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Pakistan striving to rebound strongly from current economic challenges: SBP chief

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1 year ago

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  • SBP chief briefs investors, fund managers on current challenges, way forward.
  • Says challenges largely driven by “adverse global shocks, domestic developments”.
  • Inflation expected to ease in coming months; financing uncertainty to end after IMF deal.

State Bank of Pakistan (SBP) Governor Jameel Ahmad has said that the country was striving to rebound strongly from the current economic challenges, including external financing woes and record inflation.

He stressed that Pakistan’s economy had “always rebounded strongly after undergoing severe shocks”.

“No doubt, this time, we have faced not one but a series of domestic and global shocks. But we strive to rebound strongly from the current challenges as well.”

He made the remarks while addressing international investors and fund managers at an event organised by Barclays in Washington, United States on Pakistan’s economic challenges and the way forward.

A statement issued by the central bank said Ahmad briefed the attendees about the challenges Pakistan is facing, the policy responses and the way forward.

The SBP chief noted that the economic challenges, including high inflation and balance of payments pressures, were largely driven by “adverse global shocks and domestic developments”.

Even though global commodity prices had fallen from the peak reached in 2022, they were still “significantly high” and thus, were taking a toll on domestic inflation and the current account, he elaborated. The rupee has depreciated sharply over the last few months, which has increased the cost of living for consumers in the heavily import-dependent country.

At the same time, the SBP chief said, tightening global financial conditions have made it harder for emerging markets such as Pakistan to access international financial markets. Consequently, this put stress on the country’s foreign exchange reserves, which have fallen to critically low levels in recent months, and the exchange rate. The devastating floods of 2022, which caused damages of $30 billion, had worsened the country’s economic distress, he pointed out.

Ahmad also spoke about the country’s external balance of payments situation, noting that Pakistan had met all its obligations in a timely manner contrary to earlier market expectations. 

“The country’s debt repayments have been rather front-loaded, whereas inflows have been gradual,” he explained.

He said the country was receiving fresh financing in addition to loan rollovers ahead of the expected revival of a loan programme with the International Monetary Fund (IMF).

Policy response

Elaborating on the central bank’s policy measures, the SBP chief said it had raised the benchmark interest rate by 1,400 points to 21% in the last 18 months and tightened regulations to rein in inflation and reduce the current account deficit.

In addition, the exchange rate had adjusted over the last few months, which he termed the “first line of defence against emerging external imbalances”.

The fiscal deficit had reduced due to the government’s contractionary fiscal policy, despite flood rehabilitation-related expenditure. The primary balance was also in surplus so far compared to a deficit last year, he noted.

“The country is on its way to achieving macroeconomic stability, as the impact of policy measures is already playing out in the economy. The current account deficit has narrowed and foreign exchange reserves, albeit low, are increasing,” he remarked.

Inflation was expected to decrease in the coming months while the revival of the IMF programme would remove uncertainties regarding external financing, Ahmad added. 

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An investigation was “launched” into PTA’s inability to get Rs. 78 billion back from Telcos

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19 hours ago

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The PTA has reportedly been instructed to reply to NAB by July 29. According to the enquiry, the national exchequer has suffered losses as a result of the delay in collecting dues.

The PTA has been asked to provide NAB with information about any pertinent records, court proceedings, and overdue bills. The NAB Karachi has summoned the PTA officials to appear with all pertinent documentation.

All of the principle sum has to be paid by the LDI firms, according to sources. But due to judicial stay orders, the collection of dues has been impeded.

These sources further state that a steering group has been established by the Ministry of IT to supervise the issue of dues recovery.

In a previous event, the tariffs levied on importing cell phones from outside were clarified by the Pakistan Telecommunication Authority (PTA).

Contrary to what some internet reports claim, PTA clarified in response to recent news regarding the tariffs on mobile phone imports that there hasn’t been a formal decision to remove these levies in Pakistan.

the PTA.Pakistanis living abroad will be the only ones free from these levies, according to the PTA. A SIM card can be inserted and the phone restarted to temporarily register a device for non-PTA mobile subscribers.

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Business

Weekly inflation in Pakistan increased by 0.17 percent.

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19 hours ago

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The SPI for the week under review in the aforementioned group was reported at 321.95 points, as opposed to 321.40 points during the previous week, according to the PBS statistics.

The SPI for the combined consumption group saw a 20.09 percent increase in the week under review compared to the same week the previous year.

The weekly SPI includes 51 necessary items for every spending group and 17 urban areas, with a base year of 2015–16 = 100.

The SPI for the lowest consumption category, which is up to Rs 17,732, grew by 0.08 percent from 311.97 points to 312.22 points this past week.

0.18 percent,The index of consumption for the lowest consumption groups, which are Rs 17,732-22,888, Rs 22,889-29,517, Rs 29,518-44,175 and above Rs 44,175; increased by 0.13 percent, 0.15 percent, 0.18 and 0.19 percent, respectively.

Nineteen (37.25%) of the fifty-one commodities had price increases over the week, eight (15.69%) had price decreases, and twenty-four (47.06%) had unchanged pricing.

On a weekly basis, the following commodities saw significant price decreases: tomatoes (9.19%), onions (2.14%), LPG (1.04%), bananas (0.53%), wheat flour (0.35%), potatoes (0.17%), pulse masoor (0.16%), and bread (0.05%).

Chicken (4.80%), garlic (2.01%), pulse gramme (1.87%), eggs (1.71%), beef (0.93%), gur (0.89%), pulse moong (0.84%), fresh milk (0.45%), firewood (0.23%), and cigarettes (0.12%) were among the items whose average prices increased significantly week over week.

The commodities that saw a year-over-year decline were: wheat flour (31.75%); cooking oil (13.44%); vegetable ghee 2.5 kg (10.42%); vegetable ghee 1 kg (9.85%); mustard oil (8.33%); eggs (5.82%); rice basmati broken (4.15%); and tea package (2.52%).

Gas prices for Q1 (570.00%), onions (96.01%), pulse gramme (40.39%), powered milk (39.11%), garlic (34.61%), pulse moong (29.77%), men’s sandals (25.01%), beef (23.52%), salt powder (23.28%), pulse mash (22.50%), and energy saver (17.96%) were among the commodities whose average prices increased year over year.

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Business

The price of gold has drastically dropped in Pakistan.

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2 days ago

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As per the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the cost of 24-karat gold per tola decreased by Rs 2,300, standing at Rs 250,500.

A kilogramme of 24-karat gold costing Rs1,972 less at the local market, making it worth Rs2114,763. Ten grammes of 22-karat gold had a price decrease to Rs196,866 as well.

After losing a significant $43 during the day, the rate per ounce of gold on the international market also decreased. It currently stands at $2,370.

On Thursday, the price of 24-karat silver also experienced a decline, falling by Rs60 to settle at Rs2,860 petal.

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