Pakistan’s ‘ambitious’ budget strengthens prospects for IMF deal — Fitch

A salesman uses his mobile phone as he sits under a television screen displaying the live broadcast of Pakistan Finance Minister Muhammad Aurangzeb presenting the 2024/25 budget, at an electronics market in Karachi, Pakistan June 12, 2024. (REUTERS)
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Updated 19 June 2024
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Pakistan’s ‘ambitious’ budget strengthens prospects for IMF deal — Fitch

  • Pakistan unveiled tax-heavy $67.76 billion federal budget last Wednesday 
  • American ratings agency Fitch says inflation, interest costs to decline next year 

KARACHI: Pakistan’s “ambitious” FY25 federal budget strengthens its prospects of securing a financial bailout package from the International Monetary Fund (IMF), American credit rating agency Fitch said on Tuesday, noting that it would narrow the country’s fiscal deficit but will cost its growth. 

Pakistan unveiled the much-awaited Rs18.877 trillion ($67.76 billion) federal budget for the fiscal year 2024-25 last Wednesday. The tax-heavy budget is expected to play a pivotal role in Islamabad’s negotiations with the IMF as the South Asian country desperately tries to avert a macroeconomic crisis. 

While inflation has dropped down to a 30-month low of 11.8 percent, Pakistan still needs the IMF’s financial assistance package to shore its foreign reserves and stabilize its weak currency. 

“Pakistan’s ambitious FY25 budget strengthens prospects for an IMF deal,” Fitch said in a press release. “It is uncertain whether fiscal targets will be hit, but even assuming only partial implementation of the budget, we forecast the fiscal deficit will narrow.”

Fitch said narrowing the fiscal deficit would reduce external pressures on Pakistan, though at a cost to the country’s growth. The rating agency said that as per its forecast, based on partial implementation of the budget, Pakistan will project a primary surplus of 0.8 percent, on shortfalls in revenue generation and an overshoot in current spending, partly offset by under-execution in development spending. 

“We believe tight policy settings may depress growth more than the government expects, and have reduced our growth forecast to 3.0 percent for FY25, from 3.5 percent, despite some improvements in short-term indicators of economic activity,” Fitch said. 

The American rating agency noted that Pakistan’s government debt looks set to decline to 68 percent of GDP by FYE24 due to high inflation and deflator effects, offsetting soaring domestic interest costs.

Fitch said it expects inflation and interest costs to decline, with economic growth and primary surpluses driving government debt/GDP gradually lower. 

It noted that Pakistan’s central bank cut policy rates for the first time in five years on June 10 by 150 points to 20.5 percent.

“We now forecast FY25 inflation at 12 percent, and the FYE25 policy rate at 16 percent,” it added. 

Fitch described external liquidity and funding as still Pakistan’s key credit challenges, despite stable debt dynamics. It said that while Pakistan may secure a new IMF deal, sustaining the tight policy settings necessary to keep external financing needs in check and to maintain compliance with a new EFF could become “increasingly challenging.”

Fitch noted that Pakistan’s external position has improved since February, adding that exchange rate reforms have attracted remittance inflows back to the official banking system while “strong” agricultural exports have also helped. 

“However, Pakistan’s projected funding needs still exceed reserves, at about USD20 billion per year in FY24–FY25, including maturing bilateral debt that we expect will continue to be rolled over,” the rating agency said. 

“This leaves Pakistan exposed to external funding conditions and policy missteps. Pakistan’s ‘CCC’ rating, affirmed in December 2023, reflects high external funding risks amid high medium-term financing requirements.”


Pakistan, Uzbekistan to devise joint strategy for completion of UAP rail connectivity project

Updated 03 June 2025
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Pakistan, Uzbekistan to devise joint strategy for completion of UAP rail connectivity project

  • The $4.8 billion project aims to enhance regional trade and logistics movement by connecting the three countries
  • It is part of Pakistan’s efforts to position itself as a key transit hub, connecting landlocked Central Asia to the world

ISLAMABAD: Pakistan and Uzbekistan have agreed to formulate a joint strategy for the completion of the Uzbekistan-Afghanistan-Pakistan (UAP) railway project, Pakistani state media reported, amid Islamabad’s efforts to open new regional trade avenues.

The development followed a meeting between Pakistan’s Railways Minister Hanif Abbasi and Uzbek Ambassador to Islamabad, during which the two figures held detailed discussions on the approximately 850-kilometer-long railway connectivity project, which includes a 647-kilometer rail track passing through Afghanistan.

The trilateral initiative was launched in 2021 to enhance regional connectivity by linking Central Asia with Pakistan’s southern ports of Gwadar and Karachi through Afghanistan. The project aims to improve trade access for landlocked countries and strengthen economic integration across the region.

“Upon completion of this project, Pakistan will gain the shortest and most efficient route to Central Asia, which will not only increase trade volumes but also strengthen the region’s economy on a solid footing,” Abbasi was quoted as saying by the APP news agency.

“This railway corridor will significantly reduce transit time and transportation costs, benefiting all stakeholders.”

Pakistan is seeking to leverage its strategic position as a key trade and transit hub to connect Central Asia with global markets and since last year, there has been a flurry of high-level visits, investment discussions and other economic engagements between Islamabad and Central Asian republics.

Abbasi highlighted that the corridor is expected to handle an annual freight capacity of 15 million tons, which could help boost exports and imports across the region, according to the report.

“This project will not only reinforce economic ties but will also play a pivotal role in promoting regional peace and stability,” he said.

On the occasion, Ambassador Tukhtaev acknowledged investment opportunities in Pakistan’s railway sector and emphasized the importance of collaborative efforts to foster economic prosperity and create employment for both peoples, according to the APP report.

Both officials also acknowledged the positive impact of the UAP project in promoting peace and stability in Afghanistan.

Last week, Pakistan’s Deputy Prime Minister Ishaq Dar also held a phone call with his Uzbek counterpart, Saidov Bakhtiyor Odilovich, to discuss steps to advance the UAP railway project, including the framework agreement and its signing mechanism.

Over the years, the project has faced significant challenges, including security concerns in Afghanistan, and the need to reconcile differing railway gauges across the three countries.

“Emphasizing the importance of the Uzbekistan-Afghanistan-Pakistan (UAP) Railway Line Project for regional connectivity, both leaders agreed to work closely for an early finalization of the framework agreement,” the Pakistani foreign office said.


From Nigeria to Pakistan, TB testing ‘in a coma’ after US aid cuts

Updated 03 June 2025
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From Nigeria to Pakistan, TB testing ‘in a coma’ after US aid cuts

  • President Trump’s gutting of the USAID has also stalled vital research in South Africa and left TB survivors lacking support in India
  • WHO says ‘the drastic and abrupt cuts in global health funding’ threaten to reverse the gains made by global efforts to fight the disease

LAGOS/JOHANNESBURG/MANILA: At a tense meeting in Nigeria’s capital Abuja, health workers poured over drug registers and testing records to gauge whether US aid cuts would unravel years of painstaking work against tuberculosis in one of Africa’s hardest hit countries.

For several days in May, they brainstormed ways to limit the fallout from a halt to US funding for the TB Local Network (TB LON), which delivers screening, diagnosis and treatment.

“To tackle the spread of TB, you must identify cases and that is in a coma because of the aid cuts,” said Ibrahim Umoru, coordinator of the African TB Coalition civil society network, who was at the Abuja meeting.

“This means more cases will be missed and disaster is looming.”

This desperate struggle to save endangered programs is being replicated from the Philippines to South Africa as experts warn that US aid cuts risk reviving a deadly infectious disease that kills around one million people every year.

President Donald Trump’s gutting of the US Agency for International Development has put TB testing and tracing on hold in Pakistan and Nigeria, stalled vital research in South Africa and left TB survivors lacking support in India.

The World Health Organization says “the drastic and abrupt cuts in global health funding” threaten to reverse the gains made by global efforts to fight the disease — namely 79 million lives saved since 2000 — with rising drug resistance and conflicts exacerbating the risks.

In Nigeria, TB LON is in the firing line.

The project was set up in 2020, during Trump’s first term, and received $45 million worth of funding from USAID. The US development agency said at the time it was committed to a “TB free Nigeria.”

Five years later and with the same president back in charge but now with a more radical “America first” agenda, USAID support for TB LON’s community testing work was terminated in February, according to a TB LON official. The official did not want to be named because he was not authorized to speak on behalf of the project.

HARD WORK IN JEOPARDY’
TB kills 268 Nigerians every day and cases have historically been under-reported increasing the risk of transmission. If one case is missed, that person can transmit TB to 15 people over a year, according to the World Health Organization.

The Thomson Reuters Foundation spoke to half a dozen health workers who collect TB test samples for TB LON but had stopped doing so in January due to the US aid freeze.

Between 2020-2024, TB LON screened around 20 million people in southwestern states in Nigeria, and more than 100,000 patients were treated as a result.

“All that hard work is in jeopardy if we don’t act quickly,” Umoru said, adding that non-profits working with TB LON had laid off more than 1,000 contract workers who used to do TB screening.

Nigeria’s health ministry did not respond to request for comment on the effect of the USAID cuts on TB programs.

In March, First Lady Oluremi Tinubu declared TB a national emergency and donated 1 billion naira ($630,680) to efforts to eradicate the disease by 2030.

In South Africa, medical charity Médecins Sans Frontières (MSF) said TB and HIV programs had been disrupted across the country, making patient tracking and testing more difficult, according to a statement sent to the Thomson Reuters Foundation.

South Africa had a TB incidence rate of 427 per 100,000 people in 2023, government data showed, down 57 percent from 2015. TB-related deaths in South Africa dropped 16 percent over that period, the data showed.

Minister of Health Aaron Motsoaledi said in May that the government would launch an End TB campaign to screen and test 5 million people, and was also seeking new donor funding.

“Under no circumstances will we allow this massive work performed over a period of more than a decade and half to collapse and go up in smoke,” he said at the time, referring to efforts to tackle TB and HIV.

BLOW TO CRITICAL RESEARCH

South Africa is also a hub for research into both TB and HIV and the health experts say funding cuts risk derailing this vital work.

The Treatment Action Group (TAG), a community-based research and policy think tank, says around 39 clinical research sites and at least 20 TB trials and 24 HIV trials are at risk.

“Every major TB treatment and vaccine advance in the past two decades has relied on research carried out in South Africa,” said TAG TB project co-director Lindsay McKenna in a March statement.

People struggling with poor nutrition and those living with HIV — the latter affects 8 million people in South Africa — were also more at risk of contracting TB as aid cuts made them more vulnerable by derailing nutrition programs, community outreach and testing, said Cathy Hewison, head of MSF’s TB working group.

“It’s the number one killer of people with HIV,” she said.

In the Philippines, US cuts have disrupted TB testing in four USAID-funded projects, and affected the supply of drugs, Stop TB Partnership, a UN-funded agency said.

“The country has a nationwide problem with recurrent drug shortages, which is leading to a direct impact on efforts to eliminate TB,” said Ghazali Babiker, head of mission for MSF Philippines.

In Pakistan, which sees 510,000 TB infections each year, MSF said US cuts had disrupted TB screening in communities and other services in the hard-hit southeastern province of Sindh.

“We are worried that the US funding cuts that have impacted the community-based services will have a disproportionate effect on children, leading to more children with TB and more avoidable deaths,” said Ei Hnin Hnin Phyu, medical coordinator with MSF in Pakistan.

“We cannot afford to let funding decisions cost children’s lives.”


Pakistani delegation urges US, OIC states to play role for ‘comprehensive dialogue’ with India

Updated 03 June 2025
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Pakistani delegation urges US, OIC states to play role for ‘comprehensive dialogue’ with India

  • Tensions between neighbors Pakistan, India remain high despite the two countries agreeing to a ceasefire on May 10
  • A Pakistani delegation is currently visiting key capitals to present Islamabad’s stance on recent conflict with India

ISLAMABAD: A high-level Pakistani delegation, set up by Prime Minister Shehbaz Sharif, has urged the United States (US) and the Organization of Islamic Cooperation (OIC) envoys at the United Nations to play their role for the resumption of a “comprehensive dialogue” between Pakistan and India to resolve the Kashmir dispute and other issues, Pakistan’s mission to the UN and state media said on Tuesday.

Led by former foreign minister Bilawal Bhutto-Zardari, the nine-member parliamentary delegation arrived in New York on Monday as the first stop in a diplomatic mission to present Pakistan’s position in world capitals following Islamabad’s recent military conflict with India. The group headed by Bhutto-Zardari will visit New York, Washington DC, London and Brussels. Another delegation, led by Special Assistant to the Prime Minister Syed Tariq Fatemi, will also visit Moscow.

Tensions between Pakistan and India are high after they struck a ceasefire on May 10 following the most intense military confrontation between the nuclear-armed neighbors in decades. Both countries accuse the other of supporting militancy on each other’s soil — a charge both capitals deny.

The latest escalation last month took place following weeks of tensions after India blamed Pakistan for supporting an April 22 attack on the Kashmir territory it governs that killed 26 tourists. Pakistan denied involvement in the incident and called for an international probe. Both countries traded missiles, artillery fire and drone strikes before Washington brokered a ceasefire on May 10.

” Bhutto-Zardari has urged the US to play its role in ensuring comprehensive dialogue between Pakistan and India to address all outstanding issues,” the state-run Radio Pakistan broadcaster reported after the Pakistani delegates’ meeting with US Acting Permanent Representative to the UN Ambassador Dorothy Shea in New York.

Bhutto-Zardari briefed Ambassador Shea on the developments following the April 22 attack, expressing deep concern over India’s immediate attribution of blame to Pakistan without any “credible investigation or verifiable evidence.”

“Such premature and baseless allegations exacerbate tensions and undermine prospects for constructive dialogue and peace,” he was quoted as saying.

On Monday, the Pakistani delegates held a meeting with OIC envoys at the UN, wherein they reaffirmed Pakistan’s commitment to peace, restraint, and diplomacy, and called for the restoration of the Indus Waters Treaty by India, full respect for the ceasefire, and the resumption of a “comprehensive dialogue, with the resolution of the Jammu and Kashmir dispute at its core,” Pakistan’s Permanent Mission to the UN said.

India suspended the decades-old Indus Waters Treaty with Pakistan a day after the attack at the Pahalgam resort town. The move drew a sharp response from Islamabad, which said any attempts to divert or stop the flow of its waters by India would be considered an “act of war.”

About 80 percent of Pakistani farms depend on the Indus system, as do nearly all hydropower projects serving the country of some 250 million.

“Bhutto-Zardari expressed grave concern at the unilateral suspension of the Indus Waters Treaty — a move that Pakistan considers a blatant act of weaponizing water and a violation of international and treaty obligations,” the Pakistani mission said.

The former Pakistani foreign minister thanked OIC countries for their efforts and role aimed at de-escalation, mediation and ceasefire during the conflict. He highlighted that the only path to peace was in dialogue, engagement and diplomacy.

“OIC has emerged as the moral conscience of the world in these difficult times,” Bhutto-Zardari said, thanking the OIC member states for their steadfast support for the people of Jammu and Kashmir.

The statement said that the OIC’s permanent representatives appreciated Pakistan’s briefing and reaffirmed their solidarity with the country.

“They reiterated their concern over the worsening security situation in South Asia and stressed the importance of upholding the principles of the UN Charter and international law and in this regard, the sanctity of treaties, including the Indus Waters Treaty,” Pakistan’s UN mission said.

The Pakistani delegation also met Ambassador Carolyn Rodrigues-Birkett, president of the UN Security Council for June, according to a statement issued by Bhutto-Zardari party.

“The Pakistani delegation stressed that in the face of a growing trend of unilateralism and escalation, the Security Council must play its crucial role to ensure peace and conflict resolution,” it said.

The delegation urged the Security Council to play a “proactive role” in promoting de-escalation, ensuring respect for international law and treaties and facilitating peaceful resolution of disputes.

The statement said Birkett reaffirmed the Security Council’s commitment to upholding international peace and security in line with its mandate.

Bitter rivals India and Pakistan have fought three wars, including two of them over the disputed region of Kashmir, since gaining independence from British rule in 1947. Both claim the Himalayan territory in its entirety but rule it in part.


Pakistan stock market hits record high on ADB funding boost, insurance sector buying

Updated 03 June 2025
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Pakistan stock market hits record high on ADB funding boost, insurance sector buying

  • The benchmark KSE-100 index gained 1,573.07 points, or 1.32 percent, during Tuesday’s trading
  • Anticipated relief for oil refineries, real estate and agri sectors played catalyst role, analysts say

ISLAMABAD: The Pakistan Stock Exchange (PSX) surged to an all-time high of more than 120,000 points on Tuesday, with analysts attributing the rally to the Asian Development Bank’s (ADB) financing package for Pakistan and strong buying by insurance companies in banking, fertilizer and power sectors.

The benchmark KSE-100 index closed at an unprecedented high of 120,450.87 points, marking a gain of 1,573.07 points, or 1.32 percent, from the previous day’s close of 118,877.80.

The development follows the ADB’s approval of an $800 million package to help Pakistan enhance fiscal reforms and economic stability, alongside the government’s approval of over Rs800 billion for public sector development projects in the upcoming budget.

“Stocks closed all time high led by scrips across the board after ADB approval of $800 million financing package,” Ahsan Mehanti, CEO of Arif Habib Commodities, told Arab News.

“Government set FY26 growth target at 4.2percent and government approval for Rs880 billion PSDP in the federal budget FY26 announcements next week.”

Mehanti said the anticipated budgetary relief for oil refineries, real estate and agriculture sectors, along with gains in rupee’s value, played a catalytic role in the bullish close at the PSX.

Raza Jafri, head of Intermarket Securities, said this was the first time the KSE-100 Index has ever closed above the 120,000-point mark.

“Strong buying by insurance companies in sectors such as banks, fertilizers and power led the market higher,” he said.

The budget for fiscal year 2025–26 is expected to be presented in Pakistan’s lower house of parliament on June 10, following the Eid Al-Adha holidays.

Pakistan’s annual inflation rate rose to 3.5 percent in May, though the country’s macroeconomic outlook has improved in recent months, supported by a stronger current account balance, increased remittances and declining inflation.

Authorities remain cautious as they aim to build on recent economic stabilization, guide the country toward gradual growth, and reaffirm their commitment to ongoing economic reforms.


Russia urges normal India-Pakistan ties, eyes deeper counterterrorism cooperation with Islamabad

Updated 03 June 2025
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Russia urges normal India-Pakistan ties, eyes deeper counterterrorism cooperation with Islamabad

  • Senior Pakistani official Syed Tariq Fatemi briefs Russia’s Sergey Lavrov on India standoff during Moscow visit
  • The Russian foreign minister expressed satisfaction over growing ties, including cooperation on new steel mills

ISLAMABAD: Russian Foreign Minister Sergey Lavrov on Tuesday called for normal relations between India and Pakistan and expressed interest in closer counterterrorism cooperation with Islamabad during a meeting with a senior aide of Pakistan’s Prime Minister Shehbaz Sharif in Moscow.

The meeting came as Syed Tariq Fatemi, special assistant to the prime minister, began a visit to Russia weeks after India and Pakistan exchanged missiles, drones and artillery fire, following heightened tensions that ended with a US-brokered ceasefire on May 10.

Pakistan has since call for a “composite dialogue” with India to discuss all outstanding issues, though New Delhi has rejected direct talks after Washington said the two countries had agreed to meet at a neutral venue to defuse tensions.

Both sides have also formed delegations to present their respective positions over the conflict to the international community.

“At the outset of his visit to the Russian Federation, Syed Tariq Fatemi, Special Assistant to the Prime Minister (SAPM) called on Sergey Lavrov, Russian Foreign Minister, this afternoon,” Pakistan’s embassy in Moscow said in a statement. “He also briefed the Russian Foreign Minister, in detail, about the recent developments in South Asia, conveying Pakistan’s perspective on the dangers of escalation as well as the dire consequences of India’s threat to reduce the flow of the Indus Waters Treaty, by holding the Treaty in a so-called ‘abeyance.’”

“Foreign Minister Lavrov stressed Russia’s support for promotion of normal relations between the two countries and its positive effect in the region,” the statement added.

Fatemi also delivered a letter from Prime Minister Sharif to President Vladimir Putin and conveyed Pakistan’s desire to expand cooperation with Russia in areas including energy, trade and connectivity.

Lavrov, for his part, expressed satisfaction over the “steadily growing bilateral cooperation” and cited specific initiatives, including new steel mills and connectivity projects.

“He [Lavrov] also stated that Russia looked forward to working closely with Pakistan, within the framework of the Shanghai Cooperation Organization (SCO), especially in the field of counter-terrorism,” the embassy said.

Russia and Pakistan have strengthened ties in recent years through growing bilateral cooperation, particularly in energy, and by working together on regional platforms such as the SCO, where both are full members.