Pakistan’s central bank likely to keep interest rate unchanged

A logo of the State Bank of Pakistan is pictured on a reception desk at the head office in Karachi on July 16, 2019. (REUTERS/File)
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Updated 02 March 2021
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Pakistan’s central bank likely to keep interest rate unchanged

  • SBP slashed its key policy rate from 13.25 percent to 7 percent between March 17 and June 25 to help the economy hit by COVID-19
  • Industrialists are calling for a further reduction to 5 percent to support the growth momentum and industrialization

KARACHI: The State Bank of Pakistan (SBP) is expected to keep its key interest rate unchanged at 7 percent amid economic recovery, experts say, as the central bank is scheduled to announce its monetary policy for the next two months on Monday.
The SBP slashed its key policy rate from 13.25 percent to 7 percent between March 17 and June 25 to support the economy hit by the coronavirus outbreak.  
"The central bank is expected to keep the interest rate unchanged because the COVID situation prevails and we believe that the government will not like to increase rates amid the economic recovery," Samiullah Tariq, head of research at Pakistan Kuwait Investment, told Arab News on Sunday.
According to a poll conducted by Topline Securities, majority of top-notch financial market participants also believe the rate will remain the same.
"Out of 72 responses received, 87.5 percent are of the view that rate will remain unchanged, 7 percent voted for a rate increase of 25 bps and above,” Muhammad Sohail, chief executive of Topline Securities said.
Another brokerage firm, Arif Habib Limited (AHL), also predicts that the monetary stance would not change.  
“We expect the SBP to keep policy rates unchanged at 7 percent in the upcoming monetary policy statement," AHL said in a report, forecasting that inflation is likely to ease in coming months.
The central bank forecasts that the average inflation rate would be between 7 percent and 9 percent during the current fiscal year.  
Pakistani industrialists, however, are calling for a further reduction of interest to 5 percent, saying it is necessary for the growth momentum and industrialization in the country.   
"Our economy was on a ventilator before that coronavirus outbreak and after the situation turned worst the unemployment has substantially increased and now the government is taking long-term measures and it seems that the economic situation is improving," Sheikh Sultan Rehman, vice president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), told Arab News.
"There are signs of economic recovery and to keep the momentum continue we demand that the interest should be reduced to 5 percent and gradually to around 3 percent for long-term growth," he said.   
Economists say that in the current global and domestic situation, monetary policy has to ensure that financing conditions remain favorable.
"An uncertain global recovery is pushing central banks to actively ensure that monetary policy remains geared to financing the whole economy. In addition, lower inflation has given room for near zero rates globally," said Dr. Khaqan Najeeb, former advisor at the Ministry of Finance.  
He added that with slowing growth and higher food inflation the task is complex for Pakistan.
The central bank expects that economic growth would be between 1.5 percent and 2.5 percent as compared with the negative growth of 0.4 percent recorded in the previous fiscal year. Pakistan had recorded negative growth for the first time since 1952.  
"Monetary policy has to ensure financing conditions remain extremely favorable. Beyond just lower funding costs it is crucial to recalibrate instruments to counteract the negative impact of funding measures for containment of the virus," Dr. Najeeb said.


Pakistan army chief vows to root out militancy on visit to troubled northwest

Updated 15 sec ago
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Pakistan army chief vows to root out militancy on visit to troubled northwest

  • Pakistan has struggled to contain militancy in Khyber Pakhtunkhwa province, since its truce with Pakistani Taliban broke down in 2022
  • Islamabad has frequently accused Afghanistan of supporting militant groups that launch cross-border attacks, Kabul denies the allegation

ISLAMABAD: Pakistan’s army chief, Gen Asim Munir, on Monday promised to eliminate militancy from the South Asian country, the military said, as the army commander visited the northwestern Khyber Pakhtunkhwa (KP) province that has witnessed a surge in attacks in recent months.
Pakistan has struggled to contain surging militancy in KP, which borders Afghanistan, since a fragile truce between the Pakistani Taliban and the state broke down in November 2022. The TTP and other militant groups have frequently targeted security forces convoys and check-posts, besides targeted killings and kidnappings of law enforcers and government officials in recent months.
On Monday, Gen. Munir visited the provincial capital of Peshawar, where he was given a briefing on the prevailing security situation and the ongoing counter-terrorism operations in the region, according to the Inter-Services Public Relations (ISPR), the military’s media wing.
“The enemy may try to sow discord and fear, but we will not relent. Hostile elements will be dealt with an iron hand,” he was quoted as saying by the ISPR. “They will continue to suffer heavy losses, and their capacity to inflict harm will be decimated.”
The army chief said that any attempt to disturb the peace of the nation would be met with “decisive and overwhelming force,” praising the unwavering resolve and sacrifices of armed forces and law enforcement agencies
“Through their dedication, courage, and supreme sacrifices, we have successfully degraded the operational capabilities of terrorist organizations, both within our borders and beyond,” he said.
“Our forces have relentlessly pursued and eliminated key terrorist leaders, dismantled their infrastructure, and neutralized their cells, sending a clear message that terror has no place in our land. This war is ongoing and we would take it to its logical conclusion.”
The visit by the army chief came two days after Pakistani security forces killed nine militants in two separate engagements in KP’s North Waziristan district, which borders Afghanistan.
Islamabad has frequently blamed the surge in militancy on Afghanistan, accusing it of sheltering and supporting militant groups that launch cross-border attacks. Afghan officials deny involvement and insist that Pakistan’s security issues are an internal matter of Islamabad.
Separately, Gen. Munir interacted with members of various political parties, including Chief Minister Ali Amin Gandapur, in Peshawar.
“The political representatives showed vivid clarity on unflinching support of the armed forces and LEAs in nation’s fight against terror and agreed on the need for a unified front beyond political colors against the extremist philosophy of terrorist groups,” the ISPR added.


Authorities start dismantling bunkers in clashes-hit northwestern Pakistani district

Updated 13 January 2025
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Authorities start dismantling bunkers in clashes-hit northwestern Pakistani district

  • Tribal and sectarian clashes since Nov. 21 have killed at least 136 people in Kurram, causing medicine, food and fuel shortages
  • On Jan. 1, warring sides agreed on the demolition of bunkers and handover of heavy weapons to authorities under a peace agreement

PESHAWAR: Authorities in Pakistan’s Khyber Pakhtunkhwa (KP) province have started dismantling bunkers built by rival tribes in the Kurram district, which has been hit by deadly clashes in the last two months, an official said on Monday.
Kurram, a northwestern district of around 600,000 people in KP, has been rocked by tribal and sectarian clashes since November 21, when armed men attacked a convoy of Shia passengers, killing 52 people.
The attack sparked further violence and blockade of a main road connecting Kurram’s main town of Parachinar with the provincial capital of Peshawar, causing medicine, food and fuel shortages in the area, as casualties surged to 136.
Authorities last week issued a notification regarding dismantling of the bunkers in Lower Kurram, more than a week after a council of tribal and political elders brokered a peace deal between the two sides.
“One bunker each has been demolished in Balishkhel and Khar Kali area of Lower Kurram and arrangements for the demolition of the rest are being made,” Lower Kurram Assistant Commissioner Hafeez-ur-Rehman told Arab News over the phone.
“The bunkers are being dismantled using explosives, under the supervision of the district administration.”
Under the peace agreement signed on Jan. 1, both sides agreed on the demolition of bunkers and the handover of heavy weapons to authorities within two weeks.
Any party that launches an attack after the signing of the deal will be considered a “terrorist” and action will be taken against it. A fine of Rs10 million ($35,933) will be imposed on those who violate the terms of the deal by using weapons against each other, according to the peace agreement.
Land disputes in the volatile district will be settled on a priority basis with the cooperation of local tribes and the district administration. Opening of banned outfits’ offices will be prohibited in the district, while social media accounts spreading hate will be discouraged via collective efforts backed by the government.
The decisions were made by the KP apex committee, which comprises civilian and military leadership in the province.
Muhammad Ali Saif, a spokesperson for the KP government, confirmed the start of a drive to demolish all such structures in the volatile district.
“All bunkers will be dismantled in light of the apex committee decision and the peace agreement,” he said, adding that it was essential to restore peace in the area.
However, a shortage of food and medicines persists in the district and provincial authorities have been supplying relief goods and transporting ailing and injured people from Kurram to Peshawar via helicopters.


Pakistani forces kill 27 militants in insurgency-hit Balochistan province

Updated 13 January 2025
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Pakistani forces kill 27 militants in insurgency-hit Balochistan province

  • Balochistan, Pakistan’s largest province by landmass and rich in mineral resources, has been the site of a low-level insurgency by Baloch separatists
  • Separatist militants last week seized Zehri town in Balochistan’s Khuzdar district, setting government property on fire and robbing Rs768,000 from a bank

ISLAMABAD: Pakistani security forces have killed 27 militants in the southwestern Balochistan province, the military said on Monday, in the latest incident in the insurgency-hit region.
The militants were killed in an intelligence-based operation in Balochistan’s Kacchi district, according to the Inter-Services Public Relations (ISPR), the military’s media wing.
The deceased had been involved in militant activities against security forces as well as innocent civilians and were “highly wanted” by the law enforcement agencies.
“Multiple hideouts, including caches of arms, ammunition and explosives, were also destroyed during the operation,” the ISPR said in a statement.
Balochistan, Pakistan’s largest province by landmass and rich in mineral resources, has long faced a low-level insurgency led by separatist groups, who accuse Islamabad of exploiting the province’s natural resources, such as gold and copper, while neglecting the local population.
Successive Pakistani governments have denied the allegations, saying they prioritized Balochistan’s development through investments in health, education and infrastructure projects.
On Monday, a roadside bomb blast killed one person in Balochistan’s Turbat district, while dozens of ethnic Baloch separatists last week entered Zehri town in the Khuzdar district and seized control of its main market, setting government properties on fire and robbing Rs768,000 ($2,745) from a private bank.
Footage and pictures seen by Arab News showed armed fighters roaming the streets of the town after seizing weapons, vehicles and motorbikes from the Levies paramilitary force. The outlawed Balochistan Liberation Army (BLA) separatist group claimed responsibility for the attack.
Security forces reclaimed the town following skirmishes with the militants, during which one soldier was injured. Provincial authorities later sacked 15 Levies personnel for showing “cowardice” by surrendering to armed militants, according to a government notification.
Violence by Baloch separatist factions, primarily the BLA, killed about 300 people last year, according to official statistics, marking an escalation in the decades-long conflict.


Pakistan, Bangladesh vow to strengthen trade ties, consular services

Updated 13 January 2025
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Pakistan, Bangladesh vow to strengthen trade ties, consular services

  • Pakistan and Bangladesh have sought to improve bilateral ties since former premier Hasina’s ouster
  • Established together as one nation in 1947, Bangladesh won liberation from Pakistan in 1971 with India backingEstablished together as one nation in 1947, Bangladesh won liberation from Pakistan in 1971 with India backing

ISLAMABAD: Islamabad and Dhaka have vowed to strengthen ties, particularly in trade and consular services, the Pakistan embassy said on Monday after the consul general of Bangladesh in Dubai paid a courtesy call on his counterpart from Pakistan. 

Pakistan and Bangladesh share a complex history, having been a single country known as East and West Pakistan until Bangladesh was born in 1971 after a war of liberation backed by Pakistan’s arch-rival and neighbor India. Nearly three million people were killed in the conflict.

Ties reached a new low in 2016 when Bangladesh executed several leaders of its Jamaat-e-Islami party on charges of committing war crimes in 1971. Pakistan called the executions and trials “politically motivated,” arguing that the convicts were being punished for taking a pro-Pakistan stance during the war. 

However, Islamabad’s ties with Dhaka improved after Prime Minister Sheikh Hasina was ousted last year after student-led violent protests in the country. Hasina fled to India, which has cast a shadow over the relationship between Dhaka and New Delhi in recent months, with the former repeatedly demanding that India extradite the ousted leader.

“H.E. Md. Rashedujjaman, Consul General of Bangladesh in Dubai paid a courtesy call on H.E. Hussain Muhammad, Consul General of Pakistan, at the Consulate General of Pakistan today [Monday],” the Pakistani consulate said in a statement. 

“Welcoming the visiting Consul General, Mr. Hussain emphasized the importance of strengthening ties between Bangladesh and Pakistan, particularly in trade. Both Consuls General acknowledged the potential for collaboration and agreed to engage their respective consulates’ trade sections to further promote bilateral cooperation.”

Both sides also discussed various consular services including passport issuance, national identity cards, and visa procedures.

“Both Consuls General agreed to enhance information sharing and future collaboration regarding community services and public awareness initiatives,” the statement said.


Pakistan voices concern over recent ‘Islamophobic’ remarks against British-Pakistanis in UK

Updated 13 January 2025
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Pakistan voices concern over recent ‘Islamophobic’ remarks against British-Pakistanis in UK

  • The development comes amid a debate around child sexual abuse in the UK, with an inquiry report accusing some Pakistani origin men of involvement
  • Islamabad says such remarks are aimed at ‘conflating’ reprehensible actions of a few individuals with the entire 1.7 million British-Pakistani diaspora

ISLAMABAD: Pakistan’s Foreign Office on Monday expressed “deep concern” over a recent spate of “Islamophobic” remarks directed toward the Pakistani community in the United Kingdom (UK), saying they were aimed at “conflating” reprehensible actions of a few individuals with the entire 1.7 million British-Pakistani diaspora.
The development comes amid a debate around grooming gangs in the UK after British Safeguarding Minister Jess Phillips rejected Oldham Council’s request for a government-led inquiry into a historical child sexual abuse scandal in the town in favor of a local investigation. The grooming scandal, which came to light in the 2010s, involved the systematic abuse of thousands of girls in towns such as Rotherham, Rochdale and Oldham. A 2014 report estimated that 1,400 children were exploited in Rotherham between 1997 and 2013, primarily by men of Pakistani origin.
Indian nationalist lawmaker Priyanka Chaturvedi this month sparked the controversy by stating that the blame for grooming gangs in the UK should not be attributed to Asia as a whole, but rather to one “rogue nation.” Tech billionaire Elon Musk also endorsed the anti-Pakistan narrative on X and criticized British Prime Minister Keir Starmer for rejecting calls for a new national inquiry and instead advocating the implementation of recommendations of an earlier seven-year inquiry.
In its response to media queries about the controversy, the Pakistani Foreign Office said British nationals of Pakistani origin had a rich history of contributing to the UK’s growth, development and, indeed, freedom, with an “exceptionally large” number of predominantly Muslim soldiers from what is now Pakistan serving in the British Indian army and laying down their lives in both World Wars.
“We note with deep concern the increasingly racist and Islamophobic political and media commentary in the UK that is aimed at conflating the reprehensible actions of a few individuals with the entire 1.7 million British Pakistani diaspora,” it said in a statement.
The Foreign Office said that the Pakistan-UK friendship is characterized by warmth, cordiality, robust cooperation and trust, noting that British-Pakistanis formed the “backbone of the UK’s health, retail and services sectors.”
“Many British Pakistanis hold high public office, and thousands serve their communities as Members of Parliament, mayors, councillors, and as members of local police and municipal services. British Pakistanis have excelled in sports and arts. Their cuisine and music enriches British culture,” it said.
“To demonize such a large and diverse community on the basis of the actions of a few individuals needs to be condemned.”
It said the multifaceted Pakistan-UK relations cover important areas, including trade and investment, education, security and counter-terrorism, and the presence of 1.7 million strong British-Pakistani diaspora provides the strongest link between the two friendly countries.