Finance minister hints at new taxes as IMF concludes visit to discuss stalled bailout deal 

Pakistan’s Finance Minister Ishaq Dar (C) speaks during a press conference in Islamabad on February 10, 2023. An IMF team left Pakistan on February 10 having failed to reach a deal on financial aid that would help the country avoid economic collapse. (AFP)
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Updated 10 February 2023
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Finance minister hints at new taxes as IMF concludes visit to discuss stalled bailout deal 

  • Talks ended without announcement on disbursement of $1.1 billion in funding critical to keeping economy afloat 
  • Release of the latest tranche is necessary to prevent Pakistan from defaulting on external payment obligations 

ISLAMABAD: An International Monetary Fund (IMF) mission to Pakistan concluded talks on a stalled bailout program without the announcement of a staff-level agreement as Finance Minister Ishaq Dar said all issues were “settled,” but hinted at the imposition of new taxes. 

The IMF mission led by Nathan Porter visited Islamabad from Jan. 31 to Feb. 9 to hold discussions under the ninth review of the IMF’s $7 billion Extended Fund Facility (EFF) arrangement signed in 2019. 

The release of the latest tranche of $1.1 billion, which was expected to be paid out last December, is necessary to prevent Pakistan from defaulting on external debt obligations. The country’s $350 billion economy is also facing a balance-of-payments crisis, with foreign exchange reserves dipping to less than three weeks of import cover. 

A successful IMF deal will also unlock other crucial funding from governments and multilateral bodies. But the fiscal adjustments demanded by the deal are likely to fuel record high inflation, which hit 27.5 percent year-on-year in January. 

“We will have to impose Rs170 billion fiscal measures, taxes and we are trying our best that no such tax is imposed which directly, indirectly it does, but does not directly burden a common man,” Dar told reporters on Friday morning. 

In a statement on Friday, the IMF said it welcomed Pakistan’s commitment to implement policies “needed to safeguard macroeconomic stability.” 

“Considerable progress was made during the mission on policy measures to address domestic and external imbalances,” the statement said, listing key priorities such as strengthening the fiscal position with permanent revenue measures and reduction in untargeted subsidies, scaling up social protection to help those affected by last summer’s record-breaking floods, allowing the exchange rate to be market determined to gradually eliminate the foreign exchange shortage and enhancing energy provision by preventing further accumulation of circular debt and ensuring the viability of the energy sector. 

“The timely and decisive implementation of these policies along with resolute financial support from official partners are critical for Pakistan to successfully regain macroeconomic stability and advance its sustainable development,” the IMF said. 

“Virtual discussions will continue in the coming days to finalize the implementation details of these policies.” 

Dar also told reporters that after the latest talks, “all matters were settled.” 

“Extensive discussions took place on power, gas sector, fiscal side, monetary side,” he said. 

The finance minister said Pakistan had received the IMF’s Memorandum of Economic and Financial Policies (MEFP), containing economic and fiscal targets under the ninth review of the program. 

“We have received the MEFP draft at 9am this morning. We will completely go through it over the weekend and then we will obviously have a virtual meeting with them [IMF] on Monday,” Dar said. 

“And then we will take that forward, which obviously takes a few days. After the MEFP will be finalized, you know, after that there is their own internal process then a board meeting is held and finally you have the disbursement after approval in that.” 
 


Pakistan weekly inflation down by 0.81% as prices of essential items remain largely stable

Updated 5 sec ago
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Pakistan weekly inflation down by 0.81% as prices of essential items remain largely stable

  • Annual inflation rate fell to 0.3% in April, well below the finance ministry’s estimate of 1.5-2%
  • The Pakistan Stock Exchange also recorded a 7.5% gain in May on a month-on-month basis

ISLAMABAD: Short-term inflation, measured by the Sensitive Price Index (SPI), lowered by 0.81% in Pakistan, the country’s statistics bureau said this week, as prices of most essential items remained stable.

The SPI, which comprises 51 essential items collected from 50 markets in 17 cities, is computed on a weekly basis to assess the price movement of essential commodities at a shorter interval of time to review the price situation in the country.

While the SPI for the week ending on May 29 decreased 0.81% on a week-on-week basis, it recorded an increase of 0.41% when compared to the same week last year, according to the Pakistan Bureau of Statistics (PBS).

“During the week, out of 51 items, prices of 14 (27.45%) items increased, 10 (19.61%) items decreased and 27 (52.94%) items remained stable,” the PBS said.

A decrease was observed in the prices of electricity charges for Q1 (10.10%), chicken (8.51%), LPG (2.67%), sugar (0.25%), powdered milk (0.20%), vegetable ghee 2.5Kg (0.17%), wheat flour (0.09%), rice (0.07%), garlic (0.05%) and pulse moong (0.01%).

The items whose prices increased during the week included tomatoes (4.54%), potatoes (2.94%), eggs (2.19%), onions (2.17%), gur (0.77%), bananas (0.73%), mustard oil (0.34%), pulse mash (0.22%), pulse gram (0.17%), pulse masoor (0.14%) and basmati rice (0.12%).

Pakistan’s annual inflation rate fell to 0.3% in April, well below the Ministry of Finance estimate of 1.5% to 2%. The central bank forecasts average inflation to be in the range of 5.5% to 7.5% for the fiscal year ending June.

Also, the Pakistan Stock Exchange (PSX) recorded a 7.5% gain in May on a month-on-month basis, according to the Karachi-based Topline Securities.

“This gain can be attributed to cut in policy rate by 100bps by SBP,” it said in its monthly review, citing improvement in inflation outlook and approval of first review of Pakistan’s $7 billion International Monetary Fund (IMF) program as well as the approval of another $1.4 billion under the IMF’s Resilience and Sustainability Facility.

“Average daily traded volume and value during the month stood at 566 million shares and PKR28 billion.”


Pakistan’s finance chief stresses apolitical funding approach in meeting with World Bank officials

Updated 31 May 2025
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Pakistan’s finance chief stresses apolitical funding approach in meeting with World Bank officials

  • Aurangzeb’s statement comes after India lobbied the IMF to halt a $1 billion disbursement in recent weeks
  • Minister meets the incoming World Bank country director, commends her predecessor in Islamabad

KARACHI: Pakistan’s Finance Minister Muhammad Aurangzeb on Friday called for a merit-based approach to global development financing, urging international lenders to rise above political considerations during a meeting with incoming and outgoing World Bank country directors in Islamabad.

The meeting followed weeks of diplomatic friction between nuclear-armed rivals India and Pakistan, which escalated into a four-day military standoff involving fighter jets, missiles, drones and artillery fire.

Amid the tensions, Indian authorities lobbied the International Monetary Fund (IMF) to halt the disbursement of a $1 billion tranche to Pakistan, saying the funds could finance Islamabad’s military activities.

IMF officials later dismissed the concerns, emphasizing the disbursement mechanisms ensured transparency and that IMF support was intended to stabilize developing economies’ balance of payments, with the funds directed to central banks rather than governments.

“The Minister ... highlighted the recent successful completion of the International Monetary Fund (IMF) review and the subsequent $1 billion disbursement under the Extended Fund Facility (EFF), along with additional resources made available through the Resilience and Sustainability Facility (RSF),” said a statement circulated by the finance ministry after the meeting.

“He noted that development finance must be guided by merit and objective assessment, rising above political considerations to ensure sustainable progress,” it added.

Aurangzeb also praised the World Bank’s longstanding support for Pakistan’s economy, especially in times of fiscal stress, and reiterated Islamabad’s commitment to deepening collaboration with the institution.

He extended a warm welcome to Bolormaa Amgaabazar, the new World Bank Country Director for Pakistan, while commending her predecessor, Najy Benhassine, for his contributions during his tenure.

A key point of discussion was the World Bank’s 10-year Country Partnership Framework (CPF), a strategic agreement designed to guide development cooperation through targeted investments in Pakistan’s critical sectors.

The CPF, finalized during Benhassine’s tenure, will now be overseen by Amgaabazar and aims to unlock $20 billion for the country.

Aurangzeb highlighted the importance of effective implementation of the framework to fully leverage the Bank’s institutional, technical and financial support.

The meeting reaffirmed mutual commitment to strengthening Pakistan’s economic resilience and advancing inclusive development through strategic partnerships, the finance ministry said.


‘Everything came crashing down’: US visa freeze shatters hopes of young Pakistani students

Updated 31 May 2025
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‘Everything came crashing down’: US visa freeze shatters hopes of young Pakistani students

  • Washington has temporarily suspended student and exchange visa appointments to expand social media vetting
  • Pakistani students say the move threatens their academic year and could cause them significant financial losses

ISLAMABAD: For many in Pakistan, the US visa freeze has felt like a devastating setback after years of academic effort and ambition, affected applicants and an education consultant said on Friday.

The suspension, ordered by US Secretary of State Marco Rubio earlier this week, halts new student and exchange visa appointments worldwide and is part of a broader policy under President Donald Trump’s administration to intensify screening of foreign nationals, including expanded social media vetting.

US embassies have been instructed to pause interviews while new guidelines are being finalized, as officials in Washington say the goal is to identify potential security risks amid a rise in campus activism following Israel’s war in Gaza, which has sharply polarized student opinion.

Trump’s critics argue, however, the measures are discriminatory and risk undermining access to American higher education for bright students from developing countries — long considered a cornerstone of the US advantage in global research and innovation.

“I had always dreamed of pursuing higher education in the United States and after months of preparation, hard work and dedication, I finally got accepted into New York University,” Mohammad Ibrahim, a student from Lahore, told Arab News over the phone.

“But just as I was preparing for the next big chapter of my life, everything came crashing down,” he continued, adding that due to the sudden visa ban imposed by the Trump administration, his plans have been put on hold.

Ibrahim said despite getting admission after meeting all the university requirements, he was now stuck in an uncertain situation, with nothing to do but wait, hope and keep trying to move forward, even when everything had suddenly gone beyond his control.

“It’s disappointing,” he said. “An entire year of my life feels like being wasted.”

Inayah Murtaza, an exchange program candidate from the same city, said the new US policy had led to delays in visa interviews and a ban on the exchange student program, leaving her and many others devastated.

“American higher education system provides excellent opportunities. However, the recent policies by the Trump administration are extremely devastating,” she said, adding the ban had hurt her both emotionally and financially.

For Malik Zalaid Hassan, from Sheikhupura, who had secured admission to study artificial intelligence at the University of California, the visa suspension was a huge setback.

“I won’t get my money back… I just lost a ton of money,” he told Arab News, emphasizing he had already paid thousands of dollars in tuition and housing fees.

“I really hope America does something about this and I really hope it changes because this has an impact on a lot of people,” he continued.

Mohammad Ayyan Akhtar, a counselor at UniGrad, an education consultancy firm in Lahore, said the visa appointments ban had placed many students in a heart-wrenching situation.

“It includes their financial losses, and on top of everything, their academic loss is a big concern,” he said.

“The Trump administration should lift [the ban] as early as possible to save the loss of hundreds of Pakistani students [of their] academic year,” he added.


Trump says Pakistani representatives coming to US next week for trade talks

Updated 17 min 45 sec ago
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Trump says Pakistani representatives coming to US next week for trade talks

  • Pakistan faces a potential 29% tariff on its exports to the United States due to a $3 billion trade surplus with world’s biggest economy
  • Trump said he would have no interest in making a deal with the South Asian country or its neighbor, India, if they were to engage in war

ISLAMABAD: US President Donald Trump said on Friday representatives from Pakistan are coming to the United States next week for trade talks, following a conversation between Pakistani Finance Minister Muhammad Aurangzeb and US Trade Representative Ambassador Jamieson Greer to launch the process.

The talks come after US President Donald Trump imposed steep tariffs on a number of countries earlier this year, a move widely viewed as a setback for the global economy still recovering from the coronavirus pandemic.

Pakistan faces a potential 29% tariff, currently under a 90-day pause announced in April, on its exports to the United States due to a $3 billion trade surplus with the world’s biggest economy.

“As you know, we’re very close making a deal with India,” Trump told reporters at Joint Base Andrews after departing Air Force One.

The US is Pakistan’s largest export destination and the new duties threatened to undermine Islamabad’s fragile economic recovery.

Finance Minister Aurangzeb described the beginning of trade talks with the US as both a challenge and an opportunity to reset trade ties, according to his ministry.

“Pakistan’s formal negotiations on US reciprocal tariffs kick-started between Mr. Muhammad Aurangzeb, Pakistan’s Finance Minister, and Ambassador Jamieson Greer, United States Trade Representative through a telephonic/conference call on 30th May, 2025,” it said.

“The two sides exchanged their viewpoint through a constructive engagement with the understanding that technical level detailed discussions would follow in the coming few weeks.”

According to Pakistan’s central bank, the country exported $5.44 billion worth of goods to the US in 2024. From July to February of the current fiscal year, exports to the US reached $4 billion, up 10 percent from the same period last year.

Nearly 90 percent of those exports are textiles, which analysts say will be hardest hit.

Experts have also warned previously the tariffs could reduce Pakistan’s competitiveness, especially if regional exporters such as China, Bangladesh and Vietnam redirect more goods to Europe, intensifying competition in alternative markets.

With additional input from Reuters


Police in Islamabad briefly detain senior rights activists protesting Israel’s war in Gaza

Updated 30 May 2025
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Police in Islamabad briefly detain senior rights activists protesting Israel’s war in Gaza

  • Tahira Abdullah and Samina Khan were detained by police outside the Islamabad Press Club
  • No charges were specified, and both rights activists were released by the police later in the day

ISLAMABAD: Two senior human rights activists, Tahira Abdullah and Samina Khan, were briefly detained by police on Friday outside the Islamabad Press Club for ostensibly protesting against Israel’s war in Gaza before their release later in the day.

A video purportedly showing their arrest depicts them wearing Palestinian flags and keffiyeh scarves as they are escorted away by women police personnel, along with a man and three youths.

Abdullah can be seen asking a policeman why they are being taken away. She then tells the female police personnel not to push her and Khan, and requests that they be moved to a separate car instead of the police truck.

“They [Abdullah and Khan] were illegally picked up from outside the Islamabad Press Club premises and taken away to the women police station in G-7,” lawyer Hadi Ali Chattha told Arab News.

“They aren’t allowed to meet their counsel to discuss options,” he continued. “Station House Officer (SHO) Misbah Waqas is refusing to let their families and counsel meet them.”

Police did not specify any charges against the two rights activists. Islamabad police spokesperson Dr. Taqi Javed also did not respond to a query from Arab News in this regard.

Last year in May, Abdullah was among the protesters who staged a demonstration at Islamabad’s D-Chowk in support of the Palestinians. She had urged everyone to come out in large numbers, saying the Pakistani government would not pay heed to their demands otherwise.

The Islamabad Press Club is a key venue in Pakistan’s capital where journalists and activists hold press conferences and protests. It serves as a platform for raising awareness and drawing media attention to political and social issues. Protesters use it to voice demands and push for government action.

A video of Abdullah and Khan that was later shared by lawyer Chattha shows them stepping out of the police precinct after being released, chanting the slogan, “Free, free Palestine.”

Pakistan does not recognize Israel and supports an independent Palestinian state based on pre-1967 borders, with Jerusalem as its capital.