ISLAMABAD: The International Monetary Fund has called on Pakistan’s new government to act fast to stabilize its teetering economy, warning growth will likely slow and inflation rise, but made no mention of a new bailout deal.
Former cricketer Imran Khan’s new administration had vowed to decide by the end of September if it would seek an IMF bailout to shore up the economy as it faces a balance-of-payments crisis and dwindling reserves.
However, it has yet to announce a deal as it seeks other arenas of financing and launched a highly publicized austerity drive that has included auctioning off government-owned luxury automobiles and buffaloes.
The IMF said in a statement released late Thursday that Pakistan was in need of significant external financing in the near term and recommended upping gas and power tariffs while also pushing for exchange rate “flexibility” and monetary policy tightening.
“These steps would help reduce current account pressures and improve debt sustainability,” said the fund in a statement.
But it warned that tough days may lay ahead as higher oil prices and tightening financial conditions for emerging markets will likely add to Pakistan’s economic woes.
“In this environment, economic growth will likely slow significantly, and inflation will rise,” said the IMF.
Pakistan has gone to the IMF repeatedly since the late 1980s. The last time was in 2013, when Islamabad got a $6.6 billion loan to tackle a similar crisis.
For months analysts have warned Khan’s new government must act quickly to stem a new current account crisis, which could undermine its currency and its ability to repay billions in debts or purchase imports.
The US, one of the IMF’s biggest donors, has raised fears Pakistan could use any bailout money to repay mounting loans from China, sparking criticism from Islamabad.
Pakistan’s budget deficit has climbed steadily over the past five years, and foreign currency reserves have declined. The rupee has been repeatedly devalued in the past year, fueling inflation.
Khan has vowed to improve trade with India, increase the ease of doing business and boost tax collection but since taking office in August is yet to roll out a comprehensive plan aimed at tackling the country’s economic fortunes.
The state of Pakistan’s finances could also undermine one of Khan’s most popular promises to construct an “Islamic welfare state” based on increased spending on education and health.
The IMF’s warnings come days after the Asian Development Bank said Pakistan’s economy could shrink by one percent in the current fiscal year.
IMF calls for more action in Pakistan, but no word on bailout
IMF calls for more action in Pakistan, but no word on bailout
- Pakistan has gone to the IMF repeatedly since the late 1980s
- The last time was in 2013, when Islamabad got a $6.6 billion loan to tackle a similar crisis
Saudi minister at Davos urges collaboration on minerals
- The reason of the tension of geopolitics is actually the criticality of the minerals
LONDON: Countries need to collaborate on mining and resources to help avoid geopolitical tensions, Saudi Arabia’s minister of industry and mineral resources told the World Economic Forum on Tuesday.
“The reason of the tension of geopolitics is actually the criticality of the minerals, the concentration in different areas of the world,” Bandar Alkhorayef told a panel discussion on the geopolitics of materials.
“The rational thing to do is to collaborate, and that’s what we are doing,” he added. “We are creating a platform of collaboration in Saudi Arabia.”
The Kingdom last week hosted the Future Minerals Forum in Riyadh. Alkhorayef said the platform was launched by the government in 2022 as a contribution to the global community. “It’s very important to have a global movement, and that’s why we launched the Future Minerals Forum,” he said. “It is the most important platform of global mining leaders.”
The Kingdom has made mining one of the key pillars of its economy, rapidly expanding the sector under the Vision 2030 reform program with an eye on diversification. Saudi Arabia has an estimated $2.5 trillion in mineral wealth and the ramping up of extraction comes at a time of intense global competition for resources to drive technological development in areas like AI and renewables.
“We realized that unlocking the value that we have in our natural resources, of the different minerals that we have, will definitely help our economy to grow to diversify,” Alkhorayef said. The Kingdom has worked to reduce the timelines required to set up mines while also protecting local communities, he added. Obtaining mining permits in Saudi Arabia has been reduced to just 30 to 90 days compared to the many years required in other countries, Alkhorayef said.
“We learned very, very early that permitting is a bottleneck in the system,” he added. “We all know, and we have to be very, very frank about this, that mining doesn’t have a good reputation globally.
“We are trying to change this and cutting down the licensing process doesn’t only solve it. You need also to show the communities the impact of the mining on their lives.”
Saudi Arabia’s new mining investment laws have placed great emphasis on the development of society and local communities, along with protecting the environment and incorporating new technologies, Alkhorayef said. “We want to build the future mines; we don’t want to build old mines.”
