World Bank links approval of $450 million Pakistan loan with IMF review

A man is walking in front of the World Bank Building in Washington DC on September 25, 2020. (Photo courtesy: AFP/File)
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Updated 12 May 2023
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World Bank links approval of $450 million Pakistan loan with IMF review

  •  Pakistan and IMF have been in ninth review since February, aiming to resume stalled funding of $1.1 billion from $6.5-billion bailout
  • IMF funding is crucial for Pakistan to avert default on its external payment obligations during a balance of payment crisis

KARACHI: The World Bank has linked the approval of a $450 million loan for Pakistan with the completion of the ongoing ninth review of the international monetary fund’s $6.7 billion bailout program, the global lender has said. 

The second Resilient Institution for Sustainable Economy (RISE-II) is a policy loan for budgetary support for which the government of Pakistan is expected to receive $450 million from the World Bank. The program was expected to be approved in 2021 but has been delayed.

Nearly 100 days have passed since the last IMF staff level mission to Pakistan and the two sides have yet to strike a preliminary deal - a key step to secure the next funding tranche of a bailout deal signed in 2019. That is the longest such gap since at least 2008.

Meanwhile foreign exchange reserves at $4.457 billion cover barely a month's worth of imports.

A World Bank spokesperson told Arab News this week that considerable progress had been made and the RISE program would now be linked to the completion of the country’s ongoing IMF review. 

“The World Bank continues to work with the Government of Pakistan on the preparation of the RISE-II Development Policy Operation, including discussions around supported policy actions on which there has been considerable progress recently; the adequacy of the macroeconomic framework; the financing amount; and the timeline for approval, in particular, as it relates to the completion of the ongoing IMF review,” WB spokesperson Mariam Altaf said in an emailed response to Arab News.

The global lender had approved $500 million in financing under the RISE-I program for Pakistan to mitigate the impacts of the COVID-19 pandemic, while RISE-II was approved in 2020 to help Pakistan strengthen its fiscal management, promote transparency, increase private sector growth, and undertake foundational reforms in the energy sector to transition to low-carbon energy. 

RISE-II also supports foundational reforms to improve the financial viability of the power sector through a reduction and ultimate elimination of the sector’s circular debt, which was initiated under RISE-I. 

It further aims to improve the investment climate through the implementation of a nationwide harmonized General Sales Tax (GST), a competitive national tariff policy, an inclusive digital payments system that allows fintech companies to undertake electronic money operations, and a better-regulated banking system, according to a World Bank document. 

The South Asian nation is currently negotiating with the IMF for the conclusion of the ongoing review ahead of the fiscal budget for the next year, expected in the first week of June 2023. 

The talks between the Fund and Pakistani authorities are ongoing since November 2022 but no progress is in sight yet, as the IMF calls for more prior actions despite an energy tariff hike, the presentation of a mini budget, and the arrangement of additional financing from friendly countries like China, Saudi Arabia and the UAE.

The deadlock has blocked funding not only from IMF but also from other multilateral and bilateral lenders, including the World Bank. The conclusion of the ongoing review will clear the way for the disbursement of $1.1 billion from the Fund and unleash other bilateral and multilateral financing. 

Nathan Porter, mission chief to Pakistan at the IMF, last week said the lender was working with the Pakistani authorities to bring the ninth review to a conclusion once the necessary financing was in place and the agreement was finalized. 

“In addition, the IMF supports the authorities in the implementation of policies in the period ahead, including in the technical work to prepare the FY24 budget, which is to be passed by the National Assembly before end-June,” he said in a statement shared with Arab News.

In recent negotiations between Pakistan and the IMF, the fuel subsidy scheme announced by Prime Minister Shehbaz Sharif in March 2023 has been a sticking point but after prolonged discussions, Pakistani authorities have finally given up the subsidy, which envisaged charging the country’s rich and subsidizing the poor to mitigate the impacts of high inflation that hit 36.4% in April this year. 

Pakistani authorities have also committed that they will not introduce new tax exemptions and

durably allow a market-based exchange rate for the rupee, according to the report.

The country’s national currency on Thursday breached the psychological barrier of Rs300 against the United State dollar in the interbank market before closing at Rs298.93.

Pakistani analysts believe the recent rupee devaluation against the greenback, among other factors, is the outcome of the government’s assurance of a market-determined exchange rate to the IMF.

“There are three factors that contribute to the rupee depreciation,” Tahir Abbas, the head of research at Arif Habib Limited, told Arab News. “Political instability, market-based exchange rate implementation, and the demand for import payments are the key factors that impact the rupee against the dollar.”

The Pakistani rupee has depreciated by 24.25% so far since January 2023 and by 31.47% since July 2022.


UK announces £108 million to support Pakistani businesses tackle climate change

Updated 11 sec ago
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UK announces £108 million to support Pakistani businesses tackle climate change

  • Funds will help businesses develop climate technologies, support Pakistan’s private sector
  • UK government says program will support the creation of over 100,000 Pakistani jobs

ISLAMABAD: The United Kingdom (UK) government this week announced £108 million in funds to support Pakistani businesses adapt to climate challenges, saying that it would help them develop technologies and meet significant investments required to tackle climate threats.
The announcement was made at the culmination of the two-day visit by British Parliamentary Under-Secretary of State for the Middle East, Afghanistan and Pakistan Hamish Falconer to Islamabad on Friday.
The British government said the funding will support a first-of-its-kind investment facility to deliver climate technologies and private sector support in Pakistan. The program will be delivered in partnership with the International Finance Corporation.
“The UK and Pakistan are committed to tackling tomorrow’s threats today,” Falconer was quoted as saying by the British government on Friday. 
“That’s why we’re investing in the expertise needed and supporting local businesses, alongside the Government of Pakistan, to get ahead of the challenges that climate change poses to the Pakistani people and the world.”
According to the Global Climate Risk Index, Pakistan is among the countries most at risk from climate change. The 2022 floods, which experts linked to global warming, impacted over 33 million people, resulted in more than 1,700 deaths and caused an estimated $33 billion in damages.
Pakistan’s economic struggles and high debt burden put a strain on its resources and impinged its ability to respond to the disaster.
Pakistan has also been grappling with increasingly unpredictable weather patterns, including droughts, heatwaves, and heavy rainfall. This year, the country experienced its heaviest April rainfall since 1961, with 59.3 millimeters recorded. Additionally, several regions faced severe heatwaves in May and June.
“The program will leverage the £108m the UK puts in to mobilize 5-6 times that amount of investment from the private sector and will support the creation of over 100,000 Pakistani jobs,” the British government said on its official website. 
Pakistan and the UK enjoy strong military, economic and educational ties, with the latter hosting a large Pakistani diaspora.
Recent high-level visits by military leaders from both countries have signalled a deepening of defense ties and cooperation. The strong relationship is built on a shared history and the significant presence of a Pakistani diaspora in the country.


Cannot allow Islamabad protest, Pakistan interior minister tells ex-PM Khan’s party

Updated 57 min 11 sec ago
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Cannot allow Islamabad protest, Pakistan interior minister tells ex-PM Khan’s party

  • Jailed Imran Khan’s party has called for “long march” to Islamabad on Nov. 24 to demand his release
  • Pakistani authorities block roads, seal off motorways ahead of opposition’s Islamabad protest

ISLAMABAD: Pakistan’s Interior Minister Mohsin Naqvi on Saturday discussed the prevailing political situation in the country with former prime minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) Chairman Gohar Ali Khan, warning him that the government will not allow the party to stage a protest sit-in or rally in the capital.
Thousands of Khan supporters are expected to arrive in Islamabad on Sunday for a “long march” to the capital. The PTI’s march is primarily aimed at pressurizing the government to end the jailed Khan’s imprisonment, which has lasted for over a year, on what his party contends are politically motivated charges. 
The party also aims to raise its voice against alleged rigging in the Feb. 8 general elections while calling for measures to ensure judicial independence, which it says has been undermined by the 26th constitutional amendment. The government denies this. 
The Islamabad High Court (IHC) on Thursday directed the government to form a committee to hold discussions with the PTI. The court said that if no breakthrough was reached between the two parties, then the government would be responsible for maintaining law and order. It said that in that case, “no protest or rally or for that matter sit-in shall be allowed.”
“Mohsin Naqvi informed Barrister Gohar about the post-Islamabad High Court order situation,” state broadcaster Radio Pakistan reported. “He said we are bound by the high court’s order and cannot permit any procession, sit-in or rally.”
The minister informed the PTI chairman about the engagements of the 80-member high-level delegation accompanying the president of Belarus, who will be in Islamabad from Nov. 24-27. 
“Barrister Gohar said he will inform the Interior Minister about the final response after party consultation,” the state media said. 
MOTORWAYS, MAJOR ARTERIES SEALED
Pakistan’s National Highways and Motorway Police (NHMP) said on Friday that motorways across the country leading to Islamabad have been sealed from various areas to protect people’s lives ahead of the PTI’s planned protest. 
Authorities sealed off major arteries and roads with shipping containers leading to Islamabad from the surrounding Rawalpindi city, including at the Faizabad terminal, and other areas on Friday. 
In a notification released on Friday, the NHMP cited intelligence reports that protesters were planning to disrupt law and order in the capital, adding that they would be armed with sticks and slingshots. 
“To prevent any untoward situation and to protect the lives of the people, motorways have been closed from various locations,” the NHMP said.
“The lives and property of the people will be guaranteed at all costs. Those who take the law into their hands will be dealt with strictly.”
Hours earlier on Friday, the NHMP had shared a notification on social media platform X in which it had said that certain sections of the motorway were closed due to maintenance work. These sections were: M-1 Islamabad to Peshawar, M-2 Islamabad to Lahore, M-3 Lahore to Abdul Hakeem, M-4 Pindi Bhattian to Multan, M-14 Hakla to Yarik and M-11 Lahore to Sialkot. 
As per local media reports, the Metro Bus service between the twin cities of Islamabad and Rawalpindi will be suspended on Nov. 24 while a ban on public gatherings has been imposed in Punjab from Nov. 23-25 ahead of the PTI’s march. 
Earlier this week, Pakistan’s interior ministry had authorized the deployment of paramilitary Punjab Rangers and Frontier Corps troops in Islamabad to maintain law and order.
Pakistan’s parliament also passed a law earlier this year to regulate public gatherings in Islamabad, specifying timings for rallies and designating specific areas. The law prescribes three-year jail terms for participants in illegal assemblies and 10-year imprisonment for repeat offenders.


Cop among two killed in separate IED blasts in northwestern Pakistan

Updated 23 November 2024
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Cop among two killed in separate IED blasts in northwestern Pakistan

  • No group has so far claimed responsibility for blasts which took place in Bajaur tribal district
  • Seventy-five police personnel have been killed, 113 injured in militant attacks in KP this year

PESHAWAR: A police constable and a civilian were killed in separate Improvised Explosive Device (IED) blasts in northwestern Pakistan on Saturday, police said, as Islamabad struggles to contain surging militancy in its Khyber Pakhtunkhwa (KP) province.
The IED blasts took place in the northwestern Bajaur tribal district on Saturday morning, killing one cop and a civilian.
As per official data, 75 police personnel have been killed and 113 injured in militant attacks and targeted assassinations in KP province this year.
“Both blasts were reported in the premises of Loi Mamund police station earlier today,” Bajaur Police spokesperson Muhammad Israr told Arab News.
No group has claimed responsibility for the blasts so far.
“An IED was placed in front of the policeman’s house which detonated when he was leaving home for duty at around 9:30 am in Mena village of Loi Mamund,” Israr added.
He said the other blast took place around 8:00 am in Irab village, also located within the vicinity of Loi Mamund police station, in which one person was killed.
Israr said police have started investigating both incidents.
Pakistan blames the surge in militancy in KP province, which borders Afghanistan, on the Pakistani Taliban militants that it alleges have found safe havens in Afghanistan.
Kabul denies the allegations and urges Pakistan to resolve its security challenges on its own. Relations between the two countries have deteriorated since November 2022 when a fragile truce between the Pakistani state and the Pakistani Taliban broke down.


Mourners in Pakistan’s Kurram district demand inquiry after sectarian clashes kill 41

Updated 23 November 2024
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Mourners in Pakistan’s Kurram district demand inquiry after sectarian clashes kill 41

  • Gunmen opened fire on vehicles carrying 41 members of Shiite community in Kurram district on Thursday
  • Authorities impose curfew, suspend mobile phone services in district long plagued by sectarian clashes

ISLAMABAD: Mourners in northwestern Pakistan’s Kurram district on Saturday demanded the government hold a transparent inquiry into sectarian clashes that killed 41 people this week, as fear grips the restive area days after the attack. 
Authorities imposed a curfew and suspended mobile phone services in Kurram district after 41 people were killed on Thursday when gunmen opened fire on vehicles carrying members of the minority Shiite community. 
The assault, one of the deadliest such attacks in recent years in the area, took place in the district where sectarian clashes have killed dozens of people in recent months. 
“A transparent inquiry of this incident should be carried out,” Hayat Abbas Najafi, one of the mourners, told Reuters at one of the district’s main towns Parachinar during a funeral ceremony. 
“We call on the government as well as security institutions that Parchinar, which is a great part of Pakistan, should be saved from sectarianism and should be provided safety and security.”
No one immediately claimed responsibility for the attack, which came a week after authorities reopened a key highway in the region that had been closed for weeks following deadly clashes.
Previous clashes in July and September killed dozens of people and ended only after a tribal council called for a ceasefire.
Sajjad Hussain, another mourner, said among those killed were infants as young as six months old and women.
“They were innocent passengers. What was their fault,” he asked. 
Shop owners in Parachinar announced a three-day strike on Friday to protest the attack while locals described an atmosphere of fear across the district following the incident. 
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.
Shiite Muslims make up about 15 percent of the 240 million population of Sunni-majority Pakistan.
With inputs from Reuters


UAE promotes Arab culture and cuisine at three-day festival in Karachi 

Updated 23 November 2024
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UAE promotes Arab culture and cuisine at three-day festival in Karachi 

  • UAE consulate in Karachi kicks off celebrations ahead of nation’s National Day 
  • UAE is one of Pakistan’s largest trading partners and major source of remittances

KARACHI: The United Arab Emirates (UAE) Consul General in Karachi this week paid a visit to promote several stalls selling Arab cuisine and highlighting Arab culture at a three-day festival in Pakistan’s southern port city of Karachi, ahead of the Gulf nation’s National Day. 
Sindh’s Culture Minister Syed Zulfiqar Ali Shah inaugurated the three-day Sindh Craft Festival on Friday which showcases traditional shawls, quilts, handlooms, and caps made by artists from all over Sindh at Karachi’s famous Port Grand entertainment hub. 
UAE Consul General Dr. Bakheet Ateeq Al Rumaithi visited the festival on Friday to highlight Arab cuisine and review stalls promoting Arab culture at the festival. The UAE consulate is gearing up for celebrations to mark the nation’s 53rd National Day on Dec. 2.
“Various stalls have been set up at Port Grand keeping in mind Arab culture,” the UAE Consulate in Karachi said in a statement on Friday. 

Sindh’s Culture Minister Syed Zulfiqar Ali Shah (2L) inaugurates three-day Sindh Craft Festival during an event to mark the UAE’s 53rd National Day in Karachi on November 22, 2024. (Photo courtesy: UAE Consulate Karachi)

Al Rumaithi noted that women, children and the elderly were all taking part in the three-day cultural festival. 
“We have a centuries-old relationship with Pakistan which is strengthening,” he observed. 

UAE Consul General Dr. Bakheet Ateeq Al Rumaithi (5R) cuts the cake to celebrate the UAE’s 53rd National Day in Karachi on November 22, 2024. (Photo courtesy: UAE Consulate Karachi)

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 Sharif 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 also home to more than a million Pakistani expatriates and the second-largest source of remittances to Pakistan after Saudi Arabia.