Tag: pakistan economy

  • Pakistan’s foreign exchange reserves increase by $31 million, reaching $7.64 billion

    Pakistan’s foreign exchange reserves increase by $31 million, reaching $7.64 billion

    The State Bank of Pakistan (SBP) reported an increase of $31 million in its foreign exchange reserves on a weekly basis, reaching a total of $7.64 billion as of October 6, according to data released on Thursday.

    The overall liquid foreign reserves of the country amounted to $13.03 billion, with commercial banks holding net foreign reserves of $5.39 billion.

    The central bank did not provide a specific explanation for the increase in reserves.

    In its report, the SBP stated, “During the week ending on October 6, 2023, the SBP’s reserves rose by $31 million, reaching $7,646.7 million.”

    Notably, the previous week witnessed a decrease of $21 million in Pakistan’s central bank reserves.

    In July of this year, the SBP’s reserves received a significant boost when Pakistan received the first tranche of approximately $1.2 billion from the International Monetary Fund (IMF) after the approval of a new $3-billion stand-by arrangement. Additionally, inflows from Saudi Arabia and the UAE contributed to the growth of reserves.

    However, it’s worth mentioning that the central bank’s reserves have been under pressure due to ongoing debt repayments, an increase in import expenditures following the relaxation of restrictions, and a lack of fresh inflows.

  • Gold price drops by Rs15,500 to Rs199,500 per tola

    Gold price drops by Rs15,500 to Rs199,500 per tola

    The All-Pakistan Sarafa Gems and Jewellers Association (APSGJA) resumed its bullion rate updates after an approximate month-long hiatus, revealing a substantial decline in the value of precious metals.

    According to APSGJA’s data, the price of 24-carat gold plummeted by Rs15,500 per tola and Rs13,546 per 10 grammes, reaching new levels of Rs199,500 and Rs171,039, respectively.

    The last bullion rate report was issued on September 12, when the per-tola price of gold stood at Rs215,000.

    However, escalating uncertainties in the economic landscape led to increased speculation. Consequently, the government intervened with a crackdown on speculators, resulting in the temporary suspension of bullion rate updates.

    During this 28-day period of rate suspension, gold traders resorted to arbitrary pricing as no standardised rates were available. Simultaneously, in the international market, the price of gold experienced a notable decline, dropping by $55 to reach $1,891 per ounce.

    Furthermore, APSGJA’s data also revealed a decrease in silver prices, with a Rs50 per tola and Rs42.87 per 10 grammes reduction, bringing silver’s rates to Rs2,500 and Rs2,143.34, respectively.

  • PM Kakar pushes for speedy privatisation of financially troubled state-owned enterprises

    Caretaker Prime Minister (PM) Anwaar-ul-Haq Kakar, in a meeting held on Monday, directed the relevant authorities to expedite the privatisation process of state-owned enterprises (SOEs) that are experiencing financial losses.

    Stressing the importance of this privatisation effort, the Prime Minister emphasised its role in safeguarding the national treasury from further deficits.

    During this meeting, Minister for Privatisation Fawad Hasan Fawad provided a detailed update on the progress made in the privatisation of these enterprises.

    PM Kakar also commended the Special Investment Facilitation Council (SIFC) for its commendable contributions to this endeavor. 

    It’s worth noting that the caretaker Premier had previously issued similar directives to accelerate the privatisation process of Pakistan International Airlines (PIA), a loss-making entity.

    This development comes in response to reports suggesting that unless emergency funding is secured, PIA’s flight operations could face suspension.

    A senior PIA director revealed that the operational fleet had been reduced from 23 to 16 aircraft, resulting in the cancellation of numerous flights.

  • Pakistan’s economy to recover, but challenges remain: World Bank

    Pakistan’s economy to recover, but challenges remain: World Bank

    Pakistan’s economic outlook, as per the World Bank’s ‘Pakistan Development Update,’ is challenging. The report projects a gradual recovery in real GDP growth, expecting it to reach 1.7 per cent in FY24 and 2.4 per cent in FY25. However, it warns that this recovery is contingent on implementing IMF measures, securing external financing, and maintaining fiscal discipline.

    The report highlights the dire poverty situation in Pakistan, with an estimated 39.4 per cent of the population living below the Lower-Middle Income Country poverty threshold in FY23, compared to 34.2 per cent in FY22. Factors contributing to this include economic slowdown, floods in 2022, import restrictions, political uncertainty, rising global commodity prices, and reduced investor confidence.

    The fiscal deficit remains a concern. While some easing of import restrictions may widen the current account deficit, a weaker currency and higher domestic energy prices could sustain inflation. The report emphasizes the importance of comprehensive fiscal reforms, including reducing tax exemptions, broadening the tax base, improving public expenditure quality, reforming the energy sector, and managing public debt more effectively.

    The World Bank stresses that addressing these challenges is crucial for long-term recovery and recommends strengthening institutions and systems to achieve fiscal and debt sustainability. The report echoes concerns about external shocks, political instability, and debt servicing challenges, underlining the need for prudent economic management and reforms.

    The Asian Development Bank (ADB) predicts a modest GDP growth recovery to 1.9 per cent in FY24, following a contraction of 0.3 per cent in FY23, with persistent price pressures. Overall, Pakistan faces a complex economic landscape that demands immediate attention to fiscal reform, poverty alleviation, and resilience to external shocks.

  • Pakistan’s forex reserves decline by $59 million to $7.64 billion due to debt payments

    Pakistan’s forex reserves decline by $59 million to $7.64 billion due to debt payments

    The State Bank of Pakistan (SBP) reported a weekly decrease in foreign exchange reserves, with a decline of $59 million, bringing the total to $7.64 billion as of September 22, according to data released on Thursday.

    The overall liquid foreign reserves of the country amounted to $13.16 billion, with commercial banks holding net foreign reserves of $5.52 billion.

    The central bank attributed this reduction in reserves to debt repayments, stating, “During the week ending on September 22, 2023, SBP’s reserves decreased by $59 million to $7,636.7 million due to debt repayments.”

    Notably, Pakistan’s central bank reserves had increased by $56 million the previous week, following four consecutive weeks of decline, during which SBP reserves had dwindled by a cumulative total of $416 million.

    In July, SBP’s reserves received a boost when Pakistan received approximately $1.2 billion as the first tranche from the International Monetary Fund (IMF), following approval of a new $3-billion stand-by arrangement. Additionally, inflows from Saudi Arabia and the UAE contributed to the increase.

    Despite these positive developments, the central bank’s reserves have come under pressure due to ongoing debt repayments, increased import payments following the easing of restrictions, and a lack of fresh inflows.

  • Are you a woman looking to start your own business? State Bank of Pakistan has an interest-free loan for you

    Are you a woman looking to start your own business? State Bank of Pakistan has an interest-free loan for you

    In pursuit of fostering both economic stability and enhanced female workforce participation, the State Bank of Pakistan (SBP) has initiated a noteworthy endeavor. It involves extending interest-free loans to unemployed women, empowering them to embark on substantial entrepreneurial ventures.

    During a seminar titled ‘Women Bankability and Banking on Equality’ at the Government Polytechnic Institute for Women in Dera Ismail Khan, Fazal Muqeem, Deputy Chief Manager of SBP in Dera Ismail Khan, articulated this pivotal announcement.

    Muqeem underscored that women, through the establishment of their own businesses, would not only be able to provide for their families but also confront the pervasive impact of the current inflationary trends that affect every echelon of society. He highlighted the financial difficulties faced by economically disadvantaged individuals in meeting their daily expenses due to limited income avenues.

    In light of the restricted employment opportunities within the country, the pursuit of self-employment emerges as the most viable option in such circumstances, according to Muqeem. He elucidated that these initiatives are the result of collaborative efforts between the Prime Minister and the central bank, aimed at cultivating productive citizenship among unemployed women.

    These policies have facilitated the opening of bank accounts for unemployed women on an equitable basis with men, thereby enabling them to access interest-free loans of up to Rs0.5 million.

    Muhammad Zubair, Assistant Director, asserted that the contemporary era is characterised by digital mobility, and citizens should harness this resource to their advantage. He encouraged citizens to become income tax filers, which would help them reduce their tax liabilities.

    Sara Khan, Principal of GPI for Women, expressed her gratitude to the SBP for their support and highlighted their institution’s dedication to equipping students with skills that empower them to be self-sufficient and valuable contributors to society.

    According to Geo News, she envisioned that numerous women would benefit from SBP’s policy in the future and hoped that such insightful seminars would continue to be organised, enabling the underprivileged and eligible women of Dera Ismail Khan to reap the benefits.

    The event also saw the presence of key figures such as Muhammad Amir Ejaz, Assistant Chief Manager of SBP in Dera Ismail Khan, Rizwanullah Shah, Zafar Awan, Placement Officer at GPI (Women), and a substantial gathering of teachers and female students.

  • IMF urges Pakistan to increase taxation on the rich and ‘protect the poor’

    IMF urges Pakistan to increase taxation on the rich and ‘protect the poor’

    International Monetary Fund (IMF) Managing Director (MD) Kristalina Georgieva has urged Pakistan to increase taxation for the rich and safeguard the well-being of the less privileged. She said that these actions align with the desires of the people in Pakistan. 

    According to Geo News, speaking on the sidelines of the 78th United Nations General Assembly (UNGA) session in New York, she stated, “What we are asking in our programme is that you please collect more taxes from the wealthy and please protect the poor people of Pakistan. I do believe this is in line with what people in Pakistan would like to see for the country.”

    In a separate social media post after a meeting with Pakistan’s caretaker prime minister, Anwaar ul Haq Kakar, Georgieva stated, “Very good meeting with Pakistan’s PM today on Pakistan’s economic prospects. We agreed on the vital need for strong policies to ensure stability, foster sustainable and inclusive growth, prioritise revenue collection, and provide protection for the most vulnerable in Pakistan.”

    Furthermore, the Prime Minister’s Office (PMO) released a statement expressing gratitude for the IMF’s approval of a $3 billion stand-by agreement (SBA) to support Pakistan’s economy. The arrangement, approved by the IMF’s Executive Board in July, is set for its second review in November.

    The statement mentioned that Kakar briefed the MD IMF on various measures taken by the Government of Pakistan to stabilise and revive the country’s economy, with a focus on creating a stable environment for sustainable economic growth and investment, particularly for vulnerable segments of society.

    Kristalina Georgieva commended Pakistan’s concerted efforts in implementing policies and reforms to revive the economy and assured continued engagement with Pakistan.

    Read more: UAE bans fresh meat imports from Pakistan 

    In July, Pakistan secured a last-minute SBA with the IMF, providing relief to its economy, which had long grappled with a boom-and-bust cycle due to the absence of meaningful structural reforms. High inflation and a balance-of-payments crisis have led to economic distress, prompting the Asian Development Bank (ADB) to revise its growth outlook for the country.

    Low foreign exchange reserves have resulted in import restrictions as debt payments remained high and avenues for dollar inflows were limited.

    Anwaar-ul-Haq Kakar also called upon the international community to find a lasting solution to the debt issues faced by 59 countries in debt distress, emphasising the need for global and regional cooperation to achieve sustainable development goals. 

    He highlighted the importance of resources for developing countries and reiterated Pakistan’s commitment to supporting the Global Development Initiative. Kakar also noted the significance of China’s Belt and Road Initiative (BRI) and China-Pakistan Economic Corridor (CPEC) in achieving sustainable development goals.

  • Pakistan Railways increases train fares amid record-high fuel prices 

    Pakistan Railways increases train fares amid record-high fuel prices 

    Pakistan Railways has announced a second fare increase this September in response to a significant surge in petrol and diesel prices. 

    According to ARY News, effective tomorrow, September 19th, train fares will see a 5 per cent hike across all categories, encompassing shuttles, passenger trains, express services, and freight. It’s worth noting that this increase excludes shuttle and passenger trains covering distances of 250 kilometres or less. 

    Over the past 1.5 months, the railway ministry has already implemented a cumulative 20 per cent fare increase. The previous increments occurred on August 10th (10 per cent) and September 2nd. 

    This decision by Pakistan Railways closely follows an earlier announcement this month, wherein a 5 per cent fare increase was revealed for all shuttle, passenger, express, and inter-city trains. 

    These adjustments coincide with a recent decision by the caretaker government to raise petroleum product prices by up to Rs14 per litre. This move is seen as contradictory to previous promises of relief to the general populace. 

    Of particular note is the substantial increase in petrol and diesel prices, with petrol rising by Rs26.2 per litre to reach a new price of Rs331.38 per litre and diesel increasing by Rs17.34 per litre, now priced at Rs329.18 per litre. 

    Within the span of just one month, the caretaker government has raised petrol prices by Rs58 per litre and diesel prices by Rs56 per litre, raising concerns among economic experts regarding a potential fresh wave of inflation triggered by these drastic fuel price hikes. 

  • SPI index surges to three-week high at 26.41%: Food and energy prices drive inflation

    SPI index surges to three-week high at 26.41%: Food and energy prices drive inflation

    The Sensitive Price Indicator (SPI) index recorded a notable surge, reaching 26.41 per cent for the week ending on September 7, 2023, marking a three-week high. This increase was primarily propelled by the persistent rise in food and energy prices when compared to the same week in the previous year, putting added strain on households’ purchasing power and disposable income.

    Within this week, data from the Pakistan Bureau of Statistics (PBS) revealed that out of 51 items, 32 (62.75 per cent) experienced price increases, 5 (9.80 per cent) saw decreases, while 14 (27.45 per cent) remained unchanged, in contrast to the previous week.

    Food items saw significant price hikes, including a 17 per cent increase in tomato prices, a 10.87 per cent uptick in pulse masoor prices, a 6.73 per cent rise in sugar prices, a 4.66 per cent surge in garlic prices, and a 3.62 per cent uptick in gur prices. Pulse moong prices rose by 3.55 per cent, onions by 3.43 per cent, and pulse gram by 3.25 per cent. Among non-food items, diesel prices soared by 6.28 per cent, LPG (liquefied petroleum gas) increased by 5.19 per cent, and petrol prices rose by 5.12 per cent.

    Conversely, there was a decline in the prices of certain items, including chicken by 3.20 per cent, 5-liter cooking oil by 1.03 per cent, 2.5 kg vegetable ghee by 0.47 per cent, Lipton tea by 0.43 per cent, and 1 kg vegetable ghee by 0.14 per cent, compared to the previous week.

    Looking at the bigger picture, the Consumer Price Index (CPI) revealed that monthly inflation has remained persistently high, averaging 27.8 per cent in the first two months (Jul-Aug) of the current fiscal year 2023-24. This was primarily attributed to recent rupee depreciation, imported inflation, and the continuous ascent of power and petroleum product prices.

    It is anticipated that September’s monthly inflation reading will reach its peak, with experts also suggesting the possibility of the government raising gas prices, further exacerbating inflationary pressures on the economy.

    To combat inflation, the Pakistan central bank is expected to raise its key policy rate by 1.5 to 2 percentage points during its upcoming Monetary Policy Committee (MPC) meeting on September 14. The current policy rate stands at a record high of 22 per cent.

    Topline Research highlighted significant developments since the last MPC meeting on July 31, 2023, including Pakistan posting a current account deficit of $809 million in July after four consecutive months of current account surplus. 

    Additionally, local fuel prices have increased by around 19 per cent, international oil prices in US dollars have risen by 6 per cent, and the rupee has depreciated by 6 per cent against the US dollar. These factors are expected to weigh heavily on the central bank committee’s decision during the upcoming MPC meeting.

  • High interest rates and taxes lead to 20.90% drop in car financing in Pakistan

    High interest rates and taxes lead to 20.90% drop in car financing in Pakistan

    In a notable shift, the landscape of automobile financing in Pakistan has undergone a substantial transformation, with figures from the State Bank of Pakistan (SBP) indicating a significant decline. The data, released by SBP, unveils a marked decrease in car financing, plummeting to Rs285.19 billion in July 2023. This represents a notable 20.90 per cent year-on-year (YoY) decrease and a 2.91 per cent month-on-month (MoM) decrease when compared to the figures from July 2022, which stood at Rs360.55 billion, and June 2023, which registered at Rs293.73 billion.

    The primary contributors to this downward trajectory are multi-faceted. Firstly, the imposition of higher interest rates has played a pivotal role in reshaping the car financing landscape. Additionally, the surge in car prices has also contributed significantly to this downturn. Moreover, regulatory restrictions governing the acquisition of loans have created a notable barrier, further impacting the market. Furthermore, the imposition of elevated taxes on the import of automobiles and their integral parts has compounded the challenges faced by the automobile financing sector.

    Contrastingly, in a separate but related sphere, consumer financing for house building displayed a contrasting narrative. SBP’s data reveals that by the conclusion of July 2023, consumer financing for house building registered at Rs211.11 billion, marking a commendable 4.82 per cent YoY increase. According to Mettis Global, this uptick can largely be attributed to SBP’s proactive measures to stimulate the housing and construction sector within the nation. However, in terms of monthly changes, the figures remained relatively static, with a minor decline of 0.57 per cent.

    Meanwhile, financing for personal use, amounting to Rs250.24 billion, experienced a marginal 0.09 per cent YoY decrease. Similarly, on a monthly basis, financing within this category saw a slight downturn of 0.95 per cent. Consequently, the cumulative credit extended to consumers in various segments reached Rs851.22 billion during the assessment month. This overall credit value reflected a notable 4.70 per cent YoY decline and a 0.99 per cent MoM reduction.

    Furthermore, the credit scenario within the private sector depicted a nuanced picture. Outstanding credit to the private sector encountered a minor 0.06 per cent YoY decrease and a slightly more pronounced 1.12 per cent MoM reduction, resting at Rs8.19 trillion in July 2023. In contrast, loans granted to the manufacturing sector exhibited an encouraging 1.12 per cent YoY increase, amounting to Rs4.48 trillion during the review period. However, on a monthly scale, the loans within the manufacturing sector dipped by 1.44 per cent MoM.

    In summation, the marked decline in car financing, as evidenced by SBP’s recent data, underscores the multifaceted challenges that the automobile financing sector in Pakistan is currently grappling with. While interest rates, car prices, and regulatory curbs have contributed to this downward trend, other sectors such as house building and manufacturing loans have demonstrated distinct trajectories. As the nation navigates through these financial dynamics, stakeholders remain vigilant in monitoring and adapting to these evolving circumstances.