ISLAMABAD: Pakistan's fiscal deficit will be significantly worse than projected this fiscal year, with the fallout from the novel coronavirus pandemic pushing millions into unemployment and poverty, according to government estimates reviewed by Reuters.
Pakistan began a phased lifting of its countrywide lockdown last week despite a rising rate of cases — a move pushed primarily by fears of an economic meltdown. The country has reported 35,788 COVID-19 cases and 770 deaths.
Due to "a shortfall in revenues; re-prioritizing of expenditures and increase in public spending," the post-pandemic fiscal deficit could reach as high as 9.4 percent against an earlier projection of 7.4 percent, one of the finance ministry documents seen by Reuters said.
Two government officials told Reuters on condition of anonymity that in recent meetings on the financial situation there were fears the deficit could even hit double digits.
That is higher than the previous upper estimate of 9 percent predicted by Prime Minister Imran Khan's adviser on finance, Abdul Hafeez Shaikh, in a May 8 interview with Reuters.
Shaikh said on Thursday it is hard to give specific numbers given the pandemic's uncertainty, although the economy is to likely contract -1 percent to -1.5 percent.
"We think that right now where we're is likely to worsen," he said addressing a webinar.
The impact on workers and poorer people is also stark, with estimates that the poverty headcount will rise from 24.3 percent to a base case of 29 percent, and a worst-case scenario of 33.5 percent, the documents said.
At least 3 million people will lose their jobs — 1 million in the industrial sector and 2 million in services.
The documents noted that Pakistan Institute of Development Economics, an autonomous research organization set up by the government, has projected job losses could reach 18 million.
Tax collection dropped sharply by 16.4 percent in April, the internal estimates showed.
They also stated that exports are likely to fall by $2.8 billion to $3.8 billion, with a negative impact on remittances from the Middle East, United States and Europe, which are likely to remain around $20 billion to $21 billion against $21.8 billion in 2019.
However, a slump in imports will cut Pakistan's current account deficit to $4.5 billion in the fiscal year, from $13.8 billion in 2019.
The estimates say the economy will contract 1.5 percent for fiscal year 2020 against a rise of 3.29 percent in 2019.
Pakistan has already rolled out a Rs1.24 trillion ($7.71 billion) stimulus to support the economy and cash handouts to the poor.
Moody's on Thursday placed Pakistan's local and foreign currency long-term issuer B3 ratings under review for downgrade, citing a potential default on private sector debt.
Officials say Pakistan is confident of getting at least $5.4 billion in external financial help, including $1.386 billion already received from the International Monetary Fund (IMF) as rapid financing to mitigate the coronavirus losses, and a debt rescheduling of $1.8 billion from G-20 countries.
That is aside from money expected from the IMF's three-year $6 billion support program the country entered last year, according to two officials familiar with the situation.
"Our external finance outlook appears to be very good at the moment," one of the top officials told Reuters. "Our expectation and our assessment is very positive."
The officials said Pakistan was receiving $500 million in coronavirus-related support from the Asian Development Bank, and around $1 billion from the World Bank, that will also carry forward another $700 million in projects from last year.
Pakistan has also requested long-time ally China to roll over payments related to the power projects set up as part of Belt and Road initiative.
Finance chief Shaikh is to present a budget in two weeks aimed at finding ways to generate revenues and cut expenditures
Pakistan's deficit and poverty rate to soar due to coronavirus
https://arab.news/rag24
Pakistan's deficit and poverty rate to soar due to coronavirus
- At least 3 million people will lose their jobs — 1 million in the industrial sector and 2 million in services
- Exports likely to fall by $2.8 billion to $3.8 billion, with a negative impact on remittances from the Middle East
Pakistan calls for regional mechanisms to address ‘foreign occupation’ issues in Middle East, Asia
- Pakistan demands right of self-determination for people in disputed Kashmir, Gaza territories
- Foreign office spokesperson strongly condemns Israel for bombing Beit Lahya city in Gaza
ISLAMABAD: Pakistan’s additional foreign secretary for the Asia and Pacific region has urged world powers to strengthen cooperation mechanisms to address foreign occupation issues, particularly in the Middle East and South Asia regions, the country’s foreign office said on Friday.
Ambassador Imran Ahmed Siddiqui, Pakistan’s additional foreign secretary of the Asia and Pacific region, represented his country at the 19th Asian Cooperation Dialogue (ACD) meeting of foreign affairs ministers held in Tehran on June 24.
Siddiqui stressed the importance of promoting regional connectivity and leveraging complementarities among member states at the conference, Pakistan’s foreign office spokesperson said.
“He also underscored the importance of strengthening sub-regional dialogue and cooperation mechanisms within Asia to effectively address issues of foreign occupation and persecution, particularly in the Middle East and South Asia,” Foreign Office Spokesperson Mumtaz Zahra Baloch said in a statement.
Baloch also strongly condemned Israel for its “indiscriminate” bombing of the Beit Lahya city in northern Gaza, calling for an immediate ceasefire in the Middle East.
On Wednesday, an Israeli air strike at the Abu Awad family home in Beit Lahiya killed 15 people, media reports said.
“Pakistan strongly condemns the indiscriminate bombing of Beit Lahiya city in northern Gaza by Israeli forces killing women and children,” Baloch said.
“The indiscriminate acts of collective punishments constitute war crimes and flagrant violation of international humanitarian law.”
Despite global protests and condemnation, Israel continues to pound Gaza with bombs and ground operations. The Jewish state accuses Hamas fighters of hiding among civilians and says it wants displaced people to get out of the way of its operations against the fighters in northern Gaza.
More than eight months into Israel’s war on Gaza, aid officials say the enclave remains at high risk of famine, with almost half a million people facing “catastrophic” food insecurity. Over 37,700 Palestinians have been killed in Gaza since last year, Palestinian officials say.
Upcoming monsoon rains can cause ‘devastating’ floods in Pakistan— PM’s aide on climate change
- Pakistan’s disaster management authority says Sindh, Punjab could face “emergency” situation during monsoon season
- Punjab government says it has begun cleaning and de-silting nullahs to deal with any pre-monsoon eventualities
ISLAMABAD: The upcoming monsoon rains can cause “devastating” floods in Pakistan, the prime minister’s coordinator on climate change, Romina Khurshid Alam, said on Friday, urging authorities to ensure access to relief camps is provided to people in vulnerable areas.
The chief of Pakistan’s National Disaster Management Authority (NDMA) on Wednesday issued a similar warning, saying that the country’s Sindh and Punjab provinces could face an “emergency” situation during the upcoming monsoon season.
Monsoon season in Pakistan typically runs from July to September. Large swathes of the South Asian nation were submerged in 2022 due to extremely heavy monsoon rains and melting glaciers, a phenomenon linked to climate change that damaged crops and infrastructure and killed at least 1,700 people. The floods also displaced millions and inflicted billions of dollars in losses.
“Coordinator to the Prime Minister on Climate Change and Environmental Coordination, Romina Khurshid Alam on Friday stressed that the upcoming monsoon rains could lead to devastating floods,” the state-run Associated Press of Pakistan (APP) said in a report.
Chairing a meeting of the government’s task force on global warming and heat waves, Alam called for relief camps in vulnerable areas to be heavily advertised so that people may get access to them.
Many parts of the country remained in the grip of a severe heat wave last month that experts attributed to climate change effects. Alam highlighted the “urgent need” for protective measures against severe threats of heat waves and floods to food, health, and the economy.
“Hazards cannot be stopped but can be handled,” she was quoted as saying by the state media.
Alam directed authorities to address the issue of deforestation and dumping of trees in nullahs, saying these could damage bridges during floods, especially in Khyber Pakhtunkhwa (KP) and Azad Kashmir.
The prime minister’s aide was told that most of the measures against floods such as the establishment of relief camps, mapping of resources, desilting of nullahs, and public awareness campaigns had already been taken.
Separately, the Provincial Disaster Management Authority (PDMA) Punjab said authorities in the province had been cleaning and de-silting nullahs immediately to deal with any pre-monsoon-related eventualities.
PDMA Punjab Director-General Irfan Ali Kathia said the authority had warned of potential urban flooding in Lahore, Sialkot, Gujranwala, Narowal and Rawalpindi cities, adding that administrations in these cities had been alerted accordingly.
“In case of rains, immediate drainage of water should be ensured in every city. Wherever there is a risk of flood, early measures should be taken,” he was quoted as saying by the APP.
Pakistan passes tax-laden budget ahead of fresh IMF loan
- Finance bill passed ahead of Pakistan’s talks with IMF for loan of $6 billion to $8 billion
- Government presented budget this month with challenging tax revenue target of $46.66 billion
ISLAMABAD: Pakistan’s parliament on Friday passed the government’s tax heavy finance bill for the coming fiscal year amid an annual inflation projection of up to 13.5 percent for June.
The bill comes ahead of more talks with the IMF for a loan of $6 billion to $8 billion to avert a debt default for Pakistan, the slowest growing economy in South Asia.
As the parliament moved to pass the bill clause by clause, Pakistan’s sovereign dollar bonds slid on Friday, Tradeweb data showed, with the 2031 maturity shedding 1.4 cents to trade at 78.69 cents on the dollar.
Finance Minister Muhammad Aurangzeb moved the finance bill in parliament, which was opened to seek amendments and debate by the ruling alliance led by Prime Minster Shehbaz Sharif and its opposition.
Speaker Sardar Ayaz Sadiq announced passing of the budget in a live TV telecast.
The government presented the national budget on June 12 with a challenging tax revenue target of 13 trillion rupees ($46.66 billion) for the year starting July 1, up about 40 percent from the current year, to strengthen the case for a new rescue deal with the International Monetary Fund (IMF).
The budget is gearing the country toward an era of sustainable and inclusive growth, said a finance ministry report issued on Friday, which projected annual consumer price inflation for June 2024 between 12.5 percent to 13.5 percent, up from 11.8 percent in May.
“The government was implementing various administrative, policy and relief measures to control inflationary pressures,” the report said.
The rise in the tax target is made up of a 48 percent increase in direct taxes and a 35 percent hike in indirect taxes over revised estimates of the current year. Non-tax revenue, including petroleum levies, is seen increasing by 64 percent.
The tax would increase to 18 percent on textile and leather products as well as mobile phones besides a hike in the tax on capital gains from real estate.
Workers will also get hit with more direct tax on income.
Opposition parties, mainly parliamentarians backed by the jailed former Prime Minister Imran Khan, have rejected the budget, saying it will be highly inflationary.
Pakistan has projected a sharp drop in its fiscal deficit for the new financial year to 5.9 percent of gross domestic product (GDP), from an upwardly revised estimate of 7.4 percent for the current year.
Pakistan’s central bank has also warned of possible inflationary effects from the budget, saying limited progress in structural reforms to broaden the tax base meant increased revenue must come from hiking taxes.
The upcoming year’s growth target has been set at 3.6 percent with inflation projected at 12 percent.
Pakistan rejects US resolution demanding election probe, seeks relations based on ‘non-interference’
Pakistan rejects US resolution demanding election probe, seeks relations based on ‘non-interference’
- Foreign office says US lawmakers should play a constructive role in strengthening bilateral ties, explore cooperation avenues
- Pakistan plans to introduce a tit-for-tat resolution in parliament in a bid to display unity, assert its national sovereignty
ISLAMABAD: Pakistan on Friday described a recent resolution adopted by the United States House of Representatives, demanding an impartial probe into the rigging allegation after the February 8 elections, as “unsolicited,” saying it wanted relations with the US that were based on “mutual trust and non-interference.”
The resolution, overwhelmingly adopted by US lawmakers this week, expressed concern over the state of democracy in Pakistan and called for freedom of media and speech.
Deputy Prime Minister Ishaq Dar told the National Assembly on Thursday that Pakistan must display its unity and assert its sovereignty, while promising to bring a tit-for-tat resolution in the coming days.
Addressing the weekly news briefing, Foreign Office Spokesperson Mumtaz Zahra Baloch said Pakistan “deeply regretted” the resolution, which showed little understanding of the country’s politics and electoral process.
“We believe that bilateral relations between countries should be based on mutual respect and sovereign equality,” she said. “The unsolicited interference from the US Congress is therefore neither welcome nor accepted.”
“Pakistan would like to develop its relations with the United States on the basis of mutual trust and confidence and non-interference in each other’s domestic affairs,” she added. “We also hope that the US Congress would play a more constructive role in strengthening Pakistan-US bilateral relations by focusing on avenues of collaboration for mutual benefit of the relations.”
Pakistan’s foreign office also issued a statement after the US lawmakers adopted the resolution, saying its timing and context clashed with the improving dynamics of bilateral ties between the two states.
“Such resolutions are therefore neither constructive nor objective,” it added.
The US House voted 368-7 over the resolution that condemned “attempts to supress the people of Pakistan’s participation in their democracy” while asking the government to uphold their human, civil and political rights.
Pakistan’s envoy to US says country needs small arms amid government’s plan for anti-militant operation
- Pakistani officials have expressed concerns in the past over TTP using US military equipment left behind in Afghanistan
- Masood Khan tells Washington conference ‘US should make Pakistan a partner for a diplomatic comeback in Kabul’
ISLAMABAD: Pakistan’s envoy to the United States, Ambassador Masood Khan, highlighted the need for small arms and other sophisticated equipment at an annual conference in Washington focusing on his country this week, as authorities in Islamabad announced plans to launch a comprehensive operation against militant outfits.
Pakistan’s top national security forum said last week it was going to launch Operation Azm-e-Istehkam, or Resolute Stability, amid growing concerns over militant violence and its negative implications for the government’s attempt to put the national economy back on track.
Pakistani officials have expressed concerns in the past over an armed network, Tehreek-e-Taliban Pakistan (TTP), using American military equipment which was left behind in Afghanistan following the withdrawal of international forces in 2021.
These concerns specifically mentioned advanced items like automatic assault rifles and night vision devices, which significantly enhance the capabilities of these groups and pose security challenges to civilians and security forces in Pakistan.
The government asserts TTP leaders have taken sanctuary in neighboring Afghanistan, which facilitates the network’s attacks inside Pakistan, although Afghan authorities have denied this.
“We have launched a news operation — Azm-e-Istehkam or Resolute Stability — to opposed and dismantle terrorist networks,” Khan said while addressing Annual Pakistan Conference at the Wilson Center on Wednesday. “For that, we need sophisticated small arms and communication equipment.”
He noted it was also important for regional security while pointing out that militant violence was also a threat to US interests.
Pakistan’s defense minister Khawaja Asif hinted at the possibility of launching cross-border attacks against TTP militants in Afghanistan in a recent interview with Voice of America.
Khan emphasized the US and Pakistan could collaborate in Afghanistan once again.
“The US should make Pakistan a partner for a diplomatic comeback in Kabul, if that is what is being planned, and work with Pakistan in an inclusive setting, on counterterrorism and the rights of women and girls in Afghanistan,” he said.
“We should continue to invest in the reset of our relationship, maintain strong security links, enhance intelligence cooperation, resume sales of advanced military platforms and sustainment of Pakistan’s US-origin defense equipment,” he added.
The Pakistani ambassador also spoke about his country’s efforts to generate foreign investment, saying that Pakistan had remained a lucratic and attractive market for American companies.
