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. 


Russian vaccine not yet approved in Pakistan, says drug regulator

Updated 24 January 2021

Russian vaccine not yet approved in Pakistan, says drug regulator

  • Data was reviewed by the expert committee and more information is required before approval: DG health
  • So far, Pakistan has approved only two vaccines for emergency use

ISLAMABAD: Pakistan has not yet approved the Russian Sputnik V vaccine for emergency use in the country, the Drug Regulatory Authority of Pakistan (DRAP) told Arab News on Sunday, after local media reported it had been green lighted by the government for ‘emergency use.’
“Emergency use of Russian vaccine is not allowed yet,” Akhtar Abbas, spokesperson for DRAP said.
“The matter is pending with registration and policy boards. Sputnik-V vaccine has been registered by the DRAP and registration is half the procedure,” he said, but added that the company that had applied for the vaccine still required clearance for approval.
“Once (clearance) is done, DRAP will give approval for the third vaccine.”
Last week, Pakistan Drug Regulatory Authority (DRAP) authorized the Oxford University-AstraZeneca Covid-19 vaccine for emergency use in the country, followed a few days later by the Chinese state-owned firm Sinopharm’s Covid-19 vaccine, also for emergency use.
“The emergency use authorization has not been given yet (for Sputnik V). They have applied for it. Their data was reviewed by the expert committee and they asked for more information. It’s in process,” Pakistan’s Director General for health, Dr. Rana Mohammed Safdar, told Arab News on Sunday.
Pakistan has reported 48 deaths from COVID-19 in the last 24 hours and an increase of almost 1,600 cases, bringing the total case count in the country to 532,412, according to the National Command and Operation Centre (NCOC) which overseas the national coronavirus response.