Pakistan hopes to clear final IMF review, considers additional financing of $6-8 billion

The seal of the International Monetary Fund is seen at the headquarters building in Washington, DC on July 5, 2015. (AFP/File)
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Updated 27 February 2024
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Pakistan hopes to clear final IMF review, considers additional financing of $6-8 billion

  • Pakistan has increased energy prices to meet the global lender’s conditions under the short-term $3 billion loan
  • Pakistani officials say the final decision to avail another IMF program will be made by the next elected government

KARACHI: Expressing confidence to clear the final review of $3 billion short-term financing program of International Monetary Fund (IMF) after meeting key conditions including energy price hike, Pakistani authorities are weighing options to avail another $6-8 billion program, an official privy to the situation confirmed on Tuesday.
The South Asian nation, with a population of over 241 million, increased gas prices by up to 76 percent for domestic consumers in recent months before raising petroleum prices by 1-3 percent in February. The National Electric Power Regulatory Authority (NEPRA) also notified Rs7.05 per unit hike in power prices under fuel charge adjustment (FCA) on Monday.
Pakistani authorities are confident that recent energy price adjustments to meet some of the key conditions of the global lender would help clear the second and last review of the $3 billion Stand By Arrangement (SBA) that ends in March 2024.
“With latest energy price hikes, Pakistan has met almost all the preconditions set by the IMF for end-December 2023 review including exchange rate stability, continuation of tight monetary policy and restricted circular debt flow,” an official of finance division on Tuesday told Arab News on condition of anonymity.
The official said the government was successful in restricting the circular debt flow below the fund’s stated target of Rs385 billion ($1.37 billion), though it went as high as Rs378 billion ($1.35 billion) by the end of last December.
Pakistan’s circular debt stock, outstanding payments and liabilities in the country’s energy sector, continues to swell despite taking painful measures by the government including tariff hikes that resulted in high inflation.
The circular debt within the energy sector escalated to a staggering Rs5.73 trillion (approximately $20.5 billion) by the end of last November, official data reveals. This figure encompassed a power sector debt of Rs2.7 trillion ($9.66 billion) alongside a gas sector indebtedness surpassing Rs3 trillion ($10.7 billion).
While the IMF has not yet announced dates to start negotiations with Pakistan for the second review since it was ostensibly waiting for the formation of the next government, a successful review of the program will enable the South Asian nation to receive another tranche of about $1.1 billion from the fund.
The Pakistani official said the country was exploring various options to put before the IMF to avail new long-term program in recent weeks.
“The options under consideration included the size and conditions for the new program,” he said adding: “Yes, the size could be anywhere between $6-8 billion including the climate financing factor, the RSF.”
The Resilience and Sustainability Facility (RSF) of the IMF offers affordable, long-term financing to countries committed to reforms aimed at mitigating risks to future balance of payments stability, including challenges posed by climate change and pandemic preparedness.
The official, however, clarified that nothing had been finalized yet, adding these options were still at a preliminary stage and would be suggested to the next government, if finalized.
“It will be the prerogative of the next elected government to negotiate the size, terms and condition of the next program with the fund or whether or not they want to go to the IMF,” he added.
Last year in November, Pakistan’s caretaker finance minister Dr. Shamshad Akhtar hinted the country would continue to seek financial facility from the IMF to keep its fragile economy afloat.
Pakistani economists underscored the need for a new IMF program while calling for immediate engagement with the fund.
“It is good to hear that the government is working to get another IMF program,” Dr. Sajid Amin, deputy executive director at Islamabad-based Sustainable Development Policy Institute (SDPI), said.
“The real test, however, will be how quickly the new government takes up the challenge and engages with the fund.”
The present state of economy, particularly the low foreign exchange reserves and high external debt repayments, made it imperative for the country, Amin continued, to seek the IMF support for at least three more years.
“Unnecessary delays, as we witnessed in the PTI [Pakistan Tehreek-e-Insaf] and PDM [Pakistan Democratic Movement] tenures, will hurt the economy,” he warned.
Arab News sought comments from both the IMF and the finance ministry for this story, but received no response.


After ICUBE-Q, Pakistan to launch modern communication satellite into space on May 30

Updated 28 May 2024
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After ICUBE-Q, Pakistan to launch modern communication satellite into space on May 30

  • The satellite will help usher in digital era in Pakistan by providing Internet to country’s remote areas, the national space agency says
  • The satellite launch from Xichang Satellite Launch Center (XSLC) will be broadcast live from agency centers in Islamabad, Karachi

ISLAMABAD: Pakistan will be launching its latest modern communication satellite, PAKSAT MM1, into the space on May 30, Pakistani state media reported on Tuesday, weeks after it launched ICUBE-Qamar (ICUBE-Q) into the lunar orbit.

Pakistani satellite ICUBE-Q was launched on May 3 aboard China’s Chang’e-6 lunar mission from Hainan, China. A major milestone in Pakistan’s space exploration efforts, the satellite successfully entered the moon’s orbit on May 8, and shortly after began transmitting the first images from lunar orbit.

The Pakistan Space and Upper Atmosphere Research Commission (Suparco), Pakistan’s national space agency, now plans to launch the communication satellite with Chinese assistance on May 30.

“The satellite PAKSAT MM1 would be launched from Xichang Satellite Launch Center (XSLC), China,” the Radio Pakistan broadcaster reported.

“The SUPARCO MM1 Satellite is a result of the tireless efforts of Pakistani scientists and engineers and it is conceived keeping in sight the growing needs of the country in the broad spectrum of communication and connectivity.’

The satellite would help usher in a digital era in Pakistan by helping provide Internet to remote areas, the report read, citing Suparco officials.

The launch ceremony would be broadcast live from Suparco’s offices in Islamabad and Karachi.

Established in 1961, Suparco manages Pakistan’s space program, enhancing the nation’s capabilities in satellite communications, remote sensing and meteorological science.


Pakistan confers civilian award on Islamic Development Bank chief for his eminent services

Updated 28 May 2024
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Pakistan confers civilian award on Islamic Development Bank chief for his eminent services

  • The IsDB is an international financial development institution that aims to foster socio-economic development in Muslim member countries
  • Pakistan is also among 56 members of the IsDB where the IsDB has invested in various projects and third largest beneficiary of its financing

ISLAMABAD: Pakistan’s Ambassador to Saudi Arabia Ahmad Farooq on Tuesday conferred the ‘Hilal-i-Quaid-i-Azam’ medal on Islamic Development Bank (IsDB) head Dr. Mohammed Sulaiman Al-Jasser in the Saudi city of Jeddah, the Pakistani consulate said. 

The Hilal-i-Quaid-i-Azam medal is one of Pakistan’s highest civil awards that is awarded to foreign nationals for their eminent services to Pakistan. 

The award ceremony was attended by representatives from Pakistan’s missions in the Kingdom and to the Organization of Islamic Cooperation (OIC).

“The President of Pakistan has conferred this medal on Dr. Al-Jasser for his instrumental role and for IsDB Group’s leadership in supporting Pakistan’s economic and development agenda and support at important world forums,” the Pakistani consulate in Jeddah said in a statement. 

The IsDB is a multilateral and international financial development institution that aims to foster socio-economic development in Muslim member countries. Pakistan is also among the 56 members of the IsDB where the IsDB has invested in various projects. 

In March, Pakistan and the IsDB signed a financing agreement worth $200 million for the Sindh Flood Emergency Housing Reconstruction Project. The project aims to construct 700,000 houses, benefiting an estimated 4.2 million people in rural areas of the southern province, and will support the creation of 75,000 water, sanitation, and hygiene facilities for over 1.3 million individuals.

The Bank announced a $100 million loan to support Pakistan’s polio eradication efforts in December 2023, on the sidelines of the COP28 United Nations climate summit in Dubai. 

After the devastating floods of 2022 killed 1,700 people and inflicted losses worth $30 billion on Pakistan, the IsDB pledged $4.2 billion for the South Asian country over the next three years.


Pakistani, Saudi investors to set up $5 million edible oil refinery in Kingdom — Pakistan trade official

Updated 28 May 2024
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Pakistani, Saudi investors to set up $5 million edible oil refinery in Kingdom — Pakistan trade official

  • Official says the joint venture is expected to be signed in next six months and it will allow export of 50 percent edible oil
  • Saudi authorities are offering land and other facilities to investors to encourage investment in the Kingdom, he adds

KARACHI: Pakistani and Saudi investors are establishing a $5 million edible oil refinery in Saudi Arabia through a joint venture (JV), a senior Pakistani trade official said on Tuesday, following recent business-to-business interactions between the two countries.

The development comes weeks after a 50-member, high-level delegation, led by the Kingdom’s Assistant Minister of Investment Ibrahim Al-Mubarak, arrived in Pakistan to explore investment opportunities in the South Asian country.

Pakistan and Saudi Arabia have been working closely in recent weeks to increase bilateral trade and investment deals, with Crown Prince Mohammed bin Salman last month reaffirming the Kingdom’s commitment to expedite an investment package of $5 billion.

“We are putting up an edible oil refinery in Saudi Arabia with the local partners. We have shared the feasibility with each other, and we will sign [an agreement] very soon,” Atif Ikram Sheikh, president of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), told Arab News on Tuesday. “There will be a joint venture.”

Ikram, who runs edible oil refineries and other businesses in Pakistan, informed that the project cost would be equally shared by investment partners, including himself.

“The project cost will be $5 million and we will share the cost together and this would be materialized within six months,” he said, adding the Saudi authorities were offering land and other facilities for the refinery. 

Saudi Arabia is currently consolidating its economy on modern lines under Vision 2030, a strategic development framework intended to cut the Kingdom’s reliance on oil. Under the framework, the Kingdom is also encouraging investment in diversified sectors to increase its export base.

“Their [Saudi authorities] condition is to maximize oil export up to 50 percent, while the rest you can sell in the local market,” Sheikh said.

The FPCCI chief said Saudi Arabia’s interest in Pakistan’s diversified sectors was “constantly increasing” and both sides had made tangible progress, including Saudi investment inflows in oil, agriculture and other sectors. 

In December last year, Aramco, one of the world’s leading integrated energy and chemicals companies, signed an agreement to acquire a 40 percent equity stake in Gas & Oil Pakistan that followed the signing of an agreement in November 2023 by Shell Pakistan (SPL) with Saudi Arabia’s Wafi Energy to sell its domestic operations after Shell Petroleum Company announced its exit from Pakistan with the sale of 77 percent shareholding in the local business.

Pakistani traders also expect further inflow of investment from the Gulf countries.

The FPCCI president said Pakistan’s Special Investment Facilitation Council (SIFC), a body consisting of Pakistani civilian and military leaders and specially tasked to promote foreign investment in Pakistan, is playing a crucial role in boosting investment in the South Asian country. 

The council, established in June last year, is focusing on investments in energy, agriculture, mining, information technology and aviation sectors, specifically targeting the Gulf nations.


Pakistan PM says ‘deeply concerned’ about Israeli strikes on Rafah, deplores violation of international law

Updated 28 May 2024
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Pakistan PM says ‘deeply concerned’ about Israeli strikes on Rafah, deplores violation of international law

  • Israeli tanks reached the center of Rafah for the first time on Tuesday, three weeks into an operation that has sparked global condemnation
  • Shehbaz Sharif says Pakistan strongly condemns Israel’s bombardment of Rafah, urges international community, particularly UN, to play role

ISLAMABAD: Pakistan Prime Minister Shehbaz Sharif said on Tuesday he was “deeply concerned” about Israeli strikes on the southern Gaza city of Rafah, deploring repeated violations of the international law by the Jewish state.

Israeli tanks reached the center of Rafah for the first time on Tuesday, witnesses said, three weeks into a ground operation in the southern Gaza city that has sparked global condemnation.

Overnight, Israeli forces pounded the city with airstrikes and tank fire, pressing their offensive despite an international outcry over an attack on Sunday that sparked a blaze in a tent camp, killing at least 45 Palestinians.

Sunday’s attack on the Rafah refugee camp came two days after the International Court of Justice (ICJ) ordered Israel to end its military offensive in Rafah, where more than half of Gaza’s population had sought shelter before Israel’s incursion earlier this month.

“Deeply concerned by the disturbing developments in Rafah. Pakistan strongly condemns Israel’s indiscriminate bombardment that has led to heavy casualties,” PM Sharif said on X.

“It is deplorable that international law is being repeatedly violated, despite ICJ’s recent clear verdict against Israel.”

The case against Israel was initiated by South Africa in December 2023, where it labeled Israel’s actions in the Gaza Strip as “genocidal,” asserting that they intended to destroy the Palestinian people in ways specified under the 1948 Genocide Convention.

Pakistan does not recognize the state of Israel and calls for an independent Palestinian state based on “internationally agreed parameters” and the pre-1967 borders with Al-Quds Al-Sharif as its capital.

In recent months, the South Asian country has repeatedly raised the issue of Israel’s war on Gaza, launched last October, at the United Nations through its permanent representative, Ambassador Munir Akram.

“The international community, particularly the UN, must play its part in protecting civilians from such brutal aggression,” PM Sharif said in his statement on X.

The war on Gaza broke out after Hamas attacks on Israel on October 7, which killed more than 1,100 people, in response to the deteriorating condition of Palestinian people living under Israeli occupation.

Israel launched a retaliatory offensive, widely viewed as disproportionate, in which more than 35,000 Palestinians, mostly women and children, have lost their lives, according to the Palestinian Health Ministry.


Pakistan PM calls for minimizing load shedding amid heatwave, urges steps against power theft

Updated 46 min 58 sec ago
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Pakistan PM calls for minimizing load shedding amid heatwave, urges steps against power theft

  • Power outages are not uncommon in Pakistan during the summer months when the demand on the national grid spikes sharply
  • Pakistan’s power sector has also been plagued by high rates of power theft and distribution losses, leading to huge debts

ISLAMABAD: Prime Minister Shehbaz Sharif on Tuesday urged authorities to minimize load shedding in Pakistan amid an ongoing heatwave and to take steps against power theft in the country, his office said.

The directives were issued during a meeting Sharif presided over in Islamabad to review the supply of electricity, load management and measures against power theft in parts of the country.

Power outages are not uncommon in Pakistan during the summer months when the demand on the national grid spikes sharply due to the widespread use of air conditioners and desert coolers.

These seasonal surges often lead to prolonged power outages, which fuel public discontent, particularly during the intense heatwaves that have swept across Pakistan in recent years.

“The situation of [power] load management in extreme heat should be improved, keeping the convenience of the public in view,” Sharif was quoted as saying by his office.

“Provincial governments and law enforcement agencies should fully support the anti-electricity theft campaign.”

The South Asian nation’s power sector has been plagued by high rates of power theft and distribution losses, resulting in accumulating debts across the production chain — a concern also raised by the International Monetary Fund (IMF) during recent bailout talks.

The government of PM Sharif has recently launched a campaign to curb power theft in the country to avoid huge financial losses.

The prime minister said he would personally review progress on the drive against power theft, urging authorities to ensure that consumers were not charged excessive bills.

“The national interest and the development and prosperity of the country require that all the government institutions perform their responsibilities effectively against electricity theft,” he added.