KARACHI: The International Monetary Fund’s (IMF) $3 billion bailout deal will provide much-needed fiscal space to Pakistan but not solve the country’s long-term problems, financial experts and economists said on Saturday.
Subject to the IMF’s board approval in July, the stand-by arrangement (SBA) provides breathing space to a Pakistani economy staring at default and in dire need of external financing. The staff-level pact was announced a day before Pakistan’s previous $6.5 billion loan program with the IMF expired.
Cash-strapped Pakistan will get $1.1 billion in funds under the new financing arrangement right after the IMF’s board meeting in mid-July. The new deal provides Pakistan more than the $2.5 billion disbursement it expected to receive under the Extended Fund Facility (EFF) program that concluded incompletely on June 30, 2023.
“The SBA provides some much-needed space to the Pakistani economy and will most certainly dampen near-term uncertainty,” Uzair Younus, director of the Pakistan Initiative at the Washington-based think tank, the Atlantic Council, told Arab News.
“However, the economy remains in a precarious situation and the government has to try and sort out some of the major issues in the energy sector, reduce distortion in the exchange rate market, and adopt a policy framework that doesn’t just burn the external financing the country has unlocked to achieve near-term political objectives.”
Economists say the deal will only offer Pakistan short-term respite.
“It will not solve long-term problems of paying on average around $25 billion per year for the next three years,” Dr. Ikram ul Haq, a Lahore-based senior economist, told Arab News.
The new deal came through after Finance Minister Ishaq Dar revised the federal budget the government passed on June 9, 2023. Dar increased Pakistan’s revenue collection target to Rs9.415 trillion ($33 billion) and put total spending at Rs14.480 trillion ($51 billion), increasing the petroleum levy from Rs50 to Rs60 per liter.
Authorities have taken Rs215 billion ($752 million) additional tax measures, cut Rs85 billion expenditures, hiked allocations under the social safety Benazir Income Support Program (BISP) by Rs16 billion, and withdrew amnesty on foreign exchange inflows, while the central bank jacked up policy rate by 1 percent to record high at 22 percent in an emergency meeting.
Economists said the high cost of the IMF bailout package would be borne by the masses rather than the elite.
“The key to success of SBA and next program will be structural reforms that is Waterloo of our elites,” Haq said, adding that “the real victims will be masses who will pay higher indirect taxes and bear high cost of utilities as has happened under previous program.”
For now, the SBA has had a positive impact on local and international investors’ confidence, with Pakistan’s sovereign dollar bond, maturing in 2024, gaining its value as fears of default subsided.
“Significant upward movement in bond prices demonstrates growing optimism among investors regarding Pakistan’s ability to address its economic challenges and implement necessary reforms under the IMF-supported program,” Tahir Abbas, head of research at Arif Habib Limited told Arab News.
Pakistani analysts and currency dealers expect that the country’s capital markets may rally from next week in response to positive the development, which would unlock further funding from bilateral and multilateral partners.
Malik Bostan, president of the Exchange Companies Association of Pakistan (ECAP) hoped the IMF deal would help Pakistan’s national currency regain its lost value.
“The rupee is expected to recover about Rs5 to Rs10 on the opening day of trading and will further strengthen by Rs10 to Rs20 with the inflow of funds,” Bostan told Arab News. “Those hoarding dollars for gains will not suffer losses if they don’t come out to sell.”
IMF’s $3 billion bailout deal will not solve Pakistan’s long-term problems, say experts
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IMF’s $3 billion bailout deal will not solve Pakistan’s long-term problems, say experts
- Economists say IMF agreement provides much-needed space to Pakistani economy, will dampen near-term uncertainty
- Pakistani rupee to recover by Rs10-20 against the US dollar when the IMF funds are received, says currency dealer
Pakistan reopens airspace as ceasefire with India takes hold
- The country shut down its airspace following strikes on three of its air bases by Indian forces
- Pakistan Airport Authority asks passengers to contact their airlines for updated schedules
ISLAMABAD: Pakistan reopened its airspace to all domestic and international flights on Saturday, shortly after a ceasefire agreement with India brought a pause to cross-border missile and drone attacks that had disrupted regional travel and raised fears of a wider conflict.
The ceasefire agreement was announced by US President Donald Trump, who said the two countries had agreed to “a full and immediate ceasefire” after a long night of talks mediated by Washington.
Secretary of State Marco Rubio said in a separate message that both countries had agreed to initiate talks on a broad set of issues at a neutral venue.
The reopening was announced less than 24 hours after Pakistan had shut down its airspace following strikes on three of its air bases by Indian forces.
“Pakistan’s airspace has been completely restored for all types of flights,” the Pakistan Airports Authority said in a statement.
“All airports in the country are available for normal flight operations,” it added, asking passengers to contact their airlines for updated schedules.
Flights were grounded, rerouted or delayed across South Asia this past week as tensions between the nuclear-armed neighbors escalated.
Pakistan International Airlines (PIA) suspended operations after halting ground services, while several foreign airlines — including Korean Air, EVA Air, and China Airlines — opted to avoid Pakistani airspace, citing security concerns.
The standoff between the two South Asian nuclear states was sparked by a deadly attack in Indian-administered Kashmir last month that killed 26 people, mostly tourists.
India blamed Pakistan for the incident, though officials in Islamabad repeatedly denied any involvement and called for a neutral and impartial probe.
However, New Delhi launched missile strikes on what it called “militant training camps” in five Pakistani cities, drawing retaliatory action from Islamabad.
Pakistan and India agree to ceasefire
- US secretary of state says two countries had agreed to talks on “broad set of issues at a neutral site”
- Announcement comes after Pakistan and India launched attacks on each other early morning Saturday
ISLAMABAD: Pakistan and India both confirmed on Saturday they had agreed to a ceasefire after President Donald Trump said the US had mediated late night talks between the nuclear-armed South Asian nations on the brink of an all-out war.
The announcement came after the Pakistan military said early on Saturday India had attacked three bases in Pakistan with missiles, after which it had targeted multiple bases in India in response, including a missile storage site in India’s north. India said there was limited damage to equipment and personnel at air force stations in the Udhampur, Pathankot, Adampur and Bhuj areas. The military said there were several high-speed missile attacks on several air bases in Indian Punjab, and that India had responded to the attacks.
Five civilians were killed in attacks in the Jammu region of Indian-administered Kashmir, regional police said.
“Pakistan and India have agreed to a ceasefire with immediate effect. Pakistan has always strived for peace and security in the region, without compromising on its sovereignty and territorial integrity,” Pakistani Deputy Prime Minister Ishaq Dar wrote on X.
The Indian ministry of external affairs also confirmed the ceasefire deal in a briefing.
Separately, Trump said:
“After a long night of talks mediated by the United States, I am pleased to announce that India and Pakistan have agreed to a FULL AND IMMEDIATE CEASEFIRE. Congratulations to both Countries on using Common Sense and Great Intelligence.”
US Secretary of State Marco Rubio said the two countries had also agreed to talks on a “broad set of issues at a neutral site.”
Earlier on Saturday, Pakistani and Indian officials had both separately said they would consider de-escalation if the other nation reciprocated.
Through this week, allies and friends like Saudi Arabia, China, Iran and Qatar have offered mediation and urged restraint. The Group of Seven (G7) major countries called on India and Pakistan to engage in direct dialogue while the US government said it had offered assistance in starting “constructive talks.”
Saturday’s military confrontation, the worst fighting between the longstanding enemies in decades, followed days of daily clashing since Wednesday through drones and missiles and gunfighting on the Line of control, the de facto border that divides the disputed Kashmir region between them. At least 50 have been killed on both sides.
The latest tensions were triggered by a militant attack in Indian-administered Kashmir that killed 26 people on April 22. New Delhi said Islamabad was involved, which denied the allegation and repeatedly said it was willing to participate in a transparent and credible inquiry.
Pakistan and India have a history of bitter relations, having fought two of their three wars over Kashmir, a region split between them, since gaining independence from the former British colonial rule in 1947.
Both nations acquired nuclear weapons in 1998.
In separate attacks, gunmen kill two, set police vehicle ablaze in southwest Pakistan
- Balochistan has been the site of a decades-old insurgency where separatist militants often target security forces, foreigners and ethnic Punjabi workers
- The latest attack comes at a time when Pakistan is fighting another insurgency in its northwest and is engaged with arch-foe India at the eastern border
QUETTA: Gunmen killed three people, including two barbers from the eastern Punjab province, and set a police vehicle ablaze in Pakistan’s restive Balochistan province in the southwest, police and paramilitary Levies officials said on Saturday.
Balochistan, Pakistan’s most impoverished province, has been the site of a decades-old insurgency, where separatist militants often target security forces, police, foreigners and ethnic Punjabi commuters and workers, who they see as “outsiders,” by wresting control of highways and remote towns.
In this first attack, gunmen shot dead three people and injured another one inside a barber shop in Lasbela, a district adjacent to Pakistan’s commercial capital of Karachi, according to Senior Superintendent of Police (SSP) Atif Amir.
“Two of the deceased hailed from Bahawalpur (Punjab) and one from Quetta,” the official told Arab News. “Hunt for the attackers is underway.”
In another incident, dozens of armed men entered the Panjgur district late on Friday night and attempted to seize control of the Panjgur city and nearby areas.
“The armed men set a police vehicle and record of the Panjgur police station on fire,” Abdullah Baloch, an official at the Panjgur Levies control room, told Arab News.
“No casualty was reported despite an exchange of fire between security forces and armed men in Panjgur city and Goran, another area located 15 kilometers from Panjgur.”
No group immediately claimed responsibility for the attacks, but Baloch separatists have carried out similar assaults on law enforcers and ethnic Punjabis in the past.
The separatists accuse Islamabad of exploiting the province’s natural resources, such as gold and copper, and accuse foreigners and people from other province of backing the Pakistani state. Successive Pakistani governments have denied the allegations and said they only worked for the uplift of the region and its people.
The latest attacks come at a time, when Pakistan is fighting another insurgency by religiously motivated militant groups in its northwestern Khyber Pakhtunkhwa (KP) province, while the country’s eastern border with India has also flared up in recent weeks over an attack in Indian-administered Kashmir that killed 26 tourists last month.
Islamabad has variously accused Afghanistan and India of supporting the Pakistani Taliban and Baloch separatist groups, an allegation denied by Kabul and New Delhi.
In March, the Baloch Liberation Army separatist group hijacked a train with hundreds of passengers aboard near Balochistan’s Bolan Pass, which resulted in the deaths of 23 soldiers, three railway employees and five passengers. At least 33 insurgents were also killed, according to officials.
Late last month, police killed nine suspected militants in an intelligence-based operation in Balochistan’s Pishin district.
Pakistan shuts its airspace for 24 hours after fresh exchange of strikes with India
- India-Pakistan tensions, sparked by last month’s attack Kashmir that killed 26 people, spiraled into a military conflict this week
- The ongoing conflict has forced intermittent closure of airspaces in both countries, plunging the regional air traffic into disarray
KARACHI: Pakistan has once again closed its airspace to all domestic and international flights for 24 hours, the country’s airports authority said on Saturday, hours after Islamabad hit Indian military targets in retaliation to what it said were strikes on three of its air bases.
India-Pakistan tensions, sparked by last month’s attack in Indian-administered Kashmir that killed 26 people, spiraled into a military conflict this week, when India conducted missile strikes on what it called “militant training camps” in five Pakistani cities, which Islamabad said killed 31 civilians.
Both sides have since exchanged drone, missile and artillery strikes, with either one claiming to have acted in retaliation. The ongoing conflict forced intermittent closure of airspaces in both countries, where flight operations were already affected since the neighbors closed their airspaces for the other shortly after the Kashmir attack.
While Pakistan partially resumed flight operations this week, Islamabad decided to close its airspace for another 24 hours after Pakistan launched strikes on Indian military targets in response to what it said were attacks on three of its air bases, one close to the capital, in the wee hours of Saturday.
“Pakistan’s airspace will remain closed for all types of flights until 12PM tomorrow (May 11),” a Pakistan Airports Authority (PAA) spokesperson said around Saturday noon.
The ongoing tensions between Pakistan and India have plunged flight operations across the region into a disarray, with several domestic and international flights delayed, canceled or returned. The state-run Pakistan International Airlines (PIA) this week suspended all flights after halting ground operations and initially diverting airborne planes to Karachi.
The latest closure bars both domestic and international air traffic from entering Pakistan’s airspace, a major corridor for flights between Europe and Asia.
Several Asian airlines, including EVA Air, Korean Air, Thai Airways and China Airlines, have rerouted or delayed flights for Europe, citing “safety concerns” due to the ongoing conflict. A Taipei-Milan flight was diverted to Vienna for refueling this week, while Korean Air opted for a longer route via Myanmar and Bangladesh.
India’s flight operations have also been impacted, with several airports closed.
The conflict has drawn international concern and world powers, including the United States, United Kingdom and China, have urged both countries to exercise restraint and avoid any escalation.
Pakistan minister denies nuclear body meeting after offensive launched on India
- Since Wednesday both sides have carried out strikes, counter strikes
- US secretary of State Rubio calls both sides for de-escalation, direct talks
ISLAMABAD/NEW DELHI: Pakistan’s defense minister said on Saturday that no meeting of the top military and civil body overseeing the country’s nuclear arsenal had been scheduled following a military operation against India earlier in the day.
Pakistan’s military said earlier that the prime minister had called on the authority to meet. The information minister did not respond immediately to a request for comment.
The worst fighting between the nuclear-armed rivals since 1999 has killed dozens of people on both sides and led to repeated calls for de-escalation from the United States and the G7 group of rich countries.
“This thing that you have spoken about (nuclear option) is present, but let’s not talk about it — we should treat it as a very distant possibility, we shouldn’t even discuss it in the immediate context,” Pakistan Defense Minister Khawaja Asif told ARY TV.
“Before we get to that point, I think temperatures will come down. No meeting has happened of the National Command Authority, nor is any such meeting scheduled.”
US Secretary of State Marco Rubio called Pakistan’s Army Chief General Asim Munir and India’s foreign minister, Subrahmanyam Jaishankar, urging both sides to de-escalate and “re-establish direct communication to avoid miscalculation.”
“India’s approach has always been measured and responsible and remains so,” Jaishankar said on X after the call with Rubio.
Pakistan’s foreign minister, Mohammad Ishaq Dar, told local television that if India stops here then “we will consider to stop here.”
Indian media reported that Indian and Pakistani officials had spoken on Saturday.
The Indian military said regarding Pakistan’s military attacks on Saturday that “all hostile actions have been effectively countered and responded appropriately.”
“The Pakistan military has been observed to be moving their troops into forward areas, indicating offensive intent to further escalate the situation,” Indian Wing Commander Vyomika Singh told a press conference.
“Indian armed forces remain in a high state of operational readiness. Indian armed forces reiterate their commitment to non-escalation, provided it is reciprocated by the Pakistan military.”
STRIKES, COUNTER STRIKES
Pakistan early on Saturday said it had targeted multiple bases in India including a missile storage site in India’s north, in response to prior attacks by the Indian military.
India said there was limited damage to equipment and personnel at air force stations at the Udhampur, Pathankot, Adampur and Bhuj areas. The military said there were several high-speed missile attacks on several air bases in Punjab, and that India had responded to the attacks.
Five civilians were killed in the attacks in the Jammu region of Indian-administered Kashmir, regional police said.
Pakistan said that, before its offensive, India had fired missiles at three air bases, including one close to the capital, Islamabad, but Pakistani air defenses intercepted most of them.
Analysts and diplomats have long feared that conflict between the arch-rivals could escalate into the use of nuclear weapons, in one of the world’s most dangerous and most populated nuclear flashpoint regions.
Locked in a longstanding dispute over Kashmir, the two countries have engaged in daily clashes since Wednesday when India launched strikes inside Pakistan on what it called “terrorist infrastructure.” Pakistan vowed to retaliate.
Pakistan’s information minister said in a post on X that Saturday’s military operation was named “Operation Bunyanun Marsoos.” The term is taken from the Qur'an and means a firm, united structure.
Sounds of explosions were reported in India’s Srinagar and Jammu, where sirens sounded, a Reuters witness said.
“India through its planes launched air-to-surface missiles ... Nur Khan base, Mureed base and Shorkot base were made targets,” Pakistan military spokesman Lt. Gen. Ahmed Sharif Chaudhry said in a late-night televised statement.
India has said its strikes on Wednesday, which started the latest clashes between the countries, were in retaliation for a deadly attack on Hindu tourists in Indian Kashmir last month.
Pakistan denied India’s accusations that it was involved in the tourist attack. Since Wednesday, the two countries have exchanged cross-border fire and shelling, and sent drones and missiles into each other’s airspace.
