ISLAMABAD: Pakistan’s new government plans to tap Middle Eastern commercial banks for financing after securing a new and long-term bailout loan from the International Monetary Fund (IMF) in the coming months, the new finance chief said on Wednesday.
The first order of business for new finance minister Muhammad Aurangzeb will be to seek a fresh Extended Fund Facility (EFF) from the IMF after a current standby arrangement expires on April 11. Pakistan bagged the last-gasp rescue package last summer to avert a sovereign default. The final review this week, if successful, will release a last tranche of around $1.1 billion.
“Once we conclude the [new] Extended Fund Facility, we should be able to approach Middle Eastern banks, which have ended their whole business and appetite, for commercial borrowing and we will be able to get funding and support from them primarily to help us with our trade business, etc.,” Aurangzeb said during an interview with Pakistan’s Geo TV on Wednesday night.
Pakistan has been financially assisted by countries like Saudi Arabia and the United Arab Emirates in the past, with deposits of billions of dollars in its central bank, followed by rollovers.
Gulf states have also regularly provided Pakistan oil on deferred payment facilities and offered direct financial support to help stabilize its economy and shore up its foreign exchange reserves.
Pakistan’s newly appointed finance minister has said he wants to ensure macroeconomic stability and reduce spending and tax system leakages as an IMF team arrived in Islamabad to hold a second and last review of the nation’s $3 billion stand-by arrangement starting today, Thursday.
A set of critical challenges face Aurangzeb, including stabilizing the economy amid soaring inflation and dwindling foreign reserves, managing substantial external debts and navigating negotiations with global lenders. Pakistan also needs fiscal reforms to boost revenue and attract investments, vital for sustainable economic growth and job creation.
The debt-ridden economy, which shrank 0.2 percent last year and is expected to grow around 2 percent this year, has been under extreme stress with low reserves, a balance of payment crisis, inflation at 23 percent, policy interest rates at 22 percent and record local currency depreciation.
“The GDP is better, we have macroeconomic stability and the exchange rate is getting better,” Aurangzeb told Geo. “So we need to bring this macro stability to permanence. If this stability comes toward permeance, we can lead it toward growth.”
The minister said Pakistan had a narrow tax base and needed to reduce revenue leakages, for which it was important to digitize the tax system and make it more transparent.
“This is something we have already started working on,” said the minister, who made his first official visit to the Federal Bureau of Revenue, the national tax collection body, on Wednesday.
On foreign borrowing, the minister said Pakistan needed to improve its economic management to break out of the practice of asking friendly countries to deposit money in its central bank and then seeking rollovers.
“Now even these friendly countries have given us a clear hint that they want to help us but not through aid but through investments,” the finance minister added. “And I think it is the right thing to do for the country.”
Aurangzeb said the government would tap the China bond market in the next fiscal year.
“The one [bond] market that we haven’t tapped is in China,” he said.
“See, our G2G [government-to-government] relationships are good. Their banks are still rolling over and giving aid to us. Chinese government is also helping us.”
“So, the panda market there, the bond market, it’s the second or third most liquid market in the world,” he added. “So I think from the ministry of finance we should go toward inaugural panda bonds during the next fiscal year.”
In February, China rolled over a $2 billion loan to Pakistan due in March.
The lender has said it will formulate a medium-term program if Islamabad applies for one.
Ahead of the current stand-by arrangement, Pakistan had to meet IMF conditions including revising its budget, and raising interest rates and the price of electricity and gas. The IMF also got Pakistan to raise $1.34 billion in new taxes. The measures fueled all-time high inflation of 38 percent year-on-year in May.
The government has not officially stated the size of the additional funding it is seeking through a successor program, but Bloomberg reported in February that Pakistan planned to seek a new loan of at least $6 billion from the lender.
Pakistan says will seek financing from Middle Eastern banks after securing new IMF bailout
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Pakistan says will seek financing from Middle Eastern banks after securing new IMF bailout
- New finance chief hopes better credit ratings post-bailout will make tapping bond markets easier
- Pakistan aims to secure new IMF loan after successful completion of last review under $3 billion facility
Pakistan says Hong Kong conglomerate discussing $1 billion investment in maritime sector
- Pakistan maritime affairs minister holds meeting with Hutchison Ports officials
- Proposal includes upfront $200 million in foreign direct investment for Pakistan
ISLAMABAD: A Hong Kong-based multinational conglomerate has expressed interest in investing $1 billion in Pakistan’s maritime sector to improve the South Asian nation’s port infrastructure, the maritime ministry said on Thursday.
Hutchison Ports, a subsidiary of CK Hutchison Holdings, is a leading global port operator and logistics company, operating in 52 ports across 26 countries in Asia, Europe, the Americas, and Australia. It provides container terminal operations, cargo handling, logistics, port management, transportation, and distribution services.
Pakistan’s seaports in Karachi, located along the Arabian Sea, are essential for global trade and provide job opportunities for thousands of citizens. The country has been actively working on restructuring and enhancing its port infrastructure.
On Thursday, Maritime Affairs Minister Qaiser Ahmed Shaikh held a meeting with a high-level delegation from Hutchison Ports, led by the company’s Managing Director for the Middle East and Africa, Andy Tsoi, to discuss the $1 billion investment plan, the maritime affairs ministry said.
“This groundbreaking proposal includes an upfront $200 million Foreign Direct Investment,” the ministry said, adding that the investment would focus on modernizing the Karachi International Container Terminal and South Asia Pakistan Terminals Limited “with advanced automation technologies, enhancing operational efficiency and adopting eco-friendly solutions.”
The plan includes introducing “electrified and remote-control equipment” to reduce carbon emissions and establishing a state-of-the-art warehousing depot for Pakistan’s growing trade sector as well as funding to improve roads around the south wharf to ensure “smooth container traffic flow and boost supply chain efficiency.”
The development comes amid Pakistan’s efforts to boost trade and seek international partnerships to expand maritime activities.
In August 2024, state media reported that Danish shipping firm Maersk was in discussions with local authorities to invest $2 billion in Pakistan’s port and transport infrastructure over the next two years.
In October last year, the maritime minister signed an agreement with Denmark’s Minister Morten Bodskov to restructure Pakistan’s maritime sector and provide technical training at its ports.
Paris court sentences Pakistani who targeted Charlie Hebdo to 30 years jail
- When he carried out attack, 29-year-old Zaheer Mahmood wrongly believed satirical newspaper was still based in the building
- Newspaper had moved in the wake of an earlier attack, which killed 12 people including eight of the paper’s editorial staff
PARIS: A Paris court on Thursday sentenced a Pakistani man to 30 years in jail for attempting to murder two people outside the former offices of Charlie Hebdo in 2020 with a meat cleaver.
When he carried out the attack, 29-year-old Zaheer Mahmood wrongly believed the satirical newspaper was still based in the building, which was targeted by Islamists a decade ago for publishing cartoons of the Prophet Muhammad.
The newspaper had in fact moved in the wake of the attack, which killed 12 people including eight of the paper’s editorial staff.
The killings in 2015 shocked France and triggered a fierce debate about freedom of expression and religion.
Originally from rural Pakistan, Mahmood arrived in France illegally in the summer of 2019.
The court had earlier heard how Mahmood was influenced by radical Pakistani preacher Khadim Hussain Rizvi, who had called for the beheading of blasphemers to “avenge the Prophet.”
Mahmood was convicted of attempted murder and terrorist conspiracy, and handed a ban from ever setting foot on French soil again.
Pakistan says three militants killed trying to infiltrating its border with Afghanistan
- Islamabad frequently accuses Afghanistan of sheltering, supporting militant groups that launch cross-border attacks
- Afghan officials deny state complicity, insisting Pakistan’s security issues are an internal matter of Islamabad
ISLAMABAD: Pakistani security forces have killed six militants attempting to enter the country through its border with Afghanistan in the southwestern Balochistan province, the Pakistan military said on Thursday.
Islamabad frequently accuses neighboring Afghanistan of sheltering and supporting militant groups that launch cross-border attacks. The Taliban government in Kabul says it does not allow Afghan soil to be used by militants, insisting that Pakistan’s security issues are an internal matter of Islamabad.
In the latest incident, the Pakistan army said security forces had picked up on the movement of a group of militants who were attempting to infiltrate the Pakistan-Afghanistan border on the night between Jan 22. and 23 in Balochistan’s Zhob District. Six militants were killed, it said, and a large quantity of weapons, ammunition and explosives was recovered.
“Pakistan has consistently been asking Interim Afghan Government to ensure effective border management on their side of the border,” the army said. “Interim Afghan Government is expected to fulfill its obligations and deny the use of Afghan soil by Khwarij for perpetuating acts of terrorism against Pakistan.”
The Pakistani Taliban, or the Tehreek-e-Taliban Pakistan (TTP), have frequently targeted Pakistani forces in the northwestern Khyber Pakhtunkhwa province. The group also has some presence in Balochistan, the site of a low-level insurgency for decades by separatists fighting for the province’s independence.
On Jan. 19, Pakistani security forces killed five militants as they tried to infiltrate Pakistan’s border in Zhob district.
No talks with India on resumption of trade, Pakistan foreign office says
- In 2019, Indian PM Modi withdrew Indian-administered Kashmir’s autonomy to tighten grip over the territory
- Move provoked outrage in Pakistan and the downgrading of diplomatic ties and suspension of bilateral trade
KARACHI: The Pakistani Foreign Office said on Thursday Islamabad and New Delhi were not holding talks to resume trade, suspended in 2019 when India revoked the special status of the part of Kashmir that it controls and split the region into two federally administered territories.
The disputed Himalayan region is claimed in full, though ruled in part by both India and Pakistan since their independence from Britain in 1947, with the nuclear-armed neighbors having fought two of their three wars over the territory.
In 2019, Indian Prime Minister Narendra Modi withdrew Indian-administered Kashmir’s autonomy in order to tighten his grip over the territory, provoking outrage in Pakistan and the downgrading of diplomatic ties and suspension of bilateral trade.
Speaking to reporters at the Indian embassy in Washington this week, Indian Foreign Minister Dr. Subrahmanyam Jaishankar said no talks on trade resumption had been held between his country and Pakistan.
“Pakistan decided to suspend bilateral trade in response to India’s illegal and unilateral actions of 5 August 2019 relating to ... Kashmir,” Shafqat Ali Khan, the spokesperson for Pakistan’s Ministry of Foreign Affairs, told Arab News when asked to respond to the Indian minister’s comments.
“High level engagement between Pakistan and India remains suspended at the moment. In that backdrop, both sides are not holding talks on resumption of trade.”
Khan said the volume of bilateral trade between Pakistan and India stood at $1.907 billion in the financial year 2018-19. He said India had in 2019 withdrawn the Most-Favored Nation status granted to Pakistan and imposed 200 percent duty on all Pakistani items, “posing a serious setback to Pakistan’s exports.”
Speaking on Wednesday, Jaishankar said it was Pakistan that had suspended trade.
“Their [Pakistan] government took a decision in 2019 not to conduct trade with India, that was from their side,” Jaishankar said.
“Our concern regarding this issue from the beginning was that we should get MFN status. We used to give MFN status to Pakistan, they didn’t give [it] to us.”
For decades, the armies of India and Pakistan have faced off over the the Line of Control (LoC), a UN-monitored ceasefire line agreed in 1972, that divides the areas each administers.
The foes fought a 1999 battle along the LoC that some analysts described as an undeclared war. Their forces exchanged regular gunfire over the LoC until a truce in late 2003, which has largely held since.
PM launches World Bank’s $20 billion Country Partnership Framework for Pakistan
- 10-year-plan will focus on development issues like impact of climate change and boosting private-sector growth
- Last year, Pakistan secured $7 billion IMF loan deal though Sharif has vowed to reduce dependence on foreign loans
ISLAMABAD: Prime Minister Shehbaz Sharif on Thursday launched the World Bank’s Country Partnership Framework (CPF) for Pakistan, a plan to focus $20 billion in loans to the cash-strapped nation over the coming decade on development issues like the impact of climate change and boosting private-sector growth.
Pakistan in 2023 nearly defaulted on the payment of foreign debts when the International Monetary Fund rescued it by agreeing to a $3 billion bailout to Pakistan. Last year, Islamabad secured a new $7 billion loan deal from the IMF. Since then, the country’s economy has started improving with weekly inflation coming down from 27 percent in 2023 to 1.8 percent earlier this month. Sharif has vowed to reduce dependence on foreign loans in the coming years.
The World Bank’s lending for Pakistan will start in 2026 and focus on six outcomes: improving education quality, tackling child stunting, boosting climate resilience, enhancing energy efficiency, fostering inclusive development and increasing private investment.
“Together, this partnership fosters a unified and focused vision for your county around six outcomes with clear, tangible and ambitious 10-year targets,” Martin Raiser, the World Bank vice president for South Asia, said in an address at the launch ceremony of the loan program.
“We hope that the CPF will serve as an anchor for this engagement to keep us on the right track. Partnerships will equally be critical. More resources will be needed to have the impact at the scale that we wish to achieve and this will require close collaboration with all the development partners.”
Speaking at the ceremony, PM Sharif said the CPF was a “vision to transform Pakistan’s economy, building climate resilient projects, alleviating poverty and unemployment and promoting digitization, agriculture and IT led initiatives.”
Separately, Raiser met Ahad Cheema, Pakistani minister for economic affairs, to discuss in detail the framework’s next steps and its implementation.
“The two leaders also discussed the need to address key challenges in project implementation, such as land acquisition, project start-up delays, and ensuring compliance with social safeguards,” Cheema’s office said in a statement.
“Cheema stressed that effective coordination between the World Bank and other development partners, as well as streamlined approval processes, would be essential to overcoming these hurdles.”
Cheema also called on the World Bank to enhance Pakistan’s allocation of concessional resources, especially in support of climate change mitigation and foreign debt management.
