ISLAMABAD: Pakistan’s central bank chief believes the country has the capacity and financial cushion to ride out rising external account pressures being driven by a surge in global commodity prices.
The pressure should ease as soon as central banks around the world tighten monetary policy, which is likely to curb rebounding global demand, he said.
“What we have to ensure is that we have the capacity to sustain ourselves through it...I believe we do,” State Bank of Pakistan (SBP) Governor Dr. Reza Baqir said in an interview with Reuters on Monday.
He said the surge in global commodity prices over the past few months was being driven by a sharp recovery in demand as economies bounced back from a COVID-induced slump.
“But as central banks begin to turn hawkish, it is going to moderate global demand growth; that in turn is what is going to bring down international commodity prices,” said Baqir, who previously worked at the International Monetary Fund.
“We (Pakistan) just have to get through it until this commodity supercycle ceases,” he said, adding that two thirds of the rise in the trade deficit over the past few months had been driven by surging global commodity prices. “One third of our typical (import) payments on any given day are oil payments...and you have seen how much oil prices have risen.”
The price of Brent crude rose 50 percent in 2021 and has rallied further in 2022.
Pakistan’s imports grew 65 percent year-on-year to over $40 billion in the first half of this financial year, while exports rose 25 percent to $15.1 billion. Over the same period, the trade deficit has more than doubled to $25.4 billion from $12.3 billion.
The current account balance meanwhile turned to a deficit in the current financial year, standing at $7.1 billion in the first five months compared to a $1.9 billion surplus over the same period last year.
The rapid rise in the country’s import bill has put a strain on its foreign exchange reserves. But Baqir said these were high enough to ride out the storm, while Pakistan’s adoption of a flexible exchange rate in 2019 provided an additional buffer.
Pakistan’s foreign exchange reserves stand at $24 billion, up sharply from $7.2 billion in 2018-19. Out of the $24 billion, $17.6 billion is currently held at the central bank.
“Our flexible exchange rate system is one of the institutional reforms that has happened in Pakistan that, in turn, will help to ensure the sustainability of our balance of payments,” Baqir said.
Pakistan’s central bank has lifted rates by 275 basis points to 9.75 percent since September to tackle a falling Pakistani rupee, high inflation and a current account deficit. The bank signalled in December that it was likely close to done with hiking rates in the near-term. The rupee has depreciated about 10 percent over the past six months against the dollar.
Pakistan’s consumer price index rose 12.28 percent in December from a year earlier, above the central bank’s upwardly revised 9 percent-11 percent target for this financial year.
“We are confident that they (inflation worries) will be suitably addressed by the measures that we have taken,” Baqir said.
Pakistan can ride out rising external account pressures — central bank chief
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Pakistan can ride out rising external account pressures — central bank chief
- Current account balance turned to deficit in current financial year, standing at $7.1 billion in first five months
- The rapid rise in the country’s import bill has put a strain on its foreign exchange reserves
Malala Yousafzai vows support for Gaza after backlash over Broadway musical
- Yousafzai was criticized in Pakistan for co-producing a play with Hillary Clinton who supports Israel’s Gaza campaign
- The Nobel laureate says ‘we do not need to see more dead bodies’ to understand the urgency of a ceasefire in Gaza
LAHORE: Nobel laureate Malala Yousafzai on Thursday condemned Israel and reaffirmed her support for Palestinians in Gaza, after a backlash in her native Pakistan over a Broadway musical she co-produced with former US Secretary of State Hillary Clinton.
Yousafzai, who was awarded the Nobel Peace Prize in 2014, has been condemned by some for partnering with Clinton, an outspoken supporter of Israel’s war against Hamas.
The musical, titled “Suffs,” depicts the American women’s suffrage campaign for the right to vote in the 20th century and has been playing in New York since last week.
“I want there to be no confusion about my support for the people of Gaza,” Yousafzai wrote on X, the former Twitter. “We do not need to see more dead bodies, bombed schools and starving children to understand that a ceasefire is urgent and necessary.”
She added: “I have and will continue to condemn the Israeli government for its violations of international law and war crimes.”
Pakistan has seen many fiercely emotional pro-Palestinian protests since the war in Gaza began last October.
Yousafzai’s “theatre collaboration with Hillary Clinton – who stands for America’s unequivocal support for genocide of Palestinians – is a huge blow to her credibility as a human rights activist,” popular Pakistani columnist Mehr Tarar wrote on social media platform X on Wednesday.
“I consider it utterly tragic.”
Whilst Clinton has backed a military campaign to remove Hamas and rejected demands for a ceasefire, she has also explicitly called for protections for Palestinian civilians.
Yousafzai has publicly condemned the civilian casualties and called for a ceasefire in Gaza.
The New York Times reported the 26-year-old wore a red-and-black pin to the “Suffs” premier last Thursday, signifying her support for a ceasefire.
But author and academic Nida Kirmani said on X that Yousafzai’s decision to partner with Clinton was “maddening and heartbreaking at the same time. What an utter disappointment.”
The war began with an unprecedented Hamas attack on Israel on October 7 that resulted in the deaths of around 1,170 people, according to an AFP tally of Israeli official figures. Hamas militants also abducted 250 people and Israel estimates 129 of them remain in Gaza, including 34 who the military says are dead.
Clinton served as America’s top diplomat during former president Barack Obama’s administration, which oversaw a campaign of drone strikes targeting Taliban militants in Pakistan and Afghanistan’s borderlands.
Yousafzai earned her Nobel Peace Prize after being shot in the head by the Pakistani Taliban as she pushed for girls’ education as a teenager in 2012.
However, the drone war killed and maimed scores of civilians in Yousafzai’s home region, spurring more online criticism of the youngest Nobel Laureate, who earned the prize at 17.
Yousafzai is often viewed with suspicion in Pakistan, where critics accuse her of pushing a Western feminist and liberal political agenda on the conservative country.
Pakistan commends UAE leadership for ‘swift’ response to record-breaking rains
- Pakistan’s foreign minister telephones UAE counterpart, expresses sympathy over devastation caused by torrential rains
- Heavy rains lashed UAE last week, turning streets into rivers and hobbling Dubai airport, world’s busiest for global passengers
ISLAMABAD: Pakistan’s Foreign Minister Ishaq Dar on Wednesday commended the United Arab Emirates (UAE) leadership for its swift and efficient response to the devastation caused by record-breaking rains in the desert country.
Heavy rains lashed the desert country last week, turning streets into rivers and hobbling Dubai airport, the world’s busiest for international passengers.
The rainfall was the UAE’s heaviest since records began 75 years ago, dumping two years’ worth of rain on the desert country.
“Foreign Minister Ishaq Dar held telephone conversation with Foreign Minister His Highness Sheikh Abdullah Bin Zayed of United Arab Emirates to express deepest sympathy on the devastation caused by recent torrential rains,” Pakistan’s Ministry of Foreign Affairs (MoFA) said.
“He commended the leadership of the UAE for the swift, efficient and timely administrative response to this natural calamity,” it added.
The foreign ministry said both representatives also exchanged views on matters of bilateral and global importance.
Pakistan’s PM Sharif last Friday telephoned UAE President Sheikh Mohamed bin Zayed Al-Nahyan, urging both countries to collaborate to tackle the impacts of climate change.
Sharif had lauded the UAE president for his “outstanding leadership qualities” and strong commitment to ensure the welfare of the Emirati people.
Pakistan has been prone to natural disasters and consistently ranks among one of the most adversely affected countries due to the effects of climate change. Torrential rains have killed more than 90 people in the South Asian country this month, according to authorities.
Malala Yousafzai faces backlash for Clinton musical co-credit
- Malala Yousafzai co-produced “Suffs” musical with Hillary Clinton, which depicts American women’s struggle for right to vote
- Yousafzai has been condemned by some for partnering with Clinton, an ardent supporter of Israel’s war on Palestine
LAHORE: Nobel laureate Malala Yousafzai faced a backlash in her native Pakistan on Wednesday, after the premier of a Broadway musical she co-produced with former US Secretary of State Hillary Clinton.
The musical, titled “Suffs” and playing in New York since last week, depicts the American women’s suffrage campaign for the right to vote in the 20th century.
However Yousafzai, who was awarded the Nobel Peace Prize in 2014, has been condemned by some for partnering with Clinton, an outspoken supporter of Israel’s war against Hamas.
Pakistan has seen many fiercely emotional pro-Palestinian protests since the war in Gaza began last October.
“Her theater collaboration with Hillary Clinton — who stands for America’s unequivocal support for genocide of Palestinians — is a huge blow to her credibility as a human rights activist,” popular Pakistani columnist Mehr Tarar wrote on social media platform X.
“I consider it utterly tragic.”
Whilst Clinton has backed a military campaign to remove Hamas and rejected demands for a ceasefire, she has also explicitly called for protections for Palestinian civilians.
Yousafzai has publically condemned the civilian casualties and called for a ceasefire in Gaza.
The New York Times reported the 26-year-old wore a red-and-black pin to the “Suffs” premier last Thursday, signifying her support for a ceasefire.
But author and academic Nida Kirmani said on X that Yousafzai’s decision to partner with Clinton was “maddening and heartbreaking at the same time. What an utter disappointment.”
Israel’s military offensive has killed at least 34,262 people in Gaza, mostly women and children, according to the Hamas-run territory’s health ministry.
The war began with an unprecedented Hamas attack on October 7 that resulted in the deaths of around 1,170 people, according to an AFP tally of Israeli official figures.
Clinton served as America’s top diplomat during former president Barack Obama’s administration, which oversaw a campaign of drone strikes targeting Taliban militants in Pakistan and Afghanistan’s borderlands.
Yousafzai earned her Nobel Peace Prize after being shot in the head by the Pakistani Taliban as she pushed for girl’s education as a teenager in 2012.
However the drone war killed and maimed scores of civilians in Yousafzai’s home region, spurring more online criticism of the youngest Nobel Laureate, who earned the prize at 17.
Yousafzai is often viewed with suspicion in Pakistan, where critics accuse her of pushing a Western feminist and liberal political agenda on the conservative country.
Pakistan’s foreign minister calls for early resumption of PIA flights to Europe
- Foreign Minister Ishaq Dar meets EU ambassador to discuss bilateral ties, trade and matters of mutual interest
- PIA flights to Europe and the UK have been suspended since 2020 following Pakistan’s infamous pilot license scandal
ISLAMABAD: Pakistan’s Foreign Minister Ishaq Dar on Wednesday stressed the resumption of direct flights from the country’s national airline to Europe, the foreign ministry said, in his meeting with EU Ambassador Riina Kionka during which both sides discussed bilateral relations, trade and matters of mutual interest.
PIA flights to Europe and the UK have been suspended since 2020 after the EU’s Aviation Safety Agency revoked the national carrier’s authorization to fly to the bloc following a pilot license scandal that rocked the country. The issue resulted in the grounding of 262 of Pakistan’s 860 pilots, including 141 of PIA’s 434.
Kionka and Dar discussed Pakistan-EU bilateral ties and important issues of mutual interest during their meeting, Pakistan’s Ministry of Foreign Affairs (MoFA) said. Dar told Kionka Pakistan views the EU as a “valued partner” and an important factor of stability during the current volatile times.
“FM emphasized the significance of direct flights between Pakistan and European countries in view of large diasporas,” MoFA said. “In this regard, he stressed on the need for an early resumption of PIA flights to Europe.”
Both sides also expressed satisfaction over the “significant progress” of Pakistan-EU institutional mechanisms and resolved to maintain the upward trajectory of their relations by increasing their high-level interactions.
“FM vowed to further strengthen the existing strategic partnership in all areas, inter alia, trade, migration, climate change,” MoFA said.
“The EU side assured their full cooperation to Pakistan in achieving the objectives of economic diplomacy.”
The EU is Pakistan’s second most important trading partner, accounting for over 14 percent of the country’s total trade and absorbing 28 percent of Pakistan’s total exports. Pakistani exports to the EU are dominated by textiles and clothing.
Pakistan’s GSP+ status is a special trade arrangement offered by the EU to developing economies in return for their commitment to implement 27 international conventions on human rights, environmental protection and governance.
Pakistan, Egypt among countries who pay most in surcharges to IMF— report
- Indebted member countries paid about $6.4 billion in surcharges between 2020-2023, says report by US think tanks
- Surcharges do not hasten repayment, instead punish countries already struggling with liquidity constraints, critics say
Countries, mostly middle and lower-income, have been burdened by surcharges on top of interest payments on their borrowings from the International Monetary Fund (IMF), widening global inequities, according to a report by US think tanks.
WHY IT’S IMPORTANT
Indebted member countries paid about $6.4 billion in surcharges between 2020-2023, the report from Boston University’s Global Development Policy Center and Columbia University’s Initiative for Policy Dialogue released on Tuesday showed.
And the number of countries paying these surcharges has more than doubled in the last four years.
The IMF is expected to charge an estimated $9.8 billion in surcharges in the next five years, according to an earlier report by the Center for Economic and Policy Research.
Critics of the policy argue that surcharges do not hasten repayment and instead punish countries already struggling with liquidity constraints, increase the risk of debt distress and divert scarce resources that could be used to boost the struggling economies.
BY THE NUMBERS
Countries such as Ukraine, Egypt, Argentina, Barbados and Pakistan pay the most in surcharges, the report showed, accounting for 90 percent of the IMF’s surcharge revenues.
These surcharges, levied on top of the fund’s increasingly steeper basic rate, are IMF’s single largest source of revenue, accounting for 50 percent of total revenue in 2023.
KEY QUOTES
“IMF surcharges are inherently pro-cyclical as they increase debt service payments when a borrowing country is most need of emergency financing,” Global Development Policy Center’s director Kevin Gallagher said.
“Increasing surcharges and global shocks are compounding the economic pressure on vulnerable countries.”
CONTEXT
Data published by the Institute of International Finance earlier this year showed global debt levels hit a record of $313 trillion in 2023, while the debt-to-GDP ratio — a reading indicating a country’s ability to pay back debts — across emerging economies also scaled fresh peaks.
IMF shareholders agreed last week on the importance of addressing challenges faced by low-income countries, Managing Director Kristalina Georgieva said on Friday.
