Pakistan’s central bank rules out 'sudden and higher' interest rate changes in foreseeable future

This undated file photo shows premises of the State Bank of Pakistan. (Shutterstock)
Short Url
Updated 02 March 2021
Follow

Pakistan’s central bank rules out 'sudden and higher' interest rate changes in foreseeable future

  • The State Bank of Pakistan has given forward guidance on monetary policy for the first time to address concerns of investors
  • The central bank maintains policy rate at 7 percent for the next two months as domestic recovery gains traction

KARACHI: Pakistan’s central bank on Friday ruled out any “sudden and higher” interest rate movements in the foreseeable future amid speculations that the International Monetary Fund (IMF) was likely to resume its $6 billion loan program for the country. 

The bank decided to maintain the policy rate at 7 percent for the next two months, saying that domestic economic recovery had gained further traction. 

“In the absence of unforeseen developments, the Monetary Policy Committee (MPC) expects monetary policy settings to remain unchanged in the near term,” Governor State Bank of Pakistan (SBP) Dr Reza Baqir told a news conference in Karachi. 

“As the recovery becomes more durable and the economy returns to full capacity, the MPC expects any adjustments in the policy rate to be ‘measured and gradual’ to achieve mildly positive real interest rates,” he said while reading a document, adding that the MPC considered it appropriate to provide some forward guidance on monetary policy to facilitate policy predictability and decision-making by economic agents. 

Last week, Baqir said the country was hoping for good news following talks with the IMF on the revival of fiscal stabilization program where concerns about future interest rates were also raised. The central bank’s forward guidance is meant to assuage such concerns of investors and business community. 

Pakistan signed $6 billion, three-year Extended Fund Facility (EFF) with the IMF and has so far secured $1.44 billion under the loan program since July 2019. The country was expecting another tranche of about $450 million before the second review was put on hold about a year ago. 

“We were in touch with the IMF at the technical level and the IMF also wanted fast economic recovery,” the SBP governor said, adding: “Now talks are going on with the IMF and when announcement would be made that our agreement on the review has been done its basic purpose would be to maintain the economic growth so that recovery could be stabilized.” 

Despite recent electricity tariff hikes, the central bank said that inflation was expected to fall within the previously announced range of 7-9 percent during FY21, hoping that the trend would move toward the 5-7 percent target range over the medium-term. 

Pakistan on Thursday increased the electricity tariff by Rs1.95 per unit, or 15 percent, which will also affect the base tariff for lifeline consumers using up to 50 units per month for the first time in almost two decades.

The SBP governor said, however, that the impact of these measures on inflation would be temporary. 

“The rates have been increased in the past as well,” he added, “but we witnessed that their impact was temporary.” 

He said the country had come out of the difficult stabilization phase and the economic activity data and indicators of consumer and business sentiment were reflecting continued improvement. 

However, the MPC stressed in its report that considerable uncertainty remained part of the general economic outlook. 

“The trajectory of the COVID pandemic is difficult to predict, given still-elevated global cases, the emergence of new strains, and lingering uncertainties about the roll out of vaccines worldwide,” the SBP statement read. “Such external shocks could slow the recovery.” 


South Africa-based Pakistani entrepreneur to invest in coal-to-gas plant at Thar coalfields

Updated 10 sec ago
Follow

South Africa-based Pakistani entrepreneur to invest in coal-to-gas plant at Thar coalfields

  • The project will convert coal into synthetic gas for industrial use
  • Initiative can reduce energy costs, alleviate growing fuel import bill

ISLAMABAD: A South Africa-based Pakistani entrepreneur is investing in a coal-to-gasification plant at the Thar coalfields in southern Sindh province to generate cleaner energy and reduce Pakistan’s reliance on imported fuels, state media reported on Tuesday.
The announcement follows Pakistan’s high-profile mining summit in Islamabad, which brought together investors, policymakers and industry leaders from around the world to explore the country’s vast untapped mineral wealth.
Businesswoman Tabassum Pardesi’s investment signals a renewed effort to harness Pakistan’s Thar coal reserves through gasification technology, which converts coal into synthetic gas for industrial use. The initiative can reduce energy costs, alleviate the country’s growing fuel import bill and provide a domestic alternative to costly liquefied natural gas.
“Tabassum ... is now spearheading a landmark investment initiative to establish a coal-to-gasification plant at the Thar coalfields,” the Associated Press of Pakistan (APP) said in its report.
“The venture, in collaboration with leading South African mining conglomerates, aims to generate cleaner energy, reduce Pakistan’s reliance on imported fuels, and unlock long-term economic opportunities for the region.”
It highlighted that Pardesi, who is known for co-founding the South African Skywise Airlines, has submitted a proposal for the project to the Pakistani authorities and also initiated a “strategic lobbying” campaign during the minerals summit.
The report said her goal was to secure high-level public-private partnerships, streamline regulatory pathways and ensure alignment with Pakistan’s national energy and climate resilience goals.
Pakistan aims for a low-carbon future, targeting 60 percent renewable energy and 30 percent electric vehicle sales by 2030. It plans a 15 percent emissions reduction, increasing to 35 percent with international support.
“Pakistan has the potential to become a global mining powerhouse,” APP quoted Pardesi as saying. “With its abundant natural resources and a youthful workforce, all we need is visionary execution and international collaboration — and I’m here to help make that happen.”
The Thar desert is home to the world’s largest lignite coal reserves, estimated at 175 billion tons, equivalent to 50 billion tons of oil and 2,000 trillion cubic feet of gas. Pakistan’s mineral sector contributes only 3.2 percent to GDP and 0.1 percent to global mineral exports despite rich mineral resources including salt, copper, gold and coal.


Pakistan, Saudi Arabia agree to partner on geological surveying amid push to tap $6 trillion minerals sector

Updated 2 min 58 sec ago
Follow

Pakistan, Saudi Arabia agree to partner on geological surveying amid push to tap $6 trillion minerals sector

  • Geological surveys significantly impact mining by helping to locate, assess, and sustainably exploit mineral resources
  • Government officials, heads of private companies from various countries attend two-day mineral summit in Pakistani capital

ISLAMABAD: Pakistan and Saudi Arabia have agreed to collaborate in the field of geological surveys through experience sharing and knowledge transfer, the chief of the Saudi Geological Survey said on Tuesday, as Islamabad seeks to tap the potential of the country’s vast natural reserves estimated to be worth $6 trillion. 

Geological surveys, scientific studies that map and analyze the Earth’s geological features, will be a key part of Pakistan’s efforts to tap the underutilized promise of Pakistan’s mineral sector, which despite rich reserves including salt, copper, gold, and coal contributes only 3.2 percent to the GDP and 0.1 percent to global mineral exports. Geographical surveys help to identify mineral deposits, and significantly impact mining by helping to locate, assess, and sustainably exploit mineral resources.

“For the Saudi Geological Survey and Pakistan Geological Survey, yesterday we had a meeting, and we agreed that we will work together to share the experience, transfer the knowledge, the learning, understanding the best practices, which are going to really help both countries in moving forward,” Eng. Abdullah Mefter Al-Shamrani, Chief Executive Officer of the Saudi Geological Survey, told Arab News on the sidelines of the two-day Pakistan Minerals Investment Forum being held in Islamabad. 

“There is good cooperation between the two organizations, [and] it is going to bring great value for both countries.” 

Al-Shamrani said Saudi Arabia had sent a large delegation comprising government officials and private investors to the mineral summit, who had held productive discussions with Pakistani companies.

“We had a great discussion between companies from Pakistan and Saudi Arabia, where they agreed together that they will continue working, exploring and looking for opportunities here in Pakistan and also at the same time for Saudi Arabia,” Al-Shamrani said. 

“Today [Tuesday] we have seen some of the investors in Saudi Arabia, they are asking for permission to go and explore some areas in Pakistan,” he added.

Pakistan is home to one of the world’s largest porphyry copper-gold mineral zones, while the Reko Diq mine in southwestern Balochistan has an estimated 5.9 billion tons of ore. Barrick Gold, which owns a 50 percent stake in the Reko Diq mines, considers them one of the world’s largest underdeveloped copper-gold areas, and their development is expected to have a significant impact on Pakistan’s struggling economy.


Heatwave-like conditions to prevail in southern Pakistan over next 24 hours — Met Office

Updated 08 April 2025
Follow

Heatwave-like conditions to prevail in southern Pakistan over next 24 hours — Met Office

  • At the same time, a shallow westerly wave, likely to enter upper parts of the country on Tuesday night, may cause rain and thunderstorms in upper regions
  • Pakistan has witnessed frequent, erratic changes in its weather patterns, including floods, droughts and cyclones, that have been blamed on climate change

ISLAMABAD: Heatwave-like conditions will prevail in southern parts of Pakistan over the next 24 hours, the Pakistan Meteorological Department (PMD) said on Tuesday, urging people to avoid sun exposure and take precautions.
The weather conditions may cause temperatures to rise 4-7°C above normal in central and southern Punjab, Sindh and parts of the Balochistan province.
“General public especially children, women and senior citizens are requested to take precautionary measures. Avoid exposure to sun light during the daytime and get hydrated,” the PMD said in its advisory on Tuesday.
“Farmers are advised to manage their crop activities (wheat harvesting) keeping in view the weather conditions and take care of their livestock as well. Judicious use of water is advised.”
Similarly, the PMD said, a shallow westerly wave is likely to enter upper parts of the country on Tuesday night and may persist till Friday.
The weather system may cause rain-wind/thunderstorm in Chitral, Dir, Swat, Shangla, Kohistan, Mansehra, Abbottabad, Battagram, Bunner, Kurram, Bajaur, Mohmand, Orakzai, Murree, Galliyat, Gilgit-Baltistan, Azad Kashmir, Islamabad, Rawalpindi, Attock, Chakwal, Talagang, Mianwali, Jhelum. Gujrat, Sialkot, Narowal and Lahore during the period, according to the advisory.
Isolated hailstorm may also occur during the forecast period. Dust-storm and gusty winds are also expected in the plains of Punjab, Khyber Pakhtunkhwa and upper Sindh during the forecast period.
“Wind-dust-storm/hailstorm and lightning may damage loose structures like electric poles, trees, vehicles and solar panels,” the PMD added.
Pakistan has witnessed frequent, erratic changes in its weather patterns, including floods, droughts, cyclones, torrential rainstorms, heatwaves and the slow-onset threat of glacial melting, in recent years that scientists have blamed on human-driven climate change.
In 2022, unusually heavy rains triggered floods in many parts of the country, killing over 1,700 people, inflicting economic losses of around $30 billion, and affecting at least 30 million people.


After bloodbath a day earlier, Pakistan stocks gain in line with global recovery

Updated 08 April 2025
Follow

After bloodbath a day earlier, Pakistan stocks gain in line with global recovery

  • Pakistan Stock Exchange fell to intraday low of 8,687 points on Monday, largest intraday point-wise drop in PSX history
  • Major stock indexes plunged on Monday after US President Trump announced tariffs on goods imported from the rest of the world

ISLAMABAD: Pakistan stocks closed at 115,532, gaining 623 points (0.54 percent) on Tuesday, a day after the Pakistan Stock Exchange fell to an intraday low of 8,687 points, the largest intraday point-wise drop in PSX history.

Major stock indexes plunged on Monday after US President Donald Trump announced tariffs on goods imported from the rest of the world, saying a 10 percent tariff on all nations and much higher rates of up to 50 percent on individual countries will boost the US economy and protect jobs.

“In line with the global trend, the market saw a recovery,” Topline Securities said in its daily market review. “A total of 526 million shares were traded, with a turnover of Rs 33 billion.”

Major stock markets jumped on Tuesday after three days of heavy selling while US Treasury yields rose for a second day as investors were optimistic that Washington might be willing to negotiate on some of its aggressive tariffs. Oil prices rebounded as well, helping lift energy shares. European shares also rose from 14-month lows on Tuesday after four straight sessions of heavy selling, although investors’ mood remained sensitive to tariff-related developments. Britain’s main indexes also recovered from their lowest levels in more than a year, as investors looked for any indication of Washington softening its stance on the aggressive tariffs that have roiled global markets over the last few days.

Pakistan is sending a commerce ministry team to negotiate a 29 percent tariff on Pakistani goods announced by Washington last week. 


Kabul slams Pakistan’s ‘violence’ against Afghans pressured to leave

Updated 08 April 2025
Follow

Kabul slams Pakistan’s ‘violence’ against Afghans pressured to leave

  • Islamabad canceled the residence permits of hundreds of thousands of Afghans in Pakistan as part of a deportation program
  • Afghan refugees should be allowed to take their wealth, belongings and household goods with them, Afghan refugees ministry says

KABUL: The Taliban government condemned on Tuesday the “violence” used by Pakistan in its new campaign to expel Afghans from the country, accusing Islamabad of using the migrants for “political goals.”
Islamabad canceled the residence permits of hundreds of thousands of Afghans in Pakistan, including many who were born or living for decades there, as part of a deportation program.
“The mistreatment of them (Afghans) by neighboring countries is unacceptable and intolerable,” the Taliban Ministry of Refugees and Repatriation said on X, calling for a joint agreement to facilitate repatriations.
An average of 4,000 Afghans crossed the border from Pakistan on Sunday and Monday, “far higher than the March daily average of just 77,” the International Organization for Migration (IOM) told AFP.
The new phase in Pakistan’s campaign to repatriate Afghans “could affect up to 1.6 million undocumented Afghan migrants and Afghan Citizen Card (ACC) holders during 2025,” the agency said.
The UN says nearly three million Afghans live in Pakistan: 800,000 had their Pakistani ACC residency cards canceled in April and 1.3 million still have residence permits until June 30 because they are registered with the UN refugees agency UNHCR. Others have no papers.
“It is with great regret that Afghan refugees are being subjected to violence,” the Taliban refugees ministry said.
“All refugees should be allowed to take their ho was born in northern Afghanistan, told AFP on Monday after crossing the Torkham border point.
“I had papers and they ripped them up.”
In September 2023, hundreds of thousands of undocumented Afghans poured across the border into Afghanistan in the days leading up to a deadline to leave, after weeks of police raids.
More than 800,000 Afghans by the end of 2024, according UN figures.wealth, belongings, and household goods with them to their own country,” it added.
Afghans crossing the border have told AFP in recent days that they left without being able to take all their belongings or money, while others are rounded up and taken directly to the border.
Human rights activists have for months been reporting harassment and extortion by Pakistani security forces against Afghans.
Moniza Kakar, a lawyer in Pakistan’s largest city Karachi, said, “(Officials) are picking and arresting people randomly, from different places. There is no proper mechanism to shift the whole family,” she told AFP.
Relations between Kabul and Islamabad have soured since the Taliban takeover, fueled by a sharp rise in violence in Pakistan along the Afghan border.
“No one should use refugees as tools for their political goals,” the Afghan refugees ministry added.
Pakistan authorities did not provide immediate comment when contacted by AFP.
“My only crime is that I’m Afghan,” Shah Mahmood, who was born in northern Afghanistan, told AFP on Monday after crossing the Torkham border point.
“I had papers and they ripped them up.”
In September 2023, hundreds of thousands of undocumented Afghans poured across the border into Afghanistan in the days leading up to a deadline to leave, after weeks of police raids.
More than 800,000 Afghans by the end of 2024, according UN figures.