KARACHI: Pakistan’s central bank on Thursday further slashed key policy rate by 100 basis points to 7 percent citing continued economic slowdown and increasing downside risk to country’s growth.
The central bank’s move to cut the interest rates comes in an unscheduled meeting of Monetary Policy Committee which has so far slashed the key interest rate by 6.25 percent from 13.25 percent since March 17, 2020.
“The decision reflected the MPC’s (Monetary Policy Committee) view that the inflation outlook has improved further, while the domestic economic slowdown continues and downside risks to growth have increased,” the State Bank of Pakistan (SBP) said.
The SBP said that priority of monetary policy had appropriately shifted toward supporting growth and employment during these challenging times.
“The MPC re-asserted its commitment to supporting households and businesses through the Covid-19 crisis and minimizing damage to the economy. In this context, the MPC felt that from a risk management point of view, a prompt response to downside risks to growth was called for given the improved inflation outlook,” the statement read.
The central bank noted that with approximately Rs. 3.3 trillion worth of loans due to be re-priced by early July 2020, this was an opportune moment to take action from a monetary policy transmission perspective. “In this way, the benefits of interest rate reductions would be passed on in a timely manner to households and businesses.”
The central bank observed that “the moderation of underlying inflation has continued”. The headline inflation declined further to 8.2 percent in May on the back of the recent cut in diesel and petrol prices.
The fiscal budget 2020-21 is also expected to be neutral for inflation as the freeze on government salaries, absence of new taxes, and lower production cost from reduced import duties should offset the decline in subsidies in some sectors. Given the absence of demand-side pressures, average inflation could fall below the previously announced range of 7-9 percent for next fiscal year.
On the real side, the decline in LSM (Large Scale manufacturing) deepened to 41.9 percent (y/y) in April, when lockdowns were still in place. In May, high-frequency indicators of activity such as cement dispatches, automobile sales, food and textile exports, and POL sales also continued to contract, although mostly at a lower rate than in the previous two months.
Looking ahead, the economy is expected to recover gradually in the current fiscal year supported by easing lockdowns, supportive macroeconomic policies and a pick-up in global growth. However, risks are skewed to the downside and the recovery will depend critically on the evolution of the pandemic both in Pakistan and abroad.
Pakistan’s industrialists, who have been calling for reduction in the key interest rates, have welcomed the move of central bank and called for further cuts in the current pandemic.
“There is more space for the interest rate cuts. Our demand is that the rates should be slashed to 5 percent or below”, Sheikh Sultan Rehman, Vice President of Federation of Pakistan Chambers of Commerce and Industry FPCCI, told Arab News. “The coronavirus has exerted massive negative impacts on our economy and the global economy which means the room to cut the rate still exists and the bank should exercise this option”, he added.
The International Monetary Fund (IMF), in its World Economic Outlook (WEO) released on Wednesday, has further downgraded its 2020 global growth forecast to negative 4.9 percent, 1.9 percentage points lower than in April, and projected a more gradual recovery than previously anticipated.
State Bank of Pakistan cuts key policy rate by 100bps to 7%
https://arab.news/njsbt
State Bank of Pakistan cuts key policy rate by 100bps to 7%
- The surprise move comes amid improved inflation outlook and domestic economic slowdown
- Industrialists demand policy rate to be 5% or below given the global economic meltdown
In Pakistan’s Bannu, people start their day with a sugar rush
- While much of Pakistan favors savory breakfasts, residents of Bannu prefer a sweet, caramelized halwa
- People line up before sunrise at the decades-old Speen Sar restaurant to cherish its signature dish
BANNU, Pakistan: Before sunrise, the narrow lane outside Speen Sar, a modest restaurant, fills with customers waiting for halwa, a dense sweet made from wheat starch, sugar and clarified butter, that serves as breakfast for many people in this northwestern city.
Inside the restaurant’s kitchen, the morning air is thick with the scent of caramelized sugar and heated ghee. A chef leans over a large metal vat, dissolving sugar into the hot fat before adding a slurry of flour and water. With rhythmic, heavy strokes, he stirs the mixture until it thickens into a glossy halwa.
He pours the sweet onto a tray and rushes toward the counter, where a crowd of patrons has already gathered. Three cooks work in quick succession to keep pace with demand, turning out batch after batch during the breakfast rush in Bannu, a city in Pakistan’s Khyber Pakhtunkhwa province.
While halwa is widely eaten as a dessert or festival sweet across South and Central Asia and the Middle East, Bannu stands apart for turning it into a morning staple. Across most of Pakistan, breakfast tends to be savory, typically consisting of omelets, parathas or puris, and in some places nihari, a slow-cooked meat stew. Here, however, halwa is not a side dish but the meal itself, eaten plain or with bread before the workday begins.
“We open the shop at the time of morning prayer, and after prayer, we start preparing,” says Zahid Khan, whose grandfather Akbar Ghulam opened the restaurant over six decades ago.
The shop’s name, Speen Sar — Pashto for “white-haired man” — dates back to its earliest days. Khan said the business began as a small stall run by his grandfather. As he grew older and his hair turned white, customers began directing others to the “speen sar” shop, the place where the white-haired man sold halwa. The nickname endured, eventually becoming the shop’s official identity.
Speen Sar relies on a labor-intensive process of extracting starch from wheat flour.
“In our halwa, we use ghee, sugar, flour and other ingredients. From the flour, the starch that comes out is what we use to make the halwa,” Khan explained before examining the cooking process in his kitchen.
Bannu sits at the crossroads between Pakistan’s former tribal areas and the settled plains of the northwest, and the halwa shop serves as a rare social equalizer, drawing laborers, traders, students and travelers to the same counter each morning. For many passing through the city, stopping for halwa is not optional.
“Whenever I come from Waziristan ... the first thing I do is start with halwa,” says Irafullah Mehsud, an expatriate worker. “I eat the halwa first, and only then move on to other things.”
The popularity of the dish is partly due to its shelf life and to what the owners call good quality. At Rs500 ($1.80) per kilogram, it is an affordable luxury as well.
“Our halwa is widely consumed with breakfast, and it does not spoil quickly. If you want, that you will eat it tomorrow, you can even set some aside for the next day,” Khan said, pointing to a tray of nishasta halwa, a variety made by extracting wheat starch before cooking.
While the region offers variations including sohan halwa, milk-based recipes, and carrot-infused batches, this halwa offered by Speen Sar remains the undisputed king of the breakfast table in this city.
“This is a tradition of the people of Bannu. Early in the morning, everyone eats it and comes here,” says Razaullah Khan, a student at a local college. “Eating halwa is a common practice here ... but this one is the most popular. People eat it for breakfast.”
For the elders of the city, the habit is as much about routine as it is about flavor.
“This tradition has been going on for the past forty to fifty years ever since I can remember,” says Sakhi Marjan, a local elder in his late sixties. “We first come to the Azad Mandi market and then come here to eat halwa. We really enjoy this halwa. It is delicious.”
As the sun rises over Bannu, this ‘sweet’ trade shows no sign of slowing. For those like Gul Sher, a regular from Jani Khel, a town in a neighboring tribal district, a day without the local sweet is a day started wrong.
“As soon as I step into Bannu, I start my day with halwa. After that, the rest of the day goes well,” Sher said before finishing his plate of halwa.
“It is a sweet dish, and it makes the day better. It is a good thing.”
