Tag: International Monetary Fund

  • Ishaq Dar assures govt is taking all possible measures to overcome economic challenges

    Ishaq Dar assures govt is taking all possible measures to overcome economic challenges

    The Finance Minister of Pakistan, Ishaq Dar, has stated that the federal government is working diligently to steer the country out of its current economic challenges and towards sustainable growth.

    Speaking at an Iftar dinner hosted by the Islamabad Chamber of Commerce and Industry (ICCI) in honor of foreign diplomats, Dar urged friendly countries to fulfill their commitments to Pakistan to pave the way for a deal with the International Monetary Fund (IMF) and the revival of the economy.

    Dar highlighted that Pakistan was expected to become the world’s 18th-strongest economy in 2016 but is now facing serious economic challenges. He reassured attendees that Pakistan would not default and that the government is doing everything in its power to overcome the difficulties.

    The President of ICC, Ahsan Zafar Bakhtawari, called on the government to ensure consistency in economic policies to boost investor confidence. He encouraged diplomats to invest in Pakistan, emphasizing the country’s large market with over 220 million consumers and opportunities in various sectors of its economy.

    Bakhtawari expressed hope that a deal with the IMF would soon be concluded and urged the government to work towards ending the country’s reliance on foreign loans and becoming self-sufficient. He assured attendees that the business community would fully support the government in achieving this goal.

    According to APP, the Iftar dinner was attended by diplomats from various countries, including Turkmenistan, Kazakhstan, Azerbaijan, Kyrgyzstan, Turkey, Indonesia, Syria, Saudi Arabia, Australia, Malaysia, Poland, Sri Lanka, Nepal, and the Republic of Turkish Northern Cyprus, who commended the ICCI for hosting the event.

  • SBP expected to increase interest rates again on IMF insistence

    SBP expected to increase interest rates again on IMF insistence

    The State Bank of Pakistan (SBP) is reportedly considering increasing the interest rate by 2 per cent during the upcoming Monetary Policy Committee (MPC) meeting in a bid to unlock the International Monetary Fund (IMF) programme.

    This follows failed negotiations between the Shehbaz Sharif-led government and the IMF, with the latter demanding that Pakistan raise the interest rate by 4 per cent due to its belief that inflation is lower in Pakistan as per the interest rate.

    The SBP had already increased the interest rate by 2 per cent, but now the IMF is reportedly pressuring Islamabad to raise it again by 2 per cent. The MPC is scheduled to meet on April 4 to review the interest rate as per the IMF’s demand.

    According to The News, the SBP has reportedly agreed to raise the interest rate by 2 per cent in accordance with the Fund’s demands. On March 2, the SBP raised the monetary policy rate by 300 basis points to 20 per cent due to a deterioration in inflation outlook and expectations amid recent external and fiscal adjustments.

  • Pakistan’s nuclear program not linked to loan negotiations, says IMF representative

    Pakistan’s nuclear program not linked to loan negotiations, says IMF representative

    The International Monetary Fund (IMF) has refuted allegations that it imposed any conditions on the revival of a loan program that had been suspended for several months despite ongoing discussions between the two parties.

    Pakistan has been in discussions with the IMF since early February to negotiate the terms of the deal, which includes the adoption of policies aimed at addressing its fiscal deficit ahead of the annual budget in June. The funds are part of a $6.5 billion bailout package that the IMF approved in 2019, and which experts believe is critical for Pakistan to avoid defaulting on its external debt obligations.

    The delay in reaching a staff-level agreement with the IMF had prompted veteran politicians, Senator Raza Rabbani and former foreign minister Shah Mahmood Qureshi, to express concerns about whether the delay was due to the country’s strategic assets, including its nuclear and missile programs. They have called on the government to clarify this issue.

    In response, IMF resident representative in Islamabad, Esther Perez Ruiz, released a statement on Sunday denying any involvement in Pakistan’s nuclear program, stating that there was “absolutely no truth” to the rumors that program discussions with the authorities may have covered the issue.

    Ruiz further clarified that the discussions had focused exclusively on economic policies aimed at resolving Pakistan’s economic and balance of payments problems, in line with the Fund’s mandate for promoting macroeconomic and financial stability.

  • Pakistan’s proposal to increase number of beneficiaries for BISP rejected by IMF

    Pakistan’s proposal to increase number of beneficiaries for BISP rejected by IMF

    The International Monetary Fund (IMF) rejected the Pakistani government’s proposal to increase the number of beneficiaries of the Benazir Income Support Programme (BISP) and expand its scope to cover 20-30 per cent of the population living in poverty.

    The proposal aimed to provide quarterly stipends to those below the poverty line. While the IMF approved an increase in the BISP allocation by Rs40 billion, increasing it from Rs360 billion to Rs400 billion for the current fiscal year for 8.9 million beneficiaries, the proposal to expand coverage could not be implemented due to a shortage of budgetary resources.

    According to sources, the IMF refused to increase the Proxy Mean Test (PMT) ceiling for enhancing coverage and providing monthly stipends to around 30 per cent of the population living below the poverty line, citing a lack of budgetary resources. The Finance Ministry official stated that there was no disagreement, and the government has been providing a quarterly stipend of Rs7,000 to 8.9 million beneficiaries.

    The IMF staff suggested increasing tax revenues and abolishing un-targeted subsidies but did not initially oppose the idea of expanding coverage. The IMF high-ups recommended using the National Socio-Economic Registry (NSER) of the BISP to provide targeted subsidies on electricity, gas, and provision of POL for motorcycles and small vehicles.

    According to Geo, different proposals to start a targeted subsidy mechanism were discussed but ultimately dropped due to various reasons. The weekly Sensitive Price Index (SPI) touched 45.64 per cent on a weekly basis, and Consumer Price Index (CPI) crossed 31.5 per cent on a monthly basis in February 2023. Both the CPI and SPI are expected to rise further in the weeks and months ahead of the current fiscal year.

    To protect vulnerable segments from falling below the poverty line, there is no other option but to implement a targeted subsidy mechanism over the short and medium-term period. Pakistan and the IMF will need to place a target subsidy mechanism, given the possibility of a new IMF program after the expiration of the current one under the Extended Fund Facility in June 2023.

  • Short-term inflation skyrockets to record 45.64% in Pakistan: What’s causing the surge?

    Short-term inflation skyrockets to record 45.64% in Pakistan: What’s causing the surge?

    The Pakistan Bureau of Statistics (PBS) has released data revealing that short-term inflation based on the Sensitive Price Index (SPI) rose to a record 45.64 per cent for the combined income group on a year-on-year basis for the week ending March 16.

    This increase was driven by the consistent rise in the prices of essential commodities. However, on a week-on-week basis, short-term inflation increased by 0.96 per cent due to the rising cost of tomatoes, potatoes, cooking oil and fruits.

    The SPI is expected to intensify further as the full impact of depreciation, an increase in petroleum products, a hike in general sales tax and higher energy costs has yet to be reflected in official data. Commodity prices are likely to increase rapidly with a spike in demand. The year-on-year SPI surged to 45.5 per cent during the week ending September 1, 2022, and stayed above 40 per cent for the first time since August 18 last year when the reading was 42.31 per cent.

    Of the 51 items in the SPI basket, prices of 28 items soared, while those of 11 items decreased, and rates of 12 items remained unchanged. During the week under review, the prices of onions, cigarettes, gas charges for Q1, diesel, tea Lipton, petrol, rice irri-6/9, rice basmati broken, bananas, eggs, pulse moong, wheat flour and bread increased the most over the same week a year ago.

    On a week-on-week basis, the biggest change was observed in the prices of tomatoes, tea Lipton, potatoes, bananas, sugar, wheat flour, cooking oil 5 litre, vegetable ghee 2.5 Kg, lawn, diesel, shirting, and petrol. Products whose prices saw the highest decline over the previous week were onions, chicken, garlic, pulse masoor, eggs, LPG, vegetable ghee 1 Kg, pulse gram, pulse mash, pulse moong, and mustard oil.

    The government has been taking strict measures, such as hikes in fuel and power tariffs, withdrawal of subsidies, market-based exchange rate, and higher taxation, under the International Monetary Fund (IMF) programme to generate revenue for bridging the fiscal deficit, which may result in slow economic growth and higher inflation in the coming months. The increase in the policy rate to 20 per cent, general sales tax rate from 17 per cent to 18 per cent on most items, and to 25 per cent on more than 800 imported food and non-food items will further increase the retail prices of consumer goods.

  • Pakistan’s nuclear and missile programmes will not be compromised for IMF deal, says Finance Minister

    Pakistan’s nuclear and missile programmes will not be compromised for IMF deal, says Finance Minister

    During a session of the Senate on Thursday, Pakistan’s Finance Minister Ishaq Dar stated unequivocally that there would be no compromise on the country’s nuclear and missile programs. The assurance came in response to questions posed by PPP Senator Raza Rabbani, who had raised concerns about the delay in Pakistan’s agreement with the International Monetary Fund (IMF). Rabbani had suggested that the delay might be due to pressure being exerted on Pakistan’s nuclear program.

    In response to Rabbani’s questions, Dar stated that the delay was not due to any action by the current government, but rather to the fact that the IMF had requested that certain friendly countries fulfill commitments they had made to support Pakistan. According to Geo, Dar promised that once the staff-level agreement and the Extended Fund Facility program were finalized, the details would be posted on the finance ministry’s website.

    Dar also expressed his belief that Pakistan’s nuclear program was a matter of national security and emphasized that no one had the right to tell Pakistan what range of missiles or nuclear weapons it could have. He argued that the country’s nuclear and missile programs were essential for deterrence and for guarding Pakistan’s national interests.

    The delay in the IMF agreement has been a cause for concern, as it is seen as critical to taming a balance-of-payments crisis. The agreement, which was approved by the IMF in 2019 and is worth $6.5 billion, includes $1.1 billion that would be released once the agreement is signed. Dar had previously blamed the delay on the previous government, which he said had failed to meet commitments and created a trust deficit. Despite the delay, Dar stated that Pakistan was “very close” to signing the agreement.

  • PM Shehbaz expresses concern over IMF conditions burdening people

    PM Shehbaz expresses concern over IMF conditions burdening people

    The Prime Minister, Shehbaz Sharif, has shown worry that the terms set by the International Monetary Fund (IMF) will result in an increased burden on the citizens.

    During an appearance on the Geo News program Capital Talk, the Prime Minister attributed the stringent conditions to the previous government, alleging that they had breached their commitments to the IMF.

    Consequently, the IMF is insisting that Pakistan fulfills all of the conditions regardless of the cost, according to the Prime Minister. He acknowledged that many people in Pakistan are having trouble putting food on the table, purchasing medication, and paying for their children’s education.

    The Prime Minister claimed that former Prime Minister Imran Khan almost defaulted on Pakistan and damaged the country’s relations with numerous friendly countries. However, he stated that his government had provided relief to underprivileged individuals through the Benazir Income Support Program.

    He further stated that inflation was caused by the increased cost of imported goods as commodity prices rose due to the Russia-Ukraine conflict. In Pakistan, inflation is expected to reach its highest level in nearly 50 years.

    Additionally, Pakistan is struggling to obtain funding from friendly nations, resulting in a delay in the IMF bailout. The IMF Managing Director, Kristalina Georgieva, recently urged Pakistan to increase tax revenues and distribute subsidies only to those who truly require them. She emphasized that the IMF is dedicated to protecting the impoverished people of Pakistan.

  • Donald Blome assures Pakistan of US cooperation on IMF deal

    The US Ambassador to Pakistan, Donald Blome, expressed hope for a deal between Pakistan and the International Monetary Fund (IMF), stating that Washington was prepared to support the country’s efforts to resume its stalled $6.5 billion bailout program.

    Speaking at an event on Tuesday, Blome assured journalists that the IMF bailout package for Islamabad would take its final shape in a couple of days. He added that the United States was ready to cooperate with Pakistan to help address the issue and expressed a willingness to help Islamabad with its ongoing terrorism challenges.

    Blome recently visited important cities in Pakistan to meet with groups from different walks of life and noted that there had been significant progress in diplomatic relations between the two countries.

    Pakistan and the IMF have been in discussions regarding a stalled bailout package since late last year, with the country seeking a $1.1bn tranche to address its worsening balance of payments crisis and to enable friendly affluent capitals to provide assistance to overcome ongoing financial complexities.

    Both sides are engaged in negotiations to reach a mutually agreeable package that would help the cash-strapped nation come out of its ongoing economic turmoil.

    Interestingly, Finance Minister Ishaq Dar had previously stated that Pakistan would strike a staff-level agreement (SLA) with the IMF in a few days, as the government remained committed to completing the loan program signed in 2019.

    However, after failing to convince the lender, Dar had reportedly contacted the US envoy earlier this week to get “lenient treatment” from the Fund, which has been persistent with its demands.

  • Monitoring committee takes action against use of luxury cars by officials to cut expenses

    Monitoring committee takes action against use of luxury cars by officials to cut expenses

    State-run Radio Pakistan has reported that the monitoring committee responsible for overseeing the implementation of austerity measures has expressed serious concerns about some officers using vehicles above 1,800cc.

    The committee, chaired by Finance Minister Ishaq Dar, met in Islamabad on Monday to review the implementation of the decisions made at its first meeting regarding austerity measures. As part of an austerity drive to save the government Rs200 billion ($766 million) a year, Prime Minister Shehbaz Sharif had asked ministers and advisers to fly economy class and forgo luxury cars and their salaries.

    These cuts were made as Pakistan, facing a balance of payment crisis, negotiates with the International Monetary Fund (IMF) to secure $1 billion in funds that have been pending since late last year over policy issues.

    The meeting today was updated on the status of the use of luxury vehicles and was informed that a majority of the allocated vehicles have been returned by cabinet members. However, the committee expressed concerns over the non-return of the remaining luxury vehicles and directed the Cabinet Division to strictly implement the decision and retrieve the luxury vehicles within three days. The committee also discussed the withdrawal of the use of security vehicles and decided to implement the decision.

    Furthermore, the Ministry of Law and Justice was tasked with suggesting the implementation of austerity measures in the judiciary to the superior judiciary and approaching the Senate chairman and National Assembly speaker to suggest the use of teleconferences for all meetings to save time and expenditure. The Ministry of Inter-Provincial Coordination has also approached provincial governments to suggest the implementation of similar austerity measures.

    The committee also deliberated on working timings and decided that the new timing for office work will be 7:30 am to 2:30 pm, and up to 12:30 pm on Fridays, starting from the first of Ramzan and will be followed in the summer season, as per the cabinet’s decision. A notification will be issued accordingly. The finance minister, speaking at the occasion, directed all to expedite the implementation of austerity measures with sincerity and true spirit without any exception. These cuts are part of an effort to prevent an economic meltdown as Pakistan’s foreign exchange reserves have fallen below a month’s import cover.

  • Pakistani rupee reverses marginal gains, closes at Rs281.61 against US dollar

    Pakistani rupee reverses marginal gains, closes at Rs281.61 against US dollar

    On Monday, the Pakistani rupee faced renewed pressure against the US dollar, declining by 0.30 per cent in the inter-bank market after posting marginal gains on Friday. According to the State Bank of Pakistan (SBP), the rupee settled at Rs281.61, representing a decrease of Re0.84.

    Despite the rupee having found some relief on Friday with a 0.54 per cent appreciation in the inter-bank market, the currency had depreciated by 0.82 per cent against the US dollar during the previous week.

    The SBP has received inflows from China, which have provided support to critical levels of foreign exchange, but concerns over the delay in the International Monetary Fund (IMF) programme have continued to impact sentiment.

    Miftah Ismail, former Federal Finance Minister, suggested on Sunday that Pakistan should ensure 15 per cent tax on Gross Domestic Product (GDP) and 15 per cent exports to GDP in order to avoid the need for IMF programs.

    Internationally, the US dollar experienced a sharp decline on Monday due to the sudden collapse of Silicon Valley Bank (SIVB). The US government announced various measures on Monday to mitigate the impact of the bank’s collapse, including ensuring access to deposits for SVB customers and depositors of New York’s Signature Bank.