‘Inflationary storm’ expected as Pakistan hikes fuel, electricity tariffs to win IMF approval

Auto rickshaw drivers shout slogans during an anti-government demonstration to a protest against the inflation and fuel price hike in Lahore, Pakistan, on June 3, 2022. (AFP)
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Updated 03 June 2022
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‘Inflationary storm’ expected as Pakistan hikes fuel, electricity tariffs to win IMF approval

  • The move has rattled Pakistani industrialists who say many will be forced to close down their units
  • Economists say the price hike would open the “floodgates” of inflation and most affect the country’s poor

KARACHI: Pakistan is bracing for an ‘inflationary storm’ after the government raised fuel and electricity prices this week to secure International Monetary Fund (IMF) bailout money, with industrialists warning the move would dent the viability of industries and lead to mass closures. 

Pakistan entered a three-year IMF deal in 2019, but is struggling to implement tough policy commitments to revive the $6 billion program desperately needed to stabilize the cash-strapped South Asian nation.

A pending tranche of over $900 million is contingent on a successful IMF review, and would also unlock other multilateral and bilateral funding for Pakistan, whose foreign reserves currently cover just two months of imports.

After the IMF pushed Islamabad to roll back its subsidies for the oil and power sectors during talks in Doha last week, the finance ministry raised fuel prices by around 20 percent, and within a week by another 17 percent, effective from Friday, today.

The fuel hikes have come along with an increase in the basic power tariff by 47 percent, rattling Pakistani industrialists who say they will be forced to close down their units.

“No one can think about setting up industries after the steps being taken by the government because it would render the business unviable and industries will be eliminated in large numbers,” Muhammad Idreed, president of the Karachi Chamber of Commerce and Industry (KCCI), told Arab News. 

“The outcome of the tariff and fuel price hike would be detrimental for the industries as it would increase unemployment, lead to a drastic cut in exports and increase inflation in the country as cost of almost all inputs has more than doubled.”

Industrialists have called for remedial measures, including rate cuts, to offset the new price hikes and save the industry, especially small and medium enterprises.

“The sharp rise in prices of petroleum products, excessive power tariff and severe energy crisis are catastrophic for business and industry,” Saqib Naseem, the chairman of the Pakistan Yarn Merchants Association (PYMA), said in a statement.

With the new price hikes, Pakistan’s inflation rate is expected to soar to 19 percent this month — its highest in over a decade.

“The direct impact of the fuel and power tariff hike would be on the Consumer Price Index (CPI), which will add 1.5 percent and 2 percent to the prevailing inflation rate,” Tahir Abbas, head of research at Arif Habib Limited, told Arab News. 

“The combined inflationary impact of the fuel and electricity tariff, if the determined tariff is implemented, would be around 19 percent in June 2022. There would be a second round impact, when the price hike of goods and services after the cost of input is increased.” 

Economists say the price hike would open the “floodgates” of inflation and hit the country’s poor.

“The inflationary storm is going to destroy the purchasing power of ordinary households in the coming days and months,” Uzair Younus, director of the Pakistan Initiative at the Washington-based Atlantic Council, told Arab News. “To mitigate suffering and protect the most vulnerable, the government should redirect resources to direct cash transfers. They have already announced such a measure but the quantum of funding must be increased.”

Adil Jilani, head of the Economic Division at Trust Securities & Brokerage, told Arab News even harsher measures were expected in the future as Pakistan would be asked by the IMF to “do more” to meet pre-conditions and arrange external financing requirements for next year.

“The government has increased petroleum prices to an unprecedented level and now the government needs to ‘do more’ for the IMF bailout package along with external financing requirements of $37-38 billion that the country needs during the next fiscal year FY23,” Jilani said. 

Younus added: “There is still about a Rs9 subsidy on petrol and about Rs23 subsidy on diesel. In addition, the government has to place a 17 percent sales tax and a Rs30 levy, as agreed to with the IMF months ago.

“Assuming oil price stays the same and rupee doesn’t weaken further, we are looking at petrol touching about 285 rupees a liter,” he said. 

Pakistan’s equity market has already reacted to the latest developments, which also include international credit agency Moody’s downgrading Pakistan’s outlook from stable to negative over a “heightened external vulnerability risk” and the inability to secure additional external financing. 

The benchmark KSE 100 index declined by 923 points, or 2.2 percent, to close at 41,314.88 points on Friday.

“Stocks fell across the board after Moody’s cut Pakistan outlook to negative on fiscal risks amid delays in IMF bailout and concerns over global equity selloff,” Ahsan Mehanti, chief executive of Arif Habib Corporation, told Arab News.

“Dismal data of $43.33 billion trade deficit for July 2021 to May 2022, falling forex reserves and surging government treasury bond yields, and saving rate hike played a catalyst role in bearish close.” 


Over 200 investors, entrepreneurs from Pakistan, UAE attend joint business forum in Sharjah

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Over 200 investors, entrepreneurs from Pakistan, UAE attend joint business forum in Sharjah

  • Sharjah-Pakistan Business Roundtable hosted on Thursday by Sharjah FDI Office, Pakistan Business Council
  • UAE is one of Pakistan’s largest trading partners and source of foreign investment, valued at over $10 billion in last 20 years

ISLAMABAD: Over 200 investors and entrepreneurs from Pakistan and the United Arab Emirates (UAE) attended a joint business forum in Sharjah this week to explore bilateral investment opportunities in sectors such as manufacturing, IT, trade and green-tech, state media reported. 
The UAE is one of Pakistan’s largest trading partners and a major source of foreign investment, valued at over $10 billion in the last 20 years, according to the UAE ministry of foreign affairs. The UAE-Pakistan trade volume rose to $7.9 billion in 2023, up 12 percent from 2022. In May this year, Prime Minister Shehbaz said the Emirates had committed $10 billion to invest in promising economic sectors in Pakistan. The Pakistan Business Council (PBC), set up this September at the Sharjah Chamber of Commerce and Industry, also aims to increase Pakistan’s bilateral trade volume with the UAE to $40 billion in three years. 
The UAE is home to more than a million Pakistani expatriates and the second-largest source of remittances to Pakistan after Saudi Arabia.
“The Sharjah FDI Office (Invest in Sharjah) and the Pakistan Business Council in Sharjah hosted the Sharjah-Pakistan Business Roundtable here on Thursday,” Pakistani state news agency APP reported on Friday. 
“The event brought together over 200 investors and entrepreneurs to explore opportunities for strengthening economic ties and fostering bilateral investments between Sharjah and Pakistan.”
Speaking at the event, Consul General Hussain Muhammad, said Pakistan’s economy, workforce, and abundant natural resources offered “immense potential for collaboration” with the Emirates. 
“Pakistan’s economy is diverse, with opportunities in agriculture, textiles, information technology, and renewable energy,” the diplomat said. “Sharjah’s investors and businesses could greatly benefit from exploring partnerships in these sectors.”
The consul general said the recent establishment of the Pakistan Business Council in Sharjah was a “testament to the growing collaboration” between the two countries and expressed confidence that the Council would play a “crucial role” in supporting Pakistani investors, facilitating partnerships, and advancing mutual economic interests.
Over 11,500 Pakistani companies are currently registered within Sharjah’s mainland and dedicated Free Zones.


Haider tank, Shahpar fighter drone in spotlight as Pakistan’s top defense expo concludes 

Updated 37 min 30 sec ago
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Haider tank, Shahpar fighter drone in spotlight as Pakistan’s top defense expo concludes 

  • Exhibition hosted over 550 exhibitors and 350 civil and military officials from 55 countries
  • IDEAS has been held biennially since 2000 and grown into a key event for defense sector

ISLAMABAD: Pakistan’s top defense exhibition IDEAS 2024 will conclude today, Friday, with the locally manufactured third-generation Haider tank and Shahpar fighter drone among the South Asian nation’s main showpieces. 
IDEAS has been held biennially since 2000 and has since grown into a key event for the Pakistani defense sector. This year’s show, running from Nov.19-Nov. 22 in Karachi, hosted over 550 exhibitors, including 340 international defense companies, and more than 350 civil and military officials from 55 countries.
On the first day of the expo, Pakistan launched the Haider tank, locally produced at the Heavy Industry Taxila in collaboration with local and international technology partners. The tank has auto-tracking, a remote-control weapons system and a 470-kilometer cruising range.
The Shahpar-III drone capable of flying at 35,000 feet and carrying heavy weapons such as bombs, cruise missiles and torpedoes, was also launched at the exhibition. 
“I had no prior knowledge about these products, but upon visiting, I was astonished to discover such a top-class range of items being exported abroad,” Muhammad Mohsin, a visitor, told media.

A member of Pakistan armed forces takes a selfie with Global Industrial & Defense Solutions (GIDS) Shahpar, unmanned combat aerial vehicle (UCAV) during the International Defense Exhibition and Seminar “IDEAS 2024” in Karachi on November 21, 2024. (REUTERS)

“These products, manufactured in Sialkot, Gujranwala, and Karachi, truly showcase exceptional craftsmanship. It is imperative that these remarkable offerings gain greater recognition in international markets.”
Mohsin said he was unaware that Pakistan was exporting a “top-class range of items” in the defense sector until he attended this year’s IDEAS.
The Shahpar-III is a successor to the Shahpar-II drone, which could fly up to 20 hours at a maximum altitude of 23,000 feet, according to Global Industrial Defense Solutions (GIDS), a state-owned Pakistani defense conglomerate that has developed the drones. The Shahpar-III can fly up to 35,000 feet for 24 hours and carry a payload of up to 500 kilograms.

Members of the Pakistan Navy special force conduct a counter-terrorism demo during the International Defense Exhibition and Seminar “IDEAS 2024” in Karachi on November 21, 2024. (REUTERS)

GIDS, which exports its products to 14 countries including Saudi Arabia and the United Arab Emirates, introduced Shahpar-II in 2021.
“This [Shahpar-III] has a more strategic value to an armed force in comparison to Shahpar-II,” Asad Kamal, Chief Executive Officer of GIDS, told Arab News, adding that the drone would soon be inducted into the Pakistan Air Force.
“Shahpar-III is a natural step up when you’re making UAVs drones.”

Officials and people take pictures with a JF17 Thunder fighter jet during the International Defense Exhibition and Seminar “IDEAS 2024” in Karachi on November 21, 2024. (REUTERS)

Kamal said the drone could see targets at night and “take out on the enemy” with heavy weapons. 

Members of Pakistan armed forces and their families look at a counter-terrorism demo during the International Defense Exhibition and Seminar “IDEAS 2024” in Karachi on November 21, 2024. (REUTERS)
Members of the Pakistan Navy special force conduct a counter-terrorism demo during the International Defense Exhibition and Seminar “IDEAS 2024” in Karachi on November 21, 2024. (REUTERS)

“That means that from your own borders, you can launch a cruise missile from an unpiloted plane,” he added. “That cruise missile has a range of 250 kilometers. So, it can give any force a lot of firepower value by having this sort of a weapon in its arsenal.”
With inputs from AFP


Fear, grief grip Pakistan’s Kurram district as 41 killed in sectarian attacks

Updated 52 min 46 sec ago
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Fear, grief grip Pakistan’s Kurram district as 41 killed in sectarian attacks

  • Gunmen opened fire on vehicles carrying members of minority Shiite community in KP province on Thursday
  • Clashes in July and September killed dozens of people and ended only after a jirga called a ceasefire

PESHAWAR: Fear gripped Pakistan’s northwestern Kurram district on Friday as the death toll from two sectarian attacks rose to 41, with authorities imposing a curfew and suspending mobile phone services in the remote mountainous region.
Gunmen opened fire on vehicles carrying members of the minority Shiite community in Pakistan’s Khyber Pakhtunkhwa province on Thursday in one of the region’s deadliest such attacks in recent years. The assault took place in Kurram, a district where sectarian clashes have killed dozens of people in recent months.
“Total 41 people have been killed and 19 others are injured in the attack,” Deputy Commissioner Kurram, Javaid Ullah Mehsud, told Arab News on Friday, saying police were yet to file a police report on the incident. 
No one immediately claimed responsibility for the latest attack, which came a week after authorities reopened a key highway in the region that had been closed for weeks following deadly clashes.
Mehsud told reporters a local jirga, or tribal council, had been convened to help restore peace and order.
Previous clashes in July and September killed dozens of people and ended only after a jirga called a ceasefire.
A senior administration official told the AFP news agency mobile signals across the district had been shut down, describing the situation as “extremely tense” with locals staging a sit-in in Parachinar, the district’s main town.
“A curfew has been imposed on the main road connecting Upper and Lower Kurram, and the bazaar remains completely closed, with all traffic suspended,“ the official said.
Shop owners in Parachinar had announced a strike on Friday to protest the attack.
Locals described an atmosphere of fear across the district. 
“The night was spent in tension,” Irfan ullah Khan, a local youth representative, told Arab News. “People in different villages were guarding their homes … The region is in grief as the situation is tense. Anything can happen.”
Interior Minister Mohsin Naqvi called the shootings a “terrorist attack.” Prime Minister Shehbaz Sharif and President Asif Ali Zardari condemned the attack, and Sharif said those behind the killing of innocent civilians will not go unpunished.
Baqir Haideri, a local Shiite leader, denounced the assault and accused local authorities of not providing adequate security for the convoy of more than 100 vehicles despite fears of possible attacks by militants.
Shiite Muslims make up about 15 percent of the 240 million population of Sunni-majority Pakistan.
With inputs from AFP


Pakistan reports two new polio cases in northwest, raising 2024 tally to 52

Updated 22 November 2024
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Pakistan reports two new polio cases in northwest, raising 2024 tally to 52

  • Cases detected in DI Khan district in Khyber Pakhtunkhwa province 
  • Pakistan and Afghanistan are last polio-endemic countries in the world

PESHAWAR: Pakistan’s polio eradication program said on Friday two new cases of the crippling virus had been detected in the country’s northwest, bringing the nationwide tally for 2024 to 52. 
Pakistan, along with neighboring Afghanistan, remains the last polio-endemic country in the world. The nation’s polio eradication campaign has hit serious problems with a spike in reported cases this year that have prompted officials to review their approach to stopping the crippling disease.
“The Regional Reference Laboratory for Polio Eradication at the National Institute of Health has confirmed the detection of two more wild poliovirus type 1 (WPV1) cases in Pakistan, bringing the number of total cases in the country this year to 52,” the National Emergency Operation Center for Polio Eradication said in a statement. 
“On Thursday, November 21, the lab confirmed the cases from DI Khan where a boy and girl child are affected. Genetic sequencing of the samples collected from the children is underway.”
DI Khan, one of the seven polio endemic districts of the Khyber Pakhtunkhwa province, has now reported five polio cases this year.
Of the 52 cases reported in 2024, 24 are from the Balochistan province, 13 from Sindh, 13 from KP and one each from Punjab and Islamabad, the federal capital.
Poliovirus, which can cause crippling paralysis particularly in young children, is incurable and remains a threat to human health as long as it has not been eradicated. Immunization campaigns have succeeded in most countries and have come close in Pakistan, but persistent problems remain.
In the early 1990s, Pakistan reported around 20,000 cases annually but in 2018 the number dropped to eight cases. Six cases were reported in 2023 and only one in 2021. 
Pakistan’s polio program began in 1994 but efforts to eradicate the virus have since been undermined by vaccine misinformation and opposition from some religious hard-liners, who say immunization is a foreign ploy to sterilize Muslim children or a cover for Western spies. Militant groups also frequently attack and kill members of polio vaccine teams. 
In July 2019, a vaccination drive in Khyber Pakhtunkhwa was thwarted after mass panic was created by rumors that children were fainting or vomiting after being immunized.
Public health studies in Pakistan have shown that maternal illiteracy and low parental knowledge about vaccines, together with poverty and rural residency, are also factors that commonly influence whether parents vaccinate their children against polio.
Pakistan’s chief health officer this month said an estimated 500,000 children had missed polio vaccinations during a recent countrywide inoculation drive due to vaccine refusals.


Marathon polo tournament draws huge crowds in Pakistan’s picturesque north

Updated 22 November 2024
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Marathon polo tournament draws huge crowds in Pakistan’s picturesque north

  • Ten-day tournament played among 17 teams of Gilgit-Baltistan as part of independence day celebrations 
  • GB Independence Day celebrated on Nov. 1 every year to mark region’s independence in 1947 from Dogra Raj

KHAPLU, Gilgit-Baltistan: Large crowds have been gathering daily in the northern mountain town of Gilgit for a 10-day polo tournament being held to mark Gilgit-Baltistan’s Independence Day, the military’s media wing and government officials said on Thursday, the last day of the event. 
GB is administered by Pakistan as an administrative territory and consists of the northern portion of the larger Kashmir region, which has been the subject of a dispute between India and Pakistan since 1947. The impoverished, remote and rugged mountainous territory borders Afghanistan and China and is the gateway of the $65 billion China-Pakistan Economic Corridor (CPEC) infrastructure plan. 
The Gilgit-Baltistan Independence Day is celebrated on Nov. 1 every year to mark the region’s independence in 1947 from Dogra Raj, the erstwhile rulers of the now disputed Jammu and Kashmir region.
“The big event of Jashan Azadi Polo Tournament was held at Wahab Shaheed Polo Ground in Gilgit, a remote area of the northern region under the management of Pak Army,” the military’s media wing said in a statement, saying Force Command Northern Areas, Maj. Gen. Syed Imtiaz Hussain Gillani, was the chief guest at the closing ceremony of the event in which 17 teams participated.

A Pakistani tribal polo team member chases the ball as the crowd watches the match during a polo game in Skardu, in Pakistan's northeastern Gilgit-Baltistan region on November 21, 2024. (Photo courtesy: ISPR)

“The final match was won by Chilas in civil and NLI teams in departmental categories respectively,” the statement added. 
Gilgit-Baltistan is also known for the annual polo festival at Shandur, an area between the northern Pakistani towns of Gilgit and Chitral, and at over 12,000 feet (3,700 meters) the world’s highest polo ground. 
Polo in GB is played without rules and at a blistering pace, suggesting more of a clash of cavalry than a sport. Locals believe polo was born in their land and Gilgit is home to the famous polo inscription: “Let other people play at other things, the King of Games is still the Game of Kings.”

A Pakistani tribalmen perform traditional dance during a polo game in Skardu, in Pakistan's northeastern Gilgit-Baltistan region on November 21, 2024. (Photo courtesy: ISPR)

Faizullah Faraq, the spokesperson for the G-B government, said thousands had come to watch the matches and celebrate the Gilgit-Baltistan Independence Day.
“Polo is the national game of Gilgit-Baltistan. And thousands of people reached Gilgit’s playground to watch the polo matches daily,” he told Arab News on Thursday. 
“Such kinds of activities unite the youth and they play their role to create harmony in the society. The promotion of polo is a need of time to maintain peace in society.”

Crowd watches the match during a polo game in Skardu, in Pakistan's northeastern Gilgit-Baltistan region on November 21, 2024. (Photo courtesy: ISPR)

Afrad Gul, the team captain of the winning Chilas team, appreciated locals who supported the tournament. 
“I have been playing polo for the last 15 years, my son was also part of my team,” Gul said in a phone interview. “We have left no stone unturned to keep this regional game alive.”