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Tag: economy

  • Pakistan’s textile exports dip 6% in August 2023, posing economic challenges

    Pakistan’s textile exports dip 6% in August 2023, posing economic challenges

    Pakistan’s textile sector has experienced a continued decline in exports, with provisional data released by the All Pakistan Textile Mills Association (APTMA) indicating that in August, exports reached $1.48 billion, down by 6 per cent compared to the same month in the previous year when they stood at $1.58 billion.

    Moreover, the data reveals that Pakistan’s textile exports for the first eight months of the calendar year 2023 have seen a significant drop of 19 per cent, totaling $10.58 billion, as opposed to the $13 billion recorded during the equivalent period in 2022. This year-on-year decline raises concerns for Pakistan’s economy, especially in light of its foreign exchange shortage, which has already led to a depreciation of the rupee by more than 25 per cent in the inter-bank market since the beginning of 2023.

    However, there is a glimmer of optimism as monthly figures indicate a 13 per cent improvement in textile exports, rising to $1.48 billion in August compared to $1.31 billion recorded in July.

  • Saudi Arabia to invest $25 billion in Pakistan over five years: PM Kakar

    Saudi Arabia to invest $25 billion in Pakistan over five years: PM Kakar

    On Monday, Interim Prime Minister Anwaar ul Haq Kakar announced that the Kingdom of Saudi Arabia (KSA) intends to invest a substantial sum of up to $25 billion in Pakistan over the next two to five years.

    During a media briefing, PM Kakar explained that Saudi Arabia’s investment focus will primarily encompass the mining, agriculture, and information technology sectors. This initiative aims to boost foreign direct investment in Pakistan, which is currently facing financial challenges. 

    If this investment materialises, it will mark the largest-ever commitment by Saudi Arabia to Pakistan. The country is grappling with a pressing need for funds to address its trade deficit and repay international loans in the ongoing fiscal year. 

    While specific projects earmarked for Saudi investment were not disclosed during the meeting, Barrick Gold Corp. expressed interest last month in partnering with Saudi Arabia’s wealth fund for the Reko Diq mine in Pakistan. 

    Kakar emphasised that Pakistan holds substantial untapped mineral resources valued conservatively at $6 trillion. Additionally, the government intends to expedite two privatisation transactions, likely involving state-owned power sector entities, within the next six months. There is also a plan to privatise another government-owned company, preferably outside the energy sector. 

    Read more: Business community finds hope as COAS Munir vows to tackle corruption and boost investment  

    It’s worth noting that privatisation efforts in Pakistan have faced challenges in the past, as the sale of state assets is a politically sensitive issue that previous elected governments have largely avoided. 

    Currently, Pakistan is navigating a challenging path to economic recovery under a caretaker administration, following the approval of a $3 billion loan plan by the International Monetary Fund in July, which prevented a sovereign debt default. Islamabad is confronted with a balance of payments crisis and requires substantial funds to rectify its trade deficit and settle outstanding debts. 

  • Business community finds hope as COAS Munir vows to tackle corruption and boost investment 

    Business community finds hope as COAS Munir vows to tackle corruption and boost investment 

     
    In response to the pressing economic crisis facing the country, Chief of Army Staff (COAS) General Syed Asim Munir has pledged unwavering efforts to attract foreign investment and rejuvenate the economy, as reported by The News on Tuesday. General Munir made these assurances during a recent extensive meeting with members of the business community, where he engaged openly and candidly with them. 

    During an appearance on Geo News‘ “Aaj Shahzeb Khanzada Kay Sath” programme on Monday, President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), Irfan Iqbal Sheikh, expressed optimism following their meeting with the army chief. He revealed that General Munir had conveyed discussions of a potential $25 billion investment from Saudi Arabia, encompassing sectors such as IT, minerals, agriculture, and defence. 

    Highlighting a pivotal development, General Munir disclosed that Saudi Crown Prince Mohammad Bin Salman had committed to depositing $10 billion of this investment in the State Bank of Pakistan (SBP), to be reimbursed in Pakistani rupees or goods, thereby bolstering foreign exchange reserves. 

    General Munir also acknowledged the bureaucratic obstacles hindering investment and emphasised the establishment of a Special Investment Facilitation Council (SIFC) to streamline processes and eliminate bureaucratic impediments. He assured that this initiative would protect investors from interference, bureaucratic hurdles, or legal complications. 

    Irfan Iqbal Sheikh further mentioned that Saudi Arabia and the United Arab Emirates (UAE) had both pledged $25 billion in investments, with Qatar and Kuwait following suit with similar commitments. 

    General Munir expressed determination to combat corruption, particularly by curbing land-grabbing and extortion mafias. To this end, he announced the formation of four task forces to address issues related to the Federal Board of Revenue of Pakistan (FBR), border control, smuggling, and social media, aiming to improve the overall situation. 

    Sheikh stressed that the business community had grown disillusioned but found renewed courage and hope through the army chief’s commitments. 

    Meanwhile, Business Group Chairman Zubair Motiwala noted the distinct approach of General Munir in engaging with traders compared to his predecessors. He highlighted the COAS’s efforts to revive the economy through engagements in Saudi Arabia, the UAE, and upcoming visits to Qatar and Kuwait. 

    Motiwala reported that General Munir had instructed the corps commander to prevent the influx of Iranian diesel into Karachi and issued directives to address land encroachments, corruption, and law enforcement issues. 

    General Munir also emphasised that only registered Afghan refugees would be allowed to stay in Pakistan, while the rest would need to return to their home country. He conveyed Saudi Crown Prince Mohammad Bin Salman’s concerns regarding corruption and bureaucracy in Pakistan. 

    Motiwala further disclosed discussions about the charter of the economy with General Munir, expressing hope that such substantial investments would significantly improve the economic conditions in the country. 

    He also pointed out that state-owned enterprises were incurring significant losses, amounting to Rs1,300 billion, and stressed the need for action, noting that political governments might not fully embrace privatisation but would seek to relieve this burden. General Munir expressed his understanding of the government’s approach to this issue and its commitment to addressing it comprehensively. 

  • Inflation in Pakistan stays above 27% despite IMF reforms

    Inflation in Pakistan stays above 27% despite IMF reforms

    Pakistan continues to grapple with soaring inflation, with the rate holding steady at 27.4 per cent in August, according to data released on Friday. This persistent inflationary pressure is partially attributed to the reforms mandated as part of the IMF loan agreement, which have complicated efforts to stabilise prices and curb declines in the national currency, the rupee.

    The South Asian nation is treading cautiously on its path to economic recovery, with a caretaker government at the helm following the approval of a $3 billion loan programme by the International Monetary Fund (IMF) in July, averting a potential sovereign debt default.

    However, the conditions tied to this bailout, including the relaxation of import restrictions and the removal of subsidies, have contributed to a surge in annual inflation. In May, inflation reached a staggering 38.0 per cent, setting a new record. Concurrently, interest rates have risen, and the rupee has experienced historic lows, with a 6.2 per cent decline in the currency’s value last month.

    While the August data from Pakistan’s statistics bureau indicates a slight easing from July’s 28.3 per cent inflation rate, food inflation remains alarmingly high at 38.5 per cent. Authorities have further exacerbated the situation by raising gasoline and diesel prices to record highs on Friday.

    These worsening economic conditions, coupled with escalating political tensions ahead of a national election scheduled for November, have triggered sporadic protests. Jamaat-e-Islami has announced a nationwide strike in response to the increased power tariffs.

    Every day, Pakistanis are feeling the pinch and struggling to make ends meet. Waseem Ahmed, a bank employee in Islamabad, lamented the plight of the middle class, stating, “More than 60 to 70 per cent of my salary is spent on bills and petrol. Where will we get basic staples from? This is why people are contemplating suicide,” he told Reuters.

    According to ARY News, Mohammed Sohail, CEO of Topline Securities, a Karachi-based brokerage firm, acknowledged that August’s inflation reading aligns with expectations. However, he cautioned that the depreciating rupee and rising energy prices may prevent a significant year-on-year decline in inflation, contrary to earlier government projections that had anticipated a drop to 22 per cent by the end of the fiscal year running until June 31.

    Pakistan’s central bank, in its last monetary policy statement in July, held benchmark interest rates steady at 22 per cent and expressed optimism that inflation would follow a downward trajectory over the ensuing 12 months. However, the current economic challenges present formidable hurdles to achieving that goal.

  • Pakistani rupee snaps 10-day depreciation streak against US dollar with 0.02% gain

    Pakistani rupee snaps 10-day depreciation streak against US dollar with 0.02% gain

    The Pakistani rupee (PKR) finally terminated its ten-session depreciation streak against the US dollar on Friday as the local currency concluded trading at Rs305.47 versus the greenback. The State Bank of Pakistan (SBP) reported a modest appreciation of Re0.07, or 0.02 per cent, when compared to the previous day’s closing rate.

    Thursday had marked a historic low for the PKR, with a closing rate of Rs305.54 against the US dollar in the inter-bank market. This decline had raised concerns about the currency’s stability and its impact on the nation’s economy.

    However, the SBP made a significant announcement on Friday. It categorically rejected reports circulating in the media about an emergency meeting of the Monetary Policy Committee (MPC). The central bank termed these reports as completely baseless and emphasized that it would be premature to forecast the future policy rate.

    According to the central bank, only the MPC, an independent statutory body, holds the authority to make decisions regarding the policy rate. The next scheduled meeting of the MPC is set for September 14, 2023.

    Internationally, the US dollar has faced challenges as it attempts to maintain its winning streak against major currencies. Traders are closely monitoring the pivotal monthly US jobs report, which is expected to shape Federal Reserve policy in the coming months.

    The US dollar index, which measures the currency against a basket of six developed-market peers including the euro, sterling, and yen, saw a slight decline of 0.05 per cent to 103.58 on Friday. This marks a cumulative decline of 0.53 per cent for the week.

    Additionally, oil prices, a significant indicator of currency parity, remained above $87 a barrel. Crude prices are showing signs of snapping a two-week losing streak, driven by expectations of tightening supplies.

    The Pakistani economy remains closely tied to global economic developments, making these currency fluctuations and international economic indicators crucial for policymakers and market participants. The nation will continue to monitor these trends closely in the days and weeks ahead.

  • Pakistani rupee ends the day at another record low of Rs305.54 versus US dollar, losing Rs1.09

    Pakistani rupee ends the day at another record low of Rs305.54 versus US dollar, losing Rs1.09

    The Pakistani rupee (PKR) persisted in encountering downward pressure against the US dollar, with a recorded depreciation of 0.36 per cent. The day concluded with the rupee settling at Rs305.54, having incurred a loss of Rs1.09 in the interbank market, as reported by the State Bank of Pakistan (SBP).

    In the preceding session, the rupee had concluded at a historic low of Rs304.45 against the US dollar in the inter-bank market.

    IMF deviation risks dollar inflow halt

    In a session of the Senate Standing Committee on Finance held on Wednesday and chaired by Senator Saleem Mandviwalla, interim Finance Minister Dr Shamshad Akhtar conveyed that the interim government’s financial leeway for subsidies was limited. However, she mentioned that a proposal was being deliberated upon to discontinue electricity provisions for privileged segments.

    Dr Akhtar voiced apprehension that a deviation from the International Monetary Fund’s (IMF) stipulations could lead to a halt in dollar inflows, exacerbating the economic challenges facing the nation. She acknowledged that certain governmental actions had adversely affected the economic landscape. She specifically noted that the Federal Board of Revenue’s revenue collection was not meeting expectations while expenditures remained elevated.

    The Senate committee expressed its reservations about the escalating exchange rate fluctuations, the unprecedented cost of electricity, and the 22 per cent interest rate, all of which collectively pose difficulties for existing businesses to sustain and prosper.

    As a pivotal gauge of currency equilibrium, oil prices moderated on Thursday in response to data indicating a decline in China’s manufacturing activity. Additionally, investors were attentively awaiting the forthcoming US personal consumption expenditure report scheduled for later in the day.

    KSE-100 crash

    Moreover, the Pakistan Stock Exchange (PSX) remained firmly under the control of bears on Thursday as the benchmark index experienced a substantial drop of nearly 4 per cent, reflecting concerns about the country’s deteriorating economic situation.

    Investors responded with a sense of panic to the escalating rupee-dollar parity, choosing to divest from shares due to apprehensions surrounding an imminent economic crisis.

    Right from the commencement of trading, the KSE-100 index experienced a sharp decline, plummeting by over 1,700 points and breaching the 45,000 level. A prevailing negative sentiment among investors is preventing the index from making any headway into positive territory.

  • Dramatic drop: Pakistan Stock Exchange crashes over 1,700 points amid economic concerns

    Dramatic drop: Pakistan Stock Exchange crashes over 1,700 points amid economic concerns

    On Thursday, the Pakistan Stock Exchange (PSX) encountered a challenging session as the primary index witnessed a substantial decline of 3.86 per cent, reflecting a loss of 1,784 points by 2:53 pm. This notable downturn was attributed to growing concerns pertaining to the nation’s economic landscape.

    Investors were worried about the rupee losing value against the dollar. This concern led them to sell off their shares, fearing that the economy could face trouble ahead.

    Right from the start of the trading day, the KSE-100 index saw a big fall of over 1,100 points, taking it below the 46,000 mark. Unfortunately, the index couldn’t bounce back due to low investor confidence.

    By 2:14 PM, the PSX had fallen to 45,139.34 points, a drop of 1,105.21 points compared to the previous day’s close of 46,244.55 points.

    Investors are also keeping an eye on the rupee’s decline, especially since the International Monetary Fund (IMF) won’t review the situation for a few more months. Additionally, there’s uncertainty about investments from the Gulf Cooperation Council (GCC).

    If the market keeps falling, some buyers might return, as the index is currently down 8 per cent from its recent high. But a real recovery would need clear information about politics and the economy.

    According to experts, the PSX is under pressure due to the rupee’s continuous slide.

    This could cause inflation to rise, which could affect the next Monetary Policy Committee (MPC) meeting in September. During that meeting, the central bank might consider raising interest rates again.

    The financial market is worried about public protests against higher power tariffs. If the government tries to please the public with short-term measures, it could complicate talks with the IMF.

    This report serves as an intraday update on the developments in the Pakistan Stock Exchange as of 2:53 pm.

  • Pakistani rupee hits new all-time low of Rs304.445 after declining by Rs1.38 against US dollar

    Pakistani rupee hits new all-time low of Rs304.445 after declining by Rs1.38 against US dollar

    In the interbank session held on Wednesday, the Pakistani rupee (PKR) exhibited a decline of 1.39 rupees against the US dollar (USD). The closing exchange rate for the day stood at Rs304.445 per USD, in contrast to the concluding rate of Rs303.052 per USD observed in the preceding session.

    Throughout the trading day, the currency displayed a fluctuation, reaching an intraday high bid of Rs304.75 while also touching a low ask of Rs304.6.

    On a parallel note, within the open market, Exchange Companies set the buying rate for the dollar at Rs320 and the selling rate at Rs323.

    In the ongoing fiscal year, the Pakistani rupee has experienced a depreciation of 18.45 rupees against the dollar, amounting to a 6.06 per cent decrease. Concurrently, within the current calendar year, the PKR has depreciated by 78.01 rupees, reflecting a substantial decline of 25.63 per cent.

  • Pakistani rupee plunges to fresh record low of Rs303 against US Dollar

    Pakistani rupee plunges to fresh record low of Rs303 against US Dollar

    In a worrisome turn of events, the Pakistani rupee has continued its steady descent, hitting a new record low against the US dollar and raising concerns among economic analysts and policymakers. The local currency settled at Rs303.05 in the inter-bank market on Tuesday, marking a significant drop from its previous standing.

    According to the State Bank of Pakistan (SBP), the rupee experienced a decline of Rs1.05 or 0.35 per cent by the time the market closed on Tuesday. This decline follows closely on the heels of Monday’s record low, where the rupee closed at Rs302 against the US dollar.

    This decline is followed by the recent agreement secured with the International Monetary Fund (IMF). While this arrangement was expected to bring some stability to the currency, the rupee has instead faced renewed pressure.

    Falling foreign exchange inflows have posed a challenge, causing unease among financial circles. Moreover, apprehensions have grown due to a widening current account deficit, a situation exacerbated by the lifting of import restrictions by authorities.

    The international scene has also played a part in this precarious situation. On the global stage, the US dollar showed signs of hesitancy on Tuesday, as traders demonstrated caution by refraining from significant bets ahead of a series of anticipated economic data releases throughout the week. Meanwhile, the Japanese yen found itself grappling with levels that had triggered intervention in the past year.

    With multiple factors at play, including IMF negotiations, foreign exchange dynamics, and global economic trends, the coming days will likely prove crucial in determining the rupee’s trajectory and Pakistan’s economic landscape.

  • After protests, people going to court against LESCO

    After protests, people going to court against LESCO

    After a sharp hike in electricity bills, an increasing number of cases are being filed against LESCO in courts, as people turn towards legal recourse as a last option.

    More than 400 cases were filed against WAPDA within a week.

    The court, taking immediate action, ordered the department to divide the bills into installments.

    Consumers have said that they do not have any other option but to go to court. They have rejected the increase in electricity bills and appealed to the government to provide immediate relief.