Amid forex crunch, Pakistan army chief assures businessmen of 'transparency' in exchange rates

A man enters a foreign currency exchange shop in Islamabad, Pakistan on July 11, 2023. (AFP/File)
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Updated 04 September 2023
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Amid forex crunch, Pakistan army chief assures businessmen of 'transparency' in exchange rates

  • The assurance came at a meeting between army chief, business figures at a time when Pakistan is grappling with an economic crisis
  • Lahore Chamber of Commerce says the business community held significant discussions with the army chief on the economic situation

ISLAMABAD: Pakistan's army chief, General Asim Munir, has assured business community of fostering "transparency" in the dollar exchange and interbank rates, the Lahore Chamber of Commerce & Industry (LCCI) president said on Sunday, following a meeting between the two sides. 

The meeting between the army chief and leading business figures at the army's corps headquarters in Lahore came at a time when Pakistan is grappling with a severe economic crisis, with the national currency at a historic low against the dollar, forex reserves dwindling and inflation hovering above 27 percent. 

Representatives of the business community held significant discussions with the army chief over the economic situation of the South Asian country, which barely averted a sovereign default in June by securing a $3 billion bailout deal with the International Monetary Fund. 

LCCI President Kashif Anwar apprised Gen Munir of critical issues faced by the public and suggested a number of proposals, including greater control over the rates of the US dollar in both interbank and open markets, to help steer the country out of the economic turmoil, the LCCI said in a statement. 

"General Asim Munir responded positively, assuring that money exchanges would be brought under the purview of taxation, fostering transparency in dollar exchange and interbank rates," the statement read. 

Last week, Pakistan's rupee fell to an eighth consecutive record closing low, dropping to 305.5 per US dollar. 

The rupee lost 0.4 percent as Pakistan eased import restrictions to abide by conditions set under the $3 billion IMF deal and on political instability. Pakistan imposed import restrictions from 2022 to stem outflows from its shrinking foreign reserves. 

Anwar pointed out that the disparity between the central bank rate and 'Hundi' rates often led to the preference for Hundi channels when it came to sending remittances. He emphasized that if these rates were aligned, remittances would naturally flow through the State Bank of Pakistan (SBP). 

The LCCI president proposed a reduction in income and sales tax rates on electricity bills.  

"He noted that the populace grapples with the burden of high taxation on electricity, impacting daily lives, businesses and common people," the LCCI statement said. 

"Anwar introduced a pragmatic approach to fuel adjustment charges, advocating for their collection during the winter months when electricity consumption is lower, alleviating financial stress on consumers." 

Poverty-stricken Pakistanis have staged several demonstrations and strikes over the last two weeks in protest over the rising costs of living, fueled by the recent hikes in energy prices. 

A caretaker administration is currently governing Pakistan, tasked with steering the country through to a national election that is due to take place by November. It is also grappling with acute political tension. 

Gen Munir highlighted the pivotal role of the Special Investment Facilitation Council (SIFC), emphasizing its potential to attract of up to $100 billion investments from countries such as Saudi Arabia, the UAE, Kuwait and others to alleviate the suffering of Pakistani people. 

To bolster economic decision-making, he revealed the formation of task forces that were focused on economic matters and different sectors. 

The outgoing government of Prime Minister Shehbaz Sharif announced in June the formation of the SIFC, aimed at seeking investments in the energy, IT, minerals, defence and agriculture sectors from the Gulf countries 

The SIFC, which includes the army chief and other military leaders in key roles, aims to take a “unified approach” to steer the country out of the economic turmoil. 

On the occasion, the LCCI president emphasized the importance of an enhanced and sustained interactive dialogue between the business community and relevant authorities.  

"Anwar called for a unified commitment from political parties, suggesting the signing of a charter of the economy as a precondition before any upcoming elections," the statement read. 

"This gathering exemplified the shared dedication of both the business community and the military leadership to work collaboratively in addressing pressing economic challenges and propelling the nation toward growth." 


Pakistan shares close weekend trading at all-time high on improving economic indicators, Saudi investments

Updated 5 sec ago
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Pakistan shares close weekend trading at all-time high on improving economic indicators, Saudi investments

  • KSE-100 index went up by 427 points and closed at 73,086 points on investor optimism
  • Analysts say Saudi crown prince’s visit could see stock market cross 85,000 level this year

KARACHI: Pakistan’s key stock index crossed the 73,000 mark on Friday to close the weekend trading session at an all-time high on renewed hopes of an interest rate cut and improving economic indicators as well as optimism about Saudi investments, analysts said.
 
The KSE-100 index went up by 427 points and closed at 73,086 points on investor optimism stemming from an anticipated lower inflation rate this month, which fueled speculation of an interest rate cut in the next monetary policy in June. 

Last month, the Monetary Policy Committee (MPC) of the State Bank kept the key interest rate steady at 22 percent for the seventh straight meeting.
 
“Pakistan stocks exchange made another new high today crossing 73,000 amid expectations that inflation may fall at a faster than expected rate,” Muhammad Sohail, CEO of Topline Securities, told Arab News, adding that optimism about Saudi investments had also played a key role in the bullish trend at the bourse in the last few days.
 
The Pakistan Stock market performed extremely well during the outgoing week and the index increased by around 1180 points.
 
“There are two to three reasons for this surge, first being the gradual improvement in Pakistan’s economic indicators,” Sheheryar Butt, Portfolio Manager at Darson Securities, said. 
 
The South Asian nation has witnessed increasing remittance by 28 percent to $2.8 billion while the central bank’s reserves soared above $9 billion, the highest in 1.5 years.
 
“Along with this, our currency is maintained at Rs278 against the US dollar and it is also stabilizing in the interbank market. We are also seeing an increase in remittances,” Butt said.
 
Pakistan saw one of the highest inflation regimes last year, with 38 percent inflation recorded in May last year, which eased to 17.3 percent this April. Pakistani analysts expect a further fall in May, renewing optimism of an interest rate cut from the current 22 percent in the upcoming monetary policy.
 
“Inflation in Pakistan is expected to decrease significantly to around 15 percent in May 2024. This substantial drop is a testament to the effective efforts of the government and central bank in curbing inflation,” Sohail added.
 
Talks with the International Monetary Fund (IMF) for a new bailout package and Saudi investment optimism have been key drivers of the stock index in recent days while the expected arrival of the Saudi Crown prince later this month is being seen as another “milestone achieving factor.”
 
“The IMF team is going to visit Pakistan and there are brighter chances for Pakistan to get a longer program with the IMF. Pakistan will easily get a program of $6-8 billion for 2-3 years,” Butt said, adding that the Saudi crown prince’s visit could see the stock market cross the 85,000 level this year.


Pakistan to play Japan in Azlan Shah Hockey Cup final tomorrow

Updated 11 min 46 sec ago
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Pakistan to play Japan in Azlan Shah Hockey Cup final tomorrow

  • This is first time Pakistan have advanced to tournament’s final since 2011
  • Pakistan have won the Azlan Shah Cup title thrice, in 1999, 2000 and 2003

ISLAMABAD: Pakistan remained unbeaten in the Azlan Shah Hockey Cup on Friday as their match against New Zealand ended in a tie and will take on Japan in the final tomorrow, Saturday. 

Pakistan are already through to the final which will take place at 5:30pm (PKT) on Saturday at the Azlan Shah Stadium in Ipoh. This is the first time Pakistan have advanced to the tournament’s final since 2011.

Friday’s match ended in a draw, with both teams securing one point each, the Pakistan Hockey Federation (PHF) said.

“Pakistan has managed to make it to the finals with a total of 11 points from five matches on the points table,” PHF said. “Pakistan won the bronze medal in the last event [Thursday] by winning the third place match. The final match between Pakistan and Japan will be played tomorrow [Saturday].”

Six teams are participating in the event, including host team Malaysia, Pakistan, Korea, Japan, New Zealand and Canada. 

Pakistan have won the Azlan Shah Cup title thrice — in 1999, 2000 and 2003 — and came third in the last edition which was also held in Ipoh in 2022. Malaysia are the defending champions of this year’s edition.

Addressing the squad via video link, Information Minister Attaullah Tarar reiterated the government’s commitment to hockey, state-run Radio Pakistan said, adding that the prime minister had ordered focusing on removing obstacles in the development of hockey in Pakistan.

“The entire nation is praying for the victory of Pakistan and is looking forward to welcome a champion team,” Tarar said. 

Pakistan is now 18th in hockey rankings after being consistently among the top four and winning a record four World Cups. The nation has not won a single hockey medal at the Olympics since 1992.


Amid privatization push, Pakistan says profit-making public entities also being considered for sale

Updated 10 May 2024
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Amid privatization push, Pakistan says profit-making public entities also being considered for sale

  • South Asian nation is striving to deliver reforms amid talks with IMF for new bailout loan package
  • Cabinet Committee on Privatization has in principle approved 24 entities for Privatization Programme

KARACHI: The office of Pakistan’s deputy prime minister said on Friday even profit-making state owned enterprises (SOEs) would be considered for privatization as the South Asian nation strives to deliver reforms amid talks with the International Monetary Fund for a new bailout package.

Under the last $3 billion bailout package from the IMF that was critical in averting a sovereign debt default last year, the lender has said state-owned entities whose losses are burning a hole in government finances would need stronger governance. Pakistan is now negotiating with the IMF for a larger, longer program for which it must implement an ambitious reforms agenda, including the privatization of debt-ridden SOEs. 

“CCOP emphasized that even the SOE making profits shall be considered for privatization,” a statement from the deputy prime minister’s office said, referring to a meeting of the Cabinet Committee on Privatization (CCOP). 

Among the top profit-making SOEs are Oil and Gas Development Company Limited, Pakistan State Oil Company Limited, Pak Arab Refinery Company, Pakistan Petroleum Limited, the National Bank of Pakistan, National Power Parks Management, the Government Power Holding Limited, Mari Petroleum and Neelum Jhelum Hydro Power Limited.

“CCOP, while approving 24 entities for the Privatization Programme, in-principle, for the time being, directed Ministry of Privatization to deliberate the phasing of each entity in consultation with the respective Ministries,” the statement added. 

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

The disposal of the flag carrier and other entities like a sprawling steel mill in Karachi is a step that past elected governments have steered away from as it is likely to be highly unpopular, but progress on the privatization will help cash-strapped Pakistan pursue further funding talks with the IMF.


‘Asia’s largest nursery’ in Pakistan’s Pattoki awaits government support to bolster Gulf exports

Updated 58 min 43 sec ago
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‘Asia’s largest nursery’ in Pakistan’s Pattoki awaits government support to bolster Gulf exports

  • Agriculture department says no other place worldwide where nurseries sprawl whole city
  • Plant exporters urge government to lift ban on import of seeds and new plant varieties 

Pattoki, PAKISTAN: From a bird’s-eye view, dozens upon dozens of nurseries can be seen dotting the city for several kilometers, featuring colorful flowers, massive trees and decorative plants. Around them, hundreds of workers flit about planting and trimming plants and plucking weed from the ground and out of clay pots. 

This is a scene from Pattoki, a city in the Kasur district of Pakistan’s most populous Punjab province, that exporters and government officials say is the largest nursery market in Asia. Spread over a thousand hectares, the market employs around 100,000 people directly or indirectly.

“This [nursery] is spread over ten villages and each village’s population is estimated to be around 10,000 people,” exporter Lala Shaukat told Arab News in Pattoki last week. “This is a profitable business and people are earning well from it, and this [Pattoki] has become Asia’s biggest [nursery] market.”

“Pattoki is indeed Asia’s largest nursery due to its sprawl at a single place, in one city, and this is the biggest market in Pakistan from where the plants and flowers are not only supplied across the country, but also exported to Saudi Arabia, UAE and other Gulf countries,” said Dr. Basharat Saleem, a deputy director at the Punjab general agriculture directorate. 

In Pattoki, an average nursery is spread over ten hectares with 30-40 gardeners taking care of around 350 types of plants and flowers that are sold both locally and exported. 

“Around 350 varieties [of different plants] are available with us [at this nursery], including palm trees and shadow trees,” Bilal Ahmed, a nursery owner, told Arab News. “Then there are fruit plants and flower plants which are available with us in abundance.”

GULF EXPORTS

Exporter Sheraz Ali said Pakistan’s plants and flower exports to Gulf countries had increased since 2018 from around 15 containers yearly to 250 in 2024. 

“In one container, around 10,000-12,000 plants are going [exported] and its value is around 3 million ($10,782) to 3.5 million rupees ($12,578),” Ali told Arab News. “In one acre, an average of 40,000-50,000 plants [are being planted].”

The plant protection department agreed with Ali, saying at least 250 containers were shipped yearly, with the Gulf region being a major destination.

“The exports of our plants and flowers have registered a significant increase in the Gulf region in the last couple of years, and the exporters’ number of 250 shipping containers for this year seems to be true,” said Dr. Khalid Zafar, a deputy director at the plant protection department, who said exact export numbers were not readily available with his department at the moment. 

Saudi Arabia and the UAE were the closest destinations to Pakistan where shipments could reach within a week, exporters said. . 

“We have been focusing on roses as per their demand to export them to bring dollars to our market, so that it could play a role in our country’s progress,” Ali added. 

For consignments that have to be exported, plants and flowers are transferred from clay pots to a soilless medium known as cocopeat. This is a necessary step as globally exporting clay from one country to another is banned for fear that soil could transfer viruses and bacteria. 

“First of all, to export to Saudi Arabia, Dubai and all these Arab countries, there should be soilless media as you cannot transfer clay from one country to another because it may contain viruses, bacteria and there is a huge chance of the spread of diseases so you can make it soilless,” Ali explained. 

“So we import cocopeat from Sri Lanka to make it soilless and then use it in plants after taking it through a certain process.”

“GOVERNMENT SUPPORT”

Pakistani traders and growers, however, said despite the nurseries and flower markets being a “billion-dollar industry,” farmers were struggling to grow new varieties of plants and flowers and bag more orders from abroad. 

“Dubai, Saudi Arabia, Kuwait, Oman, it is a huge market for us. I am exporting to only one country, Dubai [UAE], and the quantity to other countries is negligible,” exporter Shaukat, who has been in the business for 30 years, said. “We need the government’s assistance to boost exports. The government should cooperate with us and our exports can witness a huge increase. Unless we are presented as an industry, we cannot increase our exports.”

Shaukat said the government’s decision to ban the import of plants and seedlings to Pakistan had damaged business because growers could not bring in new varieties of plants.

“The world demands new varieties of [plants] as people don’t like the fifty-year-old variety,” Shaukat told Arab News. 

Ahmed, the nursery owner, agreed that government support and incentives were key to the industry’s future growth. 

“This is a billion-dollar industry in Pakistan and there is no focus of the government or any institution on it,” he said as he walked through a row of plants. 

“If there is focus, this billion-dollar industry can earn huge revenue for both the government and farmers.”


Pakistan working to issue domestic green sukuk bonds by December — finance minister

Updated 10 May 2024
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Pakistan working to issue domestic green sukuk bonds by December — finance minister

  • Proceeds of green bonds used to finance climate change mitigation, adaptation and environmental projects
  • According to recent World Bank study, Pakistan faces potential annual GDP losses of up to 1 percent due to climate-related risks

KARACHI: Federal Minister for Finance and Revenue Muhammad Aurangzeb said on Friday the Pakistan government was working to issue domestic green sukuk bonds by December 2024 to fund environmentally sustainable infrastructure projects. 

The green sukuk is a Shariah-compliant interest-free bond in which instead of interest, investors receive an agreed share of the profits generated by the pool of underlying assets, which are partially owned by investors. Proceeds of green bonds are used to finance climate change mitigation and adaptation, and environmental projects. 

“The government is working on issuing domestic green sukuk bonds by December 2024 to finance sustainable development projects,” Aurangzeb said as he delivered an online keynote speech at the UK-Pakistan Green Investment Forum, organized by the British High Commission in Pakistan. 

In his address, the finance minister emphasized Pakistan’s commitment to addressing climate change and promoting green investment opportunities, and highlighted Pakistan’s vulnerability to the adverse effects of climate change, despite its low contribution to global greenhouse gas emissions. 

According to a recent World Bank study, Pakistan faces potential annual GDP losses of up to 1 percent due to climate-related risks.

Acknowledging a significant funding gap in adaptation, resilience, and mitigation projects and the need for a better portfolio of green investment projects, the minister emphasized Pakistan’s reliance on the private sector for support in this regard and highlighted the government’s efforts to enhance investor confidence in bankable green opportunities. 

He also outlined Pakistan’s plans to utilize innovative financing instruments like green sukuk to raise international climate finance. 

Pakistan ranks among the top 10 countries worldwide most affected by climate change and natural disasters.