Pakistan central bank raises key interest rate by 1.25% to tame inflation

A shopkeeper place a price tag on rice at a shop in Karachi, Pakistan, on June 10, 2022. (AFP/File)
Short Url
Updated 07 July 2022

Pakistan central bank raises key interest rate by 1.25% to tame inflation

  • Pakistan is attempting to tackle 13-year high retail inflation
  • Central bank raised benchmark interest rate by 150 bps in May

KARACHI: Pakistan’s central bank on Thursday increased the key interest rate by 125 basis points (bps) to 15 percent to control runaway inflation and "give relief to the common man," the acting State Bank governor announced.

In the monetary policy announced in May 2022, the central bank had increased the policy rate by 150 bps to 13.75 percent with the same objective of taming rising inflation. However, after the end of fuel subsides on power and petroleum products over the last 5 weeks, the country in June 2022 recorded 21.3 percent inflation, the highest in 13 years.  

“At today’s meeting, the Monetary Policy Committee decided to raise the policy rate by 125 basis points to 15 percent,” Dr. Murtaza Syed, the acting Governor of the State Bank of Pakistan (SBP), said at a virtual press conference.  

“The state bank realizes that in these days the common man is facing difficulties ... inflation is too high and prices of food items have been increased," he said. "But to end fuel subsidies on electricity and petroleum products was the right decision but difficult decision of the government. State bank and state bank’s policy is giving much emphasis to control inflation because it is causing difficulties for our economy.”  

The acting governor said controlling inflation was an important objective of the central bank to give relief to the common man but warned that inflation would remain on the "higher side" for at least a year.

“Inflation will remain high at least for a year but we will try that it does not increase too much. We will try to control month-on-month but the year-on-year will unfortunately remain on higher side. We will see that it will remain 18 to 20 percent in current fiscal year as the prices have been increased, before declining sharply during FY24.”

The central bank said looking ahead, growth was expected to moderate to 3-4 percent in FY23, on the back of monetary tightening and fiscal consolidation, helping to close the positive output gap and diminish demand-side pressures on inflation.

"This will pave the way for higher growth on a more sustainable basis," the bank said in its policy statement.

The central bank also decided to keep the Export Finance Scheme (EFS) and Long-Term Finance Facility (LTFF) less than 5 percent of the policy rate to facilitate exporters.  

“The interest rates on EFS and LTFF loans are now being linked to the policy rate to strengthen monetary policy transmission, while continuing to incentivize exports by presently offering a discount of 500 basis points relative to the policy rate,” the statement added.  

The central bank said the current account deficit unexpectedly spiked in May 2022 and the trade deficit continued its post-March widening trend to reach a seven-month high in June 2022, on burgeoning energy imports. As a result, foreign exchange reserves and the rupee remained under pressure, further worsening the inflation outlook.

The central bank's weekly foreign exchange reserves data released on Thursday indicated a decline during the week ended on June 30, 2022, by $493 million to $9.8 billion, due to external debt and other payments.


Pakistan to expand COVID-19 vaccination to children next month as cases rise

Updated 13 August 2022

Pakistan to expand COVID-19 vaccination to children next month as cases rise

  • Government expects to receive vaccines and special syringes by next week
  • Pakistan Medical Association says vaccine for children is safe and effective

ISLAMABAD: The Pakistani government said on Saturday it will start vaccinating children aged five to eleven against COVID-19 from mid-September as infection figures are again on the rise.

After reporting a significant decline in COVID-19 cases earlier this year, Pakistan did away with almost all coronavirus restrictions. It has been witnessing a spike in infections since June, although health authorities say the situation largely remains under control and has fully vaccinated against COVID-19 over 88 percent of the population aged above 12 years.

“We will be starting COVID-19 vaccination of children aged between five to eleven years by mid-September,” Muazzam Abbas Ranjha, a vaccination lead at the National Institute of Health (NIH) in Islamabad told Arab News.

“The process for procurement of the vaccine and special syringes for the purpose is underway, and we’ll be receiving them next week.”

Ranjha said that Pakistan has done “extremely well” in immunizing its population against the pandemic and that’s why the numbers of deaths and infections have remained low compared to the neighboring countries.

“Now it’s time to immunize our children against the disease to curb the virus spread,” he said. “It is vital to administer the vaccine to our children as well to immunize the whole population against the virus.”

The country has conducted 20,272 COVID-19 tests in the last 24 hours, out of which 728 turned out to be positive or 3.59 percent with three deaths. A total of 161 patients are in critical condition, the official data says.

Ranjha said the number of daily infections in the country was under control as the government was constantly monitoring the situation.

“There is nothing alarming so far, but the people should still keep following health guidelines like mask wearing and social distancing at public places to evade the infection,” he said.

Dr. Qaiser Sajjad, secretary general of the Pakistan Medical Association, told Arab News the vaccination of children would help boost general immunity.

“The scientific data available shows the vaccine for children is safe and effective,” he said, adding that the government should roll out an awareness before starting the drive.

“Developed countries have already started vaccination of the children to curb the virus, and it is highly recommended that we should also start it as quickly as possible.”


Summer home where Pakistani founder spent final days lives on as monument to his memory

Updated 14 min 32 sec ago

Summer home where Pakistani founder spent final days lives on as monument to his memory

  • Two-story wooden building called Quaid-e-Azam Residency was built by British in Ziarat Valley in 1892
  • It was a summer retreat of Muhammad Ali Jinnah, today one of Pakistan’s most widely visited heritage sites

QUETTA: A single bed, modest wooden furniture, and black and white photographs on the walls of a small bedroom in a 19th-century residence in southwest Pakistan present an unassuming setting. 

But this is no ordinary room: it has special significance for Pakistanis as the place where the country's founding father spent some of the last days of his life.  

The Ziarat, or Quaid-e-Azam, Residency, has a two-story wooden structure amidst a juniper forest and was built during British rule in 1892. Located in Ziarat Valley, a picturesque hill station in Balochistan province, the house was a summer retreat of Muhammad Ali Jinnah, Pakistan’s Quaid-e-Azam (Great Leader). It was also where Jinnah stayed for two months as he tried to recover from a lung disease a year after the success of his movement to separate Pakistan from India on Aug. 14, 1947 after the end of British colonial rule. 

Decades later, people from across the country visit Ziarat to pay tribute to Jinnah's memory.

Chairs and a table used by Pakistani founder Muhammad Ali Jinnah for political meetings on display at his summer residence in Ziarat, Balochistan, on Aug. 2, 2022. (AN Photo)  

“We have read about the Quaid Residency in books and heard stories from our elders … but when I stepped inside the residency, my feelings changed,” Chanda Ashraf, a 21-year-old student from Gujranwala, told Arab News.  

“Inside this residency, I have experienced how the Quaid lived here and his existence was tangible,” she said. “I request all Pakistanis to visit this place once in their lifetime.”

The house has eight rooms, fitted with cedar wood. Jinnah’s bedroom is on the second floor, in front of his sister’s, Fatimah Jinnah, who took care of him in Ziarat.

Tourists take photos in front of Pakistani founder Muhammad Ali Jinnah’s summer residence in Ziarat, Balochistan, on Aug. 2, 2022. (AN Photo)

Jinnah had had tuberculosis since the 1930s, but hid his condition because he believed it would hurt him politically, historians say. In July 1948, Jinnah arrived in Quetta and journeyed to the higher retreat at Ziarat, where the Pakistani government sent the best doctors it could find to treat him. It was here that a diagnosis of tuberculosis and advanced lung cancer was confirmed. 

On August 13, on the eve of the first anniversary of the independence for which he had fought so hard, the founding father was moved to the lower altitude of Quetta and finally back to Karachi on September 11, 1948. 

Jinnah died later that night at 10:20 pm at his home in Karachi. He was 71 years old and Pakistan was a little over one. 

Today, the Quaid’s clothes and the tableware he and his sister had used at the Ziarat summer home are on display at the residency - now a museum and one of Pakistan’s most widely visited national heritage sites. 
The Quaid-e-Azam Residency has also appeared on the 100-rupee note since 2006.

A dining table used by Pakistan founder Muhammad Ali Jinnah is on display at his summer residence in Ziarat, Balochistan, on Aug. 2, 2022. (AN Photo)  

Muhammad Rahim, who for the past 19 years has been working as an official tour guide at the residency, said he was proud to be working at the house belonging to the man who had “struggled for an independent country for our future generations.”

“My late uncle Toti Khan had performed duties in the residency when Quaid-e-Azam Muhammad Ali Jinnah had come to live here back in the summer of 1948,” he told Arab News.  

Muhammad Rahim, a guide at the Quaid-e-Azam Residency, poses at the museum’s gallery with photos of Pakistani founder Muhammad Ali Jinnah, in Ziarat, Balochistan, on Aug. 2, 2022. (AN Photo)  

“Despite two janitors hired for cleaning Quaid’s residence, I clean the entire residency with my hands, because I consider it as my service for the Quaid.”

The building was damaged in 2013, when a blaze tore through its wooden structure after a grenade attack by a Baloch separatist group. It was restored within four months.

Balochistan has long been the scene of a low-level insurgency, and a few attacks have been reported in Ziarat district in recent years, but the province’s tourism minister, Abdul Khaliq Hazara says, told Arab News the security situation was normal and thousands of people visited Jinnah’s residence every year.

“The government has been developing the infrastructure in Ziarat to facilitate tourists,” he said. “The Quaid Residency is a national heritage.”

A visitor Mohamad Alam Qasim said: "Not just for Balochistan, this is Pakistan’s heritage. Quaid-e-Azam was our national hero. He was everyone's leader."


Pakistan condemns suicide blast targeting Saudi security forces in Jeddah

Updated 13 August 2022

Pakistan condemns suicide blast targeting Saudi security forces in Jeddah

  • Security forces were targeted while trying to arrest a suspect in a deadly 2015 mosque attack
  • Explosion injured three members of the security forces and a Pakistani resident

ISLAMABAD: Pakistan condemned on Saturday a suicide blast that targeted Saudi security forces during an attempt to arrest a man linked to a deadly 2015 bombing in the Kingdom.

Abdullah bin Zayed Abdulrahman Al-Bakri Al-Shehri detonated a suicide vest when security forces attempted to arrest him in Jeddah earlier this week, the Presidency of State Security said on Friday.

When the militant blew himself up, he died at the scene, with the explosion injuring three members of the security forces and a Pakistani resident.

“Pakistan strongly condemns the recent terrorist incident in Jeddah, resulting in injuries, including to a Pakistani national,” Pakistan’s foreign office said in a statement.

“The Government and people of Pakistan reiterate their full support for and deep solidarity with the leadership, government and brotherly people of Saudi Arabia against any threats to the Kingdom’s sovereignty and territorial integrity.”

Al-Shehri was suspected of being a member of a militant cell that coordinated the 2015 suicide bombing of a mosque in Abha frequented by security force members.

Eleven members of the security forces and four Bangladeshi nationals were killed in the 2015 attack.


Finance division says Pakistan’s economy made headway despite challenges since independence

Updated 13 August 2022

Finance division says Pakistan’s economy made headway despite challenges since independence

  • The country is currently facing the daunting challenge of dealing with a mounting current account deficit, dwindling forex reserves
  • The finance division says its aspiration is to put Pakistan’s economy on higher growth trajectory through investment, efficiency, productivity

KARACHI: Pakistan’s finance division on Saturday brought out a comprehensive report on 75 years of the country’s economic journey, showing the economy had improved its growth potential over a period of time despite tough challenges.

Pakistan is poised to celebrate its 75th independence anniversary on Sunday.

The South Asian nation of over 220 million people is currently facing a daunting challenge of managing a stuttering economy, as it faces a huge current account deficit projected at nearly four percent of the Gross Domestic Product (GDP).

The country’s foreign exchange reserves have also been consistently depleting in recent months, though officials say Pakistan will soon be in a position to stabilize its external sector with the assistance of friendly countries and the International Monetary Fund (IMF).

“Pakistan’s GDP rose from $3bn to $383bn from 1950-2022,” the report said. “In 1950, GDP was 1.8 percent and in 2022 it is 5.97 percent.”

The report noted the per capita income in Pakistan also rose from $86 to $1,798 within the same period.

“Exports rose from $355.5 million to $72.0 billion from 1950-2022,” it added, “while Tax Revenues rose from Rs. 0.31 billion to Rs. 6,126.1 billion from 1950-2022.”

The finance division said Pakistan only inherited 34 industrial units at the time of its independence out of the 921 currently operating in the country.

“FDI [Foreign Direct Investment] increased from $1.2 million in FY1950 to $1,867.8 million in FY2022,” it noted, “while the remittances increased from $0.14 billion in FY1973 to $31.2 billion in FY2022.”

“Pakistan has made significant headway in spite of the many challenges that it has faced,” the report maintained. “The nation was able to transform itself into a semi-industrial economy and hub for business activities.”

The finance division added its aspiration was to put the economy on a higher growth trajectory through greater investment, efficiency and productivity.
 


Pakistan’s ousted prime minister’s party hires public relations firm for media management in US

Updated 13 August 2022

Pakistan’s ousted prime minister’s party hires public relations firm for media management in US

  • The firm will try to improve the party image in the US through information distribution, media briefings
  • Imran Khan’s political rivals say he is ‘begging’ the US after accusing it of toppling his administration in April

ISLAMABAD: Months after Pakistan’s ousted prime minister Imran Khan said his government was brought down by the administration in Washington, the American chapter of his party has hired a public relations firm to improve its image in the United States through information distribution and media management.
Khan was driven out of power in a no-confidence vote in April after he lost his parliamentary majority. However, he told his workers and supporters he was “punished” for pursuing an independent foreign policy which was not liked by the US.
He also maintained the “international conspiracy” against him had succeeded since it was carried out with the help of “local abettors,” though his allegations were later denied by US and Pakistani officials repeatedly.
According to the agreement, a copy of which is available on the Internet, the Pakistan Tehreek-e-Insaf’s (PTI) US chapter has engaged Fenton/Arlook LLC for six months from August 1 on a monthly retainer fee of $25,000 to arrange media briefings and help the party with placement of articles and broadcasts.
“Fenton/Arlook shall provide public relations services, including but not limited to distributing information to and briefing journalists, placing articles and broadcasts, arranging interviews with representatives or supporters of PTI, advising on social media efforts and other such public relations services,” the agreement said.
The US firm noted its client did not include the PTI party registered in Pakistan.
“This is an agreement between a PR firm, not a lobbyist, and a group of US citizens,” Sajjad Burki, Khan’s focal person for the US, told Pakistan’s Dawn newspaper. “We are not lobbying for PTI Pakistan, and certainly not within the US administration.”
The former prime minister’s political rivals sharply reacted to the development, saying he had many faces.
Senior Pakistan Muslim League-Nawaz (PML-N) leader Ahsan Iqbal accused Khan of “begging [the] USA” after telling his followers that his government was toppled on Washington’s behest.

 

 

However, former information minister and Khan’s close aide, Chaudhry Fawad Hussain, said the American firm was hired by the PTI USA “to put its point across in the media.”