Pakistan looking at 'unmanageable' economic catastrophe post Aramco attacks – experts

A satellite image shows an apparent drone strike on an Aramco oil facility in Abqaiq, Saudi Arabia, on Sept. 14, 2019. (Planet Labs Inc/Handout via REUTERS)
Updated 18 September 2019

Pakistan looking at 'unmanageable' economic catastrophe post Aramco attacks – experts

  • Every $5 per barrel price increase would jack up Pakistan’s import bill by $1.2 billion, analysts warn
  • Houthis attack on oil facilities removes 5.7 mbd from global supply, trigger price spike

KARACHI: Pakistan would take a $1.2 billion hit on every $5 per barrel increase in the global oil prices, experts told Arab News after two Saudi oil facilities were droned on Saturday, adding that such a scenario could lead to “unimaginable” economic consequences for the South Asian country.
The Houthi militia attacked the Kingdom’s major oil facilities in the Eastern Province on Saturday, causing a disruption of 5.7 million barrels a day and removed 5 percent of global oil supply that resulted in a 15 percent increase in the global oil price at the beginning of the Asian trade on Monday.
The Brent crude for November futures traded at $65.41 per barrel by midday after posting an 8.6 percent gain in the Asian trade.
The attack that the US State Secretary, Mike Pompeo, blamed on Iran resulted in the single biggest oil supply disruption since the Iranian Revolution of 1979 when 5.6 million barrels a day went out of the global supply.
With all eyes riveted on Saudi Arabia and how quickly it manages to restore its full oil production, Pakistani experts say it will have a devastating impact on the country’s economy as Pakistan’s enhanced oil import bill will undermine all the measures to bring down the current account deficit.
Oil imports constituted 26 percent of the country’s total import bill of $54.8 billion during the fiscal year FY19 and 24 percent during the fiscal year FY18, according to the Pakistan Bureau of Statistics.
“Every $5 per barrel surge in oil prices weakens Pakistan’s balance of payments by $1.2bn on an annual basis, assuming that the prices remain high throughout the year,” Samiullah Tariq, Director Research at the Arif Habib Limited, a brokerage firm, told Arab News on Monday.
“Higher oil prices will lead to higher inflation and negative balance of payments. If the global uncertainty persists it will also negatively affect us since such circumstances usually impede financial inflows. It would also make things difficult for Eurobond and Sukuk issuance,” he added.
Economists say that such attacks can thwart Pakistan’s efforts to reduce its import bill, adding to its current account deficit once again.
“The price spike that is expected to stay at around $70 per barrel will increase our import bill and trade deficit that recently declined. This will once again begin to erode our foreign reserves,” Dr. Ayub Mehar, a senior economist, told Arab News.
“The government must take remedial measures from now on,” he added.
“The increasing crude prices will exert pressure on an already indebted nation,” GA Sabri, former secretary petroleum, told Arab News. “We are facing a financial crisis and this attack can further deepen our losses. The losses can be unmanageable because we mainly import oil from Saudi Arabia. The recent developments are very serious and disturbing and can have a trickle down impact on the overall economy.”
Experts suggest exploration of domestic energy resources. They also implore the government to find new oil import destinations to mitigate risks to Pakistan’s energy security.
“This attack on the Aramco installations show that in future such facilities would be subjected to war targets in the regional flare up. This will impact your strategic facilities,” Dr. Maria Sultan, Director General of South Asian Strategic Stability Institute University, told Arab News.
“I am constantly calling for exploration of domestic oil and gas and other minerals because the country is full of these natural energy resources,” Sabri suggested. “We must also honor our commitments and start long term TAPI [Turkmenistan-Afghanistan-Pakistan-India] gas pipeline project,” he added. 


Pakistan’s annual heritage fair promotes culture in colors

Updated 1 min 24 sec ago

Pakistan’s annual heritage fair promotes culture in colors

  • Lok Virsa art and crafts festival attracts thousands of visitors to experience country’s diverse culture
  • 10-day festival features food, native dresses, music, crafts, artisans, and performances

Islamabad: 'Lok Mela' by Lok Virsa is an opportunity for Pakistanis and foreigners to experience the diverse and vibrant cultures of the country’s four provinces and regions in a day during the 10 days of the annual folk festival organized in Islamabad.

Festivities, foods, handicrafts and entertainment at the heritage festival of Lok Virsa in Islamabad exhibiting diverse culture from Pakistan's provinces and regions. (AN Photo)

Lok Virsa, the National Institute of Folk & Traditional Heritage which has a prime directive to preserve, document and promote Pakistan’s cultural heritage has been organizing this festival on its premises for decades in the hills of Shakarparian park. The fair kicked off on Friday and is scheduled to end on November 24.

Festivities, foods, handicrafts and entertainment at the heritage festival of Lok Virsa in Islamabad exhibiting diverse culture from Pakistan's provinces and regions. (AN Photo)

Colorful pavilions representing Punjab, Balochistan, Khyber Pakhtunkhwa, Sindh, Gilgit-Baltistan, and Azad Jammu & Kashmir are exhibiting their respective cuisines, indigenous folk music, songs, dances, attire, crafts, and artisans have been a treat for visitors arriving in droves to see, hear, smell, taste, and touch the cultural elements.

Festivities, foods, handicrafts and entertainment at the heritage festival of Lok Virsa in Islamabad exhibiting diverse culture from Pakistan's provinces and regions. (AN Photo)

Each night the festival premieres a special musical event of a province or a ceremony with live performances or a theatrical show. For children’s entertainment, the organizers have set up a limited time period puppet show. The craft bazaar and dance performances would be enough to keep visitors occupied with enjoyment.  

Festivities, foods, handicrafts and entertainment at the heritage festival of Lok Virsa in Islamabad exhibiting diverse culture from Pakistan's provinces and regions. (AN Photo)

Several stalls, many managed by female artisans demonstrated the contribution of women in Pakistan’s economic process.

At the Baluchistan pavilion, craftswoman Aziz Fatima demonstrated her skills in Balochi embroidery, a centuries-old tradition she continues taught by her mother which Fatima intends to preserve by teaching girls in her community.

Festivities, foods, handicrafts and entertainment at the heritage festival of Lok Virsa in Islamabad exhibiting diverse culture from Pakistan's provinces and regions. (AN Photo)

Lacquer artisan, Farhat Bibi from D.I. Khan showed her skills on how to protect woodwork and add designs by applying layers of the coating in different colors while the material is rotated on a simple wooden lathe machine. In the process, patterns are etched on the surface using a thick iron needle exposing each color as per requirements.

Festivities, foods, handicrafts and entertainment at the heritage festival of Lok Virsa in Islamabad exhibiting diverse culture from Pakistan's provinces and regions. (AN Photo)

Ameer Bukhsh from Kahror Pacca, Punjab showed his skills in Woodblock pattern using natural dye, a historical-artistic designing technique originating from the lower Indus valley around southern Punjab and most of Sindh. Bukhsh has imparted his textile craft training to family members and other artisans.

There are multiple attractions for visitors to keep people from all walks of life entertained and engaged. Arab News captured the moments to give a glimpse of the country’s cultural colors festival.