latest technological innovations, while Pakistan’s defense sector, including both public and private companies, will present products of international standards,” Brig. Adil said.
This year’s event will feature a new “Startups Pavilion” designed to offer international exposure to young Pakistani entrepreneurs, who will display innovative projects and technologies, he said.
Commodore Aitazaz Khalid, Director of Media for IDEAS, confirmed that Prime Minister Shehbaz Sharif will inaugurate the exhibition on Tuesday.
An international seminar on “Pakistan Defense Production Potential – Challenges, Opportunities, and Way Forward” will be held on the third day of the event, with presentations from leading national and international experts.
General Sahir Shamshad Mirza, Chairman of the Joint Chiefs of Staff Committee, will be the chief guest for the seminar.
For the visiting dignitaries and Karachi residents, the Tri-Services Karachi Show will be held at Nishan-e-Pakistan, located on the city’s seafront.
Deputy Inspector General of Traffic Police Iqbal Dara also briefed the media on the traffic management plan and alternative routes to ensure smooth access for attendees and ease congestion during peak hours.
He said IDEAS 2024 would set new records, surpassing previous milestones in terms of the exhibition space, number of exhibitors and international participants.
Pakistan to organize single-country trade exhibition in Jeddah in February — official
- Around 100 Pakistani companies to participate in three-day exhibition from Feb. 5-7, says official
- Companies offering agro products, engineering, textile, garments and services invited to take part in exhibition
ISLAMABAD: Pakistan will organize a single-country trade exhibition in Jeddah from Feb. 5-7 next year, an official of the Trade Development Authority of Pakistan (TDAP) said on Sunday, in which products from around 100 companies will be showcased as Islamabad eyes the Saudi market to boost its exports.
Islamabad and Riyadh have been working in recent months to increase bilateral trade and investment, and the Kingdom this year reaffirmed its commitment to expedite an investment package worth $5 billion for Pakistan.
Pakistani and Saudi businesses had signed 27 agreements and memorandums of understanding (MoUs) worth $2.2 billion in October. During Prime Minister Shehbaz Sharif’s visit to the Kingdom last month, the two countries agreed to enhance that figure to $2.8 billion.
“Pakistan will organize a single-country exhibition from Feb. 5-7, 2025, in Jeddah, Saudi Arabia, with the aim of increasing exports to the Kingdom,” Faisal Awan, TDAP’s deputy manager, told Arab News.
The TDAP will organize the exhibition, which Awan said would feature 100 Pakistani companies so they can “showcase their products directly to Saudi buyers in their own country.”
The official said TDAP has already published advertisements inviting Pakistani companies to showcase their products, setting Nov. 25 as the deadline to apply.
“We have invited companies from all sectors including engineering, agro products, textile and garments and services,” Awan added.
TDAP has also invited manufacturers from various sectors such as engineering, home appliances, machinery, pharmaceuticals, surgical instruments, cables and agro products such as fruits, vegetables, rice, meat, seafood, spices and processed foods, according to the advertisement seen by Arab News.
The invitation also extends to the textile and garments sector that offers knitwear, ready-made garments, home textiles, yarns, linen and fabrics, as well as the services sector which covers telecom, computer and information services.
“So far, we have received an excellent response with over 50 applications submitted in just over a week,” Awan said.
The TDAP is providing a subsidy of around 80 percent on the rates for stalls at the exhibition, Awan shared. He said the authority is charging only Rs 200,000 ($720) for each stall while the actual cost is around Rs 1.2 million ($4,319).
“Other arrangements such as visa, air tickets and accommodation must be handled by the company itself,” he said.
Awan said that while every market has its dynamics, Pakistan has a lot of expectations from the Saudi market due to the increasing business collaborations between the two countries in recent months.
“Since we have had a lot of delegations coming and going from Saudi Arabia in recent months, our expectations are very high,” Awan said. “And we aim to secure orders in the millions of dollars.”
The TDAP official said leads generated during the exhibition would be expected to materialize in the next five to six months.
Pakistan and Saudi Arabia enjoy strong trade, defense and cultural ties. The Kingdom is home to over 2.7 million Pakistani expatriates and serves as the top source of remittances to the cash-strapped South Asian nation.
Islamabad has eyed increasing collaboration in economic and trade sectors as it grapples with a prolonged economic crisis that drained its resources, triggered double-digit inflation in the country and weakened its currency over the past two years.
In 2023, Pakistan formed the Special Investment Facilitation Council (SIFC), a hybrid civil-military body tasked with fast-tracking decisions related to foreign investment.
The SIFC aims to attract investment in minerals, agriculture, livestock, energy, tourism and other vital sectors of Pakistan’s economy, mostly from Gulf countries.
