KARACHI: Pakistan’s national currency on Thursday continued its depreciating trend against the US dollar amid increasing demand for import payments as the country embarks on crucial talks with the International Monetary Fund (IMF) for the revival of a $6 billion loan program.
The rupee lost its value by 0.56 percent on Thursday to close at Rs186.97 against the greenback in the interbank market. The currency has depreciated by Rs5.42 since Monday.
“The demand for dollar is increasing due to import payments, especially to buy oil from the international market, which is putting the rupee under pressure,” Samiullah Tariq, director research at Pakistan Kuwait Investment Company, told Arab News.
“The market sentiment will improve after successful talks with the IMF and after receiving inflows from China since Beijing has agreed to roll over $2.3 billion [of Pakistan’s debt],” he continued. “As of now, the higher demand for the dollar persists.”
Pakistan’s newly appointed finance minister Miftah Ismail on Wednesday left for Washington to negotiate with IMF officials for the revival of the $6 billion Extended Fund Facility after the previous administration deviated from the program objectives by announcing a $1.7 billion relief package.
Ismail said before leaving Islamabad the IMF wanted Pakistan to reverse the relief package which he described as a “landmine laid for the government of Prime Minister Shahbaz Sharif.”
He told journalist at a news conference that the fund wanted the country to increase fuel prices, rollback the amnesty scheme announced for industries, cut circular debt, and hike power tariffs.
However, Ismail said PM Sharif had “instructed me to make sure that there is least burden on the people in return for the revival of the program.”
Pakistani finance minister was confident he would successfully manage to get the program revived, saying: “We will negotiate the IMF program and whatever belt tightening would be required we will do that and cut PSDP [Public Sector Development Fund].”
He still hoped the government would introduce people- and development-friendly budget.
Pakistani economists said the government would need to swallow a bitter pill by reversing the relief package announced by former prime minister Imran Khan at the end of February.
“This was an economic land mine that the outgoing government had planted,” Dr. Sajid Amin Javed, senior economist at the Sustainable Development Policy Institute, told Arab News. “It was not a sustainable move at a time when international oil prices were increasing at higher pace and its fallout was expected in the form of higher fiscal deficit.”
“You will have to reverse this decision to continue with the IMF program,” he noted while adding: “The economic cost of exiting the IMF program will be far higher because at the moment our economy is bleeding due to highest current account deficit, rupee at the lowest historic level, higher inflation and interest rates.”
He said the new government might want to convince the IMF to continue with the relief package until June 2022, though it would not be sustainable.
“The government will have to reverse this,” Javed explained. “But instead of putting sudden burden [on people], the impact can be passed on gradually.”
The government on Friday decided to keep the prices of petrol and diesel unchanged at Rs149.86 and Rs144.15 per liter, respectively. However, the prices worked out by oil marketing companies for the fortnight was Rs173.96 per liter for petrol and Rs204.69 for diesel.
“The government should take bold decisions and de-freeze petroleum prices,” Javed suggested. “The bottom poor segment of the country should be protected through targeted subsidies.”
He agreed with the new finance minister who said the fuel subsidy was benefiting the country’s richer segments instead of its poor citizens.
“An owner of Land Cruiser is availing Rs1,680 of subsidy on every fuel tank,” Ismail told the news conference on Wednesday.
Pakistani rupee continues to depreciate amid higher dollar demand for import payments
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Pakistani rupee continues to depreciate amid higher dollar demand for import payments
- Experts hope market sentiment will improve after successful IMF talks, inflows from China
- Economists believe government will have to reverse relief package announced by ex-PM Khan
Pakistan to block mobile connections of over 500,000 individuals for not filing tax returns
- In December, the Federal Board of Revenue said Pakistan had around 5.2 million taxpayers in 2022, out of a population of 240 million people
- The government has decided to digitalize tax collection system to prevent leakages even as large segment of economy remains undocumented
ISLAMABAD: Pakistan has decided to block mobile phone connections of more than 500,000 individuals who had not filed their income tax returns for Tax Year 2023, the country’s tax regulator said on Tuesday.
Pakistan’s narrow tax base and enduring tax evasion issue have often led to the problem of insufficient revenue collection. The shortfall exacerbates the government’s tendency to run a high fiscal deficit, often financed through domestic and international borrowing.
In Dec., the Federal Board of Revenue (FBR) said the country had a “very narrow tax base” of around 5.2 million people in 2022, out of a population of 240 million people and it had planned to add 1.5 million new taxpayers to the existing base during this fiscal year.
On Tuesday, the FBR issued an order to enforce filing of returns by the persons who were not appearing on the active taxpayer list.
“FBR has taken decisive action by issuing an order to disable mobile phone SIMs associated with 506,671 individuals who fall under the aforementioned category,” the regulator said in a statement.
“The Pakistan Telecommunication Authority (PTA) and all telecom operators have been instructed to enforce the ITGO with immediate effect, ensuring swift implementation of the order.”
These mobile connections would remain blocked until restored by the FBR or the concerned Inland Revenue commissioner, according to the statement. Telecom operators were asked to furnish a compliance report to the FBR by May 15.
Amid its efforts to broaden the tax base, the government of Prime Minister Shehbaz Sharif has recently decided to digitalize the tax collection system to prevent leakages even as a large segment of the national economy remains undocumented.
Pakistan, which has been facing an economic meltdown, is also making efforts to introduce structural economic reforms. The South Asian country has to meet a primary budget deficit target of Rs401 billion ($1.44 billion), or 0.4 percent of its gross domestic product, for the current fiscal year before the government presents its budget in June.
US envoy hosts Pakistan cricket team in display of support ahead of T20 World Cup
- Pakistan’s preparations for the mega event that will be co-hosted by the West Indies and the US
- Both Pakistan, US have been slated to play within the same group stage and will compete on June 6
ISLAMABAD: United States (US) Ambassador to Pakistan Donald Blome held a meet-and-greet session with the Pakistan cricket team at the US embassy in Islamabad in a display of support for the ‘Green Shirts’ ahead of the highly anticipated Twenty20 World Cup 2024, the US embassy said on Tuesday.
The development came amid Pakistan’s preparations for the mega event that will be co-hosted by the West Indies and the US in June.
Ambassador Blome welcomed the Pakistan team and cricket board chairman, Mohsin Naqvi, at his residence and extended his best wishes for the matches in the US.
“In dual gestures of sports diplomacy, Ambassador Blome presented the team members with a commemorative embassy cricket ball and autographed softball bat,” the US embassy said in a statement.
“The Pakistani team reciprocated by presenting the Ambassador with a signed cricket bat and team jersey.”
The US envoy later participated in an impromptu cricket demonstration with members of the Pakistan side.
Both Pakistan and the US have been slated to play within the same group stage and will compete in a highly anticipated game scheduled for June 6.
Organizers of the T20 World Cup games in the US have said that early ticket sales showed there was a huge demand for the sport in the country.
The highly anticipated clash in New York between cricket rivals Pakistan and India was over-subscribed by 200 times in the public ballot for tickets, the International Cricket Council said in Feb.
The 34,000-seat temporary venue, Nassau County International Cricket Stadium on Long Island, is already assured of a sell-out crowd for the June 9 encounter.
Pakistan says inflation expected to drop to 17.5 percent in May amid signs of economic recovery
- Finance ministry says Pakistan to achieve modest growth this year, enabling improved performance in the next fiscal
- It acknowledges higher fuel prices, saying they will be offset by the government’s initiative to reduce wheat flour prices
ISLAMABAD: Pakistan’s finance ministry said on Tuesday the country’s economy was showing signs of recovery, highlighting a downward inflationary trend that could reach 17.5 percent in the upcoming month of May.
The statement comes at a time when Pakistan received a disbursement of $1.1 billion from the International Monetary Fund (IMF) as the second and final tranche under a $3 billion standby arrangement secured last summer to avert a sovereign default.
Prime Minister Shehbaz Sharif said earlier in the day the money would help the country achieve greater economic stability, with his government striving for a bigger loan program for a longer duration.
The finance ministry said in its Monthly Economic Update and Outlook for April 2024 that the economy was “on a resilient track to achieve modest growth this year, setting the basis for better performance in the upcoming fiscal year.”
“Headline inflation observed the lowest reading after 21 months,” it noted. “In March, CPI [consumer price index] inflation recorded the third consecutive YoY [year-on-year] decline, dropping to 20.7 percent from 35.4 percent last year. This decrease was observed throughout the third quarter of FY2024.”
It added the inflation outlook for April 2024 continued a downward trajectory, with the government determined to reduce it by taking strict administrative measures.
The outlook report said the increasing crude oil prices in the international market had prompted the government to raise domestic fuel prices. However, the rise in these rates was expected to be offset by the government initiative to reduce wheat flour prices.
“Inflation is projected to hover around 18.519.5 percent in April 2024,” it continued. “However, there are expectations of a gradual easing further to 17.5-18.5 percent in May 2024.”
Pakistan’s economy witnessed a major inflationary pressure in recent years after its governments sought IMF assistance amid dwindling foreign currency reserves and depreciating national currency.
The international lender urged the country to carry out economic reforms – such as removal of subsidies and increase in fuel charges and power tariffs – which led to spiraling inflation and pushed about 40 percent of its population below the poverty line.
Last year in February, financial experts warned of spiraling inflation of up to 40 percent after official data revealed that weekly inflation had touched 38.4 percent on an annual basis.
However, the situation has gradually improved, though inflationary pressure still continues to remain on the higher side.
Saudi business delegates to soon visit Pakistan, help expedite economic cooperation — PM Sharif
- Pakistan is currently making rigorous efforts to attract investment from Saudi Arabia, other Gulf nations to support dwindling economy
- PM Shehbaz Sharif expresses resolve to work hard to implement consensus achieved in meetings with Saudi leadership on WEF sidelines
ISLAMABAD: Prime Minister Shehbaz Sharif said on Tuesday that a delegation of Saudi businessmen would soon visit Pakistan, which would help expedite economic cooperation between the two brotherly countries.
The statement came at the end of PM Sharif’s visit to Riyadh, where he attended a two-day World Economic Forum (WEF) summit on Global Collaboration, Growth and Energy for Development on April 28-29.
On the sidelines of the summit, the prime minister held meetings with Crown Prince Mohammed bin Salman as well as Saudi ministers of energy, economy and planning, and environment, water, and agriculture.
Sharif, upon the completion of his visit, said bilateral relations and economic partnership between Saudi Arabia and Pakistan were getting “stronger and stronger.”
“A delegation of businessmen from Saudi Arabia is visiting Pakistan in the next few days,” he was quoted as saying in a statement issued from his office.
“The speed of economic partnership between the two countries will be accelerated by the visit of the Saudi Arabian businessmen.”
He expressed his resolve to work hard to implement the consensus achieved at the leadership level between the two countries, saying that a record number of delegations had been exchanged between Pakistan and Saudi Arabia during the past two months.
“His Excellency Crown Prince Mohammed bin Salman issued special instructions to Saudi ministers regarding Pakistan, for which we are extremely grateful,” Sharif said.
“I also pay tribute to Saudi ministers, who made full preparations for the implementation of the consensus between the leadership [of the two countries].”
Pakistan and Saudi Arabia enjoy strong trade, defense and cultural ties. The Kingdom is home to over 2.7 million Pakistani expatriates and serves as the top source of remittances to the cash-strapped South Asian country.
Both countries have been closely working to increase bilateral trade and investment deals, and the Kingdom recently reaffirmed its commitment to expedite an investment package worth $5 billion.
Czechoslovakian software company to invest $1 million in Pakistan data center
- IceWarp officials says the company plans to open subsidiary in Saudi Arabia after establishing presence in Pakistan
- The Czech company offers cost-effective services, including hosted email, TeamChat and ChatGPT integration
KARACHI: A Czechoslovakia-based software company is all set to invest about $1 million in Pakistan to set up a data center, said one of the top organization officials on Tuesday while also highlighting plans to launch a subsidiary in Saudi Arabia.
Established in 1998, IceWarp has presence in more than 100 countries and provides specialized and highly cost-effective services, such as hosted email, TeamChat, ChatGPT integration and online conferences etc.
“Pakistan is a high potential land where digital transformation can be seen from public sector entities to private businesses,” Jan Urbik, IceWarp’s global chief sales officer, told a news conference in Karachi. “We will support Pakistan in its mission to adopt digitalization through affordable solutions.”
Urbik said his company would set up a data center in Pakistan in compliance with the local regulations requiring companies to keep the data and privacy of Pakistani citizens within the country’s borders.
“IceWarp will offer solutions that are 60 percent more cost-effective than other software companies, along with enhanced applications and cybersecurity features that will attract a number of industries, financial institutions, small and medium enterprises (SMEs) and startups to use our services,” he added.
He mentioned the launch of the data center and full fledge operations with an investment of about $1 million in the country to set up a local subsidiary in collaboration with Hexalyze, a Pakistani company.
IceWarp, which has presence in the United Arab Emirates (UAE), is also planning to set up a subsidiary in Saudi Arabia.
“During the summer time, we visited Saudi Arabia and we have been to [the] LEAP [technology conference] and we have been talking with multiple partners,” Urbik said, adding that local entities told him that his company was welcome in the kingdom.
“So, Saudi Arabia is in our head as the future possibility to open the subsidiary there as well,” he continued.
Syed Saad Shah, CEO of Hexalyze, informed that IceWarp was planning to set up its regional office in Pakistan in collaboration with his company.
“The Czechoslovakia-based software company will expand its operations in the Kingdom of Saudi Arabia and the United Arab Emirates with separate data centers in these countries while the Pakistan office will serve as the back-up support station for marketing and sales,” Shah said.
The cost-effective corporate email solutions will enable hundreds of companies in Pakistan to adopt this tech-based solution in their businesses for the first time, he continued.
“On the other hand, corporate customers will not only save money from the expenses of enterprise services, but these companies will also save precious foreign exchange for the country by paying less to the service provider,” he added.
Present in the UAE, Saudi Arabia, Australia and Pakistan with global alliance partners, Pakistan’s IT company Hexalyze has been providing integration of tech solutions to SMEs as well as large enterprises since 2014.
