The International Monetary Fund (IMF) has denied recent reports that it is seeking fresh financing from Pakistan, stating that Pakistan’s external financing requirements have remained unchanged throughout talks with the Fund.
The clarification comes after a report by the Express Tribune suggested that the IMF had increased its demand for additional financing to $8 billion, up from an unmet condition of $6 billion, in order to ensure debt repayments for the May-December 2023 period.
According to Reuters, IMF Resident Representative Esther Pérez Ruiz confirmed that the country’s external funding requirements had not changed, and that discussions were centered around a review to unlock $1.1 billion in financing as part of a $6.5 billion IMF package.
Despite ongoing talks, a staff-level agreement on the review has been delayed since November, and the IMF has reiterated that commitments on external financing from friendly countries will be necessary before it can release bailout funds.
Pakistan’s central bank reserves currently stand at $4.38 billion, equivalent to barely a month’s worth of imports.
The government is expected to present an overall budget deficit of 5.1 per cent of the GDP for the fiscal year 2023-24, as stated in the delayed Budget Strategy Paper (BSP) to be presented before the federal cabinet. A recent report by The News highlighted that the paper will be tabled amid the government’s failure to revive the stalled International Monetary Fund (IMF) programme.
The budget-making process has already been affected by uncertainty on both the IMF and political fronts. Nonetheless, the government has decided to present the next budget on June 9. Despite failing to reach a staff-level agreement with the IMF, the government will present the BSP for a medium-term period of three years. The proposed federal government budget deficit stands at 6.4 per cent of the GDP, while the overall deficit of the country is estimated to be lowered to 5.1 per cent of the GDP for the next financial year.
In addition, the BSP for the upcoming fiscal year has proposed an allocation of Rs1.7 trillion for the defence budget compared to Rs1.56 trillion in the outgoing fiscal year. The overall primary surplus of budget deficit is estimated to be 0.3 per cent of the GDP for the next fiscal year, up from the previous projection of 0.2 per cent for the outgoing year.
The Federal Board of Revenue (FBR) has been set a target of Rs9.2 trillion for the next budget, and the finance ministry suggests this is on the higher side. The FBR estimates that it could collect Rs7.2 trillion in the outgoing fiscal year against the targeted Rs7.64 trillion. In the next budget, the FBR could collect up to Rs8.6 trillion, subject to import restrictions being lifted, which could boost revenue collection. The government is projecting a GDP growth rate of 3.4 per cent for the next fiscal year, while inflation is expected to hover around 21 per cent.
According to the IMF’s latest press briefing, the country may experience stagflation, which means low growth and higher inflation rates. If stagflation continues, it could lead to rising poverty and unemployment in Pakistan. The current account deficit is estimated to be approximately $8 billion for the next budget, and there is hope that import restrictions will be gradually lifted during the next financial year.
The BSP has to be approved by the federal government under the Public Finance Management Act, which states that the paper must contain quantified macroeconomic and fiscal projections for the medium-term, be approved by April 15 of each year, and published on the Finance Division’s official website. Upon approval, the Finance Division will issue indicative budget ceilings to ministries and divisions.
The minister for finance will also discuss the budget strategy paper with the Standing Committees for Finance and Revenue in the Senate and the National Assembly. The government may extend the deadline mentioned in Sub-section (1) of the PFM Act in case of an extreme requirement.
More than 60 domestic and international flights from various airlines have been cancelled due to the unstable situation in Pakistan, with many other flights being uncertain about their arrival and departure.
The cancellations have affected flights to major cities such as Karachi, Lahore, and Islamabad, where the number of passengers has decreased.
According to the airport schedule, more than 60 domestic and foreign flights from various airlines have been cancelled, including flights from Karachi to Jeddah, Madinah, Muscat, Dubai, Riyadh, Baghdad, and Baku. The arrival and departure schedule of Karachi Airport provides a comprehensive list of the affected flights, including those cancelled between Karachi and Islamabad, Lahore, Turbat, and Peshawar.
To ensure that their travel plans are not disrupted, passengers are advised to check with their airlines for the latest updates on flight status.
According to Minute Mirror, the following flights have been canceled according to the arrival and departure schedule of Karachi Airport:
Karachi to Jeddah: ER 811 and ER 812
Karachi to Medina: PK 743
Salam Air flight to Muscat: OV 292
Emirates Air flights to Dubai: EK 605 and 604, EK 609 and 608
Karachi to Muscat: WY 323 and 324
Karachi to Riyadh: PK 729
Flight to Baghdad: IF 331 and IF 332
PIA flight from Baku to Karachi: K 154
The following flights have been canceled between Karachi and Islamabad:
PK369
PF121
PF122
9P670
9P871
PA200
PF127
ER502
The following flights have been canceled between Lahore and Islamabad:
PK302
PK303
9P840
9P841
PF141
ER520
PA406
PK306
PF147
The following flights have been canceled between Karachi and Turbat:
PK501
The following flights have been canceled between Karachi and Peshawar:
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The Asia Internet Coalition (AIC), an industry association of major internet and technology companies, has released a statement urging the Pakistani government to consider the serious consequences of their recent actions on the people and economy of the country.
The AIC has called for the immediate restoration of internet access in Pakistan. Jeff Paine, the Managing Director of the AIC, has expressed concern that the government’s actions will damage the country’s reputation as an investment destination, and has urged the government to focus on the opportunities presented by the digital economy to promote overall economic growth.
More than one hundred prominent members of the Pakistani business community, tech entrepreneurs, and civil society have condemned the government’s use of partial and complete internet shutdowns, as well as targeted content and app blocking.
These actions have been taken in response to recent nationwide protests. Tens of millions of Pakistanis rely on internet-dependent services for essential business activities, and by blocking or shutting down these services, the government is limiting civic space, creating economic uncertainty, and disrupting access to healthcare, emergency services, and financial services.
The government’s decision to shut down mobile internet services across the country has resulted in significant revenue losses for mobile phone companies and online taxi and bike services. This decision was made in response to the arrest of former Prime Minister Imran Khan, which led to nationwide protests.
As a result of the internet shutdown, online taxi and bike services have been unavailable for the past two days, causing inconvenience to commuters who depend on these services for transportation.
According to sources in the Pakistan Telecommunication Authority, there are no plans to restore internet access in the country today.
Pakistan has informed the International Monetary Fund (IMF) that it will not be implementing a fuel subsidy programme during ongoing negotiations for a $1.1 billion bailout for the country.
The IMF has stated that it will continue to engage with the government on the loan, despite increasing political tensions.
Prime Minister had previously proposed a fuel subsidy scheme in March, which would charge higher rates to affluent consumers to subsidise prices for the poor who have been hit hard by inflation.
However, the government has now committed not to implement this programme in the current fiscal year or beyond. Instead, it will not introduce new tax exemptions and will allow a market-based exchange rate for the rupee currency.
The IMF has said that Pakistan needs significant additional financing to complete the long-delayed ninth review of its bailout package.
Obtaining commitments of significant additional financing is essential before the IMF approves the release of pending bailout funds that are crucial for Pakistan to resolve an acute balance of payments crisis.
According to Dawn, the State Bank of Pakistan’s reserves fell to $4.38 billon on Thursday, which is barely a month’s worth of imports. The IMF has emphasised that Pakistan faces stagflation, large financing needs, and has been affected by several shocks, including severe floods.
The suspension of mobile data services in Pakistan is expected to result in a daily loss of $3-4 million to the country’s IT exports.
The Pakistan Software Houses Association (P@SHA) has called on the government to restore mobile broadband services, which have been suspended since Tuesday due to the political turmoil that erupted after the arrest of the PTI party’s chairman, Imran Khan.
The government has blocked 3G/4G mobile broadband services and major social media platforms like Twitter and Facebook, as well as slowing down YouTube services to control the spread of “unwanted information” that could cause disinformation and panic among the masses.
According to The News, Muhammad Zohaib Khan, the Chairman of P@SHA, warned that the suspension of mobile broadband services could result in significant losses for the IT industry, which relies heavily on internet connectivity.
The IT industry has come to a standstill since Tuesday evening, and professionals are working from home due to the precarious law and order situation in the entire country. Zohaib urged the government to resume internet services to the IT industry immediately, saying that the sudden blockade of broadband services has completely halted IT operations, and the IT industry is already facing pressure due to poor governmental policies.
Zohaib requested Prime Minister Shehbaz Sharif to intervene directly and asked for the support of the Ministry of IT and Telecom, Pakistan Software Export Board (PSEB), and Tech Destination Pakistan administrations to request the premier to issue categorical instructions.
The suspension of mobile broadband services has also affected individuals who rely on digital apps for commuting or ordering/delivering food and other products. However, an official stated that it is difficult to calculate the losses at this stage.
On Wednesday, the price of gold surged massively in Pakistan due to political turmoil following the arrest of the former prime minister and Pakistan Tehreek-e-Insaf (PTI) Chairman, Imran Khan.
According to the All Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold (24 carats) rose by Rs9,900 per tola and Rs8,487 per 10 grams to reach Rs240,000 and Rs205,761, respectively.
However, there was no increase in the international market price, which remained at $2,031 per ounce. The primary reason for the increase in gold’s price is the latest political storm that has caused violent protests across the country and led to the army’s deployment in three provinces.
People in Pakistan are purchasing gold to protect themselves against inflation and currency depreciation, as the economy is already in dire straits. Furthermore, the delay in the revival of the International Monetary Fund (IMF) program, which negatively impacts the currency market, is bolstering the demand for gold.
According to Brecorder, the rupee also fell to a fresh low of Rs290.22 against the US dollar in the interbank market on Wednesday, after losing Rs5.38 or 1.89 per cent. The APSGJA also reported that the price of silver reached a new high, rising by Rs100 per tola and Rs85.75 per 10 grams to settle at Rs3,100 and Rs2,657.7, respectively.
Foreign Minister Bilawal Bhutto Zardari has said on Thursday that one attack on General Headquarters of the Army (GHQ) was carried out by Tehreek-e-Taliban Pakistan (TTP) and now another one has been carried out by Pakistan Tehreek-e-Insaf (PTI).
Addressing a press conference, the Foreign Minister referred to violent acts of PTI workers, pointing out that this is not the first time that they have violated the law. “I had warned earlier that you people are creating Altaf Hussain in Punjab,” said Bilawal.
He continued by adding that Imran Khan believes that he can cross every red line and the law is only applicable on others.
The PPP head advised PTI to not make “matters worse [and] call for an end to violent protests and declare that you will abide by the rule of law and Constitution.”
Bilawal said that he is principally against banning any political party but said that “such decisions are made in view of the circumstances”. If such a decision is taken, he continued, “it would be taken because there would be no other choice left.”
PM’s address to the nation:
Prime Minister (PM) Shehbaz Sharif in an address to the nation on Thursday termed damaging public property an “act of terrorism” and “enmity” towards the country.
In a short address, the premier said that he would like to warn “terrorists” who are harming the country to stop, otherwise strict actions will be taken against them.
Sharif was referring to PTI supporters who are protesting against the arrest of party head Imran Khan.
PM also recalled his party members’ arrests, adding that “revengeful acts in politics never renders good results”.
He also added that “all evidence” has been accumulated in the Al-Qadir Trust case against PTI Chairman Imran Khan, who is now under NAB custody for the next eight days.
