KARACHI: Pakistan’s central bank cut its key interest rate by 150 basis points on Monday in a widely expected move, marking its first rate reduction in nearly four years in its effort to boost growth amid a sharp decline in retail inflation.
The decision to cut the key rate to 20.5 percent comes two days ahead of Pakistan’s annual budget and a week after data showed inflation slowed to a 30-month low of 11.8 percent in May.
It also comes ahead of Pakistan’s negotiations with the International Monetary Fund (IMF).
Pakistan is in talks with the IMF for a loan estimated to be anything between $6 billion to $8 billion to avert a default for an economy that is growing at the slowest pace in the region.
The growth target for the upcoming year is expected to be higher at 3.6 percent than this year’s 2 percent and last year’s economic contraction.
Analysts and the business community have had mixed reactions to the cut, and are looking forward to the upcoming budget for clarity on the central bank’s next moves.
PAKISTAN BUSINESS COUNCIL
“With headline inflation decelerating by 550 bps from April to 11.8 percent in May, and the policy rate significantly positive, businesses generally expected a sharper cut.
“However, as the monetary policy committee points out, upward inflationary risks emanate from the FY 25 budget and future increases in energy tariffs. So the ball is in the government’s court to manage inflation.”
“Businesses should derive comfort from the narrowing current account deficit, a primary surplus on the fiscal account, deceleration in the growth of currency in circulation, declining food inflation, and stable FX reserves... All these factors augur well for further reduction in the policy rate.”
MUSADAQ ZULQARNAIN, DIRECTOR OF THE PAKISTAN TEXTILE COUNCIL
“I expect that, while the policy rate should come down by 300 basis points, out of abundant caution it was reduced by 150-200 basis points.
“It will surely help a bit, though the rates will still be in a higher than workable range. But this will set the direction. We will also have to wait for the budget to see what the overall impact (is).”
M ABDUL ALEEM, CEO AND SECRETARY GENERAL OF PAKISTAN’S OVERSEAS INVESTORS CHAMBER OF COMMERCE AND INDUSTRY
“At present our real policy rate stands at 10 percent. This leaves room for a higher cut, at least by 2 percent. However, the monetary policy committee decided to cut the rate by 150 bps.
“This decline in the policy rate will provide relief of around 600 billion rupees ($2.16 billion) in debt servicing to the government and also to businesses by lowering the cost of borrowing.
“Business confidence has already improved, as reflected in the latest OICCI Business Confidence Index.
“Post the June 12 budget, we expect a revival of economic activities and the creation of employment opportunities. Moreover, as inflation is declining, we expect more cuts in future.”
TAHIR ABBAS, HEAD OF RESEARCH AT ARIF HABIB LIMITED
“The central bank has indicated that inflationary pressures are easing, supported by a significantly positive real interest rate. We believe that this monetary easing cycle will persist, with an additional 3-4 percent decline expected in 2024.
“The stock market is expected to take the news positively. However, there remains fear and uncertainty over hefty taxation measures in the upcoming federal budget.
“For industries, it would be a welcome step as it would reduce borrowing costs. More importantly, it would be positive for the federal government fiscal account as well, as it is the largest borrower in the system.”
ABID SULERI, EXECUTIVE DIRECTOR OF THE SUSTAINABLE DEVELOPMENT POLICY INSTITUTE
“This is a prudent measure by the central bank. The central bank is cautious because of the upcoming budget and some measures that may push inflation up once again.
“Once in an IMF program, we may see some changes in the rupee-dollar parity.
“We need to remember that the monetary policy is not just for inflation, but also to encourage domestic savings to prevent dollarization.
“In the next two meetings, if things remain constant, we will see the key rate ease further.”
ALMAS HYDER, SENIOR MEMBER OF THE LAHORE CHAMBER OF COMMERCE AND INDUSTRY
“A rate cut signifies taming of inflation and creating opportunities for investment. This will start a positive cycle of investment planning for the future.”
MUSTAFA PASHA, CHIEF INVESTMENT OFFICER AT LAKSON INVESTMENTS
“(I) don’t see (the cut) being an issue with the IMF as we are still very far from an accommodative policy stance (12 percent or lower). (I) foresee aggressive rate cuts in the second half of the year (4-5 percent) if we get an IMF program.”
Expert and industry present mixed reviews on Pakistan central bank rate cut
https://arab.news/bw6hc
Expert and industry present mixed reviews on Pakistan central bank rate cut
- Pakistan is in talks with the IMF for a loan estimated to be anything between $6 billion to $8 billion to avert a sovereign default
- The growth target for upcoming year is expected to be higher at 3.6 percent than this year’s 2 percent and last year’s economic contraction
Pakistan PM reviews security situation amid rising militancy, sectarian clashes
- PM Sharif was briefed by Mohsin Naqvi who recently attended a security meeting in Khyber Pakhtunkhwa
- Security remained a concern for Pakistan this year, which witnessed renewed attacks on Chinese nationals
ISLAMABAD: Prime Minister Shehbaz Sharif evaluated the security situation during a meeting with Interior Minister Mohsin Naqvi in the eastern Pakistani city of Lahore on Sunday, focusing on measures taken by the authorities to ensure peace across the country.
The talks come days after Naqvi attended a high-level security meeting in the volatile Khyber Pakhtunkhwa province, which borders Afghanistan and has seen a surge in cross-border militant attacks.
The region’s Kurram district has been gripped by sectarian clashes since last month, leaving well over 100 people dead, according to local reports.
During the meeting in Khyber Pakhtunkhwa, Naqvi and other stakeholders decided to enhance the capacity of law enforcement agencies with the federal government’s full cooperation to combat mounting security challenges.
Pakistan has also faced unrest in its southwestern province of Balochistan, where separatist attacks intensified throughout the year.
“Federal Interior Minister Syed Mohsin Raza Naqvi provided a detailed briefing to Prime Minister Muhammad Shehbaz Sharif on the overall security situation in the country,” the statement from the PM Office said. “The Prime Minister expressed satisfaction with the measures taken to ensure law and order in the country.”
The meeting also included discussions on the country’s political situation, the statement added.
Security remained a major concern for the government this year, which witnessed renewed attacks on Chinese workers, including five fatalities when their convoy was targeted by an explosive-laden vehicle near Besham city in Khyber Pakhtunkhwa.
Later in October, two Chinese engineers lost their lives in a blast near Karachi airport.
On Sunday, Pakistan’s army chief, General Asim Munir, vowed to hunt down militants and their facilitators, following a deadly attack on a military outpost in Khyber Pakhtunkhwa that left 16 soldiers dead.
Pakistan to host India’s Champions Trophy matches in UAE under hybrid model
- The decision comes after India showed reluctance to play in Pakistan, citing security concerns
- A PCB official says Pakistan has formally informed the ICC about its choice of the neutral venue
ISLAMABAD: The Pakistan Cricket Board (PCB) announced on Sunday the United Arab Emirates (UAE) will serve as the neutral venue for matches between India and Pakistan during the 2025 ICC Champions Trophy scheduled in February.
The decision was finalized after discussions between PCB Chairman Mohsin Naqvi and Sheikh Al Nahyan, Chairman of the Emirates Cricket Board, currently visiting Pakistan.
The move resolves a contentious issue stemming from India’s reluctance to play in Pakistan, citing security concerns. Pakistan, the official host of the tournament, initially refused to opt for a hybrid model, allowing the tournament to proceed with matches involving India being played at a neutral venue. However, its cricket board later accepted the arrangement.
PCB spokesperson Amir Mir confirmed the ICC has been formally informed about the decision.
“The Pakistan Cricket Board has chosen the United Arab Emirates as the neutral venue,” he was quoted in a statement. “Now, India and Pakistan’s Champions Trophy matches will be held in the UAE.”
The statement said Pakistan had the authority to determine the neutral venue as tournament host, and chose the UAE after careful deliberation.
The hybrid model was also employed during the Asia Cup last year, with Pakistan co-hosting the tournament with Sri Lanka.
Unlike the Asia Cup, however, the Pakistan national team traveled to India for the ICC Cricket World Cup later in the same year. Meanwhile, the Champions Trophy preparations in Pakistan are in full swing, with venues being readied for the event.
The hybrid model for the Champions Trophy will ensure the tournament remains on track while maintaining Pakistan’s position as the host.
Run machine Saim Ayub shines as Pakistan sweep South Africa
- Left-handed opening batsman made a sparkling 101 off 94 balls in a Pakistan total of 308 for nine
- Hosts were beaten by 36 runs as match was reduced to 47 overs due to rain with adjusted target
Johannesburg: Rising star Saim Ayub hit his second century of the series — and his third in five innings — as Pakistan completed a series cleansweep over South Africa in the third one-day international at the Wanderers Stadium on Sunday.
Left-handed opening batsman Ayub made a sparkling 101 off 94 balls in a Pakistan total of 308 for nine.
Heinrich Klaasen thrashed 81 off 43 balls for South Africa — but the hosts were beaten by 36 runs chasing an adjusted target of 308. The match was reduced to 47 overs a side because of rain.
Ayub, 22, hit 113 not out in the second one-day game against Zimbabwe in Bulawayo last month and 109 in the series opener against South Africa in Paarl last week.
In between his one-day appearances he made an unbeaten 98 in the second Twenty20 international against South Africa in Centurion.
Ayub was named player of the match and player of the series.
“It’s important because we won but it is for all the team, not just me,” he said. “The senior players helped me a lot.”
In contrast to Ayub’s form, his opening partner Abdullah Shafique was out for his third successive duck after Pakistan were sent in to bat.
But Ayub was seldom troubled as he played shots all around the wicket in partnerships of 114 with Babar Azam (52) and 93 with captain Mohammad Rizwan (53).
Ayub fell to debutant Corbin Bosch, caught behind attempting an audacious flick to leg, after hitting 13 fours and two sixes.
Bosch, the son of the late Test and one-day international player Tertius Bosch, received a call-up after injuries hit South Africa’s fast bowling resources.
For the third successive match, Klaasen was the only South African to make a half-century. He kept South Africa ahead of the required run rate until he was sixth man out, caught on the square leg boundary off Shaheen Shah Afridi with the total on 194 in the 29th over.
Ayub followed up his century by taking one for 34 in 10 overs with his mixture of off-spin and carrom balls, claiming the key wicket of David Miller and producing the most economical figures by any bowler in the match.
Brief scores:
Pakistan 308-9 in 47 overs (Saim Ayub 101, Mohammad Rizwan 53, Babar Azam 52, Salman Agha 48; K. Rabada 3-56) v South Africa 271 in 42 overs (H. Klaasen 81, C. Bosch 40 not out)
Result: Pakistan won by 36 runs (DLS method)
Series: Pakistan won the three-match series 3-0
Toss: South Africa
EU expresses concern over sentencing of civilians by Pakistani military court
- Pakistani military announced on Saturday the sentencing of 25 people over violent protests in May 2023 over ex-PM Khan’s arrest
- EU says Pakistan signed International Covenant on Civil and Political Rights, which entitles every person to ‘fair, public trial’
ISLAMABAD: The European Union (EU) on Sunday expressed concern over the sentencing of 25 Pakistani civilians by a military court in the South Asian country, saying it was “inconsistent” with Pakistan’s international obligations.
The Pakistani military announced on Saturday the sentencing of 25 people for participating in violent protests on May 9, 2023, when hundreds carrying flags of former prime minister Imran Khan’s party had attacked government and military installations.
The protests, which erupted in several Pakistani cities, followed Khan’s brief detention on corruption charges from an Islamabad court, resulting in damage to major military facilities and martyrs’ monuments in the country.
The military said it had gathered “irrefutable evidence” against those prosecuted. Khan’s Pakistan Tehreek-e-Insaf (PTI) party has demanded a judicial investigation into the May 9, 2023 events and said Saturday’s verdicts were “against the principles of justice.”
“These verdicts are seen as inconsistent with the obligations that Pakistan has undertaken under the International Covenant on Civil and Political Rights (ICCPR),” Anouar El Anouni a spokesperson for EU foreign affairs and security policy, said in a statement.
“In line with article 14 of ICCPR every person is entitled to a fair and public trial in a court that is independent, impartial and competent, and has the right to adequate and effective legal representation. It also stipulates that any judgment rendered in a criminal case shall be made public.”
The statement noted that under the EU’s Generalized Scheme of Preferences Plus (GSP+), beneficiary countries, including Pakistan, had voluntarily agreed to effectively implement 27 international core conventions, including the ICCPR, in order to continue benefitting from the special trade arrangement. The preferential trade status under the GSP+ scheme grants Pakistani exports duty-free access to the European market.
The EU has previously raised concerns over extremist violence perpetrated in the name of religion in Pakistan, specifically mentioning its blasphemy laws and forced conversions, which it says have marginalized religious minorities.
The sentencing of civilians in May 2023 riots cases has also raised concerns among supporters of ex-PM Khan, who faces charges of inciting attacks against the armed forces and may potentially be tried in a military court.
Pakistan has remained gripped by political unrest and uncertainty since Khan’s ouster from power through a parliamentary no-confidence vote in April 2022, which has also exacerbated Pakistan’s economic hardships.
On Sunday, the Pakistani government formed a committee to hold talks with the opposition PTI party on a range of issues causing political polarization, Pakistani state media reported. Senior government representatives have also recently acknowledged that negotiations could offer a pathway out of the current political impasse.
Pakistani naval ships visit Kuwait and Iraq, conduct joint exercises in Arabian Gulf
- Pakistan regularly holds joint exercises with allies to increase synergy and deter piracy, drug trafficking and other illicit activities
- The visit of Pakistan Navy flotilla to Kuwait and Iraq will further enhance the existing diplomatic and naval relations, the military says
ISLAMABAD: Pakistani naval ships have visited Kuwaiti and Iraqi ports to conduct joint exercises with both navies in the Arabian Gulf, the Pakistani military said on Sunday, adding the visits would enhance existing relations.
Pakistan Navy Ships (PNS) Rasadgar and Azmat visited the Kuwaiti port of Al-Shuwaikh, while Pakistan Maritime Security Agency (PMSA) ship Dasht visited the Iraqi port of Umm Qasr, according to the Inter-Services Public Relations (ISPR), the Pakistani military’s media wing.
On arrival at both ports, Pakistani diplomatic and host naval officials warmly welcomed the Pakistan Navy ships and the mission commander, along with commanding officers of the ships, held meetings with the naval leadership of both countries.
“Later, naval exercises were also conducted together with Kuwaiti and Iraqi navy ships,” the ISPR said in a statement. “The exercises were aimed at improving mutual cooperation between the navies and developing the capacity for joint operations.”
During the meetings, naval officials discussed matters of mutual interest, cooperation in maritime security and communication, according to the statement.
“The visit of Pakistan Navy flotilla to Kuwait and Iraq will further enhance the existing diplomatic and naval relations with friendly countries,” it read.
Pakistan Navy regularly collaborates and holds joint military exercises with allies to increase synergy, promote regional peace and stability and deter piracy, drug trafficking and other illicit maritime activities.
This month, Pakistan Navy conducted joint naval exercises and drills with Royal Oman ship ‘Alseeb.’ The bilateral naval exercise, “Samar Al-Tayeb,” is conducted regularly between the navies of the two nations.
In July, Pakistan Navy also assumed command of a multinational task force responsible for ensuring maritime security in the southeastern waters of the Middle East, operating in the Arabian Sea, Gulf of Oman and Gulf of Aden.
