Tag: IMF

  • Reduction in POL prices without IMF approval is a ‘reckless’ decision, says Miftah Ismail

    Reduction in POL prices without IMF approval is a ‘reckless’ decision, says Miftah Ismail

    Pakistan’s former finance minister Miftah Ismail has called the coalition government’s decision to maintain the petroleum development levy (PDL) this month unchanged “reckless”.

    However, he maintained that what the earlier PTI administration did to the nation was “unforgivable.”

    Shaukat Tarin, the leader of the PTI and a former finance minister, had tweeted about the PMLN’s -alleged doublespeak, to which Ismail responded.

    “We were blamed for violating IMF conditions. According to Miftah sahib, they did not wait to get clearance from MD IMF before announcing the fuel prices. Clear doublespeak,” he tweeted.

    https://twitter.com/shaukat_tarin/status/1576568757056512000?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1576568757056512000%7Ctwgr%5E5e775af4ab091b03900a542aeb8050d970a7d429%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.dawn.com%2Fnews%2F1713254

    Ismail replied that the PTI administration had in fact broken the terms of the IMF deal.

    “You agreed to increase sales tax to 17 per cent but reduced it to zero. You agreed to raise petrol levy every month by Rs4 to Rs30 but brought it to zero. You agreed to not give amnesty but gave one anyway,” he said, in reference to the previous administration’s decision to temporarily freeze fuel prices.

    Ismail argued that the subsidy was “unfounded and unsustainable” and that the PTI nearly put the nation into bankruptcy. He continued by saying that, while serving as finance minister, he had visited the IMF and prevented the nation’s default.

    “Not increasing PDL this month without IMF approval is reckless, but what PTI did with our economy was unforgivable,” he insisted.

    Ismail brought up the fact that his administration had not sought IMF approval before freezing the petroleum charge for the second time in two days.

    Ismail claimed that when Ahad Cheema, the establishment adviser to Prime Minister Shehbaz Sharif, requested him to contact the IMF managing director if gasoline prices could be held for three months, “I said that I would die but not ask this.” Ismail was speaking at an event in Karachi on Saturday.

    “In any case … I asked the MD if we could freeze the tax for three months. The answer did not arrive and the government unilaterally did it. So may God have mercy.”

    On Tuesday, September 27, Ismail resigned from his position as finance minister to make room for Ishaq Dar. Three days later, on Friday, the administration decided to lower petrol costs (Sept 30).

    Petrol costs now cost Rs224.80 per litre, down from Rs237.43 previously. This reduction in price amounts to Rs12.63. High-speed diesel (HSD) is now available at Rs12.13 less per litre, at Rs235.30 instead of Rs247.43. Kerosene’s cost per litre dropped from Rs202.02 to Rs191.83 by Rs10.19. Light diesel oil (LDO) was reduced in price from Rs197.28 to Rs186.50 per litre by Rs10.78.

    By lowering the petroleum development fee on gasoline by Rs5 per litre to Rs32.42, the government lost money. On HSD, the price was raised to Rs12.58 by an additional Rs5 per litre.

    According to DAWN, the government currently charges Rs12.58 per litre PDL for HSD, Rs15 for kerosene, Rs10 for LDO, and Rs30 for High Octane Blending Component. Additionally, the cost of gasoline and HSD includes a Rs22 per litre customs fee.

  • Pakistan seeks rollover of SAFE deposits worth $2 billion from China in March 2023

    Pakistan seeks rollover of SAFE deposits worth $2 billion from China in March 2023

    Pakistan seeks the rollover of $2 billion in State Administration of Foreign Exchange (SAFE) China deposits in March 2023. Federal Minister for Finance and Revenue Ishaq Dar, received a visit from Nong Rong, the People’s Republic of China’s ambassador, at the Finance Division.

    According to APP, Dar emphasised the long-standing friendship and kinship ties between Pakistan and China.

    The finance minister also thanked the Chinese leadership for their assistance in refinancing a syndicate facility worth RMB 15 billion ($2.24 billion) for Pakistan. He also asked the ambassador to help facilitate the rollover of $2 billion in SAFE China deposits in March 2023.

    Dar informed the ambassador of the costs to the overall economy as well as the harm done to Pakistan’s infrastructure, agriculture, lives, and property by the severe floods. He expressed gratitude to the Chinese government for providing the government and people of Pakistan with unwavering support during this difficult time.

    In reference to the CPEC, the finance minister stated that the economic corridor will be crucial in advancing Pakistan’s economy and fortifying bilateral ties between the two nations. He further pledged his unwavering support for the aid in realising the success of CPEC.

    The minister received Nong Rong’s congratulations on taking up his new duties. The envoy underlined China’s continuous support for Pakistan and emphasised how China is a rock for the Pakistani people in this time of need.

    “Since the devastating floods occurred in Pakistan, among all countries, China has announced over 644 million RMB (around 90 million dollars), the biggest amount of assistance to Pakistan,” said Nong Rong, in a tweet.

  • ‘Absolutely no truth in regime change’: US Ambassador says would work with whatever government Pakistanis elect

    ‘Absolutely no truth in regime change’: US Ambassador says would work with whatever government Pakistanis elect

    United States (US) Ambassador to Pakistan Donald Blome, in an interview with The News, said there is “absolutely no truth” in the allegations of regime change in Pakistan and said that he is “very much hopeful that the countries can get past this and get back to important work”.

    He said, “We want to see an independent, prosperous and strong Pakistan. That’s what we believe is in our interest and in the interest of the region. As for the allegations, there is absolutely no truth in that. We have spoken to them, myself, and in Washington.”

    To a question by the newspaper about the possibility of Imran Khan coming into power again, and the US reaction to it, the US ambassador said that his country “Would work with whatever government the Pakistani people select”.

    On the matter of Imran Khan’s demand to hold an inquiry into the cipher issue, the ambassador was of the view that it is not his position to talk about whether the inquiry should be made or not. During the interview, Bloom revealed that he had not met Imran Khan.

    The ambassador said it’s important to clarify that the US, in no way, asks Pakistan or any other country to “Choose a single economic partner, bloc or anything else like that”.

    Furthermore, Blome credited the government for securing the International Monetary Fund’s (IMF) deal and termed it a “significant accomplishment”.

    Talking about Pakistan’s debt, the ambassador said that Pakistan does not have an enormous amount of debt with the US in particular. “So, the Paris Club debt is a relatively small amount. It is how the US would be working with Pakistan to defer payments,” he stated.

    However, he reiterated that US wants to help Pakistan to navigate through this very difficult period

    Blome also dismissed any talk about his country using Pakistan air bases.

    ‘We want to build and reset these relations back to normal: PM Shehbaz Sharif

    At the US embassy, where Bloom was also present, Prime Minister (PM) Shehbaz Sharif expressed hope to reset US-Pakistan relations.

    “I want to say this very sincerely today that we want to build and reset these relations back to normal on the basis of trust, respect, and mutual understanding,” he declared.

    On Thursday (September 29) a diplomatic reception was held at the US embassy in Islamabad to commemorate the 75 years of relations between Pakistan and the US.

    “As I said, there will be a lot of what your [US] side will want to say but as long as we renew this friendship with sincere and serious dialogue, I can assure you that nothing will go wrong,” Shehbaz Sharif said.

    The Pakistani premier stressed that it is time for the two countries to move forward and find ways to warm up the relationship to the same degree as it was in the past.

    The prime minister also recalled that during his visit to New York, he met US President Joe Biden and Secretary of State Antony Blinken who assured him of support for the flood-affected people.

  • ‘Unless we get substantial relief how can the world expect from us to stand on our own feet? It is simply impossible’: PM Shehbaz

    ‘Unless we get substantial relief how can the world expect from us to stand on our own feet? It is simply impossible’: PM Shehbaz

    In an interview with Bloomberg TV, Prime Minister (PM) Shehbaz Sharif highlighted the damage caused by floods and urged that the world to pay more attention to the crisis.

    The premier said, “What the world has done is commendable but it is far from meeting our needs. We can’t do it alone”. He stressed that flood losses are estimated to be at $30 billion.

    “Unless the world comes up with billions of dollars for relief, rehabilitation, for building resilient infrastructure, things will not come back to normal. And I need to put the economy back on track and put millions of people back in their homes,” he told Bloomberg.

    “Unless we get substantial relief, how can the world expect us to stand on our own feet”, he asked. “It is simply impossible. The world has to stand by us”.

    He reiterated that although Pakistan contributes very little to carbon emission, the country is among the top ten most vulnerable countries to climate change, adding that around 1,500 people had died in the situation.

    Talking about the economic situation of the country, he said that Pakistan recently signed a deal with the International Monetary Fund (IMF) under “very tough” conditions, including taxes on petroleum and electricity.

    He went on to say that several world leaders had talked about the devastation in Pakistan.

    Recalling his meetings with the world leaders, he said that he is “very grateful” to United States (US) President Joe Biden for speaking about Pakistan’s plight. He added that Turkey’s President Recep Tayyip Erdogan and France’s Emmanuel Macron had also done the same.

    The premier was of the view that such action from the world shows the intentions and sincerity of global leaders. While saying that, he added that “But I think it should come very fast because time is running out and we are racing against time”.

  • PM Shehbaz likely to meet US President Biden this month

    Prime Minister (PM) Shehbaz Sharif is scheduled to visit the United States of America (USA) this month from September 19- 24 to attend the 77th session of the United Nations General Assembly.

    During this visit, he may have a meeting with US President Joe Biden. Both PM Shehbaz and Foreign Minister (FM) Bilawal Bhutto-Zardari will attend the dinner reception hosted by President Biden for heads of state and government of countries attending the General Assembly.

    Apart from this, PM will meet the head of the International Monetary Fund (IMF) and the President of the World Bank (WB) in New York. He will also address the United Nations General Assembly (UNGA) on September 23.

    It is pertinent to mention that this year’s UNGA session is significant because this will be the first in-person summit of world leaders since 2019. For the last two years, sessions were held virtually due to the Covid-19 pandemic.

    Since US President Biden’s election, relations between Pakistan and the US have cooled down. Former PM Imran Khan also has repeatedly accused the US of outsing him from power, a charge denied repeatedly by US officials and Pakistan’s establishment.

  • Pakistan continues to face liquidity crunch despite IMF programme’s revival

    Pakistan continues to face liquidity crunch despite IMF programme’s revival

    Even though the International Monetary Fund (IMF) programme has resumed after a seven-month hiatus, Pakistan continues to struggle with a major dollar liquidity crunch as the catastrophic floods have exacerbated the macroeconomic conditions.

    According to Geo, since many politicians and economists advocated for Pakistan to ask the IMF for a Rapid Financing Instrument (RFI) or Natural Calamity Response-related Funding Facility, the Pakistani government has not yet submitted a new request in anticipation of the Washington-based international lender’s unenthusiastic response.

    After being put on hold in February 2022 by the previous PTI-led government’s provision of unfunded fuel and energy subsidies, the IMF project under $6.5 billion was restarted in late August.

    Since then, there has been pressure on Pakistan’s currency; nevertheless, the recent devastating floods have hurt the economy, contrary to what experts had anticipated would happen with the restart of the IMF programme.

    The rupee has dropped 9 per cent against the US dollar in recent days due to intense pressure on the currency rate.

    According to reports, the issue has gotten worse as demand for imports has multiplied and there are not enough dollars in the country. Pakistan’s macroeconomic risks are not going away without greater dollar inflows.

    The early estimates of damages have now increased to almost $18 billion as a result of the severe flooding, with Pakistan’s agriculture industry taking the biggest hit.

    The worst agricultural performance will put pressure on rising import demand for commodities, and if Pakistan cannot attract the appropriate levels of dollar inflows, food shortages may occur in the ongoing financial year.

    In contrast to the projected aim of 3.9 per cent for the current fiscal year 2022–2023, the agriculture growth could remain zero or perhaps turn negative.

  • ‘September sitamgar hoga’: Sheikh Rasheed announces Khan’s march in Islamabad

    ‘September sitamgar hoga’: Sheikh Rasheed announces Khan’s march in Islamabad

    Former interior minister and Awami Muslim League chief Sheikh Rasheed said on Sunday that Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan will give a call to his supporters to march towards Islamabad once the flood situation eases down.

    Rasheed took to his Twitter handle and warned: “Sitambar Sitamgar ho ga (September will be cruel)”.

    The former federal minister pointed out that the International Monetary Fund (IMF) has made yet another agreement of Rs608 billion with the government. “First they robbed the treasury and now the people’s pockets”, he said.

    “Floods have opened the eyes of the people of Sindh, the floods have destroyed the Pakistan Democratic Movement’s (PDM) reputation. How will other countries give aid when the people of the country refuse to give money to money launderers?”

    He said that the people can not bear the burden of increasing petrol and power prices, yet the “government continues to raise them”.

    In a series of tweets, he said that IMF knows that there is a weak majority of the government and people can come to the streets.

    “The time is not far when factories and shops will be closed, people will be on the streets”, he warned again while adding that floods have become a matter of “political point scoring”.

    Rasheed’s statement came a day after Imran Khan warned the government to stop the “persecution” of his party workers otherwise he will again march on Islamabad.

    He said the government would have “no place to hide” in the event he comes to Islamabad.

  • IMF report exposes incorrect PTI policies that led to rupee’s devaluation

    IMF report exposes incorrect PTI policies that led to rupee’s devaluation

    The International Monetary Fund (IMF) has issued its country report for Pakistan, exposing erroneous policies implemented by the PTI administration that, according to the Fund, undermined the country’s currency reserves and led to the rupee’s devaluation.

    The study also discloses what the present administration, led by the PML-N, has promised the international lender, according to Samaa.

    The study does not identify any political party, but it does mention rising GDP, which the PTI has said is the outcome of its policies. Pakistan’s GDP increased by 6 per cent in fiscal year 2021-22 (FY22), which ended less than three months after Imran Khan was overthrown by parliament in early April.

    According to experts, the increase in GDP was driven by unsustainable expansion, which resulted in economic overheating. The IMF study comes to the same conclusion.

    According to the Fund, GDP growth in FY22 was “driven by permissive fiscal policy and a delayed monetary reaction to inflationary pressures.”

    These factors, together with worldwide food and fuel price shocks, resulted in a major worsening of the external situation, including an unsustainable current account deficit, a considerable decrease in reserves, and a significant devaluation of the rupee.

    The PTI administration failed to respond to the worldwide commodity price increase, and its policies caused the rupee to depreciate and currency reserves to dwindle, according to the international lender.

    Pakistan is at a crossroads in its economic development. Internal demand reached unsustainable levels as a result of a challenging external environment paired with procyclical domestic measures. According to the IMF, the resulting economic overheating resulted in high fiscal and external deficits in FY22, contributed to increasing inflation, and destroyed reserve buffers.

    The PTI administration broke its pledges quickly after collecting roughly $1 billion from the IMF. Following the completion of the sixth evaluation, programme implementation worsened. In the midst of a volatile political scene, planned fiscal adjustment was reversed, and some significant EFF agreements were honoured, as per the report.

    According to the report, the present administration has informed the Fund that it would reimpose the general sales tax (GST) on petroleum products and will not provide any fuel subsidies.

    The current administration will not declare a tax amnesty unless Parliament first approves it. It will also simplify the sales tax on services throughout the country. Currently, different provincial territories apply varying rates of sales tax on services.

    The Fund takes notice of the actions implemented by the PML-N administration to re-establish the IMF programme, including a budget based on a basic surplus, a rise in interest rates, and the elimination of fuel subsidies.

    The IMF has advised the government to maintain a market-based currency rate, enhance tax income, and strengthen foreign reserves. The IMF also said that the lending programmes entail exceptional risks even after policy adjustments.

  • ‘A bigger enemy of Pakistan than Imran has not been born’: PM Shehbaz

    ‘A bigger enemy of Pakistan than Imran has not been born’: PM Shehbaz

    Prime Minister (PM) Shehbaz Sharif did not mince his words when talking about Pakistan Tehreek-e-insaf (PTI) Chairman Imran Khan.

    “Thank God Pakistan was saved from default. Imran Khan wanted Pakistan to become Sri Lanka. Look at his real face,” said the PM on Thursday. He stated that after the crucial International Monetary Fund (IMF) programme restarted for Pakistan, the country was able to stand back on its feet.

    “I was sitting in a meeting when the minister of finance gave me the news [of the IMF bailout package], so I told him in front of everyone that Pakistan was saved from default,” he said.

    “But at least we were saved from a default which is what Imran Khan wanted. A man who gets letters written just so that the IMF programme could fail […] tell me, is there a worse way to show hatred with the country?”

    Shehbaz Sharif was referring to Khyber Pakhtunkhwa Finance Minister Taimur Khan Jagra’s letter to the finance division, asserting that it had proven PTI chief’s intention to sabotage the country’s fate.

    Shehbaz went on to say that only thinks about himself and said, “Imran Khan kay sur par main sawar hon, aur uski apni main sawar hai tu Pakistan ka kya banay ga? [What will become of Pakistan if he only keeps thinking of himself?]”

    The premier further said that a bigger liar, cheater, deceiver and enemy of Pakistan than Imran Khan had never been born.

    The prime minister said that when he was in the opposition, Imran Khan conspired to send his members to jail, but they did not create a fuss. “Now everyone should look at Khan’s language.”

    PM Shehbaz said that the exemption for fuel adjustment charges (FAC) in August’s billing will apply to consumers who use under 300 units of electricity.

  • ‘Pakistan’s international debt should be immediately cancelled’: British MP

    ‘Pakistan’s international debt should be immediately cancelled’: British MP

    United Kingdom (UK) Member of Parliament (MP) Claudia Webbe has called on the international community to cancel Pakistan’s debt as the country’s inflation hits the highest level since 1973.

    In a statement on Twitter, Webbe said, “Inflation in Pakistan is at an all-time high at 27 per cent! Pakistan’s international debt should be immediately cancelled – they should instead be given reparations for the climate crisis caused.”

    According to the Pakistan Bureau of Statistics (PBS), Pakistan’s Consumer Price Index-based inflation (CPI) climbed by 27.3 per cent on a year-over-year basis in August 2022.

    Prior to this statement, she repeatedly urged foreign countries to stand shoulder to shoulder in full solidarity with Pakistan and termed the silence from western countries a “moral crime”.

    “We need a global climate tax so that the global rich can be made to pay for the climate damage they cause in the world,” she said.

    She also blamed rich countries for the climate crisis and said that they should bear the cost, not Pakistan, as the country is responsible for 1 per cent of global emissions.

    On her official Twitter account, she also shared videos of the devasting floods in Pakistan.

    Water levels continued to rise on Friday as the overall death toll from the devastating floods has crossed 1,200.

    On Thursday, the UK announced an additional £15 million of lifesaving support for flood victims in Pakistan.

    More than 33 million people are affected — one in every seven Pakistanis — and reconstruction work will cost more than $10 billion.

    United Nations (UN) chief Antonio Guterres called the floods a “climate catastrophe” and launched an appeal for $160 million in emergency funding. Meanwhile, western countries have also donated millions of dollars to Pakistan.