IMF says bailout program to get Pakistan out of boom and bust cycle

In this file photo, the International Monetary Fund (IMF) headquarters building is seen ahead of the IMF/World Bank spring meetings in Washington, US, April 8, 2019. (REUTERS)
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Updated 24 December 2019

IMF says bailout program to get Pakistan out of boom and bust cycle

  • Pakistan met 6 performance criteria, missed 5 indicative targets — IMF report
  • Slow growth rate may spark agitation in the country, analysts

KARACHI: International Monetary Fund IMF on Tuesday said with the achievements of all the performance criteria set for the first quarter the fund’s bailout program now moves to the structural reforms to get the country out of boom and bust cycle.
“We see that the authorities remain strongly committed to all the objectives of the program. We are now at the stage in the program where we move to the area of structural reforms. These are really important to build an institutional framework for the country so that there is no repetition of the boom bust cycles of the past,” Ramirez Rigo, Mission Chief for Pakistan at International Monetary Fund, said in a conference call.
The IMF mission chief identified the three areas for continued progress that Pakistan needs to focus including the quality of the fiscal adjustment that will require continued work on the tax revenue side, energy sector reforms for more automaticity capacity implementation by legislation for National Electric Power Regulatory Authority (NEPRA), and the independence of central bank.
The fund on Monday released report of the first review of the bailout program under which it agreed to extend $6 billion to Pakistan. The IMF has documented progressed made by the authorities and revised targets including the revenue collection target for current fiscal year.
Islamabad had targeted Rs 5.5 trillion tax collection for the current fiscal year FY20 through Federal Board of Revenue FBR but the fund projects agency’s tax collection would be Rs 5.238 trillion, showing a reduction of Rs 265 billion.
The report highlights that the country has met around 6 performance criteria while two are continuous and the Islamabad has missed 5 indicative targets that include cumulative floor on targeted cash transfers spending Benazir Income Support Program (BISP) as only Rs 5 billion were released against target of Rs 45 billion.
Real GDP growth is projected at 2.4% in FY 2020, but net exports are now expected to provide a larger contribution to growth mainly due to greater import compression. Growth is projected to strengthen to around 3% in FY 2021, and 4.5–5% over the medium-term.
Average CPI inflation is projected to decelerate slightly to 11.8 percent in FY 2020 as administrative and energy tariff adjustments are expected to offset the effects from weak domestic demand.
The Fund views that the Pakistan has made progress on Anti-Money Laundering and Combating the Financing of Terrorism AML/CFT deficiencies, although much remains to be done. With assistance from capacity development providers (including the IMF), the authorities are committed to completing the actions in the structural benchmark by end-June 2020.
Analysts say the funds appraisal is positive for Pakistan though some targets were missed. “We believe overall IMF’s staff appraisal is positive, though some indicative targets were missed. In fact, on some accounts (like Net international reserves (NIR), Net Domestic Assets (NDA),budget deficit), the authorities have achieved over performance,” Muhammad Sohail, senior financial analysts and CEO of Topline Securities, said.
Economists say the fund has identified the important area where if the government fails to focus the situation may lead to agitation. “The IMF has reported that the job creation is need which has been hampered by the slowing growth. The fund has expressed its concerns that it could lead to agitation as you already see due to inflation. The solution they have provided is that they have suggested to increase the allocation for development spending to create more jobs,” Dr. Vaqar Ahmed, Joint Executive Director of Sustainable Development Policy Institute (SDPI), told Arab News.
The IMF will hold the next review of the bailout program from March 6, 2020 for the disbursement of another $452.4 million tranche.


'No food left in the sea': Pakistani fishermen fearful as Chinese trawlers dock at Karachi port 

Updated 19 October 2020

'No food left in the sea': Pakistani fishermen fearful as Chinese trawlers dock at Karachi port 

  • Fisherfolk forum says government plan to allow Chinese to carry out deep-sea fishing in territorial waters could render millions jobless 
  • Federal government says bottom trawling will not be allowed under new fishing policy

KARACHI: A pressure group that represents Pakistani fishermen has said a government plan to allow Chinese companies to carry out deep-sea fishing in the country’s territorial waters could threaten the survival of at least three million people who depend on the sea for livelihood.
Last month, 12 Chinese deep-sea trawlers docked at the port of Karachi, unleashing fear among local fishermen who say commercial fishing vessels and bottom-trawling would deplete fish stocks in the exclusive federal sea zones off the Sindh and Balochistan provinces. 
Bottom trawling - dragging nets across the sea floor to scoop up fish - stirs up the sediment lying on the seabed, displaces or harms some marine species, causes pollutants to mix into plankton and move into the food chain and creates harmful algae blooms or oxygen-deficient dead zones.
The coastal line of Sindh and Balochistan is 1,050 km long, Mohammad Ali Shah, Chairman Pakistan Fisherfolk Forum, told Arab News last week, saying around three million fishermen relied on the sea to survive. 
A new fishing policy is expected but yet to be revealed by the government, he said. 
“The deep-sea trawler policy has not yet been approved but before that they [China] have brought these trawlers,” Shah said, calling the arrival of the Chinese vessels at Karachi port last month ‘illegal.’ 

In this undated photo, fishing vessels of Fujian Fishery Company move from the Gwadar port towards Karachi, Pakistan (Photo courtesy: Fishermen Cooperatives Society)

In 2018, the government enacted a deep-sea fishing licensing policy that both fishermen's representative bodies and provincial government bodies opposed, calling it a constitutional violation and an encroachment on the livelihoods of fishermen in the coastal provinces.
Fears about foreign fishing companies eating up local communities are not new.
For years, fishermen in the southwestern city of Gwadar in Balochistan province - a flagship of the $60 billion China-Pakistan Economic Corridor - have protested against foreign trawlers. 
Tensions first began to mount when the Fisheries Department disclosed its plan to issue licenses to various foreign fishing vessels to operate in an exclusive economic zone in 2016.
But last week, the federal minister for maritime affairs, Ali Haider Zaidi, told Arab News the country’s new deep-sea fishing policy would not allow Chinese trawlers to engage in unregulated deep-sea fishing. Bottom trawling, he said, would be banned under the new policy.
“Importing boats is not illegal,” he said. “How you use them has to be regulated.”
Pakistan divides its sea into three zones, where zone-3 (from 20 to 200 nautical miles) is controlled by the federal government. Up to 12 nautical miles (zone-1) is the domain of the provinces Sindh and Balochistan and between 12 to 20 nautical miles the sea is declared a buffer zone. 

Fishermen remove fish from a net at the Clifton beach in Pakistan's port city of Karachi on Oct. 6, 2020. (AFP/File)

Local fishermen are not allowed to fish in zone-3 and foreign fishing vessels are not permitted to fish in the other two zones under the existing policy.
The Fishermen's Cooperative Society (FCS), which issued the permit to the Chinese trawlers, said the Chinese fishing vessels would not use the destructive bottom trawling method and instead help ‘upgrade’ Pakistan’s fishing industry and export.
Official figures put the annual value of Pakistan’s fish exports at roughly $450 million.
“Bringing Chinese trawlers for deep sea fishing is in line with the government’s deep-sea fishing policy and aimed at upgrading and modernizing fishing, besides providing job opportunities to local fishermen,” Abdul Berr, Chairman of the Fishermen's Cooperative Society, told Arab News.
“Around 3,500 fishermen will get employment opportunities with the arrival of the world’s latest fishing boats and modern small boats,” Berr said. 
He added: “First, 70 percent of the staff at trawlers and processing facilities will be local. There will be no fishing in provincial territorial waters. The trawlers will bring all their catch to Karachi where it will be processed in factories and then exported.”
Small local fishermen would receive modern fiber boats on ‘easy instalments,’ Berr said, a step towards replacing their obsolete boats.
But Sindh’s minister for livestock and fisheries, Abdul Bari Pitafi, said the mega fishing ships would wipe out sea-life, even if they were only operating in the federal government’s zone-3.
“We will...also oppose its [trawlers’] operations in zone-3 because they will just wipe out sea-life including the fish’s seed,” Pitafi told Arab News.
In 2016, a survey carried out by the Food and Agriculture Organisation revealed that more than 72 percent of the fish stock in Pakistan’s coastal areas had already declined.
“One trawler does a catch that is equal to a catch by 100 of our fishing boats,” Younus Khaskheli, a fisherman, said. “And their fishing net is the most dangerous one, because it hunts thousands of tons of fish.” 
Tens of thousands of fishing boats are registered in Pakistan, he said, with fishermen from Sindh, Balochistan, Punjab, Khyber Pakhtunkhwa and even Bangladesh fishing in these waters.
“Our sea stock will end; the country will lose the income of billions and our fishermen will become jobless,” Khaskheli said. “There won’t be any food left in the sea.”