EU minister ‘nervous’ time running out for Brexit deal

Britain's newly appointed chief Brexit negotiator Dominic Raab, left, and EU's chief Brexit negotiator Michel Barnier speak to the media ahead of a meeting at the European Commission in Brussels, Thursday, July 19, 2018. (AP)
Updated 20 July 2018
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EU minister ‘nervous’ time running out for Brexit deal

BRUSSELS: European Union ministers met Friday to discuss gaps with Britain in the Brexit negotiations as Germany’s envoy admitted he was nervous time was running out for a deal.
EU Brexit negotiator Michel Barnier was due to brief the ministers on his talks with his new British counterpart Dominic Raab, after their first meeting on Thursday.
Raab took up the job after a rebellion against Prime Minister Theresa May’s Brexit blueprint, with the discord in London and slow pace of talks worrying many in Europe.
“Time is running out. The clock is ticking. That is why I’m a little bit nervous,” Germany’s European affairs minister Michael Roth said on arrival for the Brussels meeting.
Britain is set to leave the bloc on March 30, but the two sides want to strike an agreement by late October in order to give parliaments enough time to endorse a deal.
The European Commission, the EU’s executive arm, published a document on Thursday urging the remaining 27 member states and businesses to “step up preparations” for all outcomes, including the lack of deal.
It warned of disruptions, including to business supply chains.
Britons voted to leave the 28-nation bloc in June 2016, but negotiations were only launched a year later and have bogged down frequently since then.
Raab said in Brussels on Thursday he looked forward to “intensifying, heating up” the Brexit negotiations.
May’s blueprint would see Britain ask the EU for a free trade area for goods through a “facilitated customs arrangement” alongside a “common rulebook.”
EU ministers welcomed some but not all parts of the blueprint.
They listed as a top concern the lack of progress on the future of the border between EU member Ireland and the British province of Northern Ireland.
Under its guidelines, the EU stipulates there should be no “hard border,” such as customs checks, in order to preserve the gains of the Irish peace process.
“We have no solution yet” on Ireland, Luxembourg’s minister Jean Asselborn told reporters.
“And if we can’t find a solution, I don’t know how to bring Brexit to the goal,” Asselborn said.
Standing with Raab on Thursday, Barnier said there were only 13 months to finalize a withdrawal agreement.
“It is a matter of urgency to agree on a legally operative backstop for Ireland and northern Ireland. We need an all weather insurance policy,” he said.


Pakistan opposition takes prime minister to task over IMF deal

Updated 5 min 42 sec ago
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Pakistan opposition takes prime minister to task over IMF deal

  • The daily dithering has paralyzed the economy and precipitously devalued the rupee, says Sen. Sherry Rehman
  • Govt has instilled a sense of 'comfort and confidence' in the markets, says official spokesman

KARACHI, Pakistan: Questioning the government’s lack of perspicacity to avoid “painful economic decisions,” Pakistan’s opposition said on Monday that it was shocked at Prime Minister Imran Khan’s inability to avert a crisis, if any.  

“We have serious questions about this kind of strategy, where just the daily dithering has not just paralyzed the economy and precipitously devalued the rupee, but hugely compounded the crisis in the country’s public finances,” Sen. Sherry Rehman, former leader of the opposition in the Senate, told Arab News.

The reaction follows Finance Minister Asad Umar’s comments on Saturday wherein he said that “the government will have to take tough decisions that would be painful for people,” signaling a possible hike in utility prices, following Pakistan’s decision to approach the International Monetary Fund (IMF) for a bailout program. 

Opposing the decision, Rehman said: “We are shocked at the lack of a plan for a crisis we all saw looming. Now the slash and burn of utility prices is going to cause severe economic hardship. It’s one thing to have promised a completely different Pakistan, but another to not present alternative plans at least to manage the inflationary impact…on the most socially vulnerable sectors of Pakistan.”

Defending the move, Dr. Farrukh Saleem, government’s spokesman on economy and energy issues, said that the government has instilled a sense of “comfort and confidence” in the markets, not only within Pakistan but outside the country too, which was not possible without approaching the IMF for financial help. “IMF gives one prescription to those who avail its program, which includes an emphasis on increasing exports and curtailing imports and an end of subsidies,” he said.  Adding that the country’s “circular debts have gone up to 1.3 trillion rupees” — inherited from previous governments in the past 10 years — Dr. Saleem said that it was up to Imran Khan’s administration to do away with the liabilities as otherwise “the burden would eventually be shifted to consumers.”

“The government did not raise the gas rates for the last four years despite repeated requests from the concerned departments. Someone will have to swallow bitter pills of last 10 years,” he said. 

The stock market was jubilant following Pakistan’s decision to approach the IMF. However, investors’ newly acquired confidence was quickly replaced with concern as details emerged about the terms and conditions attached with the bailout program, resulting in a 750-point plunge in the benchmark KSE 100 index on Monday.

“Panic selling continued in the quarter earnings season amid a major fall in global equities and investor concerns for likely surge in interest rates and rupee depreciation with the potential IMF loans bailout package,” said Ahsan Mehanti, chief executive of Arif Habib Group. 

Pakistan has devalued its currency for the fifth time by 27 percent since December 2017, with analysts and stakeholders expecting another markdown as the IMF deal gathers steam.

“Its first impact would be in the currency market and the currency would be further devalued. With the devaluation of the Pakistani rupee against the US dollar, the prices of almost everything would start increasing especially those of imported goods,” Zafar Paracha, general secretary of Exchange Companies Association of Pakistan, told Arab News.  Another community that is expected to bear the brunt of the decision is the country’s industrialists and traders who said they could foresee an impact on the price of inputs and raw materials.

Junaid Esmail Makda, president of the Karachi Chamber of Commerce and Industry, said: “The finance minister should take the country’s business community into confidence before taking the ‘painful decision’ because if the government comes up with harsh decision without taking us into the loop it would have a disastrous impact.” 

He further warned that such a decision would be unfavorable not just “for foreign investors but for local investors too” who might move their assets to other countries.  

However, Dr. Saleem continued to remain optimistic.

Reiterating the fact that the steps taken by the government to mitigate the impact of the IMF’s conditions would yield results, he said: “The government is working to increase exports to stabilize foreign exchange and starting a housing project that would spur economic activities in the backdrop of a growing demand of allied industries.”

 

FASTFACTS: 

The daily dithering has paralyzed the economy and precipitously devalued the rupee, says Sen. Sherry Rehman.

 

Govt has instilled a sense of ‘comfort and confidence’ in the markets, says official spokesman.


Questioning the government’s lack of perspicacity to avoid “painful economic decisions,” Pakistan’s opposition said on Monday that it was shocked at Prime Minister Imran Khan’s inability to avert a crisis, if any.    

“We have serious questions about this kind of strategy, where just the daily dithering has not just paralyzed the economy and precipitously devalued the rupee, but hugely compounded the crisis in the country’s public finances,” Sen. Sherry Rehman, former leader of the opposition in the Senate, told Arab News.

The reaction follows Finance Minister Asad Umar's comments on Saturday wherein he said that “the government will have to take tough decisions that would be painful for people,” signaling a possible hike in utility prices, following Pakistan’s decision to approach the International Monetary Fund (IMF) for a bailout program. 

Opposing the decision, Rehman said: “We are shocked at the lack of a plan for a crisis we all saw looming. Now the slash and burn of utility prices is going to cause severe economic hardship. It’s one thing to have promised a completely different Pakistan, but another to not present alternative plans at least to manage the inflationary impact…on the most socially vulnerable sectors of Pakistan.”


Defending the move, Dr. Farrukh Saleem, government’s spokesman on economy and energy issues, said that the government has instilled a sense of "comfort and confidence" in the markets, not only within Pakistan but outside the country too, which was not possible without approaching the IMF for financial help. “IMF gives one prescription to those who avail its program, which includes an emphasis on increasing exports and curtailing imports and an end of subsidies,” he said. 

Adding that the country’s “circular debts have gone up to 1.3 trillion rupees” — inherited from previous governments in the past 10 years — Dr. Saleem said that it was up to Imran Khan’s administration to do away with the liabilities as otherwise “the burden would eventually be shifted to consumers.”

“The government did not raise the gas rates for the last four years despite repeated requests from the concerned departments. Someone will have to swallow bitter pills of last 10 years,” he said. 

The stock market went jubilant following Pakistan’s decision to approach the IMF. However, investor’s newly-acquired confidence was quickly replaced with concern as details emerged about the terms and conditions attached with the bailout program, resulting in a 750-point plunge in the benchmark KSE 100 index on Monday.

“Panic selling continued in the quarter earnings season amid major fall in global equities and investor concerns for likely surge in interest rates and rupee depreciation with potential IMF loans bailout package,” said Ahsan Mehanti, chief executive of Arif Habib Group. 

Pakistan has devalued its currency for the fifth time by 27 percent since December 2017, with analysts and stakeholders expecting another markdown as the IMF deal gathers steam.

“Its first impact would be in the currency market and the currency would be further devalued. With the devaluation of the Pakistani rupee against the US dollar, the prices of almost everything would start increasing especially those of imported goods,” Zafar Paracha, general secretary of Exchange Companies Association of Pakistan, told Arab News. 

Another community that is expected to bear the brunt of the decision is the country’s industrialists and traders who said they could foresee an impact on the price of inputs and raw materials.


Junaid Esmail Makda, president of the Karachi Chamber of Commerce and Industry, said: “The finance minister should take the country’s business community into confidence before taking the ‘painful decision’ because if the government comes up with harsh decision without taking us into the loop it would have a disastrous impact.” 

He further warned that such a decision would be unfavorable not just “for foreign investors but for local investors too” who might move their assets to other countries.    

However, Dr. Saleem continued to remain optimistic.

Reiterating the fact that the steps taken by the government to mitigate the impact of the IMF’s conditions would yield results, he said: “The government is working to increase exports to stabilize foreign exchange and starting a housing project that would spur economic activities in the backdrop of a growing demand of allied industries.”