KARACHI: Concerns are at peak over the health of Pakistan’s economy as foreign reserves run out, inflation stands at decades-high levels and industrial growth slows down, with experts and industry leaders raising alarm and calling on the government to take decisive action, particularly on a stalled IMF bailout plan.
The biggest worries center around Pakistan’s ability to pay for imports such as energy and food and to meet sovereign debt obligations abroad. Right now, foreign exchange reserves with the central bank stand at just $4.6 billion, barely enough to cover a month’s imports, compelling the government to restrict the import of goods, including industrial raw materials, to stop dollar outflows.
Before devastating floods last year, an estimated $33.5 billion was needed to fulfil external financing needs for the 2022-23 financial year, according to the central bank, to be arranged through the daunting target of almost halving the current account deficit and receiving debt rollovers from friendly countries.
But in the aftermath of the floods, exports have slumped and imports have grown to make up for essential commodities lost in the flooding of millions of hectares of farmland.
Meanwhile, the Pakistani rupee has weakened 20 percent since the start of the year and the decline in the currency is pushing up the cost of imports, borrowing and debt servicing, and in turn will further exacerbate inflation running already at a multi-decade high.
“The situation is alarming,” Tariq Yousuf, President of the Karachi Chamber of Commerce and Industry (KCCI), told Arab News. “More than 7,500 containers [of imports] are stuck at ports and our industries are facing an acute shortage of raw materials, bringing them almost to the verge of collapse.”
Last year, the cash-strapped country imposed a ban on the import of luxury goods to avoid a balance of payment crisis but lifted some of the restrictions after pressure from the industrial sector.
Experts warn that a dire dollar crunch in Pakistan may further hurt the import of essential items in the coming months and lead to a shortage of several food items. The fast-depleting forex stockpile has currently left banks refusing to issue new letters of credit (LCs) for importers, hitting an economy already squeezed by soaring inflation and lackluster growth. The central bank has also restricted overseas payments and halved the amount of foreign currency that a person can carry overseas to $5,000.
Qaiser Ahmed Sheikh, chairman of the standing committee of the National Assembly (NA) on Finance and Revenue, told Arab News Pakistan was in a “dire situation.”
“There are problems opening LCs, approved by the State Bank of Pakistan, affecting raw material imports.”
Without an LC as a financial guarantee to foreign exporters, import clearances rarely go through.
Sheikh said thousands of import containers were stuck at various ports, which was affecting the manufacturing industry and fueling a fear of industrial closure and further inflation hikes.
The inflation rate in Pakistan is already worryingly high, recorded at 24.5 percent in December 2022, double the figure from around 12 percent in December 2021.
“Both industrialists and the masses are concerned that commodity prices are rising on a daily basis,” Sheikh said. “The inflation will increase further if the State Bank of Pakistan does not allow new LCs opening and the clearance of older LC contracts.”
The situation is particularly precarious for the country’s pharmaceutical industry, currently left with only a few days of stock.
“Pharmaceutical industries keep inventory for three months, but since November 2022 raw material arrival has stopped due to the LCs issue,” Dr. Sheikh Kaiser Waheed, spokesman of the Pakistan Pharmaceutical Manufacturers’ Association (PPMA), told Arab News.
“Due to resource constraints, the drugs for diabetes, cardiac patients, cancer patients etc, are in short supply,” he said. “This shortage is also partly due to excessive buying by patients as precautionary measures after reports of the import situation came out.”
The economic strain has caused a number of textile units, car assemblers, and other industries to suspend or scale down their operations while fears of petroleum product shortage from next month loom, according to industrialists and government sources.
In a meeting with industrialists at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the central bank governor this week announced that a joint committee would be set up with the FPCCI to resolve the “huge backlog in LCs,” according to a statement from the Chamber.
Pakistani senior economists interviewed by Arab News said the current economic situation was a result of the government’s “indecisiveness” with regards to negotiations with the International Monetary Fund (IMF).
A 9th IMF review to clear the release of the next tranche of funds to Pakistan has been pending since September.
“The economic situation of Pakistan is alarming … but the indecisiveness of government officials further compounds the situation,” Dr. Ashfaque Hassan Khan, a senior economist, said.
Current Minister of Finance Ishaq Dar and Minister of State for Finance, Aisha Ghaus Pasha, did not respond to requests for comment for this story.
“The only options before the government now are to either accept the IMF program (with all its conditions) or leave it,” Khan added. “Pakistan is now in a catch-22 position. The government ahead of the general elections would be reluctant to burn its political capital (by imposing more taxes and raising the rate of inflation).”
There is also talk of a mini-budget being announced to meet IMF conditions after its 9th review of the $7 billion IMF Extended Fund Facility (EFF).
“The government is negotiating with the IMF on an energy tariff increase and setting a market based exchange rate of the US dollar, which will increase inflation and there are discussions on the interest rate hike also,” Sheikh, the chairman of the NA standing committee, said.
“A mini-budget will be announced, as without it the IMF’s conditionalities cannot be fulfilled”.
The chairman denied having knowledge of the exact measures and proposed date of the mini-budget, amid speculation about a new petroleum levy and more taxes on imported and local vehicles.
“Hopefully ‘terms of engagement’ with the IMF finalized by the government of Pakistan are solid enough to finalize the 9th review,” Dr. Khaqan Najeeb, former adviser to the finance ministry, said.
“To get out of the present economic crisis, Pakistan must work on getting the IMF back, have a market determined exchange rate, rollover, reprofiling or restructuring of debt and effective social protection,” Dr. Sajid Amin, a senior economist, said.
With Pakistan’s economy in a tailspin, experts call for end to ‘indecisiveness’ on IMF program
https://arab.news/2s7cj
With Pakistan’s economy in a tailspin, experts call for end to ‘indecisiveness’ on IMF program
- More than 7,500 containers stuck at Pakistani ports create acute deficit of industrial, pharmaceutical raw materials
- Government may announce mini-budget to meet demands of the International Monetary Fund and break import deadlock
Pakistan sends delegation to Saudi Arabia following PM Sharif’s high-profile visit
- Saudi Arabia has pledged to invest $2.8 billion in Pakistan to ensure sustainable economic growth
- PM urges his team to take maximum benefit from the fruits of Pakistan’s ongoing economic diplomacy
ISLAMABAD: A Pakistani delegation departed for Saudi Arabia after recent high-level talks between the two countries, Prime Minister Shehbaz Sharif said on Tuesday, as he highlighted the gains of his administration’s economic diplomacy during the federal cabinet meeting.
Pakistan has grappled with a prolonged economic crisis in recent years, addressing it through external financing from allies like Saudi Arabia, the United Arab Emirates and China, along with support from the International Monetary Fund (IMF).
To secure sustainable economic growth, the country has sought trade and investment partnerships, with Sharif visiting Saudi Arabia and Qatar earlier this month to discuss collaborative opportunities across multiple sectors.
During these talks, Saudi Arabia pledged $2.8 billion through 34 memoranda of understanding (MoUs) and agreements on the sidelines of the Future Investment Initiative conference. Pakistan is now focused on implementing these initiatives, with five projects already underway.
“Our delegation has left for Saudi Arabia,” Sharif told cabinet members. “My visit and meeting with the crown prince [Mohammed bin Salman] went well, with positive intent for Pakistan.”
Sharif highlighted potential collaboration in mines, minerals and solar energy, while noting a demand for Pakistani information technology experts in Saudi Arabia and Qatar.
“I hope the [IT] ministry can prepare a plan [to capitalize on that],” he said.
The prime minister stressed the need to develop a highly skilled workforce to meet global standards while pointing out it was essential to “rapidly move forward” on MoU implementation with other countries.
He also mentioned $2 billion in MoUs with Azerbaijan, saying Baku had expressed readiness to proceed with these initiatives.
“These are good signals, and it’s up to us now to maximize their benefits,” he added.
Iranian FM on Islamabad visit, says Tehran reserves right to ‘legitimate defense’ against Israel
- Araghchi is in Pakistan on a two-day visit to discuss Middle East tensions, bilateral ties
- Decries Israel’s “acts of genocide” in Gaza, ongoing attacks in Lebanon, assault on Iran on Oct. 26
ISLAMABAD: Iranian foreign minister Seyed Abbas Araghchi arrived in Pakistan’s capital on Tuesday for a two-day official visit to discuss a range of issues, including tensions in the Middle East, saying at a press conference that Tehran reserved the right to a “legitimate defense” against Israeli aggressions though it did not seek escalation.
Araghchi was addressing a joint media briefing with Pakistani Deputy Prime Minister and Foreign Minister Ishaq Dar in which he spoke about Israel’s “crimes and acts of genocide” in Gaza, its ongoing attacks in Lebanon and its assault on Iran on Oct. 26.
Iran’s supreme leader on Saturday threatened Israel and the US with “a crushing response” over attacks on Iran and its allies. Any further attacks from either side could engulf the wider Middle East, already teetering over Israel’s assault of the Gaza Strip and its ground invasion of Lebanon, into a wider regional conflict as the US goes into a presidential election today, Tuesday.
“Unlike the Israeli regime, the Islamic Republic of Iran does not seek escalation,” Araghchi told reporters. “However, we reserve our inherent right to legitimate defense under Article 51 of the United Nations Charter and we would certainly respond to the Israeli aggression in a proper time and in a proper manner.”
Since the deadliest attack by Hamas in its history on Oct. 7, 2023, Israel has carried out air and ground strikes in Gaza in which over 42,000 people have been killed. Since late September, it has also been at war with Hezbollah in Lebanon. Both Hezbollah and Hamas are allies of Iran.
Pakistan, a major ally of Saudi Arabia, shares a long border with Iran but ties have been frosty over a range of issues, including cross-border militancy.
During Tuesday’s press conference, the Iranian foreign minister appreciated Pakistan’s stance in condemning Israeli aggression against Iran.
“We [Muslim nations] are working toward a solution to stop these atrocities and to alleviate the suffering of the people of Gaza and Lebanon at the upcoming OIC meeting, especially as winter approaches, which will only intensify the hardships of the homeless and refugees in Gaza and Lebanon,” Araghchi added.
Saudi Arabia will also host a joint Arab-Islamic summit on Nov. 11 to address Israeli assaults in the Palestinian territories and Lebanon.
PAK-IRAN TIES
Speaking about bilateral relations, Araghchi reiterated Iran’s commitment to the promotion of ties with Pakistan in all areas, including economic, political, academic, cultural, and tourism.
“The objective of this round of consultation is the promotion of the all-out relations between Iran and Pakistan with a new focus on the bilateral relations, particularly in the areas of trade and economy,” he added.
Speaking at the media briefing, Pakistani FM Dar said during his meetings with Araghchi, he had emphasized the need for an “urgent” ceasefire, de-escalation, and dialogue aimed at realizing the Palestinian people’s right to self-determination.
“We also resolved that in the upcoming joint Islamic summit in Jeddah, which has been scheduled for the 11th of November, we would pool our efforts in order to make sure that we come up with a joint approach to the issues for which this joint summit has been called,” Dar said.
Dar said both sides had also discussed ways to enhance cooperation across several key areas, including trade, energy, and border security.
“We agreed to intensify collaboration on border management and address shared challenges as we underscored that terrorism and extremism pose a serious threat to the regional peace and pledged to coordinate our joint efforts to eradicate these challenges,” he added.
Pakistan and Iran have had a rocky relationship despite several commercial pacts between the two countries on trade, energy, and security. Both countries signed the $7 billion Iran-Pakistan gas pipeline project agreement in 2004 but 20 years on, the project remains incomplete due to funding challenges and threats of US sanctions over doing business with Tehran.
Iran has completed the pipeline’s construction on its side of the border while Pakistan is seeking a US waiver to go ahead with building the project. Pakistan has also hired two prominent US law firms, Willkie Farr & Gallagher and White & Case, to defend its position in an international arbitration case initiated by Tehran over the stalled gas pipeline project, the attorney general confirmed to Arab News on Monday.
Pakistan and Iran are also often at odds over instability on their shared, porous frontier, with both countries routinely trading blame for not doing enough against militants who carry out cross-border attacks.
Tensions surged in January when Pakistan and Iran exchanged airstrikes, both claiming to target alleged militant hideouts in each other’s countries.
Pakistani mechanic fulfills childhood dream of building, flying homemade paraglider
- Muhammad Ashraf completed first successful flight in Balochistan’s Bostan town on Oct. 28, reaching 300 feet
- Ashraf modified 1000cc motor vehicle engine into functional paragliding engine, sourced local materials and parts
BOSTAN, Balochistan: Muhammad Ashraf, a 28-year-old motor vehicle mechanic in Pakistan’s southwestern Balochistan province, was barely a teenager when he had to quit school to help his ailing father support their family.
While Ashraf went on to become a successful technician and set up his own workshop in the rugged town of Kuchlak in the impoverished Balochistan province, his real dream was different: to build a paraglider and fly high in the skies.
In 2021, the mechanic workshop owner got to work making a fan-powered, three-wheel paramotor. He watched paragliding videos on Facebook and YouTube and eventually contacted some fellow mechanics in the provincial capital of Quetta to help him find the required engine and parts.
“I started my work by watching online videos. I didn’t learn from anyone, neither do I have enough education for anyone to teach me, nor is there any such system in our country,” Ashraf told Arab News in an interview this week ahead of a flight of his paraglider.
“I bought an old engine. I opened it and rebuilt it again myself. Once I was fully confident about the engine, I installed it,” he added. “The advantage of the Cultus [compact car] engine is that it’s lightweight yet powerful, with a 1,000cc capacity.”
Other than the car engine, Ashraf used local materials and parts to build the paramotor, spending $5,776 on the project. With a large iron rod hanging in the front to control the movement of the wings and two right-left pedals as the accelerator and brake, Ashraf’s paramotor can fly for half an hour on almost 20 liters of gasoline.
“It was too costly for me to purchase an imported engine and other parts for my paramotor from abroad, hence I used local iron and parts ordered from Lahore, Karachi and Quetta. I used local wood and trimmed it into wings for my paramotor.”
“ACHIEVEMENT FOR PEOPLE OF BALOCHISTAN”
Paragliding is a lucrative business in Pakistan’s picturesque northern areas, annually frequented by hundreds of thousands of tourists. But most people are unfamiliar with paragliding in remote, arid Balochistan, Pakistan’s largest province by area but its most poor and underdeveloped.
Ashraf says he is the first person who has built his own paramotor in the province, completing its first successful flight on Oct. 28 in Killi Qasim, a village in his hometown of Bostan in Pishin district.
“I was quite nervous before taking out my two-seater paraglider for the first flight, but I flew for three minutes and went up to 300 feet in the sky,” he recalled. “My family, friends and other people in my village were very happy when I touched the paraglider down on the ground.”
Muhammad Azam Bazai, a union councilor in Bostan, described Ashraf’s locally made paramotor as an “achievement for the people of Balochistan” and requested the provincial government to support him in building paragliding tourism in the province.
“We were initially mocking him, saying we didn’t believe his aircraft would ever fly or get off the ground,” Bazai said. “But when he flew the paraglider, I was so happy that I can’t even express the joy.”
Shahid Rind, a spokesman for the Balochistan government, said the government would look into the viability of Ashraf’s project.
“In the past, the government has promoted such initiatives and positive steps taken by the youth of Balochistan,” he told Arab News. “And if there is any professional or commercial viability in this, the government of Balochistan will definitely support this individual.”
Having successfully built his flying machine, Ashraf now wants to upgrade it to a three-seater with a more powerful engine, and also aspires to build more paramotors for flying enthusiasts in Balochistan.
“I will try to teach people who want to learn how to make and fly it,” the mechanic said as he climbed into his paraglider, readying for flight.
“Whoever is interested in learning in Balochistan, I am here to help.”
Pakistan to host England, New Zealand and Zimbabwe women's cricket teams in 2026/27
- Zimbabwe to tour Pakistan in Apri-May 2025, New Zealand to tour country in April 2027
- Pakistan will travel to South Africa, Sri Lanka and the West Indies in 2026 for cricket contests
ISLAMABAD: Pakistan will host New Zealand, Zimbabwe and England women’s cricket teams for the first time in 2026 and 2027, the Pakistan Cricket Board (PCB) said this week, saying that the tours were part of the International Cricket Council’s (ICC) Future Tours Programme 2025-29.
Zimbabwe women’s team will tour Pakistan in April-May 2026 while New Zealand will be visiting the country in April 2027, the PCB said in a statement. The English women’s cricket team will tour Pakistan in October 2027 while Bangladesh will be the fourth side to tour the country in October 2028.
“Pakistan will host England, New Zealand and Zimbabwe women’s cricket teams for the first time as ICC announced Future Tours Programme 2025-29,” the PCB said in a press release on Monday.
Eleven countries will participate in the fourth cycle of the ICC Women’s Championship being played from 2026-29 to directly qualify for the ICC Women’s 50-over World Cup in 2029, it said, adding that each team will compete against eight other teams in eight home and away matches.
The fourth cycle of the ICC Women’s Championship, which will be played from 2026-29, will see 11 sides taking part in the event for direct qualification to the ICC Women’s 50-over World Cup in 2029.
In the Women’s Championship, each team will compete against eight other teams, following the format of four home and four away series, similar to the current edition. Across 44 series, a total of 132 ODIs will be played, with each series consisting of three matches.
“The Future Tour Programme will see an ICC Women’s tournament taking place every year, starting with the ICC Women’s Cricket World Cup 2025 in India, the ICC Women’s T20 World Cup 2026 in England, the inaugural ICC Women’s Champions Trophy in 2027 and the ICC Women’s T20 World Cup in 2028,” the PCB added.
Pakistan will travel to South Africa in February 2026 and then play Sri Lanka in July of the same year as part of their away assignments, the board said. In November 2026, Pakistan will visit the West Indies while their final away series in the ICC Women’s Championship 2026-29 cycle will be in Ireland in June 2028.
Saudi Arabia, UAE invest $26.8 million in Pakistan in first quarter of current fiscal year
- Foreign investment surged by 48 percent in first quarter of current fiscal year
- Pakistan, Saudi Arabia signed agreements worth $2.8 billion last month
ISLAMABAD: Pakistan’s foreign investment has surged by 48 percent during the first quarter of the current fiscal year, state-run media reported on Tuesday, with Saudi Arabia and the United Arab Emirates (UAE) contributing $26.8 million during the same period.
Pakistan formed the Special Investment Facilitation Council (SIFC), a hybrid civil and military body, in 2023 to fast-track decisions related to foreign investment in its key economic sectors such as agriculture, mining, minerals, tourism and others. The development took place as Pakistan grappled with a prolonged economic crisis that almost led the country to suffer a sovereign default before a critical $3 billion bailout by the International Monetary Fund (IMF) last year averted the crisis.
As per a breakdown shared by state broadcaster Radio Pakistan, China invested $404 million during the first quarter of the current fiscal year while Saudi Arabia’s investment was recorded at $ 1.8 million. The UAE, meanwhile, invested $25 million, Hong Kong $98 million, the United Kingdom $72 million and the United States $28 million in the same period, the state broadcaster said.
“A significant increase of forty eight percent has been seen in foreign investment in Pakistan in the first quarter of current fiscal year, reflecting the effective strategies of the Special Investment Facilitation Council,” Radio Pakistan said.
Pakistan’s Prime Minister Shehbaz Sharif visited Saudi Arabia and Qatar last week, where he held talks with the leadership of the two countries on enhancing cooperation in trade, investment and energy. Pakistani and Saudi businesses had signed 27 agreements and memorandums of understanding (MoUs) worth $2.2 billion in October. During Sharif’s visit to the kingdom last week, the two countries agreed to enhance that figure to $2.8 billion.
Meanwhile, the UAE is Pakistan’s third-largest trading partner after China and the United States. It is also an ideal export destination for the South Asian nation as the short distance between the two countries limits transportation costs and facilitates commercial exchanges.
Sharif has actively pursued economic diplomacy in the region in recent months, seeking more investments and enhancing trade and regional connectivity for Pakistan. The South Asian country has sought to leverage its position as a transit and trade hub connecting landlocked Central Asian countries with the rest of the world and also pushed for mutually beneficial economic partnerships with Gulf countries.
