Inconclusive IMF talks plunge Pakistani currency to Rs202.01 against US dollar

A Pakistani money trader checks U.S. 100 dollar notes at a currency exchange office, in Karachi, Pakistan, on May 19, 2022. (AP)
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Updated 26 May 2022

Inconclusive IMF talks plunge Pakistani currency to Rs202.01 against US dollar

  • Economists say the government’s inability to take tough decisions is further aggravating the economic crisis
  • Experts warn the situation can spiral out of control if reserves continue to slide in the absence of a viable strategy

KARACHI: Pakistan’s national currency on Thursday plunged to another all-time low of Rs202.01 against the US dollar after the government failed to convince the International Monetary Fund (IMF) in Doha, Qatar, to revive a loan program amounting to $6 billion.

The rupee further shed 0.04 percent of its value in the interbank market following the inconclusive talks under the IMF’s Extended Fund Facility (EFF) which the country secured in 2019 to shore up its fragile economy.

“The rupee remains under pressure in the interbank market against the dollar in the absence of major inflows and dwindling forex reserves since the dollar is in high demand for import payments,” Abdul Azeem, head of research at Spectrum Securities, told Arab News.

“The lack of progress in the IMF talks has further exacerbated pressure on the already weakening currency,” he continued.

Fuel subsides remained the main sticking point between the IMF and the Pakistani authorities during their weeklong negotiations, though the country’s finance minister Miftah Ismail still called the discussions “very useful and constructive.”

The subsidies in the oil and power sectors were announced by former prime minister Imran Khan earlier this year who said they would cost over $2 billion between April and June 2022.

“The IMF team emphasised the importance of rolling back fuel & power subsidies, which were given by the previous administration in contravention of its own agreement with the Fund. [The government] is committed to reviving the IMF program & put Pakistan back on a sustainable growth path,” the finance minister said in a Twitter post on Thursday after arriving in Pakistan from Qatar.

“We discussed targets for FY 23, where, in light of high inflation, declining forex reserves and a large current account deficit, we would need to have a tight monetary policy and consolidate our fiscal position,” he added. “Thus [the government] is committed to reducing the budget deficit in FY23.”

 

 

Pakistan desperately needs external financing to boost its falling foreign exchange reserves which, at the current level of $10 billion, can barely cover two months of import payments.

The country can immediately secure a release of around $1 billion from the IMF, if it complies with the Fund’s conditions and takes remedial measures like rolling back the subsidies on petroleum products and electricity.

“The crisis of decision making is fast becoming an economic crisis,” Uzair Younus, who works with Pakistan Initiative at Washington-based Atlantic Council, told Arab News.

“With reserves continuing to slide and no signal from the government that it is willing to take tough measures, Pakistan faces a situation where things can very quickly spiral out of control,” he said. “Once herd mentality kicks in, it will be even more painful to stabilize the economy.”

Pakistani economists said the country not only needed fresh inflow of US dollars but also plug financial leakages.

“The shortage of dollar is our main problem,” Dr. Ashfaque Hasan Khan, senior economist and former member of government’s Economic Advisory Council, told Arab News.

“We are earning dollar but there are lot of leakages as well,” he continued. “This means that our imports are too high. If you curb imports through policy measures, then your main problem will be resolved.”

Pakistan’s current account deficit reached $13.78 billion in the first ten months of the current fiscal year, compared with a deficit of $543 million in the same period last year. Higher imports are major contributors to the current account deficit.

The government has already banned imports of 38 items, including vehicles, mobile phones and other luxury goods, to cut the swelling import bill.

However, Khan described the move as a “half-hearted measure” which, he said, was only going to save about half a million dollars.

“We should have done an exercise and selected high value, fast moving, and non-essential items for banning,” he said.

Khan maintained all economic indicators were performing perfectly well apart from the balance of payment issue.

He noted that Pakistan had secured six percent real economic growth along with ten and four percent industrial and agricultural growth, respectively.


Pakistan’s national currency continues to gain against greenback

Updated 7 sec ago

Pakistan’s national currency continues to gain against greenback

  • Pakistani rupee gained Rs3.03 to close at Rs218.88 against the greenback in the interbank market
  • Rupee in the open market also appreciated from Rs218 to Rs216 for selling during trading on Thursday

 

KARACHI

Pakistan’s national currency on Thursday continued its bullish trend and appreciated 1.38 percent against the United States dollar amid easing balance of payment pressure and expected inflows from the International Monetary Fund, traders and analysts said.

The Pakistani rupee gained Rs3.03 to close at Rs218.88 against the greenback in the interbank market following eight consecutive appreciation trading sessions. The rupee has recouped its value by 9.3% or Rs21 against the greenback in the continued uptrend, according to State Bank of Pakistan data.

“There are couple of reasons for the current appreciation of the Pak rupee against dollar including easing off balance of payment pressure and declining demand at home after government’s administrative measures to curtail imports,” Tahir Abbas, Director Research at Arif Habib Limited, told Arab News.  

“Declining current account deficit and price cut of oil and other commodities also eased off pressure on the rupee. The expected inflows from the IMF by the end of this month and undervalued currency are also the key reasons of rupee appreciation.”  

Following austerity measures by the government and a restriction on imports, the import bill has declined from $7.8 billion in June 2022 to $4.8 billion in July 2022, which has not only reduced the trade deficit but also eased pressure on the national currency.  

The rupee in the open market also appreciated from Rs218 to Rs216 for selling during trading on Thursday. The currency in the open market has appreciated by over 11% or Rs28 since July 29, 2022, according to the Exchange Companies Association of Pakistan (ECAP).

“There are only sellers in the market after the sentiments have changed following the measures taken by government and the central bank,” Zafar Paracha, General Secretary of ECAP told Arab News.
 
“The central bank has taken action against the banks’ treasuries departments which were involved in maneuvering of dollar in interbank market. In addition, the expected reduction in the import bill of August has also played appreciation role.”    

The pressure on the Pakistani rupee eased off after the government took steps to curtail imports and meet preconditions of the IMF for the revival of a $6 billion program signed in 2019 to stave off a balance of payment crisis.  

The IMF said last month it had reached a staff level agreement with Pakistan that would pave the way for the disbursement of $1.17 billion after its board approval later this month. Islamabad also has to convince the fund about the availability of funds for a $4 billion financing gap.

Last week, the UAE’s state news agency had reported that the country intended to invest $1 billion in Pakistani companies across various sectors, which include gas, energy infrastructure, renewable energy and healthcare.

Following the current bullish trend in the currency market, Pakistani analysts said the currency was likely to appreciate further to around Rs200 against the greenback in the near future.  

Stocks, however, on Thursday, remained bearish mainly due to profit taking that kicked off during the midsession. The benchmark KSE-100 index closed at 42,243 points, down by 251 points.

“Stocks fell sharply lower on political noise and hike in power tariff. Mid session support remained on strong rupee and falling Pakistan dollar bond yields,” Ahsan Mehanti, CEO of Arif Habib Corporation, told Arab News. “Investor concerns for weak earnings outlook played a catalyst role in bearish close.”


Pakistani journalists, lawyers call for review of British-era sedition laws seen as detrimental to free speech

Updated 22 min 18 sec ago

Pakistani journalists, lawyers call for review of British-era sedition laws seen as detrimental to free speech

  • The sedition law carries life imprisonment which legal experts say is against the fundamental rights of citizens
  • Journalist association urges the government to regulate implementation of the law to avoid vengeance and discrimination

ISLAMABAD: Pakistani journalists and lawyers on Thursday urged the government to formulate a mechanism to follow before registering cases under laws related to sedition, saying this was a pre-requisture to avoiding discrimination, vengeance and suppression of freedom of expression.

Pakistani governments and even private individuals have filed cases against journalists and activists in recent years under colonial-era sedition and incitement laws. A majority of these cases are registered under section 124-A of the Pakistan Penal Code, commonly known as the sedition law, and its sections 505 and 506, for incitement and promoting hatred between different religious, racial, or regional groups.

Pakistan’s sedition law carries sentences of life imprisonment which lawyers and journalists say was a “harsh punishment” used by  governments to silence critics and suppress freedom of expression.

“Whoever by words, either spoken or written, or by signs, or by visible representation, or otherwise, brings or attempts to bring into hatred or contempt, or excites or attempts to excite disaffection towards, the federal or provincial government established by law shall be punished with imprisonment for life to which fine may be added, or with imprisonment which may extend to three years, to which fine may be added, or with fine,” Pakistan’s law of sedition says.

“This section of the law is of sensitive nature and its implementation needs to be regulated,” Afzal Butt, president of the Pakistan Federal Union of Journalists (PFUJ), told Arab News. “There must be a mechanism that needs to be followed before registration of a criminal case under the sedition law … The due process must be followed to avoid discrimination and vengeance.”

Butt said a majority of the cases registered under sedition and incitement laws were later quashed by the courts for being “frivolous in nature and lodged in violation of the merit.”

“Criminal cases are not registered against journalists anywhere in the world on the basis of their news and analysis,” he said, adding that Pakistani governments had been using these laws to gag journalists and media houses for decades.

“These laws should either be abolished completely, or reformed at least to ensure their just application,” Butt said.

The Pakistan government says it does not suppress the press.

Legal experts have also raised questions over the sedition law, calling for its repeal to ensure the freedom of expression.

“There is need to at least revisit this British-era law’s characteristics and features to avoid its misuse by the authorities,” Advocate Mian Ali Ashfaq, who recently represented journalist Imran Riaz Khan in sedition cases, told Arab News.

He said the charge of sedition against anybody was of a “heinous nature” that would quickly invite public reaction, therefore a vetting process before registration of the case should be made mandatory.

“Proper protocols should be set up to see if the sedition charges against a journalist or activist were substantiated and tangible,” he said. “There must be no blanket application of the law.”

Advocate Abid Saqi, who challenged the application of sedition laws in a case in the Lahore High Court in October 2020, said the law was made when there was no concept of the constitution and the freedom of expression.

“This law must be abolished,” he told Arab News, “as this is against the fundamental rights of the citizens including the freedom of expression.”


In Karachi, 104-year-old migrant from India recalls potent memories of a violent partition

Updated 11 August 2022

In Karachi, 104-year-old migrant from India recalls potent memories of a violent partition

  • Muhammad Akram Khan’s family swapped an affluent life for an uncertain future in Pakistan in 1947
  • Khan got his passport made a few years ago but the dream to travel back to India could not come true

KARACHI: With six metal suitcases, three filled with gold and three with clothes, the family of Muhammad Akram Khan fled Jabalpur in the central Indian state of Madhya Pradesh for newly created Pakistan in 1947, leaving without saying goodbye even to best friends and forsaking a sprawling home and a vast business for an uncertain future in Karachi.

In this undated photo, Muhammad Akram Khan, 104-year-old migrant, photographed with the children in his family in his hometown, Jabalpur in India. (AN photo)

Khan’s family was among the millions whose lives were thrown into turmoil by the partition of colonial India into two states, mainly Hindu India and mostly Muslim Pakistan, when British rule ended in 1947.

One of the biggest mass migrations in history was marred by violence and bloodshed as about 15 million Muslims, Hindus and Sikhs swapped countries in a political upheaval that cost more than a million lives.

Muhammad Akram Khan, a 104-year-old transporter who migrated from Jabalpur in India after the independence of Pakistan 75 years ago, shares with Arab News his story of partition at Frere Hall, Karachi on August 2, 2022. (AN photo)

Before partition, Khan, now 104 years old, recalled that his family lived in harmony with Hindu neighbours and the young man’s best friend was a neighbour called Shankar Lal. But in the months running up to the partition of India on August 14, Khan said he began to feel unsafe and started convincing his reluctant father to leave for Pakistan.

“I’m alive today but tomorrow they’ll kill me,” he said, quoting his words to his father. “All young men will be killed if we don’t leave.”

When the family eventually left, they took the route of Khokhrapar, a border town situated in Tharparkar District in Sindh, considering it safer compared to Punjab province where much of the violence was taking place. With death looming over him, Khan walked for miles and miles with his family, often carrying his disabled mother on his shoulders, until they made it safely to the other side. 

The Sikh personnel who checked the family’s luggage at the border were kind, he said, and the Sikh and Hindus they met along the way, who were en route India, also didn’t show hate.

But the ordeal didn’t end there.

Muhammad Akram Khan, a 104-year-old migrant, chats with his sons and grandchildren in Karachi, Pakistan, on August 2, 2022. (AN photo)

In Pakistan “there was no shade,” Khan said, and his family had to wait a whole day to catch a train to Karachi. At first, the family lived in a small house owned by a relative, before moving to a shanty for several years. Finally, at a cost of Rs2,400, the government allotted them two small quarters in Karachi's Korangi area.

Muhammad Akram Khan, a 104-year-old transporter who migrated from Jabalpur in India after the independence of Pakistan 75 years ago, shares with Arab News his story of partition at Frere Hall, Karachi on August 2, 2022. (AN photo)

It took Khan a few months to grasp the new reality of his life, but he ultimately resumed the scrap business after selling the 12 kilograms of gold the family had brought with them from Madhya Pradesh and eventually bought cycle-rickshaws to launch a transportation business.

“I earned and built bungalows,” Khan said, smiling. “I have constructed 25 to 30 houses, all through my hard work.”

The centenarian said he had lived a full life, tying the knot four times.

“Now at my home there are 200 people,” he said smiling. His eldest daughter is in her 90s and youngest is 14 years old.  

Though he does not regret his decision to migrate to Pakistan, Khan said he was distressed by the country’s ever worsening economic situation.

“We dreamt of a great Pakistan,” he said. “We wanted young people to be honest, hardworking and respectful toward their parents and country.”

Khan got his passport a few decades ago and had a strong urge to return to Jabalpur to meet old friends. The dream of traveling back to India, however, has not come true.

“I don’t think I will be able to go now since my eyes don’t open,” he said, wistfully. “In any case, who am I going to meet there after so much time has passed?”


Norwegian woman climber on track to break 'super peaks' record

Updated 11 August 2022

Norwegian woman climber on track to break 'super peaks' record

  • Kristin Harila successfully summit Pakistan's Gasherbrum I on Thursday  
  • Pakistan has enjoyed a record-breaking climbing season this year

ISLAMABAD: Norwegian climber Kristin Harila has just three mountains left in her bid to climb the world's 14 "super peaks" in record time after successfully summiting Pakistan's Gasherbrum I, officials said Thursday.
Nepali Nirmal Purja holds the record for climbing the world's 8,000 meter-plus (26,000 feet) mountains -- six months and six days -- but Harila now has until early November to complete her quest and beat his time.
Harila's latest successful summit was reported on her official social media pages and confirmed by Karrar Hadri, secretary of Pakistan's Alpine Club.
"The second phase in Pakistan was very challenging and dangerous: ever-changing weather conditions, being hit by a rock, illness and a very tight schedule," read a message on Harila's Instagram page.
"But here we are with only three peaks left."
Five of the 14 super peaks are in Pakistan -- including K2, the world's second highest mountain -- and the country has enjoyed a record-breaking climbing season this year.
Sajid Hussain, head of the tourism department in Gilgit Baltistan, told AFP they had issued about 1,780 permits for the top peaks.
"It has boosted our tourism and has increased our foreign exchange," he said.
Only around 40 people in history have summited all 14 of the super peaks, but none have come close to Purja's 2019 expedition.
He demolished the previous record for accomplishing the feat with supplemental oxygen, set by Poland's Jerzy Kukuczka in the 1980s at seven years, 11 months and 14 days.
In an interview with AFP earlier this year, 36-year-old Harila said she was inspired to show women were as capable as men of achieving great mountaineering feats.
"In history and until now, it has been the strong macho men going out climbing mountains," she said.
"When I talk to people that are not in this sport, they believe that men are more capable than women... If we are going to change, we need to get attention and show that women are just as capable."
The three remaining mountains for Harila are Cho Oyu (sixth highest, in Nepal/China), Manaslu (eighth, Nepal) and Shishapangma (14th, China). 


Government in Pakistan’s northwest takes note of Taliban resurgence, pledges to ensure writ of state

Updated 11 August 2022

Government in Pakistan’s northwest takes note of Taliban resurgence, pledges to ensure writ of state

  • Swat Valley was a former Pakistan Taliban bastion seized by Pakistan’s army in a major offensive in 2009
  • This week saw widespread reports of the return of the Pakistani Taliban to Swat and parts of Waziristan

PESHAWAR: A spokesperson for the government of Pakistan’s northwestern Khyber Pakhtunkhwa (KP) province said on Thursday the local administration had taken notice of a protest against reports of the return of a banned militant outfit to the area, ensuring the public that the government would ensure it write.

Swat Valley was a former Pakistan Taliban bastion seized by Pakistan’s army in a major offensive in 2009. During a reign of terror under the Taliban before the military operation, militants decapitated people and tied the heads to the victim’s feet. Bodies were left hanging by telephone poles and for days no one was allowed to take them down for burial.

This week, there have been widespread reports of the return of the Pakistani Taliban, also known as the Tehreek-e-Taliban Pakistan, or TTP, to Swat and parts of Waziristan.

“The provincial government has already taken notice following a security incident in Swat and a sit-in by tribesmen in the country’s restive North Waziristan tribal district,” KP government spokesman Barrister Muhammad Ali Saif told Arab News on Thursday.

“The province’s top police officer, district administration and security officials are in Swat to address reservations of people regarding the presence of some armed men in remote mountains. We’ll ensure writ of the government at every cost because our security officials have already rendered matchless sacrifices for peace there.”

The reports of the resurgence of the Taliban come as the government of Pakistan and the TTP are holding peace talks to end violence in the country, with the latest round of negotiations held last month in Kabul and mediated by the Afghan Taliban who rule Afghanistan.

The TTP, which has carried out some of the bloodiest attacks in Pakistan since 2007, is not directly affiliated with the Afghan Taliban.

Swat police spokesperson Moin Fayyaz said a search operation by Swat police was being conducted in remote areas, including Kabal and Khwazkhela, to purge the region of” miscreants” who two days ago opened fire at a police party, leaving a senior police officer wounded.

For the past several days, an unverified video has been making the rounds on social media, showing security officials, including a senior police officer, in the captivity of militants. The hostages were later released on the mediation of tribal elders in the area, according to media reports.

Zahid Khan, an elder and social worker from Swat, told Arab News the presence of militants had been observed in the Kanala and Balasoor mountainous regions of Swat, who were threatening well-off people, traders and contractors to pay extortion money.

“We’ve summoned a grand jirga on August 17 of all tribes in Mingora, the main town in Swat, in which we will develop consensus on how to deal with emerging threats posed by militancy,” Khan added.

In 2009, thousands of families in Swat were forced to flee to safer areas after authorities asked people to leave their homes following a military operation against militants there.

“We can’t afford to leave our homes again and live a refugee life in other districts. We’ll offer stout resistance against any eventuality,” Khan added.

Jamal Dawar, a tribal elder from the North Waziristan tribal district, said that a sit-in staged by thousands of tribesmen has entered its 26th day, closing all main arteries of the district including a route leading to the Pak-Afghan Ghulam Khan border.

He said the protesters were demanding security following a sharp rise in targeted killings in the restive district.

“We’re just told that a high level delegation of all political parties including government and security officials will meet the protesters in Edak, a village where the sit-in is underway, to address our prime demand of security and getting rid of targeted killings,” Dawar added.

According to a notification, a copy of which was seen by Arab News, the federal government has constituted a committee comprising senior political leaders to meet tribesmen in North Waziristan district and address their concerns.

“The formation of a committee by the federal government to meet protesters in North Waziristan is nothing but a political gimmick and political point-scoring,” the KP spokesperson said. “The provincial government is already in contact with the elders of the district to address their legitimate issues.”