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Pakistan’s currency to weaken further, exacerbate inflationary pressure – Fitch Ratings

A foreign currency dealer counts US dollars at a shop in Karachi, Pakistan, on May 19, 2022. (AFP)
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Updated 31 January 2023

Pakistan’s currency to weaken further, exacerbate inflationary pressure – Fitch Ratings

  • Pakistan’s rupee plummeted to 24-year low last week after markets removed cap on exchange rate
  • Fitch says rupee devaluation ‘positive’ for long-term outlook, helping unlock future IMF disbursements
Updated 31 January 2023
Arab News Pakistan

ISLAMABAD: An international credit rating agency on Tuesday forecast that Pakistan’s national currency would depreciate further, exacerbating the imported inflationary pressure across the country in the days to come.

In its bid to revive a stalled $7 billion International Monetary Fund (IMF) loan program, Pakistan agreed to remove artificial controls from its exchange market. The rupee plummeted to a record 24-year low last week after foreign exchange companies removed the cap on the exchange rate. 

The removal of the currency cap has been one of the principal demands of the IMF. Pakistan, with a staggering $3.6 billion in reserves barely enough to cover three weeks of imports, is actively seeking an IMF bailout program to avoid a balance-of-payments crisis. 

In its latest forecast for Pakistan, Fitch Ratings said its earlier forecast of the dollar rising to Rs248 is “now looking out of date.”

“We believe that the rupee’s weakness still has further to run, particularly with Pakistan’s balance of payments position likely to remain weak for several more months,” Fitch said. 

The rating agency said currently there is “a considerable amount of uncertainty” at this juncture, adding that it is difficult to gauge the extent to which the latest rupee devaluation has caused investor confidence to dip. 

It said a weakening rupee would also have broader economic implications in the near future. “In the near term, it could exacerbate imported inflationary pressure, and may eventually result in steeper policy rate hikes from the SOP,” Fitch added. 

While it said that Pakistan’s economy was expected to contract by 0.3 percent in FY2022/23, the rupee’s devaluation would help Pakistan secure further disbursements from the IMF. Fitch said it would be “a positive for the longer-term outlook,” helping Islamabad ease its balance of payments strains. 

An IMF mission is currently in Islamabad till February 9, 2023, to discuss the loan revival. The mission will examine Pakistan’s policies to restore domestic and external sustainability, including strengthening the country’s fiscal position with durable measures while supporting those affected by devastating floods last year.

Topics: Pakistan Pakistan currency Inflation Fitch Ratings International Monetary Fund

‘Friendly countries’ expected to fulfill commitments for IMF deal — finance minister

Updated 26 March 2023

‘Friendly countries’ expected to fulfill commitments for IMF deal — finance minister

  • Pakistan would not default, government doing its best to steer Pakistan out of “difficult situation,” says Ishaq Dar
  • Dar had said Pakistan’s IMF deal being delayed over friendly countries’ assurances to fund balance of payment gap
Updated 26 March 2023
Arab News Pakistan

ISLAMABAD: Finance Minister Ishaq Dar said on Sunday that “friendly countries” were expected to materialize their commitments to Pakistan which would pave the way for Islamabad to finalize its loan revival deal with the International Monetary Fund (IMF), the state-run Associated Press of Pakistan (APP) said in a report.

Earlier this month, Dar told Pakistani parliamentarians that Pakistan’s deal with the IMF is being delayed as the global lender wants assurances and commitments from “friendly countries” to fund its balance of payments gap to materialize.

Though the finance minister did not name the “friendly countries” specifically, it is understood that he was referring to Saudi Arabia, China and the United Arab Emirates (UAE). All three are close allies of Pakistan who have bailed come to its aid whenever Islamabad faces an economic crisis.

Pakistan has been struggling to revive a stalled loan program with the IMF which would unlock a tranche of $1.1 billion, crucial for the country to stave off a balance of payment crisis. The South Asian country’s reserves have dipped to historic lows over the past couple of months, as it desperately seeks external financing to pay off its debts and sustain its economy.

“Addressing as chief guest an Iftar dinner hosted by the Islamabad Chamber of Commerce and Industry (ICCI) in honor of foreign diplomats, Dar said that friendly countries were expected to materialize their commitments with Pakistan that would pave the way to close the deal with the IMF and revive the economy,” the APP said.

The finance minister said Pakistan “would not default,” adding that the government was doing its best to steer the country out of a “difficult situation” to ensure its sustainable growth.

While Pakistan desperately waits for the IMF to revive the stalled loan program, the South Asian country grapples with decades-high inflation and a deepening political crisis. Pakistan’s restrictions on imports — in its bid to prevent the outflow of dollars — have caused banks to delay or deny the opening of Letter of Credits (LCs) for the import of goods.

Topics: Ishaq Dar Finance Minister Ishaq Dar Pakistan IMF Talks IMF bailout

Pakistan eye redemption in Sharjah in second T20 against Afghanistan today

Updated 26 March 2023

Pakistan eye redemption in Sharjah in second T20 against Afghanistan today

  • Afghanistan made history by beating Pakistan for the first time ever in an international match on Friday
  • Pakistan make one change to the playing XI, replace all-rounder Faheem Ashraf with Mohammad Nawaz
Updated 26 March 2023
Shahjahan Khurram

ISLAMABAD: A new-look Pakistan squad, with most of its senior players resting, will be eyeing redemption against Afghanistan today, Sunday, as the two sides lock horns in the second T20 clash of the three-match series at the Sharjah Cricket Stadium.

Afghanistan made history on Friday after they beat Pakistan for the first time in an international match. Inspired by a match-winning knock by Mohammad Nabi, Afghanistan defeating the green shirts by six wickets in a low-scoring contest in the first T20.

On a turning track that proved to be more conducive for bowlers than batters, Pakistan lost the plot earlier in the innings, managing to finish at an unimpressive 92/9 at the end of their 20 overs.

However, when Afghanistan came out to bat, Pakistani bowlers Ihsanullah, Imad Wasim and Naseem Shah exploited the pitch conditions well to put the Afghan batters at bay. It looked like Pakistan’s game at one point in time when Ihsanullah struck twice in his debut over, dismissing Ibrahim Zadran and Gulbadin Naib.

However, after a dismal 45-4, Afghanistan managed to pull through courtesy of a match-saving partnership between Nabi (38 runs from 38 balls) and Najibullah Zadran (17 runs from 23 balls).

For Sunday’s match, Pakistan announced they would take to the field with only one change in the playing XI.

“There is one change in the side as Mohammad Nawaz replaces Faheem Ashraf,” the Pakistan Cricket Board (PCB) said in a statement.

 

 

Senior Pakistan cricket players such as Babar Azam, Shaheen Shah Afridi, Muhammad Rizwan, Haris Rauf, Fakhar Zaman and others are not taking part in the series. The PCB had earlier announced it was resting the players.

PCB chief Najam Sethi said the series would serve as a grooming opportunity for younger stars such as Ihsanullah, Saim Ayub, Zaman Khan, Azam Khan, Tayyab Tahir, and others who performed well in the recently concluded Pakistan Super League (PSL).

In Azam’s absence, all-rounder Shadab Khan is leading the Pakistani squad for the three-match series in the UAE.

Pakistan decided to “compensate” Afghanistan by playing against them after Australia pulled out of an ODI series against Afghanistan. Cricket Australia said it had taken the decision in protest over the Taliban government’s education and work restrictions against women.

Topics: Pakistan vs Afghanistan Pakistan cricket

PM Sharif criticizes president’s ‘partisan attitude’ amid rising political tensions

Updated 26 March 2023

PM Sharif criticizes president’s ‘partisan attitude’ amid rising political tensions

  • PM responds to president’s letter from Friday in which he raised concerns over political developments in Pakistan
  • PM Sharif accuses president of espousing “one-sided,” “anti-government” views in line with former premier Imran Khan
Updated 26 March 2023
Arab News Pakistan

ISLAMABAD: Prime Minister Shehbaz Sharif on Sunday wrote back to President Arif Alvi, accusing him of harboring a “partisan attitude” toward the coalition government and espousing “one-sided, anti-government views” as political tensions in the South Asian country continue to rise.

Sharif’s letter was in response to Alvi, who had written to the prime minister on Friday to express concern over recent political developments in the country. In his letter, Alvi mentioned the “glaring violation” of the fundamental rights of opposition activists and media personnel to stifle dissenting voices in Pakistan.

The president, a close ally of former prime minister Imran Khan, also mentioned the Election Commission of Pakistan’s (ECP) decision to postpone the Punjab polls from April 30 to October 8 in a recent proclamation while describing it as a “flagrant violation of the Constitution ... by the executive authorities and government departments.”

The correspondence between the president and the prime minister takes place at a time when political tensions are high in the country. Khan alleges his party supporters and aides are being subjected to police brutality, arrests and harassment by the coalition government and Pakistan’s powerful military. The government denies this, and accuses Khan of inciting his supporters to attack law enforcers.

In his response to Alvi, Sharif expressed disappointment at “the blatantly partisan nature” of the president’s letter, adding that it reads like a press release by Khan’s political party. He questioned why the president had not taken notice of the “severe” human rights violations that took place under the previous government spearheaded by Khan.

Sharif pointed out that the constitution does not grant any powers to the president to seek an explanation from the prime minister. “The only reason I am responding to your letter as because I want to bring your partisan attitude and actions on record and to set the record of our Government straight,” he wrote.

Responding to Alvi’s concerns about the ECP’s decision to postpone provincial polls in Punjab to Oct.8, Sharif said the Khyber Pakhtunkhwa and Punjab assemblies were dissolved to “blackmail” the federal government and two provinces to dissolve assemblies and declare elections.

“You have not taken note of the effect of conducting elections to these two provinces prior to the general elections to the National Assembly in as much as, organizing and conducting free and fair elections under clause (3) of Article 218 may not be possible with elected provincial governments in Punjab and Khyber Pakhtunkhwa,” the prime minister wrote.

“This constitutional distortion has completely escaped your attention, which is quite saddening, given the role of the head of the state that the Constitution assigns to the President,” Sharif added.

The prime minister responded to Alvi’s allegation that he had not held meaningful consultations with the president, saying that the constitution allows the president to act on the advice of the prime minister or the federal cabinet.

“In very limited instances, the President acts in his discretion under the Constitution,” Sharif wrote. “Article 46 and Rule 15(5)(6) supra are what they ordain. That is, keep the President informed. Nothing more and nothing less.”

Topics: Prime Minister Shehbaz Sharif President Dr. Arif Alvi

After Lahore clashes, interior ministry bars governor, CM from taking police outside Gilgit-Baltistan

Updated 26 March 2023

After Lahore clashes, interior ministry bars governor, CM from taking police outside Gilgit-Baltistan

  • Days earlier, federal minister said GB police were deployed to ‘attack’ Punjab cops as they tried to arrest ex-PM Khan
  • Clashes erupted between Khan supporters and Punjab police in Lahore last week, leaving scores injured on both sides
Updated 26 March 2023
Nisar Ali

KHAPLU: The Pakistani interior ministry has barred the governor and the chief minister of the northern Gilgit-Baltistan (GB) region from taking police officials with them outside the region, more than a week after a federal minister said GB police were deployed outside Imran Khan’s residence in Lahore to prevent his arrest by their Punjab counterparts. 

A team of Islamabad police, backed by their Punjab counterparts, attempted to arrest Khan from his Lahore residence on March 14 following the issuance of his non-bailable arrest warrants by an Islamabad court in a graft case. 

A day later, Federal Information Minister Marriyum Aurangzeb said the GB police force had been deployed to “attack” the Punjab police as they tried to arrest Khan in the eastern Pakistani city of Lahore. The move to arrest Khan had sparked clashes between his supporters and the police, with several injured on both sides. 

The Pakistani interior ministry this week issued directives for GB Governor Mehdi Shah and Chief Minister Khalid Khurshid, who hails from Khan’s party, not to take regional police officials for their security to Islamabad or other parts of the country. 

“Security arrangements for the Governor and Chief Minister, Gilgit-Baltistan during their visit outside the region, shall be made by the respective provincial/regional governments,” the interior ministry said in a notification on Friday. 

“The Government of Gilgit-Baltistan shall not deploy a police force for security purposes outside the Gilgit-Baltistan region.” 

Last week, the federal government also replaced GB police chief Muhammad Saeed with Dar Ali Khan Khattak with immediate effect. 

GB Sports Minister Raja Nasir Ali Khan said security protocol was the right of every chief minister, adding the ruling coalition only acted in opposition to his Pakistan Tehreek-e-Insaf (PTI) party. 

“We will move the court against this notification,” the provincial minister told Arab News. 

But a political analyst said the interior ministry’s notification was according to the “law and customs.” 

“An incident happened [in Lahore a few days ago], and this instruction came. The instruction is according to law and customs,” Afzal Ali Shigri, a political analyst and a former IG, told Arab News on Saturday. 

“This is a normal practice and the local police are responsible to provide security for VIPs [of other regions]. This should be kept in mind that the function and responsibility [is linked] with jurisdiction. And because their jurisdiction is not outside GB, so this instruction has been issued.” 

Topics: Imran Khan arrest Zaman Park

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In massive Lahore rally, ex-PM Khan lays out 10-point recovery plan to ‘save’ Pakistan

Updated 26 March 2023

In massive Lahore rally, ex-PM Khan lays out 10-point recovery plan to ‘save’ Pakistan

  • The South Asian country of 220 million has for months been embroiled in political and economic crises
  • The ex-premier taunts the country’s military establishment, says there is no ‘easy way’ out of current situation 
Updated 26 March 2023
KASHIF IMRAN

ISLAMABAD: Former prime minister Imran Khan on Sunday laid out a 10-point recovery plan to steer Pakistan out of an economic crisis as he addressed a massive public gathering in the eastern city of Lahore. 

The former premier said the country’s revenue collected via taxes was far lesser than its expenses and the other major problem was higher outflow of dollars than the inflows, which increased pressure on the rupee and gave rise to inflation. 

He detailed a 10-point economic recovery plan to steer the country out of the crisis, stressing the need to increase exports and investment, and providing a conducive environment to businesspersons through mid- and long-term planning. 

“Overseas Pakistanis are the biggest asset of the country. If we fix our governance system, rule of law... then our governance system will safeguard their capital,” Khan said. 

Protected by a bulletproof barrier, former Prime Minister Imran Khan waves to supporters during a rally in Lahore, Pakistan, on March 26, 2023, to pressure the government of Shahbaz Sharif to agree to hold snap elections. (AP)

But to bring those reforms, the ex-premier said, the country’s governance system needed to be fixed and rule of law was supposed to be established. 

As long as the country won’t have an enabling environment for investment, no government could bring that money to Pakistan, he said. 

“Dollars flow in with increasing exports, but we never tried it,” he said. “We will divert the whole country toward exports. Whoever would bring dollars to the country by selling goods, they will be provided facilities.” 

Other points of Khan’s recovery plan included the promotion of information technology (IT), tourism, mineral exploration and agriculture in the South Asian country of 220 million. 

While laying out his plan, Khan also taunted the country’s all-powerful military about whether they had a plan to ‘save’ Pakistan. 

“I ask Pakistan’s establishment that this is clear you have decided... we won’t let Imran Khan win. All this drama, election delay, the attack on my house, there is only one aim that we won’t let Imran Khan come to power,” he said. 

“Fine, do not let [me] come to power, but tell [me] do you have any program to steer the country out of this destruction? Is there a roadmap? I challenge that the people sitting at the helm neither have the capability nor the will.”  

Supporters of Pakistan's former prime minister Imran Khan gather at a rally in Lahore early on March 26, 2023. (AFP)

The former premier said there was no “easy way” to take the country out of this difficult situation. 

“Only someone with public mandate can make difficult decisions, someone who came through the vote of people, whom the people trust in,” he said. 

“A party that would form government through public mandate, through the vote of public, that would be the first step. When a government would come for five years, then the people, business community would have the confidence that there is political stability.” 

Khan, who was ousted in a parliamentary vote of no-confidence in April last year, has been at loggerheads with the coalition government of PM Shehbaz Sharif and the country’s powerful military establishment. 

The former premier accuses the coalition and former army chief Gen (retired) Qamar Javed Bajwa of orchestrating his ouster as part of a United States-backed “foreign conspiracy.” All three deny the allegation. 

Since his removal from office, Khan has been agitating against the government and criticizing the military through his fiery speeches at rallies and pushing for early elections in the country which are otherwise slated to take place by October. 

The ex-prime minister is also facing dozens of cases, with charges against him ranging from terrorism to sedition. 

Topics: Ex-PM Imran Khan

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