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
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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
PM hails Pakistan for ‘unstoppable, unbeatable’ performance in South Africa ODI series
- Green Shirts thrashed South Africa 3-0 after losing Twenty20 series 2-0
- Pakistan will now play three Tests against South Africa later this month
ISLAMABAD: Prime Minister Shehbaz Sharif on Monday praised the Pakistan cricket team for winning a three-match One Day International (ODI) series against South Africa, describing their performance as “unstoppable and unbeatable.”
The Green Shirts completed a series clean sweep over South Africa in the third ODI at the Wanderers Stadium on Sunday, with rising star Saim Ayub smashing his second century of the series and his third from five innings.
The left-handed opening batsman 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 because of rain.
“Unstoppable and unbeatable!” Sharif remarked in a post on X. “Congratulations to Team Pakistan on an outstanding 3-0 ODI series victory against South Africa.”
The prime minister also praised the Pakistan Cricket Board chairman for the team’s performance.
“Well done, boys! Your determination, skill, and teamwork under the leadership of the PCB Chairman Syed Mohsin Raza Naqvi have made the entire nation proud,” he said.
“Keep raising the green flag high!“
South Africa won the T20I series 2-0 after the third match was washed out on Dec. 14. The ODI series win comes ahead of the upcoming International Cricket Council (ICC) Champions Trophy, which Pakistan will hosting in February and March 2025.
Pakistan will also play three Tests against South Africa later this month.
Government, Imran Khan’s party conclude first round of formal talks, next session on Jan. 2
- Negotiations began after Khan threatened civil disobedience, seeking release of political prisoners
- PTI has been asked to present its demands in the next session to set the tone for the negotiations
ISLAMABAD: The government and the opposition Pakistan Tehreek-e-Insaf (PTI) of former Prime Minister Imran Khan held the first round of formal negotiations on Monday to address a range of issues, with PTI asked to present its demands in writing at the next session on January 2.
The two sides began long-awaited talks to resolve issues fueling political polarization and straining the country’s fragile economy, with National Assembly Speaker Ayaz Sadiq chairing the meeting, after the government formed a negotiating team a day earlier.
The development came after ex-premier Khan’s threat to launch civil disobedience by urging overseas Pakistanis, his party’s key support base, to halt remittances if his demands, including the release of political prisoners, were not met by Dec. 22. Khan, who has been imprisoned for over a year on charges he claims are politically motivated, has also called for judicial commissions to investigate violent protests on May 9 last year and Nov. 26 this year, which the government says involved his party supporters.
Known for taking hard-line political positions, Khan formed a seven-member committee to negotiate with the government. This was done amid growing concerns he may face trial by the military for allegedly inciting attacks on sensitive security installations during violent protests following his brief detention last year in a graft case.
“Since some members of the opposition could not join the talks today, we have decided to hold the next meeting on January 2,” Sadiq said at the end of the initial round of negotiations. “The opposition will also present a charter of demands in the meeting.”
He said the talks were held in a cordial environment, adding that it was vital to end political polarization in parliament and across the country.
The speaker requested Senator Irfan Siddiqui to read a joint press statement and urged people not to speculate excessively about the negotiations to ensure their success.
Siddiqui said both sides agreed parliament was the appropriate forum to resolve political differences and emphasized that the negotiation process should continue.
He mentioned the PTI had been asked to provide a written document outlining its demands to help set the tone for the talks.
Speaking to the media later, Khan’s close aide, Asad Qaiser, said the PTI team asked the government to release all political prisoners, including the former prime minister, and form a judicial commission with senior Supreme Court judges to probe the May 9 and Nov. 26 incidents.
“We should be allowed to hold a meeting with Imran Khan,” he said. “He is our leader. We will move forward with his instructions.”
Qaiser informed the government had said it would arrange the meeting, though he maintained it was not clear when would that happen.
The negotiations came days after Pakistan’s military announced prison sentences for 25 people involved in the May 9, 2023, protests, which PTI has demanded be investigated. The military said it had gathered “irrefutable evidence” against those prosecuted and reiterated its commitment to bringing the planners of the violence to justice.
The country has remained gripped by political unrest and uncertainty since Khan’s ouster from power through a parliamentary no-confidence vote, which has also exacerbated Pakistan’s economic hardships.
Senior government representatives have previously acknowledged that negotiations could offer a pathway out of the current political impasse. However, they have cautioned that it is too early to determine which of PTI’s demands might be addressed.
Ancient winter festival in Pakistan’s Chitral concludes with rituals, traditional dance
- Chawmos festival is celebrated in December by the Kalash people, who are numbered around 4,000
- Festival marks welcoming of new year, celebrated with dance, animal sacrifice, singing and feasting
PESHAWAR: A religious winter festival celebrated by the Kalash people in the northwestern Pakistani district of Chitral has concluded after featuring rituals, traditional dance and other festivities for two weeks, provincial tourism authority said on Monday.
The Kalash are a group of about 4,000 people, possibly Pakistan’s smallest minority, who live in the mountains of the Hindu Kush, where they practice an ancient polytheistic faith.
They come together each year in December to celebrate the two-week Chawmos festival after the community finishes fieldwork and stores cheese, fruit, vegetables and grains for the year.
The festival features various rituals, animal sacrifice, dance, songs and feasting, preserving the Kalash culture and attracting a number of tourists to Pakistan’s Khyber Pakhtunkhwa.
“The religious Chawmos festival of the ancient Kalash Valley has concluded,” Mohammad Saad, a spokesperson for the KP Tourism Authority, said in a statement.
“The festival continued from Dec. 8 in the three valleys of Bumburet, Birir and Rumbur.”
The Kalash community’s religion incorporates animiztic traditions of worshipping nature as well as a pantheon of gods, and its people live mainly in the three Kalash valleys of Bumburet, Birir and Rumbur.
The Chawmos festival is celebrated to welcome the new year, with the Kalash people indulging in religious practices and distributing vegetables and fruit among each other, according to the official.
The festival was attended by a large number of domestic and foreign tourists who were fully facilitated by the provincial tourism authority.
Pakistan defense minister blames judiciary for delayed verdicts in May 9 cases
- National problems require decisions at the earliest, says Khawaja Asif while talking to media in London
- Protests erupted in several Pakistani cities on May 9, 2023, over ex-PM Imran Khan’s arrest in a graft case
ISLAMABAD: Pakistan’s Defense Minister Khawaja Asif on Sunday blamed the judiciary for delaying verdicts in the May 9, 2023, cases, which have so far led to the conviction of 25 supporters of former Prime Minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party for attacking government buildings and military properties last year.
On Dec. 21, the Pakistan Army sentenced 25 people for participating in the violent protests that erupted in several Pakistani cities following Khan’s brief detention on corruption charges, resulting in damage to major military facilities and martyrs’ monuments in the country.
However, several suspects are also facing legal charges in anti-terrorism courts, with the military hoping for early verdicts in their cases, according to a statement announcing the sentencing of the 25 individuals, which described the rioting as “politically provoked violence.”
The PTI has denied any involvement in the violence, describing the May 9 incident as a “false flag” operation aimed at crushing the party.
“The judiciary created the biggest hurdle in this [the conviction of May 9 suspects] while this thing was allowed to linger for one and a half years,” Asif said while speaking to the media in London, the city he is currently visiting.
Describing the May 9 protests as a national problem, he said all the cases related to it required verdicts at the earliest.
The conviction of the 25 individuals followed a ruling by a seven-member Constitutional Bench of the Supreme Court of Pakistan on Dec. 13, allowing military courts to share their verdicts. Prior to that, the court had unanimously declared last year that prosecuting civilians in military courts violated the Constitution.
Khan’s PTI party rejected the military’s announcement, with opposition leader Omar Ayub Khan saying they were “against the principles of justice.”
The sentencing of the 25 individuals also raises concerns about Khan, who faces charges of inciting attacks against the armed forces and may potentially be tried in a military court.
Earlier, Asif had regretted the delay in announcing the verdicts, saying that it “raised the morale of the accused and their facilitators.”
“Right now, only the workers, who were used [to generate violence], have been punished under the law,” he had said. “This will not end until the ones, who planned this terrible day, are not brought before the law.”
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.
