Pakistan Affairs

Tag: IMF and Pakistan

  • Pakistan hopeful of securing IMF financing ‘soon’, says PM Shehbaz

    [

    Prime Minister Shehbaz Sharif said on Wednesday Pakistan hopes to secure financing from the International Monetary Fund (IMF) “soon”.

    While chairing a cabinet meeting, he said some measures are pending for the deal to be approved.

    The government is also focused on making austerity a top priority for the economic crisis-hit country, PM Shehbaz added.

    Finance (Supplementary) Bill, 2023 adopted: NA acquiesces to IMF tax stipulation

    “This is a critical time for Pakistan and we all will need to work to improve the state of the economy,” he said. “The ministers, advisers, special assistants and government officials will take a lead in following cost-cutting measures.”

    On Tuesday, Pakistan’s Finance Secretary Hamed Yaqoob Sheikh stated that the country “expects to conclude talks with the IMF as soon as this week”.

    An IMF mission spent more than a week in Islamabad earlier this month to discuss a policy framework to allow the release of more than $1 billion in funding from a stalled $6.5 billion bailout package, originally approved in 2019.

    However, the mission left without a conclusion.

    “The consultations with the IMF are in the final stages. We expect to conclude the consultations soon, even within the week,” Hamed told Reuters.

    The National Assembly on Monday passed the Finance (Supplementary) Bill, 2023 aimed to amend certain laws relating to taxes and duties. Measures contained in the bill are crucial to unlock next tranche of IMF loan.

    Minister for Finance Ishaq Dar introduced the bill in the House on February 15, and the formal debate started on it after moving a motion by Minister for Commerce Syed Naveed Qamar on February 17, 2023.

    In his concluding speech, the Minister for Finance and Revenue Senator Muhammad Ishaq Dar said that this bill proposed to impose new taxes of Rs170 billion to minimise the fiscal deficit.



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  • Dar informs US envoy of measures taken to meet financial obligations

    [

    Federal Minister for Finance and Revenue Mohammad Ishaq Dar on Wednesday shared with Donald Blome, the US Ambassador to Pakistan, the government’s measures taken to meet its financial obligations, according to a statement issued by the Finance Division.

    During the meeting, the finance minister shared economic policies and priorities of the government to address the challenging economic environment. Dar told Blome that the present government remains concerned about the well-being of the masses therefore a number of measures are being undertaken in this regard.

    Dar informed the US envoy about the government’s plans related to revenues and expenditures for meeting its national as well as international financial obligations.

    He shared various economic avenues in which both countries can further deepen their economic relations.

    The two sides exchanged views on matters of common interest and enhance the existing bilateral relations between both countries.

    Blome expressed confidence on the policies and programmes of the government for economic sustainability and socio-economic uplift of the masses. He extended his support to further promote bilateral economic, investment and trade relations between both countries, added the Finance Division statement.

    Earlier during the day, Dar informed that the Board of the China Development Bank (CDB) has approved the disbursement of $700 million for Pakistan.

    “Formalities completed and Board of China Development Bank has approved the facility of $700 million for Pakistan,” Dar announced in a post on social media platform.

    “This amount is expected to be received this week by the State Bank of Pakistan which will shore up its forex reserves!” added Dar.

    The development comes as foreign exchange reserves held by the SBP increased $276 million to $3.19 billion, data released last week showed. Total liquid foreign reserves held by the country stood at $8.7 billion. Net foreign reserves held by commercial banks stood at $5.51 billion.

    Pakistan remains in talks with the International Monetary Fund (IMF) for the resumption of the stalled Extended Fund Facility (EFF) programme.



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  • Pakistan hopeful of securing IMF financing ‘soon’, says PM Sharif

    [

    Prime Minister Shehbaz Sharif said on Wednesday Pakistan hopes to secure financing from the International Monetary Fund (IMF) “soon”.

    While chairing a cabinet meeting, he said some measures are pending for the deal to be approved.

    The government is also focused on making austerity a top priority for the economic crisis-hit country, Sharif added.

    Finance (Supplementary) Bill, 2023 adopted: NA acquiesces to IMF tax stipulation

    “This is a critical time for Pakistan and we all will need to work to improve the state of the economy,” he said. “The ministers, advisers, special assistants and government officials will take a lead in following cost-cutting measures.”

    On Tuesday, Pakistan’s Finance Secretary Hamed Yaqoob Sheikh stated that the country “expects to conclude talks with the IMF as soon as this week”.

    An IMF mission spent more than a week in Islamabad earlier this month to discuss a policy framework to allow the release of more than $1 billion in funding from a stalled $6.5 billion bailout package, originally approved in 2019.

    However, the mission left without a conclusion.

    “The consultations with the IMF are in the final stages. We expect to conclude the consultations soon, even within the week,” Hamed told Reuters.

    The National Assembly on Monday passed the Finance (Supplementary) Bill, 2023 aimed to amend certain laws relating to taxes and duties. Measures contained in the bill are crucial to unlock next tranche of IMF loan.

    Minister for Finance Ishaq Dar introduced the bill in the House on February 15, and the formal debate started on it after moving a motion by Minister for Commerce Syed Naveed Qamar on February 17, 2023.

    In his concluding speech, the Minister for Finance and Revenue Senator Muhammad Ishaq Dar said that this bill proposed to impose new taxes of Rs170 billion to minimise the fiscal deficit.



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  • Rupee back to winning ways, settles at 261.9 against US dollar

    [

    The Pakistani rupee was back to winning ways against the US dollar, as the currency settled with a gain of 0.23% in the inter-bank market on Wednesday.

    As per the State Bank of Pakistan (SBP), the currency closed at 261.90 against the US dollar, an increase of Re0.61. Despite the gain, the currency has depreciated 21.4% during the ongoing fiscal year against the greenback.

    The Pakistani rupee’s five-session positive run came to an end against the US dollar on Tuesday after it settled at 262.51 with depreciation of Re0.63 or 0.24%.

    In a key development, Pakistan expects to conclude talks with the International Monetary Fund (IMF) over a staff-level agreement as soon as this week, the country’s finance secretary said, in a crucial step towards unlocking funds to battle an economic crisis.

    “The consultations with the IMF are in the final stages. We expect to conclude the consultations soon, even within the week,” Hamed Yaqoob Sheikh, the top official in the finance ministry, told Reuters.

    Globally, the dollar and sterling were buoyant on Wednesday, after a surprise rebound in business activity in the United States and the UK raised the likelihood that their respective central banks would have further to go in raising interest rates.

    The rebound in US business activity comes on the back of a recent slew of resilient economic data pointing to a still-tight labour market, sticky inflation and robust retail sales in the world’s largest economy.

    The US dollar index stood at 104.13, having gained 0.3% on Tuesday.

    Oil prices, a key indicator of currency parity, fell for a third trading session on Wednesday on expectations the US Federal Reserve will indicate later in the day that interest rates are set to rise more, stoking concerns of lower global economic growth and demand for fuel.



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  • Rupee maintains momentum, settles at 261.90 against US dollar

    [

    The Pakistani rupee witnessed a positive momentum against the US dollar, as the currency settled with a gain of 0.23% in the inter-bank market on Wednesday.

    As per the State Bank of Pakistan (SBP), the currency closed at 261.90 against the US dollar, an increase of Re0.61. Despite the gain, the currency has depreciated 21.4% during the ongoing fiscal year against the greenback.

    The Pakistani rupee’s five-session positive run came to an end against the US dollar on Tuesday after it settled at 262.51 with depreciation of Re0.63 or 0.24%.

    In a key development, Pakistan expects to conclude talks with the International Monetary Fund (IMF) over a staff-level agreement as soon as this week, the country\’s finance secretary said, in a crucial step towards unlocking funds to battle an economic crisis.

    \”The consultations with the IMF are in the final stages. We expect to conclude the consultations soon, even within the week,\” Hamed Yaqoob Sheikh, the top official in the finance ministry, told Reuters.

    Globally, the dollar and sterling were buoyant on Wednesday, after a surprise rebound in business activity in the United States and the UK raised the likelihood that their respective central banks would have further to go in raising interest rates.

    The rebound in US business activity comes on the back of a recent slew of resilient economic data pointing to a still-tight labour market, sticky inflation and robust retail sales in the world’s largest economy.

    The US dollar index stood at 104.13, having gained 0.3% on Tuesday.

    Oil prices, a key indicator of currency parity, fell for a third trading session on Wednesday on expectations the US Federal Reserve will indicate later in the day that interest rates are set to rise more, stoking concerns of lower global economic growth and demand for fuel.



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  • Pakistan may need debt adjustment despite IMF support: Barclays

    [

    Pakistan may require a debt adjustment in some form given the sharp deterioration in its external position, even if some support from the International Monetary Fund (IMF) and bilateral institutions is materialised, said Barclays Bank.

    In its report on Pakistan titled ‘Payment halt a possibility’ released on February 21, Barclays said it maintains an ‘Underweight rating’ on the country’s sovereign debt.

    Barclays was of the view that Pakistan’s debt metrics in and of themselves are not yet a cause for alarm.

    “But the large debt stock implies that ongoing access to funds and robust economic growth are necessary to keep debt within sustainable levels,” it said.

    Rothschild & Co delegation meets Dar, discusses roadmap for economic recovery

    “In this context the economic damage caused by the floods, the evolving political crisis, and increasing doubts about the nation’s ability to meet IMF targets could make it more difficult to manage the debt burden.”

    The report highlighted that Pakistan faces a long list of issues: “deterioration in the current account position, large foreign-currency repayments, limited fiscal space, currency pressures and need for regular central bank intervention, rising cost pressures as well as the damage from record flooding.

    “In addition, the credit-rating downgrades and lower bond prices (higher costs of refinancing) have resulted in an effective exclusion from capital markets when the country is facing large rollover risks; creating a potential ‘liquidity’ issue. This leaves limited alternatives and, absent a bilateral/multilateral bailout, growing risk of a debt readjustment sometime in 2023-24,” said the report.

    On the IMF programme, Barclays said that it remains at a critical juncture after the lender has shown a low tolerance for deviations from its programme targets regarding fiscal adjustments, foreign exchange policy and energy sector reforms.

    IMF stresses on ‘timely, decisive’ implementation of policies as virtual discussions to continue

    Moreover, the lender has leaned on Pakistan’s bilateral creditors to boost available funding.

    “We have believed the lack of new bilateral financing agreements reflects Pakistan’s complex political environment and macroeconomic instability–high inflation, slow growth, widening fiscal deficit. We do not expect this situation to change, and believe new bilateral financing agreements will remain piecemeal, focus on investment returns/opportunities rather than strategic partnerships and anchored by an IMF program,” said the report.

    Barclays said that the inflation rate is expected to remain high in wake of recent government measures.

    Political volatility on a rise

    The report said that it believes there is a risk that 2023 may see significant political instability “given the perilous economic situation, growing polarisation regarding civilian-military relations, an uptick in insurgency/terrorist activity, and the prospect of elections being held in October”.

    Foreign currency flow crisis

    Barclays pointed out that Pakistan’s balance of payments position indicates that the country is already in crisis.

    “Given this, any financing secured from bilateral or multilateral sources will need to be deployed for debt repayments and to support letters of credit for imports. This implies that the drain of FX reserves is unlikely to halt in the absence of relief for debt repayments or incremental financing,” it said.



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  • Intra-day update: rupee registers gain against US dollar

    The Pakistani rupee registered a gain against the US dollar, appreciating 0.41% in the inter-bank market during the opening hours of trading on Wednesday.

    At around 10:30am, the currency was being quoted at 261.45, an increase of Rs1.06, against the US dollar.

    The Pakistani rupee’s five-session positive run came to an end against the US dollar on Tuesday after it settled at 262.51 with a depreciation of Re0.63 or 0.24%.

    In a key development, [Pakistan expects to conclude talks with the International Monetary Fund (IMF) over a staff-level agreement][1] as soon as this week, the country’s finance secretary said, in a crucial step towards unlocking funds to battle an economic crisis.

    “The consultations with the IMF are in the final stages. We expect to conclude the consultations soon, even within the week,” Hamed Yaqoob Sheikh, the top official in the finance ministry, told Reuters.

    Globally, [the dollar][2] and sterling were buoyant on Wednesday, after a surprise rebound in business activity in the United States and the UK raised the likelihood that their respective central banks would have further to go in raising interest rates.

    The rebound in US business activity comes on the back of a recent slew of resilient economic data pointing to a still-tight labour market, sticky inflation and robust retail sales in the world’s largest economy.

    The US dollar index stood at 104.13, having gained 0.3% on Tuesday.

    [Oil prices][3], a key indicator of currency parity, were steady on Wednesday as investors await the US Federal Reserve’s comments after recent data pointed to the possibility of more interest rates hikes, which may lower economic growth and limit global fuel demand.

    This is an intra-day update
    [1]: https://www.brecorder.com/news/40227707/pakistan-finance-secretary-sees-imf-staff-level-talks-wrapping-up-this-week
    [2]: https://www.brecorder.com/news/40227755/dollar-sterling-underpinned-by-upbeat-pmi-surveys-kiwi-jumps
    [3]: https://www.brecorder.com/news/40227746/oil-steadies-as-investors-await-us-fed-reserve-comments



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