Pakistan unveils Economic Survey 2023-24 ahead of annual budget

Labourers load sacks of rice onto a truck at a market in Karachi on June 10, 2024. (AFP)
Short Url
Updated 11 June 2024
Follow

Pakistan unveils Economic Survey 2023-24 ahead of annual budget

  • The survey will include details about performance and trends of various sectors in outgoing fiscal year
  • Pakistan’s coalition government expected to lay out ambitious fiscal targets in the budget on Wednesday

ISLAMABAD: Pakistan will detail major socio-economic achievements of the outgoing fiscal year in the Economic Survey 2023-24 document released today, Tuesday, a day before the South Asian nation announces the budget for the next fiscal year. 
Pakistan’s coalition government is expected to lay out ambitious fiscal targets in the 2024-25 budget on Wednesday that will help strengthen its case for a new bailout deal with the International Monetary Fund. Pakistan is in talks with the lender for a loan estimated to be anything between $6 billion to $8 billion to avert a default for an economy that is growing at the slowest pace in the region.
“Finance Minister Senator Muhammad Aurangzeb will launch Economic Survey 2023-24 in a ceremony [in Islamabad],” the finance ministry said in a statement on Monday.
The survey will include details about performance and economic trends of various sectors, including agriculture, industry, services, energy, information technology and telecom, capital markets, health, education, transport and communications.
Annual trends of major economic indicators regarding inflation, trade and payments, public debt, population, employment, climate change, and social protections are also part of the economic survey document released each year a day before the budget. 
On Monday, Pakistan’s top economic body approved various proposals for the upcoming budget, particularly with regards to the inclusion of China-Pakistan Economic Corridor (CPEC) and foreign investment projects in the development plan.
“The federation will ensure consultation with provinces and stakeholders so that decisions are made through collective wisdom and consensus for economic revival of the country,” Prime Minister Shehbaz Sharif said at a meeting of the country’s National Economic Council (NEC) in Islamabad.
Pakistan narrowly averted default last summer thanks to a short-term IMF bailout of $3 billion over nine months.
While its fiscal and external deficits have been brought under control, it came at the expense of a sharp drop in growth and industrial activity as well as high inflation, which averaged close to 30 percent in the last financial year and 24.52 percent over the last 11 months.
The growth target for the upcoming year is expected to be higher at 3.6 percent compared to 2 percent this year and economic contraction last year.


Political talks by Pakistan’s Imran Khan-led opposition shouldn’t be perceived as ‘anti-army’ — aide

Updated 13 June 2024
Follow

Political talks by Pakistan’s Imran Khan-led opposition shouldn’t be perceived as ‘anti-army’ — aide

  • Jailed ex-PM Khan had vowed not to hold talks with his political rivals or army
  • Aides say Khan has now okayed talks with political rivals on way forward

ISLAMABAD: Former Pakistani Prime Minister Imran Khan’s confidant Mehmood Khan Achakzai said on Thursday political talks approved by the ex-premier with the coalition government should not be perceived as “anti-army.”

Khan, who is jailed in Rawalpindi’s Adiala Jail since August after being convicted on corruption and other charges, had vowed not to hold talks with his political rivals and rejected the possibility of any “deal” with the incumbent government or the military, a major player in Pakistan’s tumultuous politics.

However, earlier this week, local media reported Khan had accepted a Supreme Court judge’s advice to engage in a dialogue with his rival political parties, especially the Pakistan Muslim League Nawaz (PML-N), which heads the coalition government in the center, and the Pakistan Peoples Party (PPP), a main coalition partner. 

Khan was ousted as Pakistan’s prime minister in April 2022 via a parliamentary vote of no confidence. The former premier alleged the vote was orchestrated by Washington in cahoots with his political rivals, whom he accused of colluding with then Pakistan Army chief General Qamar Javed Bajwa, now retired, to remove him from power. All the accused deny the charge.

“The political talks should never, never be perceived as anti-army,” Achakzai said on Thursday during an interview with a local Pakistani media outlet, accepting that Khan had now given the go-ahead for talks.

Mahmood Khan Achakzai, chairman of the Pashtunkhwa Milli Awami party, arrives at the Parliament House in Islamabad, Pakistan, on March 3, 2024. (AFP/File)

The sole purpose of the talks led by him would be to “let bygones be bygones” and strive for a solution together with the entire political elite, Achakzai said, adding that the solution would not be perfect but would “at least move toward perfection.”

When asked if the PML-N and PPP chiefs, PM Shehbaz Sharif and Asif Ali Zardari respectively, were willing to join political talks, Achakzai said: 

“We are striving for supremacy of the Constitution. If they don’t want to come, don’t, but there will come a time when they won’t be able to leave their houses.”

Political tensions in Pakistan came to a head last year on May 9 when allegedly angry supporters of Khan attacked military and government installations in many parts of the country. The attacks were in response to Khan’s brief arrest from the Islamabad High Court earlier the same day. 

Subsequently, the government launched a crackdown on Khan’s Pakistane Thereek-e-Insaf party, rounding up hundreds of its leaders and supporters across the country. The party has distanced itself from the attacks, rejecting the government’s allegations that it instigated them. Some prominent leaders of Khan’s party remain incarcerated.


Unusually heavy monsoon rains in Pakistan will affect 200,000 people, top UN official warns

Updated 13 June 2024
Follow

Unusually heavy monsoon rains in Pakistan will affect 200,000 people, top UN official warns

  • UN, with help from local authorities, has prepared contingency plan, with $40 million set aside to respond to any emergencies
  • Devastating floods in 2022 killed 1,739 people, destroyed 2 million homes, and covered as much as one-third of the country 

ISLAMABAD: An estimated 200,000 people in Pakistan could be affected by the upcoming monsoon season, which is expected to bring heavier rains than usual, a top UN official warned on Thursday.

The United Nations, with help from local authorities, has prepared a contingency plan, with $40 million set aside to respond to any emergencies, said Mohamed Yahya, the newly appointed Resident Coordinator and Humanitarian Coordinator in Pakistan.

Yahya told journalists in Islamabad that the weather forecasters in Pakistan are projecting above-normal rainfall in the coming weeks. However, the rains would not be as heavy as in 2022 when devastating floods killed 1,739 people, destroyed 2 million homes, and covered as much as one-third of the country at one point.

Pakistan is one of the countries in the world most vulnerable to climate change, in part because of its immense northern glaciers, which are now melting as air temperatures rise. Warmer air can also hold more moisture, intensifying the rains of the monsoon.

Until recently, public opinion and even some government officials took little account of the possible negative impact from climate change on daily life. Pakistan’s weather patterns have changed in recent years, forcing cities to strengthen their infrastructure and farmers to adapt their practices.

The 2022 floods caused more than $30 billion in damage to Pakistan’s already cash-strapped economy.

Analysts and government officials say Pakistan in recent years failed to achieve goals for economic growth because of man-made disasters, which have repeatedly hit the country in the form of droughts, heatwaves and heavy rains, which badly damaged the road network, bridges, power system and other infrastructure.

Pakistan says despite contributing less than 1 percent to carbon emissions worldwide, it is bearing the brunt of global climate disasters. This year, Pakistan recorded its wettest April since 1961, with more than double the usual monthly rainfall.

Yahya said he was in contact with officials at Pakistan’s ministry of climate change, who were preparing their contingency own plans for monsoon season, which in Pakistan runs from July to October.

Earlier this week, weather forecasters in Pakistan urged people to stay indoors as the third heatwave in a month began. A recent study by the United Nations children’s agency said that Pakistan could avert 175,000 deaths by 2030 by developing resilient energy systems to power its health facilities.

On Thursday, temperatures in various parts of Pakistan soared as high as 48 degrees Celsius (118 degrees Fahrenheit), forcing many people to stay indoors. Authorities are asking people to hydrate and avoid unnecessary travel.


Two missing Japanese climbers spotted in Pakistan’s north

Updated 13 June 2024
Follow

Two missing Japanese climbers spotted in Pakistan’s north

  • Japanese climbers Ryuseki Hiraoka and Atsushi Taguchi were attempting to summit 7,027-meter Spantik mountain in Karakoram range 
  • Pakistan is home to five of the world’s 14 mountains higher than 8,000 meters, including K2, the world’s second highest

SKARDU, Pakistan: Two missing Japanese climbers were spotted by helicopter on Thursday in Pakistan’s mountainous north, home to some of the world’s tallest peaks, but their condition remains unknown, a tour operator said.

The Japanese climbers Ryuseki Hiraoka and Atsushi Taguchi were attempting to summit the 7,027-meter (23,054-foot) Spantik mountain in the Karakoram range before they went missing.

“The rescuers saw the climbers and recognized them by their clothes, but they could not determine their condition,” Naiknam Karim, the CEO of Adventure Tours Pakistan (ATP) which organized the tour, told AFP.

The two were spotted during a military helicopter search on Thursday that was called off due to poor weather conditions.

“There has been no communication between the two Japanese climbers and officials at basecamp since they started their expedition,” Karim earlier said.

“They were seen on June 10 (for the) last time at above 5,000 meters.”

Another team of Japanese climbers raised the alarm on Tuesday after arriving at Camp 2, at around 5,650 meters, where Hiraoka and Taguchi were scheduled to be.

The search is scheduled to resume on Friday.

“An 8-member rescue team including five Japanese climbers will ascent on foot and search for them,” Karim Added.

The pair had reached base camp on June 3 and were attempting the climb without the help of porters.

Spantik, also known as the Golden Peak, is described as a “relatively accessible and straightforward peak” on the website of a separate tourist company, Adventure Tours.

The country is home to five of the world’s 14 mountains higher than 8,000 meters — including K2, the world’s second highest.

More than 8,900 foreigners visited the remote Gilgit-Baltistan region in 2023, according to official figures from the government, where the summer climbing season runs from early June to late August.


‘Elite must pay,’ PM says as Pakistan sets big tax target amid IMF talks

Updated 13 June 2024
Follow

‘Elite must pay,’ PM says as Pakistan sets big tax target amid IMF talks

  • Pakistan has to find ways to increase revenues to reduce fiscal deficit as part of reforms being discussed with IMF
  • IMF is demanding fiscal consolidation, broadening tax base, improving tax administration and debt sustainability

ISLAMABAD: Prime Minister Shehbaz Sharif said on Thursday the elite classes of Pakistan needed to pay their share of taxes, a day after the government announced its national budget and set a challenging tax revenue target of 13 trillion rupees ($46.66 billion) for the year starting July 1, a near 40 percent jump from the current year. 

Pakistan has to find ways to increase its revenues to reduce its fiscal deficit as part of reforms being discussed with the IMF, with whom Islamabad is in talks for a bailout of up to $8 billion. The IMF wants Islamabad to carry out gradual fiscal consolidation, broaden its existing tax base, and improve tax administration and debt sustainability while protecting the vulnerable.

“During the budget preparation, I made it clear that the elite must pay taxes,” Sharif was quoted as saying in a statement by the PM Office after a meeting on tax reforms, digitization of the economy and measures to increase revenue. 

“We will eliminate tax evaders and those who assist them.”

Calling the national tax watchdog, the Federal Board of Revenue (FBR), the “most pivotal wheel” of the national economy, Sharif said the incumbent government would provide all resources for the uplift and digitalization of FBR’s human resources.

The top priority was to lower the tax rate while increasing the number of taxpayers, Sharif added, reiterating his government’s resolve to impose minimal taxes on the poor and middle class.

“We are prioritizing the complete digitization of the tax system and enhancing the capacity of the workforce,” Sharif said. “We are taking steps to bring eligible taxpayers into the tax net as soon as possible.”

The rise in the tax target in the national budget is made up of a 48 percent increase in direct taxes and 35 percent hike in indirect taxes over revised estimates of the current year. Non-tax revenue, including petroleum levies, is seen increasing by a whopping 64 percent while sales tax would increase to 18 percent on textile and leather products as well as mobile phones. A hike in the tax on capital gains from real estate has also been announced. 

Key objectives for the upcoming fiscal year include bringing the public debt-to-GDP ratio to sustainable levels and prioritizing improvements in Pakistan’s balance of payments position, the government’s budget document shows.

Pakistan has projected a sharp drop in its fiscal deficit for the new financial year to 5.9 percent of GDP, from an upwardly revised estimate of 7.4 percent for the current year. 

On Monday, the central bank warned of possible inflationary effects from the budget, saying limited progress in structural reforms to broaden the tax base meant increased revenue must come from hiking taxes.

The bank, in a bid to boost growth, cut interest rates for the first time in four years on Monday, slashing them by 150 basis points, in the face of a sharp decline in inflation from a high of 38 percent last year to 11.8 percent in May.

GDP would expand 2.4 percent in the current year, missing the budgeted target of 3.5 percent, the government said, despite revenues rising 30 percent on the year, and the fiscal and current account deficits being under control.

The upcoming year’s growth target has been set at 3.6 percent and inflation projected at 12 percent, Aurangzeb said.

With inputs from Reuters


Pakistan seeks US support for ‘favorable’ international financing to fix power sector woes

Updated 13 June 2024
Follow

Pakistan seeks US support for ‘favorable’ international financing to fix power sector woes

  • Energy Minister Sardar Leghari meets US delegation led by Assistant Treasury Secretary Brent Neiman
  • “Fan replacement program” being launched for first time in Pakistan to increase energy savings, Leghari says

ISLAMABAD: Pakistan’s Energy Minister Sardar Awaiz Leghari has sought US assistance in securing international financing at “more favorable rates” to fix deficiencies in the South Asian nation’s ailing power sector, a statement from his office said on Thursday.

Restoring the viability of the energy sector is a major demand of the IMF, with which Pakistan is in negotiations for a new bailout loan ranging from $6 billion to $8 billion to avert default in an economy growing at the region’s slowest pace.

The IMF wants Pakistan to prevent further accumulation of circular debt in its power sector arising from subsidies and unpaid bills, and implement reforms to reduce costs by improving electricity transmission and distribution, moving captive power into the grid, improving governance, and combating theft.

Additionally, Pakistan needs to maintain power and gas tariffs at levels that ensure cost recovery, with adjustments made to safeguard the financially vulnerable, through existing progressive tariff structures.

In a report released in January, the IMF said Pakistan had missed its target for power sector arrears, largely due to lower-than-expected recoveries and tariffs.

On Thursday, a delegation from the US treasury department called on the Pakistani power minister and discussed collaborations in the energy sector as well as Islamabad’s reform agenda. 

A statement from Leghari’s office said he told the delegation about “the importance of US support in securing international financing at more favorable rates for Pakistan’s power sector.”

“He expressed the need for US technical assistance to address the gap between seasonal production and demand,” the statement added. 

Leghari informed the US delegation about plans to address the power sector’s deficiencies, adding that the reforms were aimed at improving Pakistan’s energy mix and rectifying other issues. 

The energy minister also informed the US delegation about reforms to increase private sector participation in the distribution and transmission of electricity. T

Discussing debt management, the energy minister also apprised the US team of a “fan replacement program” being launched by Pakistan in a bid to increase energy saving.

“The US Assistant Secretary of Treasury [Brent Neiman] appreciated Pakistan’s power sector reform initiatives and assured all possible cooperation to resolve Pakistan’s power sector problems,” the statement said.