Pakistan’s ‘ambitious’ budget strengthens prospects for IMF deal — Fitch

Pakistan’s ‘ambitious’ budget strengthens prospects for IMF deal — Fitch
A salesman uses his mobile phone as he sits under a television screen displaying the live broadcast of Pakistan Finance Minister Muhammad Aurangzeb presenting the 2024/25 budget, at an electronics market in Karachi, Pakistan June 12, 2024. (REUTERS)
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Updated 19 June 2024
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Pakistan’s ‘ambitious’ budget strengthens prospects for IMF deal — Fitch

Pakistan’s ‘ambitious’ budget strengthens prospects for IMF deal — Fitch
  • Pakistan unveiled tax-heavy $67.76 billion federal budget last Wednesday 
  • American ratings agency Fitch says inflation, interest costs to decline next year 

KARACHI: Pakistan’s “ambitious” FY25 federal budget strengthens its prospects of securing a financial bailout package from the International Monetary Fund (IMF), American credit rating agency Fitch said on Tuesday, noting that it would narrow the country’s fiscal deficit but will cost its growth. 

Pakistan unveiled the much-awaited Rs18.877 trillion ($67.76 billion) federal budget for the fiscal year 2024-25 last Wednesday. The tax-heavy budget is expected to play a pivotal role in Islamabad’s negotiations with the IMF as the South Asian country desperately tries to avert a macroeconomic crisis. 

While inflation has dropped down to a 30-month low of 11.8 percent, Pakistan still needs the IMF’s financial assistance package to shore its foreign reserves and stabilize its weak currency. 

“Pakistan’s ambitious FY25 budget strengthens prospects for an IMF deal,” Fitch said in a press release. “It is uncertain whether fiscal targets will be hit, but even assuming only partial implementation of the budget, we forecast the fiscal deficit will narrow.”

Fitch said narrowing the fiscal deficit would reduce external pressures on Pakistan, though at a cost to the country’s growth. The rating agency said that as per its forecast, based on partial implementation of the budget, Pakistan will project a primary surplus of 0.8 percent, on shortfalls in revenue generation and an overshoot in current spending, partly offset by under-execution in development spending. 

“We believe tight policy settings may depress growth more than the government expects, and have reduced our growth forecast to 3.0 percent for FY25, from 3.5 percent, despite some improvements in short-term indicators of economic activity,” Fitch said. 

The American rating agency noted that Pakistan’s government debt looks set to decline to 68 percent of GDP by FYE24 due to high inflation and deflator effects, offsetting soaring domestic interest costs.

Fitch said it expects inflation and interest costs to decline, with economic growth and primary surpluses driving government debt/GDP gradually lower. 

It noted that Pakistan’s central bank cut policy rates for the first time in five years on June 10 by 150 points to 20.5 percent.

“We now forecast FY25 inflation at 12 percent, and the FYE25 policy rate at 16 percent,” it added. 

Fitch described external liquidity and funding as still Pakistan’s key credit challenges, despite stable debt dynamics. It said that while Pakistan may secure a new IMF deal, sustaining the tight policy settings necessary to keep external financing needs in check and to maintain compliance with a new EFF could become “increasingly challenging.”

Fitch noted that Pakistan’s external position has improved since February, adding that exchange rate reforms have attracted remittance inflows back to the official banking system while “strong” agricultural exports have also helped. 

“However, Pakistan’s projected funding needs still exceed reserves, at about USD20 billion per year in FY24–FY25, including maturing bilateral debt that we expect will continue to be rolled over,” the rating agency said. 

“This leaves Pakistan exposed to external funding conditions and policy missteps. Pakistan’s ‘CCC’ rating, affirmed in December 2023, reflects high external funding risks amid high medium-term financing requirements.”


Kashmiris mark 'Accession to Pakistan Day' amid renewed calls for right to self-determination

Kashmiris mark 'Accession to Pakistan Day' amid renewed calls for right to self-determination
Updated 18 sec ago
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Kashmiris mark 'Accession to Pakistan Day' amid renewed calls for right to self-determination

Kashmiris mark 'Accession to Pakistan Day' amid renewed calls for right to self-determination
  • Muslim-majority Himalayan region has been a flashpoint between arch-rivals Pakistan and India since independence in 1947
  • Both countries rule parts of the Himalayan territory but claim it in full and have fought two out of three wars over the disputed region

ISLAMABAD: Kashmiris in parts of the world are observing the "Accession to Pakistan Day" today, Friday, with a renewed pledge to continue struggle for their right to self-determination, Pakistani state media reported.

The Muslim-majority Himalayan region of Kashmir has been divided between Pakistan and India since their independence from British rule in 1947. Both countries rule parts of the Himalayan territory but claim it in full and have fought two out of three wars over the disputed region.

On July 19, 1947, Kashmiri representatives had unanimously passed the resolution of Kashmir’s Accession to Pakistan during a meeting of the All Jammu and Kashmir Muslim Conference in Srinagar. The resolution called for the accession in view of aspirations of Kashmir people and their religious, geographical, cultural and economic proximity to Pakistan.

The Accession to Pakistan Day is observed by Kashmiris every year to renew their pledge to complete the merger. The Azad Jammu Kashmir (AJK) government has announced a public holiday on the occasion to facilitate the masses to participate in the special programs.

"Wide-scale programs have been chalked out to observe the day throughout Azad Jammu Kashmir (AJK)," Pakistani state-run APP news agency reported.

Pakistan calls for the right of self-determination for the people of Indian-administered Kashmir and urged New Delhi to hold a plebiscite in line with the resolutions of the UN Security Council.

The day is being observed at a time when the part of the territory administered by New Delhi has been witnessing an uptick in violence.

Four Indian soldiers were killed and at least six others were wounded in gun battles with militants in Indian-administered Kashmir, a senior police officer said this month. Prior to that, two soldiers and six suspected militants were killed in two separate gun battles in the Kulgam district, police said.

Separatist groups have waged an insurgency since 1989, demanding independence for the territory or its merger with Pakistan. The conflict has killed tens of thousands of civilians, soldiers and rebels. India accuses Pakistan of supporting the separatists, a charge denied by Islamabad.


Canadian team certifies aviation security protocols at Karachi airport — Pakistan civil aviation

Canadian team certifies aviation security protocols at Karachi airport — Pakistan civil aviation
Updated 30 min 26 sec ago
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Canadian team certifies aviation security protocols at Karachi airport — Pakistan civil aviation

Canadian team certifies aviation security protocols at Karachi airport — Pakistan civil aviation
  • This was the fifth international evaluation of Pakistan’s aviation security system in recent months
  • Pakistan’s aviation protocols have faced significant scrutiny since a 2020 fake pilot license scandal

KARACHI: A two-member Canadian team on Thursday certified aviation security protocols at Pakistan's largest airport in the southern port city of Karachi, the Pakistan Civil Aviation Authority (PCAA) said.

The Canadian team comprising inspectors Barbara Durette and Abdel Tahir, from Transport Canada — a Canadian government entity responsible for policies and services of road, rail, marine and air transportation — began its aviation security assessment at Jinnah International Airport earlier this week under the supervision of Pakistan's Aviation Security Director Air Commodore (retired) Shahid Qadir.

The team evaluated various security measures, including passenger and baggage screening, perimeter protection, cargo and catering security, as well as security protocols for direct flights to Canada, according to the PCAA. It also monitored security measures for Pakistan International Airlines (PIA) flights to Toronto, assessing access control, aircraft protection, security searches and related procedures.

"The [Canadian] team expressed gratitude to PCAA for hosting them and commended the airport's security protocols for aligning with international standards and best practices," the PCAA said in a statement on Thursday.

This was the 5th international evaluation of Pakistan’s aviation security system in recent months. The PCAA earlier said it had successfully passed all previous inspections, including an inaugural assessment by the United Arab Emirates General Civil Aviation Authority (UAE-GCAA) of Islamabad and Karachi airports that concluded on July 5.

Pakistan’s aviation protocols have faced significant scrutiny since 2020 following a scandal wherein approximately 262 out of 860 active pilots were said to have obtained fake licenses, leading to the grounding of around 150 pilots from the PIA and other carriers.

This revelation came in the wake of the tragic crash of PIA flight 8303 in Karachi, resulting in the suspension of PIA’s operations in the European Union (EU) and other regions and prompting calls for regulatory reforms to improve safety standards and transparency.


Pakistani religious party’s pro-Palestine sit-in enters seventh day as talks continue with government

Pakistani religious party’s pro-Palestine sit-in enters seventh day as talks continue with government
Updated 56 min 10 sec ago
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Pakistani religious party’s pro-Palestine sit-in enters seventh day as talks continue with government

Pakistani religious party’s pro-Palestine sit-in enters seventh day as talks continue with government
  • Thousands of Tehreek-e-Labbaik Pakistan supporters have camped at Faizabad Interchange connecting Islamabad and Rawalpindi
  • TLP supporters demand the Pakistani government officially boycott Israeli products, send aid to Gaza and declare Israeli PM a ‘terrorist’

ISLAMABAD: A pro-Palestine sit-in by Tehreek-e-Labbaik Pakistan (TLP) religious party entered its seventh day on Friday, with the party saying that it was in talks with the government regarding its demands.

The TLP has asked the government to officially boycott Israeli products and send food and medical aid to Palestinians suffering Israel’s relentless military campaign in Gaza. They have also called on Pakistan’s government to declare Israeli Prime Minister Benjamin Netanyahu a “terrorist.”

The demands were laid after TLP supporters, led by its young leader Saad Rizvi, rallied from Liaquat Bagh in Rawalpindi to Faizabad Interchange that connects it with Islamabad last Saturday before deciding to set up a protest camp there. Known for its hard-line stance on blasphemy laws, the party has previously staged sit-ins at the key interchange, significantly disrupting traffic.

The TLP said several of its members have been part of negotiations with a government team, which comprises Information Minister Ataullah Tarar, Adviser to PM on Political Affairs Rana Sanaullah, Islamabad inspector-general and deputy inspector-general.

“TLP negotiations with the federal government are still ongoing,” the party said in a statement on Thursday night.

Israel’s war on Gaza has so far claimed at least 39,000 lives, many of them women and children. The casualties have sparked anger and protests worldwide, including in Pakistan, where the country’s civil society and political factions have consistently led pro-Palestine rallies.

Pakistan does not recognize the state of Israel and calls for an independent Palestinian state based on “internationally agreed parameters.” Since the beginning of Israel’s war in October 2023, the South Asian country has dispatched several aid consignments, repeatedly raised the issue at various forums and demanded the world stop Israeli military actions in the Palestinian territory.

The large number of protesters at the Faizabad Interchange have effectively blocked the Islamabad Expressway, causing difficulty for commuters and creating gridlocks in the area.

Earlier, Sajjad Saifi, a member of the TLP’s consultative council, told Arab News that over 50,000 of their supporters, led by party chief Rizvi, were camped at the Faizabad Interchange.

“We will continue our dharna [sit-in] till all three of our demands are fully met,” he said.

Asked why the party decided to stage a sit-in protest nine months into the war, Saifi said the TLP had mobilized the public since October last year through rallies across Pakistan.

“Tens of thousands of our supporters have been waiting for the leadership’s call to join the dharna in Islamabad,” he said. “We are doing it for a cause, for the people of Palestine. We don’t have any political agenda to achieve through this dharna.”

Asked about the protest and the inconvenience being caused to the public, Information Minister Tarar said on Thursday: “Don’t worry, we are on it.”


Pakistan’s population expected to double by 2025, says census data

Pakistan’s population expected to double by 2025, says census data
Updated 19 July 2024
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Pakistan’s population expected to double by 2025, says census data

Pakistan’s population expected to double by 2025, says census data
  • Pakistan fifth-largest country in the world with population of 241.9 million people, says census data
  • Pakistan records highest population growth rate in South Asia at 2.55 percent, according to census

ISLAMABAD: Pakistan has recorded the highest population growth rate in the region, the detailed results of last year’s population census revealed on Thursday, warning that the country’s population is expected to double by 2025. 

The Pakistan Bureau of Statistics (PBS) launched the detailed results of the seventh Population and Housing Census 2023 on Thursday. The report provides comprehensive data crucial for the development of urban and rural areas, and effective disaster response.

Addressing a ceremony to launch the report in Islamabad, Planning Minister Ahsan Iqbal highlighted that Pakistan was the first country in South Asia to conduct a digital census last year.

As per the census results, Pakistan is now the world’s fifth most populous country, housing 241.49 million people. Of these, 51.48 percent are males and 48.51 percent are females

“The census data shows that the current population growth rate is 2.55 percent which is the highest in the region and if it continues, the country’s population will be doubled by 2050,” state broadcaster Radio Pakistan said. 

The report said the average number of family members in Pakistan is 6.30 while the dominant religion in the country is Islam, representing 96 percent of the population.

The age-wise distribution of the population shows 36.47 million people are aged under five years, 97.53 million under 15 years, 62.58 million between 15 to 29 while 190.27 million are aged below 40 years. 

“Literacy indicators show 61 percent of Pakistan’s population aged ten years and above is literate,” Radio Pakistan said. 

Speaking at the occasion, Iqbal acknowledged that fellow South Asian countries India and Bangladesh had outperformed Pakistan in several sectors. 

“We are not behind them in intelligence and ability,” he said. “But if we do not open our eyes, we will not be even counted in the global competition.”

The minister stressed the need for peace and political stability, highlighting the importance of continuity of policies for at least ten years. 

“If we do not keep pace with the world, we will become irrelevant,” he warned.


PM Sharif directs Pakistan’s tax authority to bring ‘wealthy’ citizens into tax net

PM Sharif directs Pakistan’s tax authority to bring ‘wealthy’ citizens into tax net
Updated 18 July 2024
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PM Sharif directs Pakistan’s tax authority to bring ‘wealthy’ citizens into tax net

PM Sharif directs Pakistan’s tax authority to bring ‘wealthy’ citizens into tax net
  • Sharif chairs important meeting on reforms in Pakistan’s tax agency, Federal Board of Revenue
  • Pakistani PM says FBR reforms to enhance country’s revenue, says tax refund system will be improved

ISLAMABAD: Prime Minister Shehbaz Sharif on Thursday tasked the Federal Board of Revenue (FBR) to increase its revenues by speeding up reforms, bringing “wealthy” people into the tax net and avoiding putting additional burden on the poor, as Islamabad seeks to enhance its revenues and avoid putting pressure on the poor. 
Pakistan last month passed a tax-heavy budget with an ambitious tax revenue target of 13 trillion rupees ($47 billion) for fiscal year 2025, a near 40 percent jump from the last fiscal year. The budget was instrumental in convincing the International Monetary Fund (IMF) to enter into a $7 billion loan program with Pakistan. 
Pakistan’s opposition parties and government allies have criticized the tax-heavy budget, accusing authorities of overburdening the poor with taxes. PM Sharif’s government has vowed to carry out gradual fiscal consolidation, broaden Pakistan’s existing tax base and improve tax administration and debt sustainability while protecting the vulnerable.
The Pakistani prime minister chaired a meeting related to the FBR’s reforms and digitization in Islamabad on Thursday where he was informed that 4.9 million people who can afford taxes have been identified through modern technology. 
“The prime minister instructed to bring the wealthy and well-off people among these 4.9 million individuals to the tax net on a preferential basis and no additional burden should be put on the poor,” state broadcaster Radio Pakistan said. 
During the meeting, the Pakistani prime minister noted that the FBR had unearthed a fraud of Rs800 billion in tax refunds during the last four months, saying it reflected “positive results” by the authority. 
Sharif said the country’s tax refund system will be further improved, adding that reforms in the FBR can enhance the country’s revenue. 
“The Prime Minister said that the unnecessary delay in implementing several projects regarding the reforms in FBR is regrettable,” Radio Pakistan said. 
Sharif was told that the FBR’s trader-friendly mobile application has registered 150,000 retailers since April 1, 2024. He urged authorities to continue consultations with retailers to make this system more effective.