KARACHI: Pakistan State Bank on Monday raised the key policy rate by 150 basis points (bsp) to 12.25 percent, a week after the country reached an agreement with the International Monetary Fund (IMF) for a 39-month loan program worth $6 billion.
The hike, which is a record high in nearly eight years, comes amid fears of accelerated inflation under the new bailout plan given by the global lender.
Prime Minister Imran Khan had recently removed his Finance Minister, governor of central bank, and head of tax collecting agency Federal Bureau of Revenue (FBR) amid ongoing talks with the IMF.
The Monetary Policy Committee (MPC) meeting chaired by the new governor of SBP Reza Baqir announced the new policy rate which exceeds the market consensus of 100 bps.
“Further policy measures are required to address underlying inflationary pressures from higher recent month-on-month headline and core inflation out-turns, recent exchange rate depreciation, an elevated fiscal deficit and its increased monetization, and potential adjustments in utility tariffs,” the SBP said in the monetary policy statement.
Pakistan and the IMF entered into a loan agreement on May 12 which has certain conditionalities attached to it including keeping the interest rate higher than the expected inflation in future as compared to the current inflation rate, allow the currency to find its value in the market, and impose higher taxes while controlling government spending in terms of subsidies.
The IMF program is designed to restore macroeconomic stability and support sustainable economic growth, and is expected to unlock considerable additional external financing.
The government, marred by a widening fiscal deficit, has been relying heavily on central bank to finance the deficit which acted to dilute the impact of previous monetary tightening.
Since the last MPC meeting in March this year, the exchange rate also depreciated by 5.93 percent to PKR 149.65 per US dollar, at the close of May 20, 2019, reflecting a combination of underlying macroeconomic factors and market sentiment considerations, according to the central bank.
The SBP estimates show economic growth in FY19 with a modest rise in FY20. This slowdown is mostly due to lower growth in agriculture and industry while more than two-thirds of the real GDP growth in FY19 is expected to come from services.
Despite the improvement in the current account and a noticeable increase in official bilateral inflows, the financing of the current account deficit remained challenging. Consequently, reserves declined to $8.8 billion as of May 10, 2019 from $10.5 billion at the end of March 2019.
The exchange rate also came under pressure in the last few days. In SBP’s view, the recent movement in the exchange rate reflects the continuing resolution of accumulated imbalances of the past and some role of supply and demand factors. “SBP will continue to closely monitor the situation and stands ready to take measures, as needed, to address any unwarranted volatility in the foreign exchange market,” the statement added.
The overall fiscal deficit is likely to be considerably higher during the first 10 months (Jul-Mar) of current fiscal year as compared to the same period last year due to a shortfall in revenue collection, higher than budgeted interest payments, and security related expenditures. From a monetary policy perspective, a growing portion of the fiscal deficit has been financed through borrowings from SBP.
The average headline CPI inflation reached 7 percent in Jul-Apr FY19 compared to 3.8 percent in the same period last year while it is anticipated to increase further in FY20 subject to a number of upside risks from an expected rationalization of taxes in the upcoming budget, potential adjustments in electricity and gas tariffs, and volatility in international oil prices.
The annualized headline month-on-month inflation has also risen considerably in the last three months due to the recent hike in domestic fuel prices, rising food prices and input costs — where these inflationary pressures are likely to continue for some time.
“The inflation outlook suggests a fall in real interest rates on a forward-looking basis,” the central bank noted.
SBP raises policy rate to 12.25% fearing worst inflation post IMF deal
SBP raises policy rate to 12.25% fearing worst inflation post IMF deal
- Hike comes amid anticipation of high inflation under IMF loan program
- Government’s heavy borrowing from central bank diluted the impact of previous monetary tightening
Fakhar Zaman confident of returning for Pakistan at the Champions Trophy
- Zaman criticized the PCB before Babar Azam was rested for two England Test matches
- PCB also issued a show-cause notice over Zaman’s social media post supporting Azam
ISLAMABAD: Fakhar Zaman is confident of returning to international cricket after eight months when Pakistan hosts next month’s Champions Trophy.
Fakhar hasn’t played international cricket since Pakistan’s first-round exit from the T20 World Cup last June and subsequently missed out on central contract with the Pakistan Cricket Board for the first time in eight years.
“People don’t know that after the T20 World Cup I got sick,” Fakhar explained to the Vipers Voices podcast as he prepared to play ILT20 for Desert Vipers in the United Arab Emirates. “I was not part of the team because of my medical condition, but now [I’m] 100 percent [sure] I will play for Pakistan.”
The veteran opening batter made headlines when he criticized the national cricket administration just before Babar Azam was controversially rested for the final two home test matches against England late last year due to his inconsistent form in red-ball cricket. The PCB issued Fakhar a show cause notice for his social media post in favor of Babar.
The post didn’t go down well with PCB chairman Mohsin Naqvi, who also expressed concerns over Fakhar’s fitness.
“It cannot happen like that if selection committee is not playing one player, then other players start tweeting to express their displeasure,” Naqvi told reporters at the time. “Players are not allowed to function like this, and we will never allow that. The main issue with [Fakhar] is his fitness test, that he was not able to clear.”
In the absence of Fakhar, Pakistan won three away ODI series over the last two months, beating Australia, Zimbabwe and South Africa under the captaincy of new white-ball captain Mohammad Rizwan.
Back home, Fakhar returned to competitive cricket during the domestic Champions Cup T20 tournament last month and was the third highest-scorer with 303 runs in 10 games at a strike rate of 132.31.
“The plan was to get fully fit and play in the Champions Trophy,” Fakhar said. “I am lucky to be fit right now. I started from the Champions Trophy 2017 and that went really well for me. Now I am very excited for the next edition also.”
Fakhar had a memorable tournament in 2017 when he scored a match-winning century in the final against India.
Pakistan’s latest white-ball sensation, Saim Ayub, made two ODI centuries in South Africa before he fractured his right ankle during the second test at Cape Town last week. Ayub has been ruled out of competitive cricket for at least six weeks, putting his participation in doubt for the Champions Trophy.
The PCB flew Ayub to London from Cape Town on Monday for treatment, and Fakhar said he hoped Ayub recovers in time as Pakistan prepares to host its first major ICC tournament next month in 29 years.
“I hope he [Ayub] will recover quickly,” Fakhar said. “I was thinking to call Saim yesterday, just to talk to him about this injury. Believe me, he is such a great player that if he continues to play for the next four-five years, he will be among the top three players in the world.”
Fakhar will be playing for Desert Vipers in the ILT20 and was the top target for Tom Moody, who is director of cricket with the franchise. Fakhar said he was excited to play alongside West Indies T20 captain Sherfane Rutherford.
“He is one of the best cricketers in the T20 format and I really enjoy seeing him batting,” he said. “I am very excited to be part of this team, and I want to share the crease with him. He is one of the best players, so I am very excited to play with him.”
Iraqi envoy calls for joint security efforts with Pakistan on national army’s 104th anniversary
- Ambassador Lafta attended a ceremony as chief guest at the National Counter Terrorism Center in Pabbi
- Pakistan and Iraq have strengthened defense ties in recent years, cooperating in the fight against militancy
ISLAMABAD: Iraqi Ambassador to Pakistan Hamid Abbas Lafta emphasized the need for joint security efforts to combat militancy during a ceremony marking the 104th anniversary of his country’s national army, according to Pakistan’s military media wing on Wednesday.
Pakistan and Iraq have strengthened ties in recent years through defense cooperation, with Islamabad providing training to Iraqi security forces. In 2014, Iraq procured Super Mushak trainer aircraft from Pakistan to bolster defense relations between the two Muslim-majority nations.
Lafta attended the ceremony to mark the anniversary of the Iraqi army as the chief guest at the National Counter Terrorism Center in Pabbi, Sarai Alamgir, according to the Inter-Services Public Relations (ISPR).
“The Iraqi ambassador stressed the importance of joint security and counter-terrorism efforts between Iraq and Pakistan,” it said in a statement.
During his speech, Lafta praised the sacrifices made by the Iraqi army in the fight against militancy and emphasized the need to strengthen cooperation between Pakistan and Iraq.
He highlighted the importance of security collaboration between the two countries and commended their joint efforts in combating militancy. Lafta called for further cooperation to benefit the people of both nations, expressing his commitment to forge a “united front” in the fight against extremism.
The Iraqi envoy also pledged to work with Pakistan for regional peace and to strengthen the friendship between the two countries.
Last year in August, Pakistan’s Chairman Joint Chiefs of Staff Committee, General Sahir Shamshad Mirza, met Iraq’s Secretary of Defense, Lt. Gen. Ahmed Dawood Salman, to discuss enhancing defense and security cooperation between the two states.
A few months before, in May, Defense Minister Khawaja Asif met Lafta, seeking greater cooperation in all fields of mutual interest, particularly in defense.
Qatar Airways denies reports of office closures in Pakistan
- The airline says flights to and from Pakistan have been operating as per schedule
- Local media had claimed Qatar Airways had shut down offices in Pakistani cities
KARACHI: Qatar Airways on Wednesday denied media reports claiming it was shutting down operations in Pakistan and saying its “offices remain open.”
The airline, Qatar’s national carrier, was founded in 1993 and is wholly owned by the State of Qatar. Operating from its hub at Hamad International Airport in Doha, it has become one of the world’s leading airlines, known for its modern fleet, luxurious amenities, and extensive route network.
The clarification followed local media reports and statements from travel agents earlier this week, alleging that Qatar Airways had closed its offices and call centers across Pakistan, even as flights continued to operate on schedule.
“Qatar Airways flights to and from Pakistan are operating as usual and our offices remain open,” the airline said in a post on X. “Recent published reports claiming that Qatar Airways has closed offices in Pakistan are incorrect.”
Qatar Airways began operations in Pakistan in 1994, the year the airline was established.
Initially, it started flying to Karachi, but it has expanded its services to other major Pakistani cities, including Lahore, Islamabad and Peshawar, since then.
The airline offers both domestic and international connections.
Pakistan PM to inaugurate faceless customs assessment system today during Karachi visit
- Launched as a pilot project last month, the system aims to streamline customs clearance through automation
- Shehbaz Sharif will also visit PSX to celebrate its achievement as the second-best performing global stock market
KARACHI: Prime Minister Shehbaz Sharif is scheduled to inaugurate the Federal Board of Revenue’s (FBR) new Faceless Customs Assessment System at the Karachi Port Trust during his daylong visit to the city, which began on Wednesday, to examine several key initiatives aimed at improving economic efficiency and health care services.
The Faceless Customs Assessment System, launched as a pilot project in December 2024, aims to streamline customs clearance through automation. By minimizing human interaction, the system seeks to enhance transparency, reduce clearance times and improve trade facilitation.
The initiative marks the first step in a broader government plan to scale up the system to upcountry ports and border stations in the coming months.
“The Prime Minister will visit the South Asia Pakistan Terminal at Karachi Port Trust, where he will inaugurate the FBR’s automated customs clearance system, the Faceless Customs Assessment System,” the PM Office said in a statement. “The Prime Minister had directed the installation of this system during his last visit to Karachi.”
Pakistan seeks to modernize its port facilities to transform itself into a transit trade hub. The country has also invited landlocked Central Asian nations to utilize its ports for access to global sea lanes, enhancing regional trade connectivity.
Sharif is also scheduled to attend a ceremony at the Pakistan Stock Exchange (PSX) to celebrate its achievement as the second-best performing stock market globally in 2024, with the benchmark KSE-100 Index rising 56 percent over the year.
His PSX visit comes at a time when the government aims to unlock both foreign and domestic investment to overcome a prolonged economic crisis. Pakistani officials have described the market’s strong performance as a reflection of growing investor confidence and the administration’s commitment to fiscal reforms and improved business facilitation.
Sharif will also attend the launch of the “Manual of Clinical Practice Guidelines” at Aga Khan University, calling it a milestone in Pakistan’s health care sector. The guidelines are expected to standardize medical practices and improve health care delivery nationwide.
US seeks prisoner swap with Afghanistan involving Guantanamo detainee arrested in Pakistan — media
- Outgoing US administration seeks to bring back three Americans in exchange for Muhammad Rahim Al-Afghani
- Al-Aghani reportedly had ties with bin Laden and was the last person brought to the CIA interrogation program
WASHINGTON: The Biden administration is negotiating with Afghanistan to exchange Americans detained in the country for at least one high-profile prisoner held in Guantanamo Bay with alleged ties to former Al Qaeda leader Osama bin Laden, the Wall Street Journal reported on Tuesday.
Representatives of the White House and the US State Department did not immediately respond to requests for comment on the report. Representatives for the Afghan Taliban also did not immediately respond.
US President Joe Biden’s administration is seeking the return of three Americans seized in 2022 — Ryan Corbett, George Glezmann and Mahmood Habibi — in exchange for Muhammad Rahim Al-Afghani, the WSJ reported.
A source familiar with the matter confirmed to Reuters that the Biden administration has been negotiating with the Taliban since at least July on a US proposal to exchange Corbett, Glezmann and Habibi for Rahim.
The Taliban, who deny holding Habibi, countered with an offer to exchange Glezmann and Corbett for Rahim and two others, said the source, who spoke on condition of anonymity because of the sensitivity of the issue.
Corbett and Habibi were detained in separate incidents in August 2022 a year after the Taliban seized Kabul amid the chaotic US troop withdrawal. Glezmann was detained later in 2022 while visiting as a tourist.
A spokesperson for the National Security Council said they could not confirm the WSJ story, but added that the administration was “working around the clock” to secure the release of the three Americans.
Rahim’s lawyer, James Connell, told Reuters that neither the Biden administration nor the Taliban had informed him or Rahim of the negotiations.
“It does seem important to include Rahim or his representative in the conversation,” said Connell. “As it happens, he is willing to be traded or exchanged.”
Rahim was “the last person brought into the CIA torture program,” said Connell, referring to an agency program instituted after the Sept. 11, 2001, Al Qaeda attacks that used harsh interrogation methods on suspected Islamist militants.
The CIA denies the methods amounted to torture.
A Senate intelligence committee report on the agency’s so-called enhanced interrogation program called Rahim an “Al Qaeda facilitator” and said that he was arrested in Pakistan in June 2007 and “rendered” to the CIA the following month.
He was kept in a secret CIA “black site,” where he was subjected to tough interrogation methods, including extensive sleep deprivation, and then sent to Guantanamo Bay in March 2008, the report said.
The US-Taliban talks have been in motion since July, according to the WSJ, which cited sources who attended a classified House Foreign Affairs Committee briefing last month with White House national security adviser Jake Sullivan.
On Monday, Biden’s administration sent 11 Guantanamo detainees to Oman, reducing the prisoner population at the detention center in Cuba by nearly half as part of its effort to close the facility as the president prepares to leave office Jan. 20.
