Tag: economy

  • Saudi Arabia to invest $25 billion in Pakistan over five years: PM Kakar

    Saudi Arabia to invest $25 billion in Pakistan over five years: PM Kakar

    On Monday, Interim Prime Minister Anwaar ul Haq Kakar announced that the Kingdom of Saudi Arabia (KSA) intends to invest a substantial sum of up to $25 billion in Pakistan over the next two to five years.

    During a media briefing, PM Kakar explained that Saudi Arabia’s investment focus will primarily encompass the mining, agriculture, and information technology sectors. This initiative aims to boost foreign direct investment in Pakistan, which is currently facing financial challenges. 

    If this investment materialises, it will mark the largest-ever commitment by Saudi Arabia to Pakistan. The country is grappling with a pressing need for funds to address its trade deficit and repay international loans in the ongoing fiscal year. 

    While specific projects earmarked for Saudi investment were not disclosed during the meeting, Barrick Gold Corp. expressed interest last month in partnering with Saudi Arabia’s wealth fund for the Reko Diq mine in Pakistan. 

    Kakar emphasised that Pakistan holds substantial untapped mineral resources valued conservatively at $6 trillion. Additionally, the government intends to expedite two privatisation transactions, likely involving state-owned power sector entities, within the next six months. There is also a plan to privatise another government-owned company, preferably outside the energy sector. 

    Read more: Business community finds hope as COAS Munir vows to tackle corruption and boost investment  

    It’s worth noting that privatisation efforts in Pakistan have faced challenges in the past, as the sale of state assets is a politically sensitive issue that previous elected governments have largely avoided. 

    Currently, Pakistan is navigating a challenging path to economic recovery under a caretaker administration, following the approval of a $3 billion loan plan by the International Monetary Fund in July, which prevented a sovereign debt default. Islamabad is confronted with a balance of payments crisis and requires substantial funds to rectify its trade deficit and settle outstanding debts. 

  • Business community finds hope as COAS Munir vows to tackle corruption and boost investment 

    Business community finds hope as COAS Munir vows to tackle corruption and boost investment 

     
    In response to the pressing economic crisis facing the country, Chief of Army Staff (COAS) General Syed Asim Munir has pledged unwavering efforts to attract foreign investment and rejuvenate the economy, as reported by The News on Tuesday. General Munir made these assurances during a recent extensive meeting with members of the business community, where he engaged openly and candidly with them. 

    During an appearance on Geo News‘ “Aaj Shahzeb Khanzada Kay Sath” programme on Monday, President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), Irfan Iqbal Sheikh, expressed optimism following their meeting with the army chief. He revealed that General Munir had conveyed discussions of a potential $25 billion investment from Saudi Arabia, encompassing sectors such as IT, minerals, agriculture, and defence. 

    Highlighting a pivotal development, General Munir disclosed that Saudi Crown Prince Mohammad Bin Salman had committed to depositing $10 billion of this investment in the State Bank of Pakistan (SBP), to be reimbursed in Pakistani rupees or goods, thereby bolstering foreign exchange reserves. 

    General Munir also acknowledged the bureaucratic obstacles hindering investment and emphasised the establishment of a Special Investment Facilitation Council (SIFC) to streamline processes and eliminate bureaucratic impediments. He assured that this initiative would protect investors from interference, bureaucratic hurdles, or legal complications. 

    Irfan Iqbal Sheikh further mentioned that Saudi Arabia and the United Arab Emirates (UAE) had both pledged $25 billion in investments, with Qatar and Kuwait following suit with similar commitments. 

    General Munir expressed determination to combat corruption, particularly by curbing land-grabbing and extortion mafias. To this end, he announced the formation of four task forces to address issues related to the Federal Board of Revenue of Pakistan (FBR), border control, smuggling, and social media, aiming to improve the overall situation. 

    Sheikh stressed that the business community had grown disillusioned but found renewed courage and hope through the army chief’s commitments. 

    Meanwhile, Business Group Chairman Zubair Motiwala noted the distinct approach of General Munir in engaging with traders compared to his predecessors. He highlighted the COAS’s efforts to revive the economy through engagements in Saudi Arabia, the UAE, and upcoming visits to Qatar and Kuwait. 

    Motiwala reported that General Munir had instructed the corps commander to prevent the influx of Iranian diesel into Karachi and issued directives to address land encroachments, corruption, and law enforcement issues. 

    General Munir also emphasised that only registered Afghan refugees would be allowed to stay in Pakistan, while the rest would need to return to their home country. He conveyed Saudi Crown Prince Mohammad Bin Salman’s concerns regarding corruption and bureaucracy in Pakistan. 

    Motiwala further disclosed discussions about the charter of the economy with General Munir, expressing hope that such substantial investments would significantly improve the economic conditions in the country. 

    He also pointed out that state-owned enterprises were incurring significant losses, amounting to Rs1,300 billion, and stressed the need for action, noting that political governments might not fully embrace privatisation but would seek to relieve this burden. General Munir expressed his understanding of the government’s approach to this issue and its commitment to addressing it comprehensively. 

  • Inflation in Pakistan stays above 27% despite IMF reforms

    Inflation in Pakistan stays above 27% despite IMF reforms

    Pakistan continues to grapple with soaring inflation, with the rate holding steady at 27.4 per cent in August, according to data released on Friday. This persistent inflationary pressure is partially attributed to the reforms mandated as part of the IMF loan agreement, which have complicated efforts to stabilise prices and curb declines in the national currency, the rupee.

    The South Asian nation is treading cautiously on its path to economic recovery, with a caretaker government at the helm following the approval of a $3 billion loan programme by the International Monetary Fund (IMF) in July, averting a potential sovereign debt default.

    However, the conditions tied to this bailout, including the relaxation of import restrictions and the removal of subsidies, have contributed to a surge in annual inflation. In May, inflation reached a staggering 38.0 per cent, setting a new record. Concurrently, interest rates have risen, and the rupee has experienced historic lows, with a 6.2 per cent decline in the currency’s value last month.

    While the August data from Pakistan’s statistics bureau indicates a slight easing from July’s 28.3 per cent inflation rate, food inflation remains alarmingly high at 38.5 per cent. Authorities have further exacerbated the situation by raising gasoline and diesel prices to record highs on Friday.

    These worsening economic conditions, coupled with escalating political tensions ahead of a national election scheduled for November, have triggered sporadic protests. Jamaat-e-Islami has announced a nationwide strike in response to the increased power tariffs.

    Every day, Pakistanis are feeling the pinch and struggling to make ends meet. Waseem Ahmed, a bank employee in Islamabad, lamented the plight of the middle class, stating, “More than 60 to 70 per cent of my salary is spent on bills and petrol. Where will we get basic staples from? This is why people are contemplating suicide,” he told Reuters.

    According to ARY News, Mohammed Sohail, CEO of Topline Securities, a Karachi-based brokerage firm, acknowledged that August’s inflation reading aligns with expectations. However, he cautioned that the depreciating rupee and rising energy prices may prevent a significant year-on-year decline in inflation, contrary to earlier government projections that had anticipated a drop to 22 per cent by the end of the fiscal year running until June 31.

    Pakistan’s central bank, in its last monetary policy statement in July, held benchmark interest rates steady at 22 per cent and expressed optimism that inflation would follow a downward trajectory over the ensuing 12 months. However, the current economic challenges present formidable hurdles to achieving that goal.

  • Dramatic drop: Pakistan Stock Exchange crashes over 1,700 points amid economic concerns

    Dramatic drop: Pakistan Stock Exchange crashes over 1,700 points amid economic concerns

    On Thursday, the Pakistan Stock Exchange (PSX) encountered a challenging session as the primary index witnessed a substantial decline of 3.86 per cent, reflecting a loss of 1,784 points by 2:53 pm. This notable downturn was attributed to growing concerns pertaining to the nation’s economic landscape.

    Investors were worried about the rupee losing value against the dollar. This concern led them to sell off their shares, fearing that the economy could face trouble ahead.

    Right from the start of the trading day, the KSE-100 index saw a big fall of over 1,100 points, taking it below the 46,000 mark. Unfortunately, the index couldn’t bounce back due to low investor confidence.

    By 2:14 PM, the PSX had fallen to 45,139.34 points, a drop of 1,105.21 points compared to the previous day’s close of 46,244.55 points.

    Investors are also keeping an eye on the rupee’s decline, especially since the International Monetary Fund (IMF) won’t review the situation for a few more months. Additionally, there’s uncertainty about investments from the Gulf Cooperation Council (GCC).

    If the market keeps falling, some buyers might return, as the index is currently down 8 per cent from its recent high. But a real recovery would need clear information about politics and the economy.

    According to experts, the PSX is under pressure due to the rupee’s continuous slide.

    This could cause inflation to rise, which could affect the next Monetary Policy Committee (MPC) meeting in September. During that meeting, the central bank might consider raising interest rates again.

    The financial market is worried about public protests against higher power tariffs. If the government tries to please the public with short-term measures, it could complicate talks with the IMF.

    This report serves as an intraday update on the developments in the Pakistan Stock Exchange as of 2:53 pm.

  • After protests, people going to court against LESCO

    After protests, people going to court against LESCO

    After a sharp hike in electricity bills, an increasing number of cases are being filed against LESCO in courts, as people turn towards legal recourse as a last option.

    More than 400 cases were filed against WAPDA within a week.

    The court, taking immediate action, ordered the department to divide the bills into installments.

    Consumers have said that they do not have any other option but to go to court. They have rejected the increase in electricity bills and appealed to the government to provide immediate relief.

  • Pakistani rupee’s fall continues, settles at new record low of Rs301 against US dollar

    Pakistani rupee’s fall continues, settles at new record low of Rs301 against US dollar

    The Pakistani rupee continued its unsettling descent, marking a fresh all-time low against the US dollar, with a settlement at Rs301 in the inter-bank market on Friday. As reported by the State Bank of Pakistan (SBP), the local currency reached the 301 mark, experiencing a decline of Re0.78 or 0.26 per cent.

    On the preceding day, the rupee concluded at a historic low against the US dollar, reaching a settlement of Rs300.22.

    On the global front, the US dollar achieved its highest position in over two months on Friday, poised for its sixth consecutive week of gains, as financial markets eagerly awaited a speech by Federal Reserve Chair Jerome Powell to gain insights into the trajectory of monetary policy.

    The dollar index, a measure of the US dollar’s strength against six other major currencies, witnessed a 0.019 per cent increase, reaching 104.11, the highest level since June 7. With a 2 per cent increase in August, the index is poised to end its two-month losing streak.

    Oil prices, a pivotal gauge of currency equilibrium, surged by over 1 per cent on Friday due to the firming of the dollar, as anticipation built ahead of a highly awaited speech by the head of the US Federal Reserve. This speech is expected to provide insights into the future of interest rates.