Business

In Washington meeting, Ishaq Dar to ask IMF to revise macroeconomic framework

Published

2 years ago

Farwa

Ishaq Dar to attend IMF/World Bank meetings from Oct 10 to 16.
Pakistan to formally request IMF to give concessions on loan conditions.
IMF says policy commitments made by Pakistan to continue to apply.

Amid controversy over the new petrol price announced by the government which has been termed a “reckless” decision, Finance Minister Ishaq Dar will travel to Washington next week and hold meetings with the International Monetary Fund (IMF), seeking to revise the macroeconomic framework.

“Pakistan’s Minister for Finance Ishaq Dar will participate in the upcoming annual meeting of the IMF/WB,” a top official of the Finance Ministry confirmed while talking to The News on Wednesday.

In a surprise move last week, the federal government slashed the prices of petroleum products sparking debate about whether the move is in line with the IMF deal and former minister Miftah Ismail termed it a “reckless” move.

However, Dar responded to his predecessor by saying he knows how to deal with the IMF while state minister for finance Aisha Ghous Pasha added that the announcement didn’t violate the loan agreement.

The IMF had also said that policy commitments made by the Pakistani authorities as part of the seventh and eighth reviews under their support program continue to apply.

The publication, quoting unnamed sources, said that Pakistan will make a formal request to the IMF high-ups for revising the macroeconomic framework for the current fiscal year 2022-23 by lowering the GDP growth rate, hiking inflation and upward adjustments of twin deficits known as the budget deficit and current account deficit.

Islamabad is all set to make a request to the IMF for making the conditions attached to the Extended Fund Facility (EFF) lenient, especially freezing fuel price adjustment of electricity and petroleum development levy on POL products for the next few months to provide some relief to the inflation-stricken masses.

Pakistan, the report said, will also request to relax the budget deficit target for the current fiscal year as severe floods might damage its revenue mobilisation efforts and increase pressures on the expenditure front.

The government has restricted the budget deficit target at 4.9% for the current fiscal year under the IMF programme and throwing a revenue surplus of Rs153 billion till the end of June 2023.

The request for revising the macroeconomic framework will be made for the current fiscal year in the wake of severe floods that have caused devastation and required construction costs of over $30 billion for the struggling economy of Pakistan.

As per the report, Secretary Economic Affairs Division Kazim Niaz had already departed Islamabad for Washington to attend the upcoming meetings of Breton Wood Institutions.

Under the macroeconomic framework, the government has assessed that the country’s GDP growth might hover around 2% for the current fiscal year against the initially envisaged target of 5%.

The economic loss has been estimated at Rs2.4 trillion for the current fiscal year. The government’s projections also show that unemployment projection will increase due to the loss of 1.8 to 2 million jobs and poverty may hike by 4.5 to 5%, implying that 9 to 12 million people will fall below the poverty line.

The agriculture growth is feared to remain negative in the range of -0.7% to -2.1% against the target of plus 3.9% for the current fiscal year. The government has estimated that the growth in major crops was expected to remain negative in the range of 14 to 15.4% for the current fiscal year. Around one million large and small animals have perished. The livestock growth is expected to remain between 2 to 3% against the desired target of 3.7 % for the current fiscal year.

The inflation will hike, to go up in the range of 23 to 25% for the current fiscal year against the initially envisaged target of 11.5%.

The government has not yet firmed up any specific number for the current account deficit but it is feared that it may go up from $9 billion to $12 billion for the ongoing financial year mainly because of decline in exports.

Business

Exchange achieves all-time high: KSE-100 index surpasses 72,500 points

Published

14 hours ago

Farwa

With the benchmark KSE-100 index hitting a record-breaking high of 72,501 points, the Karachi Stock Exchange saw yet another incredible rise.

Within Pakistan’s financial environment, investors demonstrated a strong sense of trust in the market as the bullish trend continued.

As a result of the significant inflow of investment and optimism among market players, the index had an amazing 450-point rise during the trading session.

In their analysis of the market’s remarkable performance, financial analysts pointed to a number of causes for the upward trend, such as encouraging economic data, robust company profits, and the government’s proactive measures to promote economic expansion.

The durability and upward momentum of the market have also been greatly aided by continuous infrastructural investments and efforts meant to boost investor confidence.

In the meantime, interbank rates increased by six paisas, and the US dollar’s value saw a slight rise in the currency market. As a result of the current market conditions and the dynamic nature of foreign exchange swings, the dollar was quoted at Rs 278.45 in the interbank market.

Business

The investment plan for K-Electric will be audited every three months.

Published

15 hours ago

Farwa

In light of K-Electric’s inability to persuade NEPRA with its Rs. 484 billion investment plan, the regulatory body has decided to hold off on making changes to the utility’s Transmission & Distribution Investment Plan until FY 2030.

As stated in the order, the NEPRA will select the terms of reference (ToR) for the third-party audit in addition to announcing the quarterly audit. A report on the company’s investment plan’s progress will need to be submitted every quarter.

A performance report would also be required under the investment plan by K-Electric, Karachi’s only power distribution utility, according to the statement. A secure mechanism to avoid electrical mishaps was also mandated by the authority to the utility.

In the meantime, the power distribution firm stated in a statement that the investment plan will boost the utility’s infrastructure to meet present and future demands, decrease transmission and distribution losses, and increase customer base growth.

With investments totaling Rs. 544 billion, KE has been able to more than halve its T&D losses and quadruple its customer base and power consumption since privatisation, according to the statement.

A hearing in March 2023 was held to inform stakeholders about the projects that KE management had planned for FY2024–FY2030, and the statement claimed that the plan had been presented in compliance with regulatory requirements.

In terms of investment areas including expansion, energy loss reduction, network rehabilitation, maintenance, and safety, KE claimed to have clearly defined priorities and projects for this era.

The plan calls for the construction of transmission lines and grids, which will increase the dependability of KE’s network and make it possible to take on more electricity from the National Grid.

In order to manage the city’s needs through targeted investments and tech-based interventions, CEO KE Moonis Alvi said, “We are looking to invest $2 billion in Transmission and Distribution over the next 7 years.” The work of all the stakeholders who have contributed to this trip and who will help us modernise our infrastructure and get ready for the future is something I’d like to acknowledge.

The investment plan is a supplement to the business’s Power Acquisition Programme, which outlines KE’s goal of having 30% renewable energy in its generation mix by 2030. As part of its efforts to provide everyone with access to reasonably priced energy, the firm has also been granted regulatory permission for its RFPs for 640 MW of renewable projects.

Business

$399 million in airline revenue is being blocked by Pakistan. IATA

Published

15 hours ago

Farwa

Pakistan and Bangladesh have been urged by the International Air Transport Association (IATA) to promptly release airline profits that are being withheld in violation of international agreements.

“Airlines are unable to repatriate over $720 million ($399 million in Pakistan and $323 million in Bangladesh) of revenues earned in these markets, resulting in a severe situation,” an IATA statement stated.

“Money-denominated expenses like lease agreements, spare parts, overflight fees, and fuel must be paid for in a timely manner by repatriating revenues to their home countries.”

Delaying repatriation raises exchange rate risks for airlines and violates bilateral agreements’ international commitments. In order for airlines to effectively continue to offer the aviation connectivity that both of these countries depend on, Pakistan and Bangladesh must immediately release the more than $720 million that they are blocking, according to Philip Goh, Regional Vice President for Asia-Pacific at IATA.

Pakistan needs to make the difficult repatriation procedure less complicated. According to the statement, this presently includes the need to present audit certifications and tax exemption certificates, both of which create needless delays.

Approximately 425,000 jobs and $2.8 billion in economic activity were supported by Pakistan’s aviation industry prior to COVID-19. Passenger numbers are predicted to increase by more than 2.5 times by 2040 after returning to pre-COVID levels in 2023, according to the statement.