Tag: financial pressure

  • Pakistan’s forex reserves rebound: SBP gains $77 million in a week 

    Pakistan’s forex reserves rebound: SBP gains $77 million in a week 

    According to data released on Thursday, the State Bank of Pakistan (SBP) witnessed a weekly increase of $77 million in its foreign exchange reserves, reaching $7.26 billion as of November 24.  

    The total liquid foreign reserves for the country amounted to $12.39 billion, with commercial banks holding net foreign reserves at $5.13 billion. 

    During the week ending on November 24, 2023, SBP’s reserves increased by $77 million, reaching $7,257.0 million. Contrastingly, the previous week saw a decrease of $217 million in Pakistan’s central bank reserves. 

    In July of this year, the central bank’s reserves received a boost as Pakistan obtained the initial tranche of approximately $1.2 billion from the International Monetary Fund (IMF) following the approval of a new $3-billion Stand-By Arrangement (SBA).  

    This boost was complemented by inflows from Saudi Arabia and the UAE. 

    However, the SBP reserves faced pressure due to debt repayments, a surge in import payments after the easing of restrictions, and a lack of fresh inflows. 

    In a significant development, the IMF announced last week that its staff and Pakistani authorities had reached an agreement on the first review of the SBA.  

    The staff-level agreement is pending approval by the IMF Executive Board. 

    The IMF team reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of their stabilization program supported by the IMF’s $3 billion (SDR2,250 million) SBA.  

    Upon approval, approximately $700 million (SDR 528 million) will become available, bringing total disbursements under the program to almost $1.9 billion. 

    Following the SLA with the IMF, Caretaker Finance Minister Dr Shamshad Akhtar expressed confidence that external financing would not be an issue, anticipating inflows in December 2023 to contribute to an increase in foreign exchange reserves. 

  • NEPRA recommends electricity rate increase of Rs3.28 per unit

    NEPRA recommends electricity rate increase of Rs3.28 per unit

    The National Electric Power Regulatory Authority (NEPRA) has officially proposed to the government an increase in the electricity tariff of Rs3.28 per unit, citing the need for a quarterly adjustment.

    In this proposal, NEPRA is looking to impose an additional financial burden of approximately Rs160 billion on consumers of electricity. According to ARY News, this recommendation has been conveyed to the caretaker federal government through an official summary, outlining the suggested increment of Rs3.28 in electricity rates as part of the fourth-quarter adjustment for the fiscal year 2022–23. 

    The proposed increase, subject to approval by the federal government, would also apply to K-Electric consumers. As a result of this adjustment, power consumers would be required to make additional payments over the next six months, spanning from October 2023 to March 2024. 

    It is worth noting that the proposed surge in power tariffs has incited protests throughout the country, with citizens expressing their displeasure over the considerable rise in electricity costs and the imposition of excessive taxes on electricity bills. In some instances, individuals infuriated by inflated bills have resorted to burning them as a form of protest, while certain political factions have threatened to stage sit-in demonstrations outside K-Electric offices. 

    This unrest surrounding the increased electricity tariffs coincides with Pakistan’s ongoing economic struggles, characterised by financial constraints and an inflation rate hovering around 29 per cent. 

    Furthermore, it is important to highlight that the International Monetary Fund (IMF) has reportedly discouraged Pakistan from offering relief to consumers using over 200 units of electricity on a monthly basis. According to sources, the IMF argued that reducing electricity bills for such consumers would not address the issue of circular debt. 

    Consequently, relief in the form of deferred payments for electricity bills will be exclusively extended to consumers who consistently utilise less than 200 units for six consecutive months. This relief would be rescinded if a consumer’s bill exceeded 200 units within the same timeframe, as per the sources. 

    Caretaker Federal Minister for Energy, Power, and Petroleum, Muhammad Ali, has also announced that the revised electricity tariff will be introduced before October 31. During a press conference held alongside Sindh Governor Kamran Tessori, Minister Ali emphasised the government’s commitment to combating electricity and gas theft through indiscriminate measures. 

    He added that efforts are being made to regulate and potentially lower electricity tariffs, with a goal to supply cost-effective electricity to industries starting on October 31. Muhammad Ali attributed the surge in electricity bills to electricity theft and the increased price of the US dollar. 

    While acknowledging the challenges of amending previous agreements, the minister pledged that the government would explore solutions within the framework of existing arrangements. He also expressed the government’s commitment to promoting solar energy despite the lack of reductions in solar equipment prices, outlining plans to devise a strategy for the promotion of solarization.