Pakistan opposition takes prime minister to task over IMF deal

Pakistan Finance Minister Asad Umar (R) meets with IMF Managing Director Christine Lagarde at the Bali Convention Centre during the 2018 IMF/World Bank annual meetings in Nusa Dua on the Indonesian resort island of Bali on Oct. 11, 2018. (AFP file photo)
Updated 16 October 2018
0

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.”


Russian port of Vladivostok prepares to host Kim Jong Un

Updated 1 min 30 sec ago
0

Russian port of Vladivostok prepares to host Kim Jong Un

  • Russian media were quick to report preparations were underway for the summit to take place in Vladivostok
  • Proximity is no doubt important for Kim, who is rumored to travel aboard his armored train

VLADIVOSTOK, Russia: North Korean leader Kim Jong Un is expected in Russia’s far-eastern port Vladivostok in the coming days, according to reports that have prompted excitement and concern among local residents.
After weeks of speculation, the Kremlin announced that Kim will visit Russia to hold his first talks with President Vladimir Putin in late April. It gave no details on a date or place, citing “security reasons.”
Russian media were quick to report preparations were underway for the summit to take place in Vladivostok, home to Moscow’s Pacific Fleet.
The port lies only about 130 kilometers (80 miles) from Russia’s short border with North Korea. This proximity is no doubt important for Kim, who is rumored to travel aboard his armored train.
The 35-year-old will be following in the footsteps of his father Kim Jong Il, who met the newly elected Putin in Vladivostok in 2002.
The far eastern city rarely sees major international events, and some locals are happy for the city to be in the spotlight.
“Any visit is good, whether it’s an enemy or a friend,” said Danil, a student at Vladivostok’s Far Eastern Federal University, billed by the media as a possible venue for the summit.
He welcomed the talks, saying “you can only make decisions through dialogue and communication.”
Nadezhda, a native of the city, said it will be a global event and “will be a boost for development in our city.”
Authorities this week were busy cleaning garbage near railways leading to the city, Russian media reported.
“The depressing view from the train window does not give a positive impression to guests of Vladivostok arriving by train,” an official from the local branch of Russian Railways told the Interfax news agency.
Nadezhda said she was “absolutely not afraid of (North Korea’s) nuclear program” and would like to see the country.
North Korea said this week it was testing nuclear weapons after a round of talks with the US ended in failure.
But Anna Marinina was less enthusiastic about the summit, and said that if Pyongyang did use its weapons, Vladivostok would be in the firing line.
“The people that panic the most about North Korea are safe on the other side of the ocean,” she said.
“If something were to happen, it would fall on us.”
Putin has long said he was ready to meet with Kim and is preparing to play a bigger role in nuclear negotiations with Moscow’s Cold War-era ally.
The last meeting between Russian and North Korean heads of state was in 2011, when Kim’s father traveled by train to Siberia, where he took a boat ride on Lake Baikal and held tightly guarded talks with then president Dmitry Medvedev.
There is a chance however that fresh talks will not take place at all, as Kim pulled out of 2015 celebrations in Moscow for the 70th anniversary of the end of World War II at the last minute.