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Pakistan says IMF’s approval of $3 billion package to create fiscal room for next government

n this picture taken on January 11, 2022, a foreign currency dealer counts US dollar notes at a shop in Karachi. (AFP/File)
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Updated 13 July 2023
Khurshid Ahmed  
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Pakistan says IMF’s approval of $3 billion package to create fiscal room for next government

  • The international lender approved the nine-month financial facility after intense negotiations with the country
  • Pakistan will get an immediate disbursement of SDR 894 million or $1.2 billion under the new stand-by agreement
Updated 13 July 2023
Khurshid Ahmed  

KARACHI: Prime Minister Shehbaz Sharif applauded the International Monetary Fund (IMF) Executive Board’s decision on Wednesday to approve a stand-by agreement of $3 billion with Pakistan, saying the development would offer much-needed economic relief to his country and generate more fiscal room for the next government.

The two sides reached the agreement over a nine-month bailout package for cash-strapped Pakistan after intense negotiations last month. The development comes as a sigh of relief for the South Asian country, which has been reeling from a balance of payments crisis, as experts feared Pakistan would default on its external financial obligations.

“The approval of Stand-by Agreement of $3 billion by the IMF’s Executive Board a little while ago is a major step forward in the government’s efforts to stabilize the economy and achieve macroeconomic stability,” the prime minister said in a Twitter post. “It bolsters Pakistan’s economic position to overcome immediate- to medium-term economic challenges, giving next government the fiscal space to chart the way forward.”

He maintained his administration had managed to secure the deal “against the heaviest of odds & against seemingly impossible deadline,” praising the country’s financial managers for their team work.

Earlier, the IMF announced its decision to support Pakistan’s economic stabilization program in a statement posted on its website and said it would immediately disburse SDR 894 million or about $1.2 billion. The remaining amount would be phased over the program’s duration, subject to quarterly reviews.

“Pakistan’s new SBA-supported program will provide a policy anchor for addressing domestic and external imbalances and a framework for financial support from multilateral bilateral partners,” it added.

Faced with a major dollar liquidity crunch, Pakistan was even forced to restrict the import of essential items, which further depressed its economy and had a negative impact on its exports.

The IMF said its program would also focus on a “return to market-determined exchange rate” and proper foreign exchange market functioning to absorb external shocks and foreign exchange shortages.

It will also focus on a tight monetary policy that brings about disinflation and further progress on structural reforms with a particular focus on energy sector viability, governance of state-owned enterprises, and climate resilience.

The government managed to make the breakthrough after securing substantial funding from Saudi Arabia and the United Arab Emirates who collectively deposited $3 billion in the country’s central bank.

Islamabad took a slew of measures demanded by the IMF since its mission arrived in Pakistan in February, including revising its 2023-24 budget and a policy rate hike to 22 percent in recent days.

Topics: IMF International Monetary Fund IMF bailout

Pakistan, China vow to accelerate key infrastructure projects amid discussions on next CPEC phase

Updated 11 sec ago
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Pakistan, China vow to accelerate key infrastructure projects amid discussions on next CPEC phase

  • The two sides discussed the issue during Ishaq Dar’s meeting with a senior Chinese minister in Beijing
  • Both countries reaffirmed support to each other on issues of core concerns to their governments, people
Updated 11 sec ago
SAIMA SHABBIR

ISLAMABAD: Pakistan and China have agreed to expedite work on key infrastructure development schemes as the two countries strive to proceed to the next phase of the multibillion-dollar economic corridor project launched in April 2015, the foreign office announced in a release issued in Islamabad on Tuesday.

Last week, Pakistan sent Federal Minister for Planning and Development Ahsan Iqbal to conduct a series of meetings in Beijing to set the tone for the second phase of the China-Pakistan Economic Corridor (CPEC).

Currently, the country’s newly appointed Deputy Prime Minister, Ishaq Dar, is visiting China, where he met with Liu Jianchao, Minister for the International Department of the Communist Party of China (IDCPC), to discuss various dimensions of CPEC.

“The two leaders reaffirmed the importance of the All-Weather Strategic Cooperative Partnership between Pakistan and China and to further reinforce mutually beneficial collaboration,” the foreign office said. “They also expressed joint determination to accelerate progress on all CPEC projects including ML-I [Main Line 1] upgradation, Gwadar Port and KKH [Karakoram Highway] realignment.”

The three projects are central to CPEC, with ML-I upgradation, a major railway project, involving the dualization of the existing railway track from Karachi to Peshawar. The development of Gwadar Port and KKH realignment are also vital to enhance trade and connectivity within and beyond the region.

Dar reaffirmed Pakistan’s support to China on its core issues. The Chinese minister also said that Beijing would always support Pakistan’s sovereignty, territorial integrity, and socioeconomic development.

The Pakistani deputy prime minister expressed over the killings of Chinese nationals in a suicide attack in Shangla earlier this year. He noted the Pakistani authorities had a firm resolve to counter extremist violence in all its forms and manifestations and bring perpetrators of the Shangla attack to justice.

Dar also invited the Chinese minister to visit Pakistan to co-chair the next meeting of the CPEC Joint Consultative Mechanism of Political Parties this year.

Topics: Pakistan China Ties CPEC

In blow to ruling coalition, Pakistan’s electoral watchdog suspends 77 lawmakers elected on reserved seats

Updated 42 min 12 sec ago
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In blow to ruling coalition, Pakistan’s electoral watchdog suspends 77 lawmakers elected on reserved seats

  • Ruling follows top court overruling earlier verdict that party aligned with ex-PM Khan backed candidates not eligible for reserved seats 
  • Suspension of lawmakers means ruling coalition has lost two-thirds majority in National Assembly, which is required to amend constitution 
Updated 42 min 12 sec ago
Arab News Pakistan

Pakistan’s election regulator has suspended 77 lawmakers elected on reserved seats, dealing a blow to the fragile ruling coalition led by Prime Minister Shehbaz Sharif which has lost the third-thirds parliamentary majority needed to make constitutional amendments. 

The Election Commission of Pakistan’s ruling comes a week after the Supreme Court overruled a verdict by the Peshawar High Court (PHC) that a party aligned with candidates backed by former premier Imran Khan was not eligible for reserved seats in the legislature. 

Khan’s Pakistan Tehreek-e-Insaf (PTI) party couldn’t contest the Feb. 8 elections under its traditional electoral symbol, a cricket bat, which it was denied on technical grounds, and subsequently struck an alliance with another party, the Sunni Ittehad Council (SIC), in a bid to secure reserved seats for women and minorities in parliament. Under Pakistan’s election rules, political parties are allotted reserved seats in proportion to the number of parliamentary seats they win in the election. This completes the National Assembly’s total strength of 336 seats. 

The Election Commission had ruled in March that the SIC was not eligible for reserved seats, a decision the alliance had appealed in the Peshawar High Court, which rejected the petition. The SIC then approached the Supreme Court to appeal the high court’s decision, which last week suspended the PHC’s ruling. 

“Pursuant to the order on 6th May, 2024 passed by the honorable Supreme Court of Pakistan, the notifications of the following returned candidates against under mentioned categories of reserved seats are hereby suspended till further orders,” the ECP’s notification read.

With the ECP’s notification, the strength in the National Assembly of PM Sharif’s ruling Pakistan Muslim League-Nawaz (PML-N) has reduced from 121 to 107 while that of its main coalition partner Pakistan Peoples Party (PPP) is down from 72 to 67. 

This means the ruling coalition has lost its two-thirds majority in the National Assembly, with its numerical strength decreasing to 209 from 228. In the 336-member National Assembly, the figure to attain two-thirds majority is 224, without which the government cannot enact reforms or amend laws.

Sharif formed a weak coalition with other parties after February general elections produced a hung parliament. The PML-N’s 79 and the PPP’s 54 seats together made a simple majority in parliament to form a government and they also roped in smaller parties in the coalition.

Candidates backed by Khan won the most seats, 93, but did not have the numbers to form a government. Khan and his party have rejected the results of the elections, alleging widespread rigging.

According to the breakdown of the 77 suspended lawmakers, 44 belong to Sharif’s PML-N party, 15 to the Pakistan Peoples Party (PPP), 13 to the Jamiat Ulama-e-Islam-Fazal (JUI-F), and one each to the Muttahida Qaumi Movement-Pakistan (MQM-P), Istehkam-e-Pakistan Party (IPP), Awami National Party (ANP), Pakistan Muslim League Quaid (PML-Q) and Pakistan Tehreek-e-Insaf Parliamentarians (PTI-P).

The 77 suspended lawmakers include 22 legislators elected on reserved seats in the National Assembly, 25 in the Khyber Pakhtunkhwa (KP) Assembly, 27 in the Punjab Assembly, and three in the Sindh Assembly. 

Topics: Election Commission of Pakistan ECP Pakistan Arab News Pakistan

Azad Kashmir demonstrators call off protests as government cuts electricity, wheat prices after violent protests

Updated 14 May 2024
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Azad Kashmir demonstrators call off protests as government cuts electricity, wheat prices after violent protests

  • Protests began on May 11 and lasted for days until the Pakistan government approved $83 million in subsidies
  • One police officer and three young demonstrators were killed as protests turned violent in the Himalayan region
Updated 14 May 2024
SAIMA SHABBIR

ISLAMABAD: An alliance of civil rights groups on Tuesday called off a protest that had lasted for several days across Azad Kashmir and led to serious clashes with police and paramilitary Rangers after the government met its demand to reduce electricity and wheat prices in the region.

The Jammu Kashmir Joint Awami Action Committee (JAAC) organized the protests that started on May 11, seeking subsidized wheat flour and a reduction in electricity tariffs to bring them in line with the hydropower generation cost in Azad Kashmir.

The demonstrations led to four deaths, including one police officer who was reportedly killed by protesters in gunfire, while three demonstrators lost their lives in clashes with Rangers in Muzaffarabad.

Azad Jammu and Kashmir (AJK) Prime Minister Anwar-ul-Haq Chaudhry said at a news conference on Monday his government had notified reduced wheat and electricity prices after the Pakistani government approved Rs23 billion ($83 million) in subsidies.

“On the appeal of the Awami Action Committee, it has been decided to end the ongoing lockdown and wheel-jam strike across Azad Kashmir,” Amjad Ali Khan, a member of the JAAC core committee, told Arab News on Tuesday.

He said JAAC demanded compensation for the three young demonstrators killed in clashes with Rangers. He also informed that a day of mourning and a shutter-down strike would be held today across Kashmir to honor the three demonstrators.

Speaking about the details of JAAC’s agreement with the government, Khan said the authorities had agreed to drop all the cases and release the arrested individuals.

“The Awami Action Committee demanded the formation of a judicial commission to investigate police violence in the Mirpur Division and Muzaffarabad,” he added, saying the judicial commission’s investigation should be made public and those responsible should be punished.

Abdul Majid Khan, a spokesperson for the AJK government, said the authorities had shown utmost restraint to pacify the situation.

“All the demands of the protesters have been fulfilled, and the situation will hopefully return to normalcy now,” he told Arab News.

Pakistan’s information minister, Attaullah Tarar, said the situation in Azad Kashmir had been addressed after the federal government approved the grant to deal with people’s concerns.

“With the grant given by Prime Minister Shehbaz Sharif, the issue has been resolved to meet the people’s demands,” he told the media in Islamabad.

He mentioned Azad Kashmir’s special status, pointing out that its affairs were managed with the grants of Pakistan’s federal government.

“The government will look after the police personnel who fell victims of the protests,” he added.

The Himalayan territory of Kashmir has been divided between India and Pakistan since their independence from Britain in 1947, with both countries ruling part of the territory but claiming it in full.

The western portion of the larger Kashmir region is administered by Pakistan as a nominally self-governing entity, while India rules the southern portion as a union territory.

While the Indian portion has faced an ongoing insurgency for decades and multiple armed attempts by the state to quell it, the Pakistani side has remained relatively calm over the decades, though it is also highly militarized.

Topics: protest Kashmir wheat prices

Protesters call off march in Pakistan’s Azad Kashmir after demands met

Updated 14 May 2024
Reuters
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Protesters call off march in Pakistan’s Azad Kashmir after demands met

  • March called off day after Pakistan’s PM Sharif approves $86 million grant to subsidize flour, electricity 
  • Clashes between protesters and police, which began last week, claimed lives of three civilians, one cop 
Updated 14 May 2024
Reuters

MUZAFFARABAD, Pakistan: An alliance of civil rights group on Tuesday called off a protest march in Pakistan-ruled Kashmir after several days of clashes over high prices in which four people have been killed and over 100 injured, officials said.

Protesters called off the march a day after Prime Minister Shehbaz Sharif approved a grant of 24 billion rupees ($86 million) to help meet most of their demands, which included subsidies on flour and electricity prices.

The alliance’s head, Shaukat Nawaz Mir, announced the decision in Muzaffarabad, the capital city of the scenic Himalayan region.

“The government has accepted all of our demands,” he said, calling on protesters to return to their homes and businesses.

Mir also demanded the government give financial compensation for the families of three protesters and a police official who were killed in the violence.

The protesters were killed on Monday evening after paramilitary troops opened fire when they were attacked, said local government official Adnan Khurshid. The police official died in clashes over the weekend.

Kashmir’s Prime Minister Anwar-ul-Haq Chaudhry said late on Monday that the funds would help lower some prices in the region.

The subsidized rate for 40 kgs (88.2 lb) of flour will be 2,000 rupees, down from 3,100 rupees, he said. He also announced a substantial dip in the electricity prices.

The protests coincide with the visit of an International Monetary Fund mission to negotiate a new long-term loan with Islamabad.

The IMF has already warned that social tensions triggered by the high cost of living could weigh on policy implementation, adding that fiscal slippages could present a challenge for the government.

Topics: protest azad kashmir

PM says Pakistan to privatize all state-owned entities except ‘strategically important’ ones

Updated 46 min 19 sec ago
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PM says Pakistan to privatize all state-owned entities except ‘strategically important’ ones

  • Finance Minister Aurangzeb last week said there is “no such thing as strategic” public entities
  • Privatization of debt-ridden state entities is major reform demanded by IMF as Pakistan negotiates new bailout
Updated 46 min 19 sec ago
KHURSHID AHMED   

KARACHI: Prime Minister Shehbaz Sharif announced on Tuesday that his government would privatize all state-owned enterprises (SOEs) except for those deemed “strategically important” or essential ones, state-owned media reported, as Islamabad looks to overhaul its public entities to improve their performance.

The announcement is in direct conflict with Finance Minister Muhammad Aurangzeb’s statement from Sunday in which he said that all public entities would be handed over to the private sector. The minister had said he and Deputy Prime Minister Ishaq Dar were on the same page that “there is no such thing as a strategic SOE.” 

Former finance minister Dar had chaired a meeting of the Cabinet Committee on Privatization on May 10 in which he had said the government’s business would only be limited to essential or strategic SOEs. Dar said while priority would be accorded to loss-making entities, even SOEs who were earning profits would be considered for privatization.

PM Sharif chaired a high-level meeting on matters related to the Ministry of Privatization and Privatization Commission on Tuesday, the state-run Radio Pakistan reported.

“Prime Minister Shehbaz Sharif has announced to privatize all government-owned enterprises with the exception of strategically important state-owned enterprises,” Radio Pakistan said. “The Prime Minister directed all federal ministries to take necessary action in this regard and cooperate with the Privatization Commission.”

Pakistan’s Finance Division has defined strategic entities as those whose functions have significant strategic, security, or social importance in addition to economic values for the country. It has defined essential SOEs as those which are critical for the execution of government policies and where the private sector is unable to assume those functions due to various reasons. 

The Oil & Gas Development Limited (OGDCL), Pakistan State Oil (PSO), National Bank of Pakistan, and hydropower projects are considered strategically important enterprises owned by the government. However, the government has not classified strategic assets for privatization yet.

Pakistan agreed to overhaul its public entities under a $3 billion financial bailout agreement it signed with the International Monetary Fund (IMF) last year, a deal that helped it avert a sovereign debt default in 2023. The IMF has said Pakistan’s SOEs whose losses are burning a hole in government finances would need stronger governance. Pakistan is currently negotiating with the international lender for a larger, longer program for which it must implement an ambitious reforms agenda, including the privatization of debt-ridden SOEs.

Among the main entities Pakistan is pushing to privatize is its national flag carrier, the Pakistan International Airlines (PIA). The government is putting on the block a stake ranging from 51 percent to 100 percent.

Sharif instructed authorities to ensure transparency in the privatization process of all state-owned entities, including the PIA. 

“He directed to televise live Pakistan International Airlines Company Limited’s privatization including bidding and other important steps,” Radio Pakistan said. “The process of privatization of other institutions will also be broadcast live.”

The prime minister was informed that the pre-qualification process for PIA’s privatization would be completed by the end of May. He was told loss-making SOEs would be privatized on priority and that a “pre-qualified panel of experts” is being appointed in Pakistan’s Privatization Commission to speed up the process.

Separately, Aurangzeb chaired a meeting of the Cabinet Committee on State-Owned Enterprises on Monday which was attended by ministers of maritime affairs, economic affairs, housing and works, the governor of Pakistan’s central bank and other officials. The meeting was held to evaluate the performance of the country’s public entities and review the progress of the government’s privatization agenda.

Aurangzeb directed concerned ministries and divisions to submit proposals for the categorization of their respective public entities by May 20. The step is aimed at reviewing the rationale for retaining any commercial functions within the public sector, the finance ministry said.

“The objective is to retain only the essential functions within the public sector & to assign the remaining functions to the private sector,” it said. “At the same time the entities which remain in public sector have to be more competitive, accountable, and responsive to the needs of citizens.”

Participants agreed to foster transparency, efficiency, and sustainable growth within the SOEs, reflecting the government’s dedication to ensuring the optimal utilization of public resources, the ministry said.

Tahir Abbas, the head of research at Arif Habib Limited, considered Pakistan’s largest securities brokerage company, said the conflicting statements between Sharif and Aurangzeb showed lack of coordination between them. 

“There seems lack of coordination between them on the classification of assets for privatization,” he told Arab News. 

Topics: Pakistan PIA privatization Arab News Pakistan

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