If oil prices surge, Pakistan won’t meet IMF targets: experts

A security guard sits in front of a wall with signs and slogans at the operation building at the Pakistan Steel Mills (PSM) on the outskirts of Karachi Feb 8, 2016.—Reuters
Updated 18 September 2019

If oil prices surge, Pakistan won’t meet IMF targets: experts

  • The country's oil imports from Saudi constituted 26 % of the total import bill last fiscal year
  • Pakistan is struggling to meet stringent IMF reforms after signing a $6 billion bailout package this year

ISLAMABAD: Following Prime Minister Imran Khan’s statement on Tuesday that attacks on Saudi Arabia’s oil supply were a threat to the “global economy,” experts believe the government’s efforts to meet its fiscal deficit targets in line with International Monetary Fund (IMF) conditions could be reversed if oil prices increased following Saturday’s attack on two Saudi oil facilities.
“If oil prices surge, Pakistan won’t be able to meet fiscal deficit targets set by the IMF,” Khurram Hussain, economic expert and business editor at daily Dawn, told Arab News.
The pre-dawn attack claimed by Yemen’s Houthi rebels led to an almost 20% increase in global oil prices on Monday, with fears of a surging fiscal deficit in Pakistan where a majority of oil is imported from Saudi Arabia.
“Pakistan’s oil imports constituted 26 percent of the country’s total import bill of $54.8 billion during the last fiscal year,” Hussain said, and added that any escalation in Middle East tensions, would “definitely impact our economy.”
“This government took at least one year to arrest the fiscal deficit and it has yet to bring it to the level as agreed upon with the IMF, but this would be reversed with an increase in oil prices” he said.
On Tuesday however, global oil prices dropped more than 6% with reports of oil production likely to resume fully within weeks, sooner than initially thought.
Still, there are concerns that a brewing conflict with similar attacks in the region could seriously impact Pakistan’s ailing economy, which signed off on a $6 billion loan from the IMF earlier this year and carries stringent reform conditions.
On Monday, an eight-member IMF delegation arrived in Islamabad to review Pakistan’s economic progress two months after singing the deal with focus on the country’s failure to achieve the set revenue collection target.
A senior leader of the Pakistan Peoples Party (PPP), Naveed Chaudhry, said that the attack on Saudi oil facilities threatened the world’s economy and global peace, and a sporadic violation of the Kingdom’s territorial integrity could result in a “full-fledged conflict” in the region.
“The world powers should take it [the attack on Saudi oil facilities] very seriously and take cogent measures to avoid its recurrence,” he said.
The rebel Houthi group in Yemen claimed responsibility for Saturday’s horrific attack, which damaged the world’s biggest crude oil processing plant. On Monday, the Saudi-led coalition said that the attack on Saudi oil facilities was carried out with Iranian weapons, an allegation that Tehran has denied.
“This attack has grave implications for peace in the region, it endangers, at once, both the east and the west. Pakistan particularly, because of an already volatile neighborhood,” Palwasha Khan, deputy information secretary of the PPP, told Arab News.
“Moreover, the increase in oil prices will impact economies that are already struggling. Pakistan will have to be more vigilant to play its role to avoid the spread of conflict,” she added.
On Tuesday, in a telephone conversation between Prime Minister Khan and Saudi Crown Prince Muhammad Bin Salman, Khan strongly condemned the acts of “sabotage,” and reaffirmed Pakistan’s support to the sovereignty and territorial integrity of Saudi Arabia.
Foreign Minister Shah Mahmood Qureshi also announced in a statement that PM Khan would be visiting Saudi Arabia on September 19 to discuss ways forward.


Pakistan to be part of new Saudi foreign manpower program 

Updated 14 November 2019

Pakistan to be part of new Saudi foreign manpower program 

  • New skills-based system to be launched from next month
  • Will include India, Philippines, Sri Lanka, Indonesia, Egypt, Bangladesh, and Pakistan

ISLAMABAD: Starting next month, Saudi Arabia will introduce a new skilled foreign manpower program that will eventually include Pakistan, a senior official at the Saudi labor ministry said this week. 

Nayef Al-Omair, head of the vocational examination program at the Ministry of Labor, said on Tuesday in Riyadh that the ministry was categorizing the tasks and the structure of some professions for visa-issuing purposes.

Under the new policy, visas would be issued only after skill tests and the previous system would be gradually phased out. 

The new scheme would be optional for one year starting December 2019 after which it would become compulsory, Al-Omair said. The new program would first be applied to manpower recruited from India due to its large size in the Saudi market.

Eventually, the program will cover seven countries, including India, the Philippines, Sri Lanka, Indonesia, Egypt, Bangladesh, and Pakistan. Workers belonging to these states constitute 95 percent of professional manpower in the Kingdom’s local market.

Saudi Arabia is home to around 2.6 million Pakistani expats those have been a vital source of foreign remittances.

Last year the country received $21.8 billion in remittances out of which $5 billion were remitted by Pakistani nationals working in Kingdom.

According to the Pakistani ministry of finance, there was a major decline in manpower export to Saudi Arabia where only 100,910 emigrants proceeded for employment in 2018 as compared to 2017, a drop of 42,453 emigrants.

However, Sayed Zulfikar Bukhari, special assistant to the Pakistani prime minister on overseas Pakistanis, said in an interview earlier this month that Saudi Arabia had agreed to increase the share of the Pakistani labor force in the multi-billion dollar New Taif City development.

Pakistan and Saudi Arabia have formed working groups to develop procedures for this transfer of manpower. Pakistani groups will visit the Kingdom in the coming months to finalize arrangements.