As Pakistan’s new finance minister takes over ailing economy, experts keep expectations in check

Pakistan's incumbent finance minister Ishaq Dar delivers a speech after a share purchase agreement signing with Chinese consortium at the Pakistan Stock Exchange (PSX) in Karachi on January 20, 2017. (AFP/File)
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Updated 30 September 2022

As Pakistan’s new finance minister takes over ailing economy, experts keep expectations in check

  • Ishaq Dar has vowed to rein in inflation, keep currency fluctuation in check via regulatory controls
  • Rupee recoups 4.3 percent in last five trading sessions since government announced Dar’s appointment

KARACHI: As newly appointed Finance Minister Ishaq Dar attempts to tackle Pakistan’s economic crises, financial and business leaders said on Thursday that to believe Dar was a “magician” who would easily rid Pakistan of its ills was an over-optimistic feeling.

Dar took oath as a federal minister on Wednesday, five years after he was ousted from the role by a court in a corruption case.

Dar is a member of PM Shehbaz Sharif’s ruling Pakistan Muslim League-Nawaz (PML-N) party and has already been finance minister four times.

The 72-year-old takes the driving seat of Pakistan’s economy at a time when the South Asian country is struggling to contain a balance-of-payments crisis, faces depleting foreign reserves, high inflation and a weakened currency.

Dar has vowed to rein in inflation, which currently stands at a 47-year high at 27.3 percent. He has also vowed to bring stability to the currency market, where the rupee has been taking a battering against the US dollar in recent months. In a bid to bolster Pakistan’s currency, Dar has also warned currency smugglers and speculators against actions that could weaken the rupee.

On Thursday, the finance minister held a virtual meeting with International Monetary Fund Mission Chief Nathan Porter to assure him Pakistan would undertake reforms envisaged under the deal between the two countries.

He said the government would take measures to reduce the burden on Pakistan’s economy while protecting vulnerable sections of the country’s population.

“Dar is focused on two things; the first being inflation that he wants to keep in check and the second is the interest rate reduction,” Farhan Mahmood, head of research at Sherman Securities, told Arab News.

“That is not his domain but through an inflation cut, it could be achieved,” he added.

Mahmood said Dar aspired to contain currency speculation and hoarding through regulatory controls, adding the new finance minister also wants to bring in proceeds from exporters.

“Around 10-15 percent of textile exporters’ proceeds don’t come to Pakistan. Dar can make some arrangements for early repatriation,” he added.

The impression that the finance minister will be tough on currency hoarders and speculators has left some visible marks. Since Monday, Pakistan’s rupee has been making gains against the US dollar.

The rupee in the interbank market has appreciated by Rs10.08 or 4.32 percent against the greenback during the last five consecutive trading sessions. The gains were witnessed following the coalition government’s decision to replace ex-finance minister Miftah Ismail with former premier Nawaz Sharif’s confidant.

Pakistan’s rupee closed at Rs229.63, up by 1.09 percent on Thursday, the State Bank of Pakistan’s (SBP) figures showed.

Analysts believe measures to bring stability to the currency market and reduction in global prices of commodities would prove to be a favorable outcome for the new finance minister.

“Timing of his arrival is good as the prices of commodities in the international market have declined by 36 percent, including those of diesel and petrol,” Mahmood said. “Even today we estimate that if the exchange rate stabilizes at Rs200, the petrol price that is at Rs237 could [go down to] Rs190 per litter,” Mahmood said.

Samiullah Tariq, Director of Research at Pakistan Kuwait Investment Company, said the situation seems favorable for Dar at the moment. However, he said the future outcomes depended on sustainable actions.

“If actions against currency hoarders and those involved in speculations are materialized, things would be better,” Tariq said. “But this should be on a sustainable basis. However, the global financial conditions have changed which may impact his (Dar) ability to execute performance as compared to the past.”

Pakistan estimates losses from unprecedented floods may go as high as $30 billion, another mounting challenge for the cash-strapped country.

The country’s reserves, in the face of growing pressure from import payments and other factors, have declined to $8 billion.

“Many aspects need attention with an economy in a balance of payments challenges worsened by floods,” Dr. Khaqan Najeeb, former adviser to the Ministry of Finance, told Arab News.

“Building reserves is important to signal external stability and orderly movement in markets. Ensuring multilateral flows in the short run can help in this regard,” Najeeb said. “Constructing a new macro framework is essential as GDP, fiscal and current account estimates have changed after floods,” he added.

“This will form the basis of negotiations with the IMF for reconsideration.”

Pakistani industrialists and business leaders believe Dar faces the daunting task of pulling Pakistan out of its current economic crisis. They said he may not be able to solve the country’s entire problems.

“Keeping in view the long list of Pakistan’s chronic economic problems, if somebody is feeling that Ishaq Dar is a magician, then he or she is “over-optimistic,” Engineer. M. A. Jabbar, Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), told Arab News.

“We expect ‘Daronomics’ may find some of the answers but not all the answers for the ailing economy of Pakistan,” he added. “External account, inflation and forex market are the key areas where the new finance minister has to enhance his focus.”

Pakistani financial experts believe mobilizing funds for flood relief will remain important, and direct relief to millions affected would be the best way forward.

Pakistan PM meets new army chief, lauds military's professional abilities

Updated 30 November 2022

Pakistan PM meets new army chief, lauds military's professional abilities

  • Prime Minister Shehbaz Sharif tells General Asim Munir it is a huge honor to lead the Pakistan Army
  • The PM hopes the armed forces will protect the country’s security better under its new leadership

ISLAMABAD: Prime Minister Shehbaz Sharif praised the military’s professional abilities while holding a meeting with the new army chief Syed Asim Munir on Wednesday, saying it was a huge honor for anyone to lead the armed forces of Pakistan which were tirelessly working for the country’s security.

This was Munir’s first meeting with the prime minister after taking over the army’s command in a ceremony held at the General Headquarters in Rawalpindi on Tuesday. He replaced General Qamar Javed Bajwa who retired from the post after leading the army for six years.

“We have full confidence in the professional capabilities of the Pakistan Army,” the prime minister was quoted as saying in a statement released by his office after the meeting.

“It is a great honor to lead the Pakistan Army,” he said while addressing the top general. “It is hoped that the armed forces under your leadership will deal with the challenges facing the country’s security in a better way.”

Sharif congratulated Munir on taking charge of his new position.

He maintained the whole nation was proud of the army’s role in protecting the frontiers of the country and fighting violent extremism and militancy.

The army has ruled Pakistan for almost half of its 75-year history, either through coups or as an invisible guiding hand in politics.

Munir’s appointment coincides with a dispute between the army and former premier Imran Khan, who blames top military generals for playing a part in his ouster in a parliamentary no-trust vote earlier this year.

Khan also expressed hope earlier in the day the new military leadership would end the “prevailing trust deficit” between the army and the public.

The PM Office said in its statement Sharif’s meeting with the army chief focused on professional issues related to the country’s defense and security.

Munir also met President Arif Alvi during the day.

In a separate meeting, Alvi discussed defense related matters with the new Chairman Joint Chiefs of Staff Committee General Sahir Shamshad Mirza.

Pakistan President Dr Arif Alvi (right) meets army chief Syed Asim Munir in Islamabad, Pakistan, on November 30, 2022. (PID)


Gas blast at Pakistan coal mine kills nine workers, injures four

Updated 30 November 2022

Gas blast at Pakistan coal mine kills nine workers, injures four

  • Coal deposits are found in the northwestern Orakzai district that sits on the Afghan border
  • Mine workers say lack of safety gear, poor working conditions are key causes of accidents

PESHAWAR: A gas blast at a coal mine killed nine workers in a northwestern Pakistani district on Wednesday, a government official said, and a team investigating the incident said gas sparks had caused the explosion.

There were 13 workers in the mine at the time and nine bodies were recovered, said Adnan Farid, the area deputy commissioner.

The remaining four miners were rescued from the rubble and have suffered critical injuries, he said.

A government team from the mineral development department inspected the site of the incident and said the explosion took place "due to gas sparks inside the mine," Orakzai district police chief Nazeer Khan told Reuters.

A government report seen by Reuters said the blast caused the collapse of the mine, and that gas build-up had triggered the blast. It didn't specify what type of gas it was.

Coal deposits are found in the northwestern Orakzai district that sits on the Afghan border and mine accidents are common, mainly due to gas build-ups.

Mine workers have complained that a lack of safety gear and poor working conditions are the key causes of frequent accidents, labor union officials have said in the past.

At exhibition celebrating UAE National Day, envoy says Pakistan ties ‘unique in region’

Updated 30 November 2022

At exhibition celebrating UAE National Day, envoy says Pakistan ties ‘unique in region’

  • The photo exhibition highlighted 51 years of friendship between the UAE and Pakistan
  • Al-Zaabi expressed optimism about the trajectory of relations between the two countries

ISLAMABAD: The United Arab Emirates (UAE) and Pakistan are destined to take their relations to new heights, said the envoy of the Arab country, Hamad Obaid Al-Zaabi, while visiting a photo exhibition in Islamabad on Wednesday.

The exhibition that highlighted 51 years of friendship between the two states is part of a string of events organized to celebrate the UAE national day that falls on December 2.

Students of Sheikh Zayed International Academy, Islamabad, sang the national anthem of the Arab country and performed traditional dance to celebrate the occasion.

“We are always optimistic about the future of bilateral relations with Pakistan and see this relation jump to a different level,” Al-Zaabi said while addressing the ceremony.

UAE Ambassador to Pakistan Hamad Obaid Al-Zaabi (3rd from left) inaugurates a photo exhibition in connection with the 51st UAE national day in Islamabad, Pakistan, on November 30, 2022. (AN Photo)

He maintained the UAE national day was always a major occasion that meant a great deal to the citizens of his country. He also expressed his gratitude to all the students for participating in the program and making it memorable through their performance.

Al-Zaabi said Pakistan and the UAE enjoyed a strong and historic relationship which was spread over 51 years of shared cooperation.

“We always look at this relation as unique in the region,” he continued. “There are feelings of trust between the people and leaders of the two brotherly countries.”
The UAE envoy said his country looked to future generations through educational cooperation.

“Under Sheikh Zayed International Academy, students from different nationalities and cultures have come here to celebrate the UAE national day with our culture which is really important for all of us,” he added.

Students of Sheikh Zayed International Academy are performing to celebrate the 51st UAE national day in Islamabad, Pakistan, on November 30, 2022. (AN Photo)

Speaking on the occasion, former president of the Islamabad Chamber of Commerce and Industries Sardar Yasir Ilyas said Pakistan could learn a great deal from the UAE, including how to strengthen its tourism industry.

“Tourism has made the UAE a hub of international attention and Pakistan should learn from [UAE’s] experience to tap its vast potential in this field,” he added.

Pakistan Navy seizes thousands of kilograms of drugs in Arabian Sea

Updated 30 November 2022

Pakistan Navy seizes thousands of kilograms of drugs in Arabian Sea

  • Pakistan is part of a transit route in the lucrative drug smuggling trade
  • Navy says its ships located and effectively intercepted two ‘suspicious’ dhows

KARACHI: In an operation in the North Arabian Sea, two Pakistan Navy ships seized approximately 5,800 kilograms of drugs valued at approximately Rs8.6 billion, a spokesperson for the navy said on Wednesday.

Pakistan, like India, is part of a transit route in the lucrative drug smuggling trade, due to its proximity to Afghanistan, the world’s largest producer of opium, from which heroin is made.

“Successful counter narcotics operation was conducted by two Pakistan Navy Ships in Arabian Sea in which a large cache of drugs has been apprehended,” the navy said in a statement.

“While conducting Maritime Security Operations in North Arabian Sea, Naval Ships located and effectively intercepted two suspicious dhows. Upon scrutiny of these boats, a large quantity of drugs that valued approximately Rs. 8.6 billion in international market was seized.”

The navy said both dhows have been handed over to law enforcement agencies. It did not specify what types of drugs were seized or how many people were arrested on board the two dhows.

“The successful operation by Pakistan Navy to seize huge quantity of narcotics reaffirms the resolve and commitment of PN to fulfill national and international obligations for maintaining good order at sea,” the statement said. “Pakistan Navy is vigilant to counter any illegal activity and safeguard its maritime borders.”

In October this year, Indian authorities arrested six Pakistani nationals and seized heroin worth tens of millions of dollars from a Pakistani fishing boat in the Arabian Sea near the western state of Gujarat.

Pakistan and England to finalize first Test match schedule on Thursday morning

Updated 30 November 2022

Pakistan and England to finalize first Test match schedule on Thursday morning

  • The commencement of the first Test match became doubtful after England players complained of stomach bug
  • A ceremony to unveil the series trophy had also to be postponed since England skipper was not in good health

ISLAMABAD: The top governing bodies of cricket in England and Pakistan will take a decision about the commencement of the first Test match between the two sides on Thursday after England players, including skipper Ben Stokes, complained of a stomach bug ahead of the contest in Rawalpindi on Thursday.

England arrived in Islamabad on Sunday for their first Test tour of Pakistan in 17 years after playing a seven-match Twenty20 series in the country two months ago. The two sides are scheduled to play three Test matches in December, though it is not clear if the series will begin as per schedule due to the health issues faced by the visiting team.

The Pakistan Cricket Board (PCB) announced in a Twitter post on Wednesday that its officials were in conversation with the England and Wales Cricket Board (ECB) over the commencement of the first Test match.

According to a statement subsequently released, the two boards “unanimously agreed to delay the decision” until Thursday morning on the basis of the health condition of the players.

“The two boards also agreed, subject to the England players not recovering well enough to take the field on Thursday morning, then the Test will commence on Friday and will be a five-day match,” the PCB statement added. “In this scenario, the schedule of the second Test in Multan and the third Test in Karachi will remain unaffected and will be played as per original schedule, i.e. 9-13 and 17-21 December, respectively.”

The captains of the two national teams were also supposed to unveil the Test series trophy on Wednesday, but the ceremony was postponed since the England skipper was not in a good shape.

“Several players and staff members, including England captain Ben Stokes, are feeling unwell and have been advised to stay at the hotel to rest up,” said an ECB statement.

According to media reports, about eight members of the England squad have been hit by the viral food poisoning, though the team brought its own chef after some players complained about food and fell ill during the T20 series.