ECONOMIC TIMES OF PAKISTAN
Bailout talks with IMF hit a new deadlock
In a last minute hitch, talks between Pakistan and the International Monetary Fund (IMF) have reached a deadlock due to change in goalpost by the fund and the prime minister’s reservations over heavy taxation, resulting into extension in parleys.
There were at least three main sticking points that led to inconclusive talks till the last day of the IMF visit, said sources in the Ministry of Finance. As of Thursday, the top management of the Ministry of Finance was hopeful to conclude the deal and the IMF team had planned to return on May 11.
But the sources said things went off the track after the IMF insisted on inclusion of some new conditions in the programme, which appeared unreasonable.
Prime Minister Imran Khan also expressed reservations over massive additional taxes burden that the nation will bear from July this year, provided both sides reach an agreement.
“We have made good progress in our discussions with the visiting IMF Mission. Consultations will continue over the weekend,” said Dr Khaqan Hasan Najeeb, the spokesman of the Finance Ministry.
Pakistan has accepted the IMF’s demands of flexible exchange rate regime, withdrawal of subsidies, containing borrowings from the central bank and reinitiating the privatisation programme.
Led by its Washington-based mission chief Ernesto Rigo, the IMF team was originally supposed to stay in Pakistan from April 28 to May 10. Rigo will stay in Pakistan for at least one more day in hope to conclude the deal.
The sources said the IMF has sent a draft of the proposed agreement to Washington for vetting that includes some new conditions. These conditions were no part of negotiations in the first round of talks when the State Bank of Pakistan former governor Tariq Bajwa was part of Pakistani team.
China’s expo attracts over 250 fortune 500 firms
More than 250 500 companies and industry leaders have signed up for the second China International Import Expo (CIIE), the organiser said. To accommodate the increasing demand, the booth area for businesses at the 2nd CIIE, to be held in November, will be expanded to 300,000 square metres from 270,000 square metres last year, said Sun Chenghai, Vice Director of CIIE bureau.
More cutting-edge technologies will be featured at the expo, including VR and AR, self-driving cars, Internet of Things and the blockchain, according to Sun.
Hyundai Motor Group will bring its latest car models and components to this year’s expo, said Lee Hyuk Joon, Vice President of Hyundai Motor Group (China) Limited, adding that the company’s exhibition area more than doubled to 1,400 square metres.
British pharmaceutical company GlaxoSmithKline (GSK) plans to introduce a batch of new medicines, including a shingles preventive vaccine, biologics for lupus erythematosus and treatment of stable COPD, sources with the company said.
A total of 172 countries, regions and international organisations and more than 3,600 enterprises participated in the first CIIE, held from November 5 to 10 in Shanghai. It was the world’s first import-themed national-level expo.
Remittances hit 6-month high in April, amount to $1.78bn
Remittances sent home by overseas Pakistanis touched a six-month high at $1.78 billion in April 2019 ahead of the start of the fasting month of Ramazan in early May and Eid festival.
Talking to source, the head of remittances department at a state-owned bank, however, expressed disappointment over the inflow of remittances, saying these should have been much higher keeping in view the recent growth in inflows.
“The remittance inflows should have been around $1.85-1.9 billion in April,” he argued. “Overseas Pakistanis may have withheld the remittances anticipating that further rupee depreciation was around the corner.”
Govt waives new conditions for import of edible items
The government has caved into the pressure from traders and multinational companies and has allowed them to continue the import of edible products without following new labelling requirements, officials say.
The government has doubts that most of the Pakistani consumers are receiving edible products which are not halal and of inferior quality because of a flawed import policy. This may pose a health hazard to the consumers as well.
Keeping this in view, the government notified labelling requirements for the import of edible products in February this year. However, the traders, importers and multinational companies dealing in fast moving consumer goods approached the Commerce Division, seeking more time for compliance with the new conditions.
The traders and multinational companies were of the view that adequate time was required for making adjustments in the supply chain in order to comply with the labelling requirements. They also argued that the new conditions would hinder the supply of some of the essential edible products and cause their shortage in Ramazan.
Consequently, the government put off implementation of the labelling guidelines on the import of edible products till the start of July 2019, said the officials.
Under the new conditions, the edible products, at the time of import, should have at least 50percent remaining shelf life and in case of meat it should be obtained from Halal animals and slaughtered in accordance with the Islamic injunctions.
Basmati body calls for increasing rice exports to $5bn
Improving water productivity in the rice ecosystem is inevitable for sustainable rice production and boosting rice exports of Pakistan from the current $2 billion to $5 billion, said Pakistan Basmati Heritage Association (PBHA) Director Sheikh Adnan Aslam.
He was speaking at the Khushal Kissan seminar arranged by the association for the promotion and preservation of basmati rice heritage of Pakistan.
Citing that PBHA was aimed at mitigating challenges to Basmati rice production, he lamented that Pakistan faced a looming water crisis and stressed the need for improving water productivity in rice fields. He shared the PBHA’s action plan for the promotion and preservation of Basmati rice for export.
Punjab Seed Corporation Director Malik Imtiaz, who was present in the seminar, advised farmers to use certified seeds every year which would served as a foundation for increasing the yield and quality of Basmati rice. He appreciated the initiative of PBHA for providing healthy and certified seeds at subsidised rates to the farmers.
Rice Exporters Association of Pakistan former chairman Chaudhry Masood Iqbal emphasised that the government should introduce new basmati varieties for ensuring rice productivity and pest resistance. Praising PBHA’s mission, he termed it the ‘ray of light’ for the rice sector in Pakistan.
PBHA Coordinator Imran Sheikh elaborated the PBHA’s mission and advised Basmati rice farmers to adopt global rice standards of the Sustainable Rice Platform convened by the International Rice Research Institute for promoting resource efficiency and sustainability by ensuring food safety.
FBR stops freezing of bank accounts without his nod
The Federal Board of Revenue (FBR) on Friday barred its field formations from freezing bank accounts of taxpayers without prior intimation aimed at minimising harassment of taxpayers, particularly at a time of shortfall in tax revenues.
The FBR headquarters has linked the freezing of bank accounts with prior approval of the FBR chairman and intimation to the accountholder at least 24 hours before freezing the bank account.
“No bank account attachment unless the taxpayer’s CEO/principal officer/owner is informed at least 24 hours prior to the attachment and the FBR chairman’s approval is obtained,” said the instructions that the FBR headquarters sent to its 23 field formations.
PKR weakens to 142.7 against $ in open market
The Pakistani currency suddenly weakened over one-rupee to Rs142.7 to the US dollar in the open market on Friday as speculation mounted that Pakistan had agreed to let the rupee depreciate further under a stringent International Monetary Fund (IMF) bailout programme.
“There is speculation the rupee will depreciate to 165-170 against the US dollar in the inter-bank market as per IMF’s conditions,” Exchange Companies Association of Pakistan (ECAP) Secretary General Zafar Paracha said.
During the day, the rupee remained stable at 141.39 to the greenback in the inter-bank market, the State Bank of Pakistan (SBP) reported.
Debt repayments likely to swell to $31bn in next 7-year
Pakistan’s debt in terms of the size of economy is expected to increase further, said the country’s top debt manager on Thursday, as the finance ministry estimates external public debt repayments at a whopping $31 billion in the next seven years.
The $31-billion public external debt repayments from July 2019 to June 2026 have been worked out on the basis of $74 billion external public debt as of end-February 2019. The debt that Pakistan will contract in the next eight years including from the International Monetary Fund (IMF) is not part of these internal estimates of the finance ministry.
The IMF’s previous loans are also not part of these repayments, which are booked on the balance sheet of the State Bank of Pakistan (SBP).
In the near future, the total public debt as a percentage of gross domestic product is expected to increase further, said Abdul Rehman Warraich, Director General Debt Office of the Ministry of Finance, while giving a briefing to the National Assembly Standing Committee on Finance.
Warraich said as of March 2019, Pakistan’s public debt stood at Rs28.6 trillion, which was equal to 74.5percent of GDP. He hoped that the ratio would slide down to around 65percent after five years, subject to improvement in current macroeconomic conditions.
Even the 65percent debt-to-GDP ratio will be higher than the statutory limit of 60percent set by parliament in the Fiscal Responsibility and Debt Limitation Act. The last two governments as well as the current Pakistan Tehreek-e-Insaf (PTI) government are in breach of this limit.
Growth rate slumps to lowest in 9-year
The country’s economic growth rate has slowed down to 3.3percent — the lowest in nine years – in the first year of Prime Minister Imran Khan’s government, which missed its targets set for all major sectors of the economy.
Provisional official results show that gross domestic product (GDP) growth rate for fiscal year 2018-19 was almost half of the annual target of 6.2percent because of negligible growth in the agricultural and industrial sectors.
The slow pace of economic growth coupled with currency devaluation has caused the size of the economy — in the US dollar terms — to slip to around $280 billion from $313 billion at the end of the Pakistan Muslim League-Nawaz (PML-N) government’s term.
GDP — the monetary value of all goods and services produced in a year — is projected to have grown at a rate of 3.29percent during fiscal year 2018-19 ending on June 30, according to the National Accounts Committee (NAC).
The growth has come largely from the services sector, which is less job-intensive. It contributed 87percent to the total national output for the outgoing fiscal year.
The NAC also revised the economic growth rate upward for the last year of the PML-N government from 5.2percent to 5.53percent.
In February this year, the PTI government cut the GDP growth rate from 5.8percent to 5.2percent for the fiscal year 2017-18 claiming that the PML-N government overstated the growth rate. But now, its claim has proven wrong.
Planning Secretary Zafar Hasan chaired the 101th meeting of the NAC that endorsed the provisional economic growth rate figure on the basis of data received from the federal and provincial governments.
The figure is provisional and subject to variations once the final results are available at the end of the fiscal year.
The 3.29percent growth rate is the lowest in nine years. In 2010-11, the economy had grown at a rate of 3.6percent. The 3.3percent economic growth rate depicts the challenges that the PTI government faced in its first year in power. Almost every sector has witnessed negative growth. The provisional growth rate in the first year of the PTI is almost half the pace needed to absorb the youth bulge.