KARACHI: Pakistan’s central bank on Thursday further slashed key policy rate by 100 basis points to 7 percent citing continued economic slowdown and increasing downside risk to country’s growth.
The central bank’s move to cut the interest rates comes in an unscheduled meeting of Monetary Policy Committee which has so far slashed the key interest rate by 6.25 percent from 13.25 percent since March 17, 2020.
“The decision reflected the MPC’s (Monetary Policy Committee) view that the inflation outlook has improved further, while the domestic economic slowdown continues and downside risks to growth have increased,” the State Bank of Pakistan (SBP) said.
The SBP said that priority of monetary policy had appropriately shifted toward supporting growth and employment during these challenging times.
“The MPC re-asserted its commitment to supporting households and businesses through the Covid-19 crisis and minimizing damage to the economy. In this context, the MPC felt that from a risk management point of view, a prompt response to downside risks to growth was called for given the improved inflation outlook,” the statement read.
The central bank noted that with approximately Rs. 3.3 trillion worth of loans due to be re-priced by early July 2020, this was an opportune moment to take action from a monetary policy transmission perspective. “In this way, the benefits of interest rate reductions would be passed on in a timely manner to households and businesses.”
The central bank observed that “the moderation of underlying inflation has continued”. The headline inflation declined further to 8.2 percent in May on the back of the recent cut in diesel and petrol prices.
The fiscal budget 2020-21 is also expected to be neutral for inflation as the freeze on government salaries, absence of new taxes, and lower production cost from reduced import duties should offset the decline in subsidies in some sectors. Given the absence of demand-side pressures, average inflation could fall below the previously announced range of 7-9 percent for next fiscal year.
On the real side, the decline in LSM (Large Scale manufacturing) deepened to 41.9 percent (y/y) in April, when lockdowns were still in place. In May, high-frequency indicators of activity such as cement dispatches, automobile sales, food and textile exports, and POL sales also continued to contract, although mostly at a lower rate than in the previous two months.
Looking ahead, the economy is expected to recover gradually in the current fiscal year supported by easing lockdowns, supportive macroeconomic policies and a pick-up in global growth. However, risks are skewed to the downside and the recovery will depend critically on the evolution of the pandemic both in Pakistan and abroad.
Pakistan’s industrialists, who have been calling for reduction in the key interest rates, have welcomed the move of central bank and called for further cuts in the current pandemic.
“There is more space for the interest rate cuts. Our demand is that the rates should be slashed to 5 percent or below”, Sheikh Sultan Rehman, Vice President of Federation of Pakistan Chambers of Commerce and Industry FPCCI, told Arab News. “The coronavirus has exerted massive negative impacts on our economy and the global economy which means the room to cut the rate still exists and the bank should exercise this option”, he added.
The International Monetary Fund (IMF), in its World Economic Outlook (WEO) released on Wednesday, has further downgraded its 2020 global growth forecast to negative 4.9 percent, 1.9 percentage points lower than in April, and projected a more gradual recovery than previously anticipated.
State Bank of Pakistan cuts key policy rate by 100bps to 7%
https://arab.news/njsbt
State Bank of Pakistan cuts key policy rate by 100bps to 7%
- The surprise move comes amid improved inflation outlook and domestic economic slowdown
- Industrialists demand policy rate to be 5% or below given the global economic meltdown
Pakistan, Russia call for regional collaboration on Afghanistan amid shared security concerns
- The call comes as Moscow’s special representative for Afghanistan visits Pakistan for a day
- Despite security issues, Afghanistan’s neighboring states view its stability as vital for progress
ISLAMABAD: Pakistan and Russia on Thursday called for greater collaboration among regional states to address the situation in Afghanistan, amid shared concerns over militant violence emanating from the war-torn country.
The call came during a visit by Moscow’s special representative for Afghanistan, Ambassador Zamir Kabulov, who met with Pakistan’s foreign secretary, Amna Baloch, and held detailed discussions with the additional secretary, Ahmad Naseem Warraich, at the Ministry of Foreign Affairs in Islamabad.
“The two sides exchanged views on relations with Afghanistan and called for enhanced coordination among regional countries for a peaceful and prosperous Afghanistan,” the foreign office said. “The two sides agreed to remain engaged toward this end.”
The talks come as both nations grapple with security threats linked to Afghanistan. Russia has voiced alarm over Daesh and its attacks, including a concert bombing in Moscow earlier this year that was linked to militants with ties to Afghanistan.
While the Afghan Taliban and Daesh are sworn enemies, Pakistan accuses the Afghan administration of facilitating the Tehreek-e-Taliban Pakistan (TTP), a proscribed militant network blamed for cross-border attacks, an allegation Kabul denies.
Pakistan’s approach to Afghanistan has grown increasingly confrontational since last year as it pressures Kabul to rein in the TTP. By contrast, Russia announced last month it would remove the Taliban from its list of terrorist organizations, signaling a step toward normalizing ties with Afghanistan’s rulers.
Beyond security, Russia is keen to retain its influence in Central Asia and engage in Afghanistan’s economic reconstruction, particularly in energy and infrastructure projects.
Initiatives such as the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline and the Trans-Afghan Railway remain key priorities for Moscow, though persistent security challenges have delayed progress.
For Pakistan also, Afghanistan is critical for regional connectivity. Islamabad has offered landlocked Central Asian nations access to its ports, aiming to facilitate trade with global markets via sea routes.
Despite security concerns shared by Afghanistan’s neighboring countries, its stability is viewed as vital to unlocking the economic potential of regional projects.
PM Sharif urges nation to perform rain prayers as toxic smog chokes Pakistani cities
- Shehbaz Sharif urges Islamic scholars to play their role in organizing ‘Istisqa’ prayers across the country
- Toxic smog has enveloped Pakistan’s cultural capital, Lahore, and 17 other districts of Punjab province
ISLAMABAD: Prime Minister Shehbaz Sharif has urged the nation to perform prayers for rainfall, calling on Islamic scholars to take the lead in organizing “Istisqa” prayers, his office announced on Thursday, as worsening air quality continues to endanger the health of millions.
The Istisqa prayer is a special Islamic ritual performed to seek rain, primarily during times of drought or severe water shortages. It symbolizes the community’s humility, repentance and reliance on divine mercy for sustenance.
Toxic smog has enveloped Pakistan’s cultural capital, Lahore, and 17 other districts in Punjab since last month. Health officials report that more than 40,000 people have sought treatment for respiratory illnesses, prompting Punjab authorities to close schools until November 17 to safeguard children’s health.
“PM Sharif appeals to the nation to offer Istisqa prayers for rain,” his office announced in a statement. “Scholars should especially play their role in organizing Istisqa prayers.”
The prime minister noted the rainfall would improve the environment apart from aiding in getting rid of diseases.
“Istisqa prayers should be organized in all mosques under the auspices of the federal government and the provinces,” he was quoted as saying. “In the current situation, there is a dire need for rain.”
A day earlier, Pakistan’s Meteorological Department forecast light rains from Nov. 14-16 in most districts of the country’s populous Punjab province.
The UN children’s agency has warned that the health of 11 million children in Punjab is in danger due to air pollution.
South Asia, particularly India and Pakistan, gets shrouded in intense pollution every winter as cold air traps emissions, dust, and smoke from farm fires.
Pollution could cut more than five years from people’s life expectancy in the region, according to a University of Chicago’s Energy Policy Institute study last year.
Pakistan signs four-year pact with Global Green Growth Initiative to boost climate resilience
- The agreement will help Pakistan’s transition to a green economy, address water scarcity and deforestation
- Pakistan has ranked as the fifth most vulnerable country to climate change, with its cities engulfed in smog
ISLAMABAD: Pakistan has signed a four-year country program framework agreement with an international green economy organization to advance its sustainable development goals by enhancing climate resilience through green growth initiatives, according to an official statement released on Thursday.
The agreement was signed by Pakistan’s Climate Change Ministry Secretary, Aisha Humera Moriani, and the Global Green Growth Initiative’s (GGGI) Deputy Director-General, Helena McLeod, during a formal ceremony at the United Nations-led Global Climate Conference (COP29) in Baku, Azerbaijan.
Pakistan ranks as the fifth most vulnerable country to climate change, according to the Global Climate Risk Index. In 2022, catastrophic floods claimed over 1,700 lives, affected more than 33 million people, and caused economic losses exceeding $30 billion.
While international donors pledged over $9 billion last January to help Pakistan recover from the devastating floods, officials report that little of the pledged amount has been disbursed so far.
“The Ministry of Climate Change & Environmental Coordination and GGGI has signed a four-year Country Programme Framework agreement to advance Pakistan’s sustainable development goals through targeted climate action and green growth interventions,” said the official statement.
On the occasion, McLeod said her organization aimed to facilitate Pakistan’s transition to a green economy through collaboration with national stakeholders to address water scarcity, deforestation and energy challenges “compounded by climate change effects.”
Prime Minister Shehbaz Sharif’s Coordinator on Climate Change Romina Khurshid Alam thanked the GGGI for engaging with Pakistan to “mobilize green finance, support climate action frameworks and promote investment” to achieve climate resilience.
Pakistan also regularly faces other climate change-induced effects such as droughts, cyclones, torrential rainstorms and heatwaves.
Currently, record-high air pollution levels have triggered hundreds of hospitalizations, school closures and stay-at-home orders in the eastern city of Lahore and other cities in the populous Punjab province, which has been enveloped in thick, toxic smog since last month.
A mix of low-grade fuel emissions from factories and vehicles, exacerbated by agricultural stubble burning, blanket Lahore and its surroundings each winter, trapped by cooler temperatures and slow-moving winds.
The city of 14 million people stuffed with factories on the border with India regularly ranks among the world’s most polluted cities, but it has hit record levels this month, as has New Delhi.
Army officer, soldier killed in southwest Pakistan clash that leaves three militants dead
- Incident in Balochistan occurred after security forces reacted to militant presence in Harnai district
- A Pakistan army major and a havildar lost their lives when an improvised explosive device blew up
QUETTA: An army officer and a soldier lost their lives in Pakistan’s southwestern Balochistan province on Thursday, according to a statement from the military’s media wing, during an encounter that also left three militants dead.
Balochistan, which borders Iran and Afghanistan, has been the site of a low-level insurgency by separatist militants for over two decades. In August, ethnic nationalist militants carried out several coordinated attacks on civilian and military targets in the province, killing more than 50 people on August 25-26.
Most of the assaults were claimed by the Balochistan Liberation Army (BLA), the leading separatist group operating in the province, which is home to key China-led infrastructure projects, including a port and a gold-copper mine.
“On 14 Nov 2024, on reported presence of terrorists, planning to target innocent civilians in Harnai District, security forces under Major Muhammad Haseeb were immediately mobilized to sanitize the area,” the Inter-Services Public Relations (ISPR) informed.
“Own troops effectively engaged the terrorists’ location and resultantly three terrorists were sent to hell,” it continued. “However, during the operation, an improvised explosive device exploded on the leading vehicle of security forces, resultantly, Major Muhammad Haseeb (age: 28 years, resident of District Multan), a brave officer, who was leading his troops from the front, along with Havildar Noor Ahmed (age: 38 years, resident of District Barkhan), having fought gallantly, made the ultimate sacrifice and embraced Shahadat [martyrdom].”
The incident comes just four days after a deadly suicide bombing at the Quetta railway station killed dozens of people, including army soldiers, and wounded several others.
A day earlier, security forces killed eight militants and injured six others during an intelligence-based operation in Pakistan’s restive northwestern Khyber Pakhtunkhwa (KP) province.
KP has been predominantly targeted by Tehreek-e-Taliban Pakistan (TTP) militants, who have carried out attacks on security forces’ convoys and check posts, as well as killing and kidnapping officials and civilians in recent months.
The TTP leadership is reportedly based in neighboring Afghanistan, straining ties between Kabul and Islamabad, as Pakistani officials accuse the Afghan Taliban of “facilitating” cross-border militant attacks.
Afghanistan denies the allegations and has urged Pakistan to address its security challenges internally.
Pakistani security forces kill eight militants in restive northwest
- Army says six militants also injured during operation in Miran Shah area of North Waziristan
- South Asian nation blames surge in militancy on TTP fighters operating out of Afghanistan
ISLAMABAD: Security forces killed eight militants while six others sustained injuries during an intelligence-based operation in Pakistan’s restive northwestern Khyber Pakhtunkhwa province, the military’s media wing said on Wednesday.
According to Inter-Services Public Relations (ISPR), the operation was conducted in the Miran Shah area of North Waziristan district.
Khyber Pakhtunkhwa, which borders Afghanistan, has witnessed several attacks by Tehreek-e-Taliban Pakistan (TTP) militants who have targeted security forces’ convoys and check posts, besides killing and kidnapping officials and civilians in recent months.
“Security forces conducted an intelligence-based operation in general area Miran Shah, North Waziristan District on the reported presence of khwarij [militants],” the ISPR said.
“During the conduct of the operation, own troops effectively engaged khwarij’s location, as a result of which, eight khwarij were sent to hell, while six khwarij got injured.”
A “sanitization operation” was also conducted in the area to eliminate any other militants, it added.
Earlier this month on Nov. 10, Pakistani security forces killed four militants in two separate encounters in Khyber Pakhtunkhwa. Prior to that, four Pakistani soldiers and five militants lost their lives in a gunbattle in South Waziristan’s Karama area.
The TTP leadership is said to be based in neighboring Afghanistan, affecting the ties between Kabul and Islamabad since the Pakistani officials have accused the Afghan Taliban of “facilitating” cross-border militant attacks.
Afghanistan denies the allegation and has urged Pakistan to resolve its security challenges internally.
