KARACHI: Pakistan’s central bank on Monday cut its key interest rate by 150 basis points, or 1.5 percent, after keeping it at an all-time high of 22 percent since June last year, in a much-expected move that marks the country’s first rate cut in four years.
The decision to slash the policy rate to 20.5 percent comes after data showed inflation had eased to a 30-month low of 11.8 percent in May.
The rate cut is more than the expectation gauged through surveys conducted by various financial institutions that predicted about 100bps reduction.
“Monetary Policy Committee (MPC) noted that while the significant decline in inflation since February was broadly in line with expectations, the May outturn was better than anticipated earlier,” the State Bank of Pakistan (SBP) said in a statement.
The committee assessed that underlying inflationary pressures were also subsiding amidst tight monetary policy stance, supported by fiscal consolidation.
At the same time, the MPC viewed some upside risks to the near-term inflation outlook associated with the upcoming budgetary measures and uncertainty regarding future energy price adjustments.
“Notwithstanding these risks and today’s decision, the Committee noted that the cumulative impact of the earlier monetary tightening is expected to keep inflationary pressures in check,” the statement read.
Pakistan’s central bank had raised its policy rates in an emergency meeting in late June last year to a record high of 22 percent. Monday’s move is the first rate cut since Jun 25, 2020.
While financial analysts called it a bold move, industrialists said it was “too little, too late.”
“A rate cut of 1.5 percent was a bold decision by the State Bank of Pakistan, especially before the finalization of the new IMF (International Monetary Fund) Program and the announcement of Budget FY25,” said Khurram Schehzad, CEO of Alpha Beta Core financial advisory firm.
The South Asian country is set to unveil budget for the next fiscal year in a parliamentary sitting on June 12.
Islamabad is currently locked in talks with the IMF for a longer-term bailout of around $8 billion and the country is expected to formally request for the program after the budget.
However, Atif Ikram Sheikh, president of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), said the business community was expecting higher and more substantive rate cuts.
“The policy rate cut announced today is too little, too late. The business, industry and trade community was expecting higher and more substantive cut after inflation dropped to 11.8 percent which is lowest in 30 months,” Sheikh said.
The FPCCI president said the interest rate should come down to 15 percent to enable Pakistani exporters compete in regional and international export markets by reducing the cost of capital. This should be accompanied with the fulfillment of the government’s promise to rationalize electricity tariff for the industry, he added.
Iftikhar Ahmed Sheikh, president of Karachi Chamber of Commerce & Industry (KCCI), expressed his disappointment over what he called a meager rate cut, saying the business community was expecting a substantial reduction of at least 4-5 percent.
“However, as the SBP has decided to ease monetary policy by 150 basis points, we hope that this approach continues in the days to come to gradually bring down the interest rate to single digit,” he said in a statement.
He said lower interest rate in line with international trends would certainly encourage borrowings by the private sector that would prove favorable for the economy, encouraging business expansion as well as industrialization.
The KCCI president called the rate cut “first step in the right direction” and hoped to see further reduction in interest rate in a country where the cost of doing business had been exorbitantly high.
Pakistan’s central bank cuts policy rate by 1.5 percent to boost economy
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Pakistan’s central bank cuts policy rate by 1.5 percent to boost economy
- The decision comes a week after data showed inflation slowed to a 30-month low of 11.8 percent in May
- While financial analysts called Monday’s rate cut a bold move, industrialists said it was ‘too little, too late’
VPN demand increased 253% in Pakistan between Nov. 24-26 — Top10VPN
- Pakistani authorities have suspended mobile Internet services and blocked several VPNs amid a protest by PTI opposition party
- Social media platform X has been blocked since February and the government is also moving to implement a national firewall
ISLAMABAD: Top10VPN, an independent VPN review company, said this week VPN demand had more than tripled in Pakistan following the tightening of social media restrictions between Nov. 24-26, days that coincide with the launch of a protest movement by the opposition Pakistan Tehreek-e-Insaf (PTI) party.
Pakistani authorities have suspended mobile Internet services and blocked several VPNs amid a protest launched by supporters of former Prime Minister Imran Khan, who has been jailed since August 2023 on a spate of charges from corruption to terrorism.
The government has been cracking down on VPN use for weeks, with the Pakistan Telecommunication Authority announcing that businesses and freelancers would be able to legally use VPNs by registering with the government, but unregistered VPNs will be blocked in Pakistan after Nov. 30. Authorities say the measures are meant to deter militants and other suspects who use VPNs to conceal their identities and spread “anti-state propaganda” and promote “blasphemous” or other illegal content online.
Digital rights activists say the move is part of government attempts to block vital tools that allow users to bypass restrictions amid a wave of digital crackdowns, particularly as the use of VPNs has sharply risen in Pakistan since February this year when the government banned X.
“Demand for VPN services initially increased by 102 percent in Pakistan on November 24 compared to the daily average over the 28 days prior,” Top10VPN said in a report.
The PTI had launched its ‘long march’ protest to the federal capital, Islamabad, on Nov. 24.
“VPN demand intensified the next day [Monday], at 253 percent above the baseline on November 25 and continues to remain elevated,” the website added. “The surge followed reports that WhatsApp had been targeted by the authorities, preventing media sharing.”
The federal government is also moving to implement a nationwide firewall to block malicious content, protect government networks from attacks, and allow the government to identify IP addresses associated with what it calls “anti-state propaganda” and terror attacks. Internet speeds have dropped by up to 30-40 percent over the past few months due to the firewall, according to the Wireless and Internet Service Providers Association of Pakistan (WISPAP).
In August, the Pakistan Business Council (PBC) warned that frequent Internet disruptions and low speeds caused by poor implementation of the national firewall had led many multinational companies to consider relocating their offices out of Pakistan, with some having “already done so.” The Pakistan Software Houses Association (P@SHA), the country’s top representative body for the IT sector, warned last week Internet slowdowns and the restriction of VPN services could lead to financial losses and closures and increase operational costs for the industry by up to $150 million annually.
Pakistan’s IT and ITeS exports have been growing at an average of 30 percent per year, and are on the way to achieve over $15 billion in the next 5 years, according to industry data, provided the government ensures continuity in export, fiscal, financial, SME, infrastructure and IT policies.
“If the VPNs are blocked, most of IT companies, Call Centers, BPO [business process outsourcing] organizations of Pakistan will lose all the major Fortune 500 clients, as well as others – as data protection and cybersecurity are of paramount importance to our clients, and connecting to client systems through VPN is a global norm and standard, and is a basic requirement and expectation of clients around the world,” P@SHA Chairman Sajjad Mustafa Syed said in a statement released last Tuesday.
“Additionally, no international company of any size tolerates any intrusion into their security protocols by any private or public institution.”
Pakistan army says three militants attempting to infiltrate from Afghan border killed
- Kabul government denies it allows militants to use its soil to attack Pakistan
- Pakistan has seen sharp rise in militant attacks across the country in recent months
ISLAMABAD: The Pakistan army said on Tuesday it had killed three militants out of a group that had tried to infiltrate its frontier with neighboring Afghanistan in the northwestern North Waziristan district, calling on Kabul to ensure “effective border management” on its side.
Islamabad, facing a sharp rise in militancy in recent months, says the Tehreek-e-Taliban Pakistan (TTP) group uses Afghanistan as a base to launch attacks and that the ruling Taliban administration has provided safe havens to the group along their shared border. The Taliban government in Kabul denies this.
The TTP is separate from the Afghan Taliban movement but pledges loyalty to the group that has ruled Afghanistan after the US-led international forces withdrew in 2021.
“On night 25/26 November, movement of a group of khwarij [militants], who were trying to infiltrate through Pakistan-Afghanistan border, was picked up by the security forces in general area Hassan Khel, North Waziristan District,” the army said in a statement. “Own troops effectively engaged and thwarted their attempt to infiltrate. Resultantly, three Khwarij were sent to hell.”
The statement said Islamabad had “consistently” been asking the Afghan government to ensure effective border management on their side of the border.
“Interim Afghan Government is expected to fulfil its obligations and deny the use of Afghan soil by Khwarij for perpetuating acts of terrorism against Pakistan,” the army added.
“Security Forces of Pakistan are determined and remain committed to secure its borders and eliminate the menace of terrorism from the country.”
What has caused Pakistan’s deadly clashes between police and supporters of Imran Khan?
- Topping the demands of Khan’s Pakistan Tehreek-e-Insaf party is the release of all its leaders, including Khan
- PTI supporters say they will hold ‘do or die’ sit-in at public square near parliament that is a popular protest site
Thousands of supporters of Pakistan’s jailed former Prime Minister Imran Khan marched on the capital Islamabad this week, breaking through barricades and clashing with police in response to his call for a sit-in protest.
Here is a look at what led to the protest and this chapter of political rallies in Pakistan:
WHAT DO PROTESTERS WANT?
Topping the demands of Khan’s Pakistan Tehreek-e-Insaf (PTI) party is the release of all its leaders, including Khan, who has been jailed on a series of corruption charges since August 2023.
They also seek the resignation of the current government over what they call rigged general elections this year.
PTI supporters from across the country, including Khan’s wife Bushra Bibi, have marched on the capital, with large numbers coming from the party’s stronghold in the northern province of Khyber Pakhtunkhwa.
They have vowed to enter the capital and rally at a public square near parliament that is a popular protest site, holding what leaders have called a “do or die” sit-in.
HOW HAS THE GOVERNMENT RESPONDED?
Prime Minister Shehbaz Sharif’s government has given no indication yet of bending to the demands. Authorities have used shipping containers to block major roads and streets in Islamabad, with police and paramilitary patrolling in riot gear.
Mobile Internet links are down and schools have been closed for several days in the capital and the nearby garrison city of Rawalpindi. Gatherings have been banned in Islamabad.
WHAT HAS HAPPENED SINCE THE MARCH BEGAN?
Thousands of supporters clashed with police and paramilitary troops on the weekend, as they tried to enter Islamabad.
Both sides have reported injuries and the prime minister’s office said members of the paramilitary were killed when they were run over by a car in the protest convoy. The interior ministry put the number of those killed at four.
WHERE DO THE PROTESTERS WANT TO GO?
The marchers aim to reach the roundabout near parliament that has long been a rallying point for protests and sit-ins that have marked Pakistan’s turbulent politics for decades.
The site is in Islamabad’s heavily fortified red zone, home to parliament, key government installations, luxury hotels, embassies and the offices of foreign organizations.
WHAT IS THE HISTORY OF POLITICAL PROTEST IN PAKISTAN?
Stormy politics and unrest during Pakistan’s 77-year history have included protests and sit-ins by opposition parties.
Khan led one of Pakistan’s largest sit-ins in 2014 when his supporters protesting against the PML-N government occupied the roundabout site for 126 days.
PTI supporters last marched on Islamabad in October, sparking days of clashes with police that killed one officer.
Ex-PM Khan party’s protest disrupts petrol supply in Islamabad, Punjab— oil transporters
- Authorities have sealed off roads leading to Islamabad with containers to deter protesters
- Several pump stations have run out of petrol due to non-delivery, says oil tankers association
ISLAMABAD: The supply of petrol to Islamabad and several cities in Pakistan’s eastern Punjab province has been “severely affected” due to a protest by former prime minister Imran Khan’s party, an oil tankers association said on Tuesday, as major roads and highways leading to the capital were sealed off.
Pakistani authorities started closing highways and motorways leading to Islamabad in many parts of the country with shipping containers on Saturday, ahead of a “long march” to Islamabad by Khan’s party.
Authorities also said on Sunday they were closing certain sections of the motorway 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.
The closed routes had stalled the delivery of petrol to several parts of Punjab and Islamabad, Oil Tanker Contractors Association spokesperson Noman Butt said.
“Routes to Islamabad, Rawalpindi and North Punjab are closed due to which supply from petrol tankers is severely affected,” Butt said in a statement.
“Thousands of tankers are waiting for the route to open.”
Butt said petrol had not been supplied to Gujranwala, Jhelum, Sialkot and Kharian districts in Punjab for the last three days.
He said petrol supply has also been affected in Islamabad, Kohala, and the northern city of Gilgit.
“Petrol has run out at pumps in many cities,” he added.
Khan’s party aims to pressure the government to end his 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.
Thousands of Khan supporters arrived at D-Chowk, a high-security area in Islamabad’s Red Zone that houses key government buildings and is a popular site for protests, on Tuesday afternoon.
His supporters, led by the former prime minister’s wife Bushra Khan, braved teargassing, arrests and clashes to reach D-Chowk where they plan on staging a sit-in protest to demand his release.
Pakistan’s interior minister said three Rangers personnel and a Punjab Police constable had been killed in the clashes. The PTI rejects its supporters were responsible for their deaths.
Pakistan to build its first indigenously designed and built frigate-sized warship — naval chief
- Frigates are designed for surface warfare, anti-submarine warfare and have air defense capabilities
- Pakistan has been actively working to bolster its naval capabilities by inducting advanced warships
ISLAMABAD: Pakistan Naval Chief Admiral Naveed Ashraf said this week that the country is building its first indigenously designed frigate-sized warship called “Jinnah Class Frigates” to address the challenges presented by the prevalent multi-threat maritime environment.
A frigate-sized warship is a multi-mission naval vessel, typically 100-150 meters in length, with a displacement of 2,000-4,000 tons. Frigates are designed for surface warfare, anti-submarine warfare, and have air defense capabilities. They are equipped with a mix of guns, missiles, torpedoes, and anti-submarine rockets.
Pakistan has been attempting to bolster its naval capabilities through the induction of advanced warships. Recently, it inducted PNS Babur and PNS Hunain, two state-of-the-art vessels, into its fleet. These warships are part of a broader effort to enhance the country’s maritime security and operational readiness.
In an interview with Naval News website on Monday, which covers naval defense and technology, Pakistan Navy chief Admiral Ashraf highlighted that the Pakistan was focusing on inducting modern platforms, force multipliers, and indigenization apart from ensuring a variety of options to reduce reliance on external sources.
“Based on experience gained during the construction of MILGEM Class Ships, the Pakistan Navy is planning to build JINNAH Class Frigates which will be our first ever indigenously designed and built frigate-sized warship,” he said.
The report said Pakistan inducted Type 054 A/P Frigates from China, OPVs Batch-1 and Batch-II from Romania, and MILGEM Class Corvette from Turkiye, adding that these will add to the navy’s existing defense capabilities.
PNS Babur, constructed in Turkiye and PNS Hunain, an offshore patrol vessel from Romania, are equipped with cutting-edge technology to address both surface and air threats.
“Pakistan Navy is in the process of inducting the remaining MILGEM class ships as two of these ships are being constructed indigenously in Pakistan (KS&EW),” the naval chief was quoted as saying.
“Our development strategy is based on ‘progressive capability enhancement’ to create a balanced, potent, and combat-ready force to deal with the evolving threats through the acquisition of force multipliers, and indigenous and innovative technical solutions.”
