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Tag: pakistan economy

  • IMF urges gas sector reforms to curb circular debt

    IMF urges gas sector reforms to curb circular debt

    The International Monetary Fund (IMF) highlighted the significance of prompt gas tariff determinations and notifications, crucial in curbing the escalating gas circular debt, while safeguarding vulnerable households.

    Stressing the necessity of adhering to the mandated 40-day window, the IMF underscored the urgency to initiate these measures commencing with the June 2024 semiannual adjustment.

    In its latest report, the IMF conducted its second and final review within the stand-by arrangement framework, released on Friday.

    It noted a slight decrease in natural gas circular debt to Rs2,083 billion (equivalent to 2.0 per cent of GDP) as of January 2024, attributing this decline to the resumption of gas tariff adjustments, albeit with some delay, aligned with cost recovery objectives.

    The Fund recommended a continued trajectory towards eliminating captive power usage, advocating for the prioritization of cheaper natural gas for the most efficient power plants.

    Additionally, it proposed efforts to standardize gas prices for all fertilizer companies, aligning with plans to implement a weighted average cost of gas (WACOG) across Pakistan, ensuring uniformity while facilitating cost recovery.

    Acknowledging Pakistan’s recent 24 per cent gas tariff increase on February 15, the report highlighted its progressive rate structure protecting residential consumers, while enhancing and equalizing prices for fertilizer companies.

    Furthermore, it recognized Pakistan’s adherence to the Structural Benchmarks (SBs) concerning the notification of the semiannual gas tariff adjustment.

    The report also shed light on the increasing prominence of Regasified Liquefied Natural Gas (RLNG) within Pakistan’s gas mix, driven by dwindling natural gas supplies exacerbated by years of under-pricing.

    Consequently, RLNG has been diverted to domestic users at subsidized rates, underscoring the complexity of the gas sector dynamics.

  • PSX surges to record high as KSE-100 closes above 73,000 points

    PSX surges to record high as KSE-100 closes above 73,000 points

    After a series of subdued sessions, the Pakistan Stock Exchange (PSX) saw a resurgence of buying on Friday, propelling its benchmark KSE-100 index above the 73,000 mark for the first time in history.

    The positive momentum reflected renewed investor confidence amid signs of economic stability.

    The KSE-100 index opened on a bullish note, reaching an intra-day high of 73,449.37 before settling at 73,085.50, a gain of 427.45 points or 0.59 per cent by the close of trading.

    Despite some sporadic selling during the day, the bulls largely controlled the market, resulting in a robust session.

    Industries driving the surge

    Key sectors that drove the surge included cement, chemical, oil and gas exploration companies, and oil marketing companies (OMCs). Index-heavy stocks such as Lucky Cement (LUCK), Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL), Pakistan State Oil (PSO), Sui Northern Gas Pipelines Limited (SNGPL), and Sui Southern Gas Company (SSGC) closed in the green, contributing significantly to the overall upward trend.

    Market experts attribute the surge to a combination of improved economic indicators and investor expectations.

    Pakistan’s foreign exchange reserves and remittances have shown positive growth, suggesting a stabilising economy.

    Additionally, there is anticipation of a potential policy rate cut in the upcoming Monetary Policy Committee (MPC) meeting on June 10, following a recent decline in the inflation rate.

    On Thursday, the KSE-100 index had a marginal increase in a largely range-bound session, closing at 72,658.05, a gain of 56.24 points, or 0.08 per cent.

    The strong close on Friday underscores a more optimistic outlook for the market as investors continue to monitor key economic developments and policy changes.

  • Pakistan’s debt climbs by Rs276.55 billion to Rs4.78 trillion

    Pakistan’s debt climbs by Rs276.55 billion to Rs4.78 trillion

    Pakistan’s government incurred an additional debt of Rs276.55 billion during the week ending April 26, 2024, according to the State Bank of Pakistan’s weekly report.

    This brings the total net borrowing for the current fiscal year to a staggering Rs4.78 trillion, underscoring a trend of elevated borrowings compared to previous years.

    The government sector’s borrowings are categorised into three main segments: budgetary support, commodity operations, and others.

    During the latest week, the bulk of the borrowing went towards budgetary support, which accounted for Rs230.84 billion.

    Meanwhile, commodity operations contributed Rs45.76 billion to the debt increase, while the “others” category saw a retirement of Rs54.82 million.

    Looking at the cumulative figures for the ongoing fiscal year, budgetary support borrowings have now reached Rs5.07 trillion, with commodity operations showing a net retirement of Rs283.57 billion, and others indicating a net retirement of Rs2.64 billion.

    The government’s financing primarily comes from two sources: the State Bank of Pakistan (SBP) and scheduled banks.

    This fiscal year, the government has paid off a net sum of Rs735.22 billion to the SBP, with the Federal Government contributing Rs425.15 billion to the total.

    Provincial governments collectively retired Rs294.54 billion, while the governments of Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (GB) retired Rs17.89 billion and borrowed Rs2.36 billion, respectively.

    In contrast, scheduled banks have lent out a net total of Rs5.8 trillion. Of this amount, the federal government borrowed Rs5.96 trillion, while the provincial governments retired Rs159.99 billion.

    These figures point to the government’s continued reliance on borrowing to manage fiscal operations.

    Analysts are concerned about the sustainability of this trend, suggesting that it could pose risks to the country’s economic stability if not carefully managed.

  • Overseas workers’ remittances surge to $3 billion in March

    Overseas workers’ remittances surge to $3 billion in March

    In March 2024, Pakistan witnessed a significant surge in the influx of overseas workers’ remittances, reaching a notable milestone of $3 billion.

    This remarkable figure reflects a remarkable 31.3 per cent increase on a month-on-month basis compared to February 2024, when the remittances stood at $2.25 billion.

    The latest data released by the State Bank of Pakistan (SBP) unveiled this positive trend, highlighting the pivotal role remittances play in Pakistan’s economic landscape.

    Year-on-year comparisons also underscored the upward trajectory, with a 16.4 per cent increase noted in March 2024 compared to the same month in the previous year, when remittances amounted to $2.54 billion.

    Such consistent growth in remittances holds significance beyond mere monetary figures, as these funds contribute substantially to bolstering the country’s external account and fueling economic activity.

    Moreover, they serve as a crucial supplement to the disposable incomes of remittance-dependent households, enhancing their financial resilience.

    In a broader fiscal context, the first nine months of Fiscal Year 2024 witnessed a steady rise in workers’ remittances, totaling $21.0 billion.

    This marks a modest 0.9 per cent increase compared to the corresponding period in the previous fiscal year, where remittances amounted to $20.8 billion.

    Such stability and growth in remittances underscore the resilience of Pakistan’s overseas workforce and their commitment to supporting their families and homeland.

    Breaking down the sources of these remittances, Overseas Pakistanis in Saudi Arabia emerged as leading contributors, with remittances totaling $703.1 million in March 2024.

    This represents a substantial 30 per cent increase compared to the previous month and a noteworthy 24 per cent increase year-on-year.

    Similarly, remittances from the United Arab Emirates (UAE) witnessed a remarkable surge, jumping by 43 per cent on a monthly basis to reach $548 million in March, reflecting a 34 per cent increase compared to the same period last year.

    The United Kingdom also played a significant role in this surge, with remittances soaring to $462 million in March 2024, marking a notable 33 per cent increase compared to February 2024.

    Meanwhile, remittances from the European Union exhibited a robust 19 per cent monthly growth and a 6 per cent year-on-year improvement, amounting to $315 million in March 2024.

    Overseas Pakistanis in the United States also contributed significantly, send`ing $373 million in March 2024, reflecting an 18 per cent increase compared to the previous year and a substantial 30 per cent increase month-on-month.

  • IMF engagement should not hinder Pakistan’s economic progress: PM Shehbaz

    IMF engagement should not hinder Pakistan’s economic progress: PM Shehbaz

    Prime Minister (PM) Shehbaz Sharif asserted on Tuesday that any forthcoming engagement with the International Monetary Fund (IMF) must not impede Pakistan’s economic progress.

    His remarks come in the wake of discussions regarding a potential Extended Fund Facility (EFF) with the IMF, scheduled for deliberation in Washington next month, as the nation grapples with mitigating a looming economic crisis.

    With the expiration of the standby $3 billion arrangement with the IMF looming on April 11, recent negotiations have culminated in a staff-level agreement, paving the way for the disbursal of the final tranche of $1.1 billion.

    PM Shehbaz, following his re-inauguration, promptly directed his financial team to initiate efforts towards securing an EFF from the IMF.

    Speaking at a ceremony in Islamabad, the Prime Minister underscored the indispensability of another IMF programme while highlighting the imperative of simultaneously pursuing economic expansion.

    He highlighted key areas such as agriculture, IT exports, and both traditional and non-traditional exports as avenues for growth, questioning any limitations posed by an IMF programme on such initiatives.

    “If there is an IMF programme, who has stopped you from doubling agriculture output? from increasing IT exports? from increasing traditional and non-traditional exports?” PM Shehbaz posited, stressing the compatibility of economic growth initiatives with an IMF programme.

    He cautioned against using the IMF as an excuse for stagnation, urging prioritisation of domestically controllable economic avenues.

    In reiterating his stance, Prime Minister Shehbaz Sharif conveys a dual commitment to engaging with the IMF while ensuring a steadfast focus on bolstering Pakistan’s economic trajectory, fostering employment, and curbing inflation.

    As the nation navigates through economic challenges, the Prime Minister’s emphasis on proactive economic strategies resonates as a call to action for sustainable growth and resilience.

  • Gold prices reverse previous day’s gains with Rs4,200 per tola drop

    Gold prices reverse previous day’s gains with Rs4,200 per tola drop

    Gold prices experienced a downturn in the domestic market on Friday, aligning with the global trend.

    The price of 24-karat gold dropped by Rs4,200 to reach Rs228,200 per tola, reflecting fluctuations in international gold prices.

    Notably, the previous day saw a significant increase of Rs4,600 per tola in gold prices in Pakistan.

    According to the Karachi Sarafa Association, the price of 24-karat gold per 10 grammes fell to Rs195,645, marking a decrease of Rs3,600.

    Similarly, the price of 22-karat gold also saw a decline, reaching Rs179,341 per 10 grammes.

    In addition to gold, silver prices also saw a decrease. 24-karat silver was sold at Rs2,580 per tola and Rs2,211.93 per 10 grammes, indicating a decrease of Rs20 per tola and Rs17.15 per 10 grammes, respectively.

    Internationally, spot gold prices retreated after reaching a milestone of over $2,200 an ounce for the first time.

    This drop followed the Federal Reserve’s indication of maintaining its trajectory for three interest-rate cuts this year. Spot gold traded near $2,166.81, showing a decrease of $14.65 or 0.68 per cent for the day.

    The correction in gold prices was influenced by the strengthening of the dollar, which rose by 0.8 per cent after hitting a one-week low.

  • Pakistan’s forex reserves surge to $8.02 billion, SBP data shows

    Pakistan’s forex reserves surge to $8.02 billion, SBP data shows

    The latest data released on Thursday revealed a noteworthy surge in the foreign exchange reserves held by the State Bank of Pakistan (SBP), marking an increase of $105 million over the course of a week, reaching a total of $8.02 billion as of March 15.

    In addition to the SBP’s reserves, the total liquid foreign reserves for the country now stand at $13.4 billion, with commercial banks accounting for $5.38 billion of this amount.

    Despite the significant boost, the central bank did not provide specific details regarding the reason behind this increase.

    However, it did report that during the week ending on March 15, SBP’s reserves climbed by $105 million to reach $8,017.9 million, indicating a positive trend.

    The previous week had also witnessed an increase in Pakistan’s central bank reserves, albeit a smaller one, amounting to $17 million.

    In a pivotal development, Pakistani authorities successfully concluded negotiations with the International Monetary Fund (IMF) on the second and final review of the $3 billion Stand-By Arrangement (SBA).

    As per the agreement reached, pending approval by the IMF’s Executive Board, an additional access of $1.1 billion under the SBA will become available.

    This anticipated inflow from the IMF is expected to further bolster the country’s reserves and serve as a promising sign for its struggling economy.

  • SBP sees surge of over $17 million in forex reserves

    SBP sees surge of over $17 million in forex reserves

    The latest data released by the State Bank of Pakistan (SBP) revealed a notable rise in the country’s foreign exchange reserves. During the week ending March 8, 2024, SBP’s reserves increased by $17.2 million, marking a 0.22 per cent growth, reaching a total of $7.91 billion.

    Additionally, Pakistan’s overall reserves experienced a surge, ascending by $131.3 million, or 1.01 per cent, week-on-week (WoW), to a sum of $13.15 billion. This increase was further complemented by a rise in reserves held by commercial banks, which climbed by $114.1 million, or 2.23 per cent, to reach $5.24 billion.

    In a significant development, the second review of the stand-by arrangement (SBA) with the International Monetary Fund (IMF) is slated to take place from March 14 to 18, 2024. This review holds particular importance as it marks the final assessment under the SBA. Upon reaching a staff-level agreement, the final tranche of $1.1 billion will be disbursed, subject to approval by the Executive Board of the IMF.

    It is noteworthy that in the current fiscal year, Pakistan has witnessed a substantial increase in its total liquid foreign reserves, amounting to $3.99 billion, or 43.57 per cent. Similarly, the ongoing calendar year has seen a rise of $0.48 billion, or 3.77 per cent.

  • IMF mission to arrive tomorrow for final review discussions on Pakistan’s SBA

    IMF mission to arrive tomorrow for final review discussions on Pakistan’s SBA

    The International Monetary Fund (IMF) mission is poised to commence vital economic review discussions from March 14 to 18, 2024, marking the conclusive evaluation of Pakistan’s Standby Arrangement (SBA).

    Sources within the Finance Ministry have confirmed that the IMF mission is scheduled to touch down in Pakistan tomorrow night, kickstarting a series of pivotal discussions set to unfold over the next four days.

    During this intensive period, the IMF mission is slated to engage in comprehensive dialogue with Pakistan’s economic team. Key participants include representatives from the Finance Ministry, Energy Ministry, Federal Board of Revenue (FBR), State Bank of Pakistan (SBP), Planning Commission, and the Petroleum Division.

    Insiders suggest that the IMF mission will delve into discussions covering a spectrum of economic facets. Talks are expected to encompass various critical sectors, including finance, energy, taxation, and central banking.

    Furthermore, in parallel with these discussions, preliminary conversations are anticipated to unfold regarding the potential initiation of a new loan programme with the IMF mission. This prospect adds an extra layer of significance to the ongoing economic deliberations as Pakistan navigates its financial landscape in the pursuit of sustainable economic growth.

    Stay tuned for comprehensive coverage as the IMF mission engages in the final review of Pakistan’s Standby Arrangement, paving the way for crucial decisions that could shape the nation’s economic trajectory in the coming months.

  • Pakistan gears up for crucial IMF talks on $3 billion SBA programme

    Pakistan gears up for crucial IMF talks on $3 billion SBA programme

    Pakistan is set to commence vital discussions with the International Monetary Fund (IMF) concerning the completion of the second review under the $3 billion Standby Arrangement (SBA) programme.

    The formal invitation to the Washington-based lender is expected to be dispatched shortly after the formation and oath-taking of the federal cabinet, with negotiations anticipated to commence in the coming week.

    Simultaneously, Pakistan plans to request a new deal under the 36-month Extended Fund Facility (EFF).

    Sources have indicated that the size of the upcoming EFF programme is yet to be finalized, but Islamabad aims to explore the inclusion of climate finance to potentially increase the programme’s magnitude from $6 billion to $8 billion.

    A significant challenge facing the incoming finance minister is the pursuit of the Federal Board of Revenue’s (FBR) tax collection target of Rs890 billion for March 2024. Failure to meet this quarterly (Jan-March) target with the IMF may prompt additional taxation measures for the remaining fiscal year.

    Prime Minister Shehbaz Sharif chaired a high-level meeting on Tuesday to receive a comprehensive briefing from the FBR team on the future strategy for revamping the taxation system.

    The FBR has, to date, collected Rs5.82 trillion in the first eight months of the current fiscal year, experiencing a shortfall of Rs33 billion in achieving the February 2024 monthly target.

    To meet the targeted Rs9.415 trillion by June 30, 2024, the FBR must collect Rs3.58 trillion in the remaining four months (March-June) period.

    March 2024 holds particular significance, with the monthly target of Rs890 billion crucial for fulfilling the agreed third-quarter (Jan-March) period with the IMF.

    PM Shehbaz emphasized the immediate commencement of automation and digitization of the FBR, personally committing to monitor the entire process.

    According to The News, he urged the adoption of international best practices to enhance transparency, increase tax collection, and eradicate tax evasion, corruption, and smuggling.

    Expressing dissatisfaction with the current progress, PM Shehbaz directed the FBR to start the automation and digitization process immediately, urging the acquisition of services from international firms. He stressed the appointment of officers based on merit in the Track and Trace system.

    During the meeting, FBR Chairman Malik Amjad Tiwana briefed the prime minister on measures taken towards automation, tax net expansion, refund payments to exporters, and anti-smuggling efforts.

    PM Shehbaz, however, insisted on immediate progress, highlighting the collaboration with the Ministry of Interior and the Pakistan Army to combat smuggling effectively.

    As the meeting concluded, PM Shehbaz praised the efforts of caretaker finance minister Dr. Shamshad Akhtar and her team, commending their adherence to the policies laid by the previous government to avert default.

    The prime minister expressed confidence in achieving progress and prosperity through diligent efforts and adherence to the right direction.

    The meeting, attended by key officials, emphasized the urgency of digitalized invoicing and the inclusion of 1.5 million more individuals into the tax net, underlining the government’s commitment to fostering economic stability and growth.