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IMF to review PM Imran Khan’s relief package in talks with Pakistan this week

IMF to review PM Imran Khan’s relief package in talks with Pakistan this week



IMF logo and Pakistan flag

Pakistan and the International Monetary Fund (IMF) are meeting this week to review the relief package Prime Minister Imran Khan announced to lower POL and electricity prices in the face of a difficult international environment. Both sides will talk about the benefits of the package, The News reported.

The IMF team will kick-start virtual parleys with Pakistani authorities on March 4, 2022, and these talks will continue for two weeks for the completion of the 7th Review under the $6 billion Extended Fund Facility (EFF) program.

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When contacted about the relief package announced by PM Imran Khan, the IMF’s Resident Chief in Pakistan, Esther Perez Ruiz, said that Pakistani authorities and the IMF would discuss during the upcoming 7th review of the EFF the merits of the recently-adopted relief package and other measures to promote macroeconomic stability amidst a challenging external environment.

This scribe also contacted the Ministry of Finance high-ups and got confirmation that the IMF team would hold virtual review talks from March 4, 2022, which would last for a two-week period.

Premier Imran Khan announced a reduction in petrol and diesel prices by Rs10 per litre and the electricity tariff by Rs5 per unit. It is estimated that the government will dole out Rs 360 billion on these two fronts of POL and electricity during the remaining four-month (March-June) period of the current fiscal year.

During the current fiscal year, the government will provide a direct subsidy of Rs200 billion on electricity and Rs160 billion on POL prices.The PTI-led government is going to replicate one old program, first introduced during the Musharraf government and later on during the PPP-led government in 2008 and 2009, which was known as Price Differential Claims (PDCs), to reduce the prices of POL products. However, these claims were largely never reimbursed to Pakistan State Oil (PSO) and the amount was still due after a 12-year period. With these measures, it seems that the government has entered into election mode. It is yet to be seen how the IMF will respond to this massive doled out package, as apparently it seems like a total reversal of the Fund-sponsored program. The initial estimates suggested that the cost of other measures such as the internship programme for almost 150,000 graduates with a monthly stipend of Rs30,000 and the doling of interest-free loans under the much-hyped Kamyab Pakistan Program were not included in the cost estimation of the relief package announced by the PM in his televised speech on Monday night.

One member of the high-profile Macro Economic Group, Dr Ashfaque Hassan Khan, told this scribe that the relief package was discussed in detail in the last two months and claimed that it would have no negative impact on the budget deficit nor the ongoing IMF program. He said that the relief package was fully financed and that savings would be utilised to finance the relief package.

The IMF provided $1 billion for COVID-19, which would be diverted towards the relief package. A second unnecessary development project-related allocation would be provided for execution of the package. Thirdly, he said that the BISP money would be fully utilised, and fourthly, the FBR’s increased collection of Rs281 billion would be utilised for this package. He said that there were some suggestions to provide targeted subsidies during the Macro Economic Group meeting, but he had asked for a general subsidy by reducing the prices for all because the government did not have the capacity to provide targeted subsidies.

When contacted, Dr. Khaqan Najeeb, former Director-General, Economic Reform Unit, Ministry of Finance, said general subsidies are less welfare-enhancing for the vulnerable, and that is the reason governments should always promote targeted subsidy regimes. Pakistan has just completed a National Socio-Economic Registry in June 2021 with a door-to-door survey of 33 million households. A good initiative indeed. This should be the right data to use for any future subsidy targeting.

Dr. Khaqan emphasised that a general subsidy on fuel and electricity can have substantive fiscal implications. Electricity consumption in the summers (March to June) is the highest during the year. The Rs5 subsidy will be used to adjust the fuel price adjustment monthly for residential and commercial consumers. In a sense, the government has temporarily abolished the fuel price adjustment for four months.

Assuming a sale of 40 billion GWh of electricity in four months, this can translate into a subsidy of Rs200 billion. If not paid for, this would be taken as a prior year adjustment in the next year’s electricity tariff, thereby increasing it further. He concluded that if there was a reduction in the price of oil, its consumption could further impact the high $7MFY22 $11.6 bn current account deficit, which the government has been trying to curtail through various measures. In the short run, the government can reduce the Petroleum Development Levy for the Rs10 reduction. However, a funded subsidy from the current budget would have to be created to fund this.


PKR on track to become top-performing currency this month: Bloomberg




  • Pakistani currency rose around 6% this month against dollar.
  • Authorities curb leakages happening through illegal channels. 
  • Crackdown on illegal dollar traders helps local currency. 

The Pakistani rupee is on track to become the top performer globally in September as the caretaker government continues its crackdown on illegal dollar trade, Bloomberg reported Thursday.

The local currency rose around 6% this month against the dollar — an amazing feat despite the Thai baht and South Korean won tumbling against the greenback.

Major currencies lost ground against the dollar on speculations that the US interest rates will stay elevated for longer.

The rupee increased 0.1% to 287.95 per dollar on Thursday, after sliding to a record low of about 307 this month. Pakistan’s currency market will remain closed for the Eid Miladun Nabi holiday on Friday.

“Many leakages were happening through illegal channels of hawala and hundi trade from the open market,” Khurram Schehzad, chief executive officer of Alpha Beta Core Solutions Pvt Ltd, told Bloomberg.

“When the dollar rate reverses everybody, the hoarders, the exporters who are holding their export proceeds, start selling their dollars,” Schehzad said.

The interim rulers have intensified efforts by launching a crackdown on people involved in the illegal dollar trade, allowing the currency to gain some lost ground.

The Federal Investigation Agency, Bloomberg reported, conducted raids across the country and security officials in plainclothes were deployed at money exchanges to monitor dollar sales as part of the crackdown.

Caretaker Prime Minister Anwaar-ul-Haq Kakar this week said the rupee’s gain is “fostering optimism for stability.”

For its part, the State Bank of Pakistan raised the capital requirements of smaller exchange companies and ordered large banks to open their own exchange companies to make the retail foreign exchange market more transparent and easier to monitor.

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Pakistan issues tender for LNG cargoes to meet winter demand




  • Delivery windows are December 7-8 and December 13-14: PLL.
  • Pakistan faces difficulty in procuring LNG amid Russia-Ukraine conflict. 
  • Natural gas supply dropped by 20% over the last year level.

LAHORE: Pakistan has issued a fresh tender to procure liquefied natural gas (LNG) spot cargoes to meet its winter demand after failing to secure supplies from the global market for over a year, The News reported on Thursday.

The Pakistan LNG Limited (PLL), a state-owned company, said on Wednesday it was seeking bids from international suppliers for two LNG cargoes of 140,000 cubic meters each, to be delivered in December at Port Qasim in Karachi.

The delivery windows are December 7-8 and December 13-14, according to the tender document. 

PLL has the mandate to procure LNG on behalf of the federal government to meet the country’s gas requirements through two LNG import terminals with exclusive arrangements for public sector distribution.

The delivery from the volatile spot market has been an uphill task for Pakistan since the start of the war between Ukraine and Russia in February 2022. 

Previous attempts to buy LNG proved futile mainly due to the lukewarm response of sellers. The growing concern of suppliers about the country’s credit risk has been another headache for a country already plagued by chronic energy shortages.

LNG is crucial for Pakistan, where natural gas accounts for over a third of power generation and local gas reserves are insufficient to address growing electricity demand in a country of over 230 million.

In late July this year, PLL failed in its attempt to purchase LNG too after several such attempts made earlier. A bidding company offered winter LNG cargoes at a premium of as high as 30% of the market price. Hence, PLL decided not to purchase the costly gas cargo due to the extremely high cost.

Last week, responding to a query raised by The News, Energy Minister Muhammad Ali said the natural gas supply in the system had dropped by 20% over the last year level. 

He said this was a huge gap, which would ultimately translate into low gas availability for the end consumers.

“The dwindling gas resources simply mean load shedding for the users,” he said, adding that imports of LNG could lead to bridging the gap, although it is a costly option. 

“We are trying to import as much LNG as possible.” However, the spot rate of LNG presently stands at $15 per unit, and Pakistan is selling it to domestic consumers at $1.5 per unit, which is not sustainable.

To meet the demand of the industry, the minister said the government is trying to import maximum cargoes of LNG. 

Responding to a query about the challenges in the import of LNG from the spot market and how to tackle them, minister Ali said Pakistan is facing two challenges on the import front. 

He said the first is the peculiar nature of the LNG trade where the purchase contract is made before the LNG is produced. 

One way to address this challenge, Ali said, is to have long-term buying contracts to ensure smooth gas imports. 

He said the other way is to try to get gas through government-to-government (G2G) arrangements. Besides having gas supplies under long-term contracts, “Pakistan is negotiating to import cargoes through G2G basis to meet winter demand.”

Talking about LNG spot purchases, he recalled that Pakistan did not get any response in June tendering amid high spot rates. 

“We are now contemplating to invite fresh bids for spot buying to ease winter demand. We are trying to minimise gas shortage in days to come.”

Moreover, talking about the second constraint in the import of LNG, which is the low capacity of gas import infrastructure, the minister said that his government wants to run both existing terminals at full capacity. They are also trying to remove hurdles in setting up more LNG terminals in the country.

One of the new terminals should have been established last year, but it was delayed due to litigation. If the third terminal is to be installed, the minister said they want to give a go-ahead to its construction within the tenure of the caretaker government.

According to a report, Pakistan’s liquefied natural gas demand will nearly triple in five years as its production of domestic gas dwindles. 

The South Asian nation will need 25 cargoes of the super-chilled fuel a month by then, from nine a month now. Pakistan has struggled to secure enough LNG to cover its needs after prices surged to an all-time high last year.

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inDrive now available in five more Pakistani cities




KARACHI: inDrive, a popular ride-hailing service in Pakistan, has now expanded its network to five more cities across Pakistan including Larkana, Kāmoke, Sheikhupura, Hafizabad, and Okara.

In a statement issued by the transport company, the inclusion of these cities reflects inDrive’s dedication to bringing innovative transportation options to both urban centres and suburban areas.

Speaking about the expansion, Senior Business Representative at inDrive Hasan Qureshi said: “We are excited to extend the convenience and reliability of inDrive to residents of Larkana, Kāmoke, Sheikhupura, Hafizabad, and Okara.”

“Our mission is to redefine transportation by providing safe, affordable, and accessible rides to everyone. With this expansion, we are not only enhancing the commuting experience but also contributing to the economic growth and empowerment of these communities.”

PR Manager Sidra Kiran said that their new service offers city residents the convenience of accessing transport from their homes, eliminating the need to search for it. 

“Both drivers and passengers stand to gain significant benefits, including time-saving and the elimination of challenges associated with street hailing. This service addresses issues such as locating rides during odd hours like early mornings or late nights,” she stated. 

She further added: “inDrive ride-hailing presents numerous benefits to drivers in small cities, including flexible opportunities, reduced unemployment, supplemental income, enhanced community connection, and positive contributions to the local economy.”

The launch of the company in these cities would benefit both riders and driver-partners. 

inDrive further said that it remains committed to upholding the highest standards of safety, affordability, customer service, and technological innovation.

inDrive is Pakistan’s premier ride-hailing service and is revolutionising the way people travel. With a commitment to providing safe, affordable, and reliable transportation.

The company allowed riders to connect with nearby drivers with its app.

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