Pakistan targeting fiscal deficit of 6.54% next fiscal year

In this handout photograph, taken on April 13, 2023, Pakistan Finance Minister Ishaq Dar gestures during his address at the National Assembly in Islamabad. (Photo courtesy: Twitter/NAofPakistan)
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Updated 09 June 2023
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Pakistan targeting fiscal deficit of 6.54% next fiscal year

  • The budget needs to satisfy the IMF to secure the release of stuck bailout money
  • Government targeting primary surplus at 0.4% of GDP, finance minister says

ISLAMABAD: Pakistan's government is targeting a fiscal deficit of 6.54% of GDP for the 2023-24 fiscal year, the finance minister said in his budget speech on Friday, much wider than the current year's original estimate of 4.9%.

The budget needs to satisfy the IMF to secure the release of stuck bailout money for the crisis-struck country, which is due to hold a general election by November.

The government was targeting primary surplus at 0.4% of GDP, the finance minister said. 

"This is not an election budget. This budget is for the success of the country, it has no political elements in it," Ishaq Dar said on the floor of the house.

For the next year, GDP growth had been budgeted at 3.5 per cent, Dar said, calling it a “modest target.”

The country’s economy has suffered record high inflation and an economic slowdown compounded by devastating floods last year and a failure so far to unlock crucial finances from the International Monetary Fund. The IMF had demanded a number of prior actions from Pakistan, including reversing subsidies, a hike in energy and fuel prices, jacking up its key policy rate, a market-based exchange rate, arranging for external financing and raising over 170 billion rupees ($613 million) in new taxation.

“Owing to the depreciating value of the rupee and the rapid increase in interest rates, the economic woes of the country increased but the government adopted the policy of saving the state instead of saving political interests,” Dar said in his budget speech. 

Pakistan's Prime Minister Shehbaz Sharif in a televised address to his cabinet on Friday reiterated that he was hopeful that the agreement with the IMF would go to its board for approval this month.

He added that the United Arab Emirates, Saudi Arabia and China had been "very helpful" in recent months in providing funding to Pakistan.

The IMF said earlier this week that it was discussing the budget with Pakistan's government. Sharif's government is hoping to persuade the IMF to unlock at least some of the $2.5 billion left in a $6.5 billion programme that Pakistan entered in 2019 and which expires at the end of this month.


Pakistan condemns latest desecration of Qur’an in the Netherlands

Updated 25 September 2023
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Pakistan condemns latest desecration of Qur’an in the Netherlands

  • Anti-Islam activists have burnt, damaged several copies of Muslim holy book in recent months
  • Desecrations have enraged Muslims, unleashed demands governments ban such acts 

ISLAMABAD: Pakistan on Monday condemned the latest “senseless” act of desecration of the Qur’an in the Netherlands in front of a number of embassies of Muslim countries.
Anti-Islam activists have burnt and damaged several copies of the Muslim holy book in recent months, prompting outrage in the Muslim world and demands the nations’ governments ban such acts.
Intentionally burning the Qur’an is seen by Muslims as a blasphemous and insulting act worthy of severe punishment. 
“Pakistan condemns in the strongest terms the latest senseless and deeply offensive act of desecration of the Holy Qur’an that took place in The Hague, the Netherlands in front of some embassies of OIC member countries including Pakistan,” the Pakistani foreign office said.
“It is a deliberately provocative and Islamophobic act that has hurt the sentiments of Muslims around the world. Such acts cannot be condoned under the guise of freedom of expression, opinion and protest.”
The foreign office said Pakistan believed freedom of expression came with responsibilities and governments should actively prevent racist and Islamophobic acts that incite religious hatred.
“Pakistan’s concerns have been conveyed to the Dutch authorities. We urge them to be mindful of the sentiments of the people of Pakistan and Muslims around the world and take active steps to prevent such hateful and Islamophobic acts.”
Last month the United Nations Human Rights Council approved a disputed resolution on religious hatred in the wake of the burning of a Qur’an in Sweden, prompting concern by Western states who say it challenges long-held practices in rights protection.


Pakistan gets visas for Cricket World Cup in India after expressing concerns to ICC 

Updated 25 September 2023
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Pakistan gets visas for Cricket World Cup in India after expressing concerns to ICC 

  • Team is scheduled to leave for Hyderabad via Dubai in the early hours of Wednesday 
  • Eighteen Pakistan players and 15 support staff are due to travel to India after visa delays 

ISLAMABAD: Pakistan has received its visas for next month’s World Cup in India after expressing concerns to the International Cricket Council over delays and complaining about “inequitable treatment”. 

The team is scheduled to leave for Hyderabad, via Dubai, in the early hours of Wednesday and Pakistan Cricket Board spokesperson Umar Farooq said his organization had received confirmation from the Indian High Commission in Islamabad late on Monday to collect their passports. 

Eighteen Pakistan players and 15 support staff are due to travel to India. 

Earlier, the PCB had expressed its disappointment with the ICC over the delays. 

“It’s a matter of disappointment the Pakistan team has to go through this uncertainty ahead of the major tournament,” Farooq said in a statement. 

“There has been an extraordinary delay in getting clearance and securing Indian visas … we have written to the ICC raising our concerns about inequitable treatment toward Pakistan and reminding them of these obligations toward the World Cup.” 

Farooq said Pakistan had reminded the ICC governing body for three years about its obligations but it “has all come down to the last two days”. 

The PCB was forced to cancel its original plan to organize a team-building process in Dubai on the way to India. “We had to rework our plan and book new flights,” Farooq said. 

Pakistan is due to play New Zealand in Hyderabad on Friday before taking on Australia in another warm-up on Oct. 3. 

It launches its World Cup campaign against the Netherlands on Oct. 6. 


Pakistan bans using injections of Avastin after patients go blind, launches investigation

Updated 25 September 2023
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Pakistan bans using injections of Avastin after patients go blind, launches investigation

  • Cancer drug Avastin in smaller doses is similar to eye drug Lucentis, used as low-cost option to treat blindness-causing conditions
  • Some 68 people from various districts of Punjab province have been hospitalized with blindness after receiving injections of Avastin

KARACHI: Pakistan’s interim health minister Nadeem Jan said on Monday the government had imposed an interim ban on using injections of Avastin cancer drug across the country after a number of patients injected with the drug lost vision.

Some 68 people from various districts of Punjab province have been hospitalized with blindness after receiving injections of Avastin, a medication primarily used for the treatment of cancer patients but also prescribed off-label in Pakistan for diabetic retinopathy-related edema. 

Health officials say the medication is registered with the Drug Regulatory Authority of Pakistan (DRAP) for the treatment of colon carcinoma only.

The regulator said in a statement on Monday incidents of “loss of vision in diabetic patients have been reported following treatment with Altered/Dispensed/Diluted Avastin injection.” 

DRAP instructed the drug’s importer to recall suspected batches of Avastin 100mg injection, which it said had been created illegally.

“The sale/distribution of registered Avastin Injection has been put on halt till verification of its quality through sampling and laboratory testing to safeguard public health,” DRAP said in a statement on its website.

“We have established a clear strategy in response to this situation,” the health minister told Arab News. “The supply of this medication [in injection form], whether from Roche or Genius pharmaceutical, has been halted, and both Punjab and other provinces have been instructed to cease its sale and purchase until the investigation report is released.”

Jan said a five-member committee had been established to investigate “whether the problem was caused by the medicine itself, issues in its supply chain, the skill level of the administering doctors, or the sterilization process.” 

Two people associated with distribution of Genius Pharmaceuticals had been identified, and a First Information Report (FIR) had been filed against them, the minister said: 

“Two suspects have been identified and charged, but they have gone underground to evade arrest. They will be apprehended soon.” 

The affected patients had used Avastin doses distributed by Genius Pharmaceuticals.

“Once the report is ready, it will be made public, and the culprits will be dealt with according to the law. They will be punished, setting an example for others and deterring them from committing such acts driven by self-greed,” Jan added.

On its website, Roche said Avastin was approved in more than 130 countries, including the United States, to treat several types of cancer. Roche’s Pakistan has not yet commented. 

Avastin was used as an eye treatment off-label, meaning outside of the approved use. Cancer drug Avastin, when used at much lower doses, is similar to eye drug Lucentis, and is used in many countries as a low-cost option to treat certain blindness-causing conditions.

Speaking to Arab News, Javed Akram, Punjab’s Minister for Specialized Health, said the injections seemed to be okay when they were dispatched from the company but problems likely arose when they were converted into smaller doses.

“It is being transferred into small syringes from large vials for cost-cutting and profit-making, which goes against good clinical practices,” Akram said, adding that the technical committee would determine the real cause. 

Akram said a majority of the affected patients from central Punjab had been admitted to Mayo Hospital, Lahore, while those from the province’s southern districts had been shifted to Nishtar Hospital, Multan.

Jan said the government had instructed provincial authorities to ensure patients received free and high-quality treatment.

“Eighty percent of the patients show improvement with proper treatment. The government is committed to ensuring the full recovery of all patients,” he said, adding that though the cases had so far only occurred in Punjab, other provinces had also been adviced to suspend the use of this medication for two weeks as a precaution.


Pakistani rupee continues rally against USD with military’s ‘resolve’ to stabilize currency — ECAP

Updated 25 September 2023
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Pakistani rupee continues rally against USD with military’s ‘resolve’ to stabilize currency — ECAP

  • Rupee was trading at all-time low of Rs307.10 against USD on Sept. 05,2023, had regained 5.2 percent of its value by Monday
  • Exchange commission says market sentiment changed after crackdown as military resolved strict action against manipulators

KARACHI: Pakistan’s national currency continued to recoup its value against the greenback on Monday amid a crackdown on dollar hoarding and smuggling that currency dealers have widely credited the country’s all-powerful army for spearheading.

The rupee was trading at an all-time low of Rs307.10 against the United States Dollar (USD) on September 05,2023. Since then, it has regained 5.2 percent of its value to close at Rs290.86 in the interbank market today, Monday, a six-week high.

Currency dealers have attributed the rupee recovery to what they call the “danda,” or stick, approach to deal with smugglers and hoarders, as tens of millions of dollars have poured back into Pakistan’s interbank and open markets since raids on black market operators began on Sept. 6.

While there have been other attempts to curb the black market when the rupee has been under stress, the latest push came after licensed dealers requested army chief General Asim Munir take action, rather than leave it solely to the civilian caretaker government that was put in place last month to run Pakistan till elections, currently expected to be held early next year. Munir had reportedly promised dealers “transparency in dollar exchange and interbank rates.”

Last week, Malik Bostan, chairman of the Exchange Companies Association of Pakistan (ECAP), told reporters a task force was made after the problem was escalated to the army chief.

“The danda approach is working perfectly fine,” Zafar Sultan Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP), said.

“The market sentiment has changed after the crackdown because the establishment was concerned and resolved to take strict action against those involved in manipulation.”

Controlling the open market rate is critical for Pakistan following a $3 billion bailout from the International Monetary Fund (IMF) that was agreed in July to help avert a sovereign default.

An IMF demand that the difference between the interbank and open market does not exceed 1.25 percent will be a key part of discussions set to begin later this month, before the release of the next tranche of the bailout.

Since the army chief’s intervention and the widespread crackdowns, the currency has recouped its value by Rs16.24 in the interbank market while a major fall was witnessed in the open market where the currency has recouped Rs36 to reach Rs293 against the greenback since September 04, 2023, according to central bank data. 
Currency dealers said a downward trend prevailed in the market, mainly in the open market, where buyers were not turning up. 

Paracha said inflows in the currency market had increased as exporters needed to cash export proceeds while remittances, going to the grey market previously, were coming in through regular channels. 

“The daily trading volume has now increased to $15-20 million,” Paracha said, adding that the volume had dropped to only about $5 million in the open market before the crackdown.

About 90 percent dollars in Pakistan are traded in the interbank market which exclusively operates for banks who buy on behalf of their clients, mainly importers who need to make payments to foreign sellers of goods. 

Pakistan’s key sources of dollar inflows, exports, remittances, and foreign direct investment remain insufficient to create a balance between supply and demand, compelling the country to suffer from twin trade and current account deficits.
 
Pakistani analysts said market sentiments had improved with some demand-supply stability after the crackdown.

“The crackdown against hoarders and smuggling of dollars has improved market sentiments, which needs to be continued for long-term stability,” Samiullah Tariq, director research at the Pakistan Kuwait Investment Company, said.


UK financial market leaders meet PM, show ‘keen interest’ in investing in Pakistan

Updated 25 September 2023
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UK financial market leaders meet PM, show ‘keen interest’ in investing in Pakistan

  • Pakistan in June set up Special Investment Facilitation Council, a civil-military forum, to attract foreign funding
  • SIFC has identified five sectors as priority namely IT, agriculture, defense, minerals and mining, and energy

ISLAMABAD: Senior leaders of London’s capital and financial markets called on caretaker Prime Minister Anwaar-ul-Haq Kakar in London today, Monday, and expressed “keen interest” in investment opportunities in the South Asian country.

Pakistan in June set up a Special Investment Facilitation Council (SIFC) — a civil-military hybrid forum — to fast-track decision making and promote investment from foreign nations. The council has identified five sectors as priority for seeking investment, namely agriculture, mining, information technology, defense production and energy, as the South Asian country deals with a balance of payments crisis and requires billions of dollars in foreign exchange to finance its trade deficit and repay its international debts in the current financial year.

Last week, Kakar used his visit to New York for the UN General Assembly as an opportunity to meet business and thought leaders and stakeholders and make the case for improved business climate in Pakistan and its potential for foreign direct investment in a range of sectors.

“The investors expressed their keen interest in exploring promising investment opportunities in the financial and capital market of Pakistan, reflecting a growing mutual interest in expanding economic collaboration,” the PM’s Office said in a statement released after his meeting with notable investment firms, including Fidelity International Limited (FIL), Wellington Management, Ashmore, Jefferies International, Redwheel Capital, Switex Industrial SA, Oxford Frontier Capital, GuarantCo, JP Morgan, Kalrock Capital, and UBL UK.

“Prime Minister Kakar informed the delegation about Pakistan’s current economic landscape, highlighting government measures for external account improvement,” the PM office said.

“He said that recent administrative actions strengthened the Pakistani rupee against the US dollar, fostering optimism for stability. He said positive indicators, including inflows from the World Bank, Asian Development Bank, and friendly nations, contributed to reduced inflation, stabilized reserves, and revival of industrial growth.”

Kakar also spoke about the potential for foreign direct investment in Pakistan’s key sectors and the positive impact of a Stand-By Arrangement (SBA) with the IMF, agreed in June. He highlighted economic improvements such as reduced inflation and improved trade after the removal of restrictions on imports and fiscal measures for monetary support and medium-term inflation targets.

“Furthermore, the Prime Minister highlighted Pakistan’s pro-investment efforts, introducing the Special Investment Facilitation Council,” the PMO said. 

“This initiative, led by the Prime Minister himself, streamlines investment processes, attracts investments in key sectors, and fosters long-term growth by simplifying the business landscape.”