In Brief
INTERNAL
Government caves in to IMF, drops petrol bomb
On 26 May, the finance minister announced that government gave a go ahead to increase petroleum products’ prices by PKR 30 per litre. He expressed the hope that now reaching an understanding on staff-level agreement with the IMF would be easier as constructive discussion are being held with the Fund on revival of the EFF. The minister acknowledged that it would contribute to inflation to some extent but the government had no other choice as it has already provided Rs56 per litre subsidy on diesel and also to reduce pressure on Rupee. (Zahir Abbasi and Wasim Iqbal, “POL products’ prices hiked by Rs30 per litre,” Business Recorder, 27 May 2022)
Wont take dictation from PTI: PM
On 26 May, while addressing national assembly during his speech, PM Shehbaz Sharif, ruled out the notion of receiving “dictation” from PTI Chairman Imran Khan, stressed that the National Assembly would make the decision regarding the date of the next general elections. The prime minister said: “Holding talks is the ultimate weapon of politicians. Our doors are opened for talks. I can form a committee for this purpose.” His address came after government had passed Elections (Amendment) Bill, 2022 and NAB (Amendment), 2022. According to NAB (amendment) Bill, 2022, there are some important points: NAB deputy chairman to become acting chairman following top official’s retirement. Process to appoint new chairman to begin two months prior to incumbent’s retirement and completed in 40 days. Federal and provincial tax matters removed from NAB’s purview. Regulatory bodies’ decisions removed from NAB’s purview. Judges to be appointed in accountability courts for a three-year period; cases to be decided within a year.NAB bound to ensure availability of evidence prior to arrest. Up to five-year imprisonment for filing false reference. (Naveed Butt, “PM rejects Imran’s ‘immediate’ election demand,” Business Recorder, 27 May 2022)
Imran Khan gives six days ultimatum for declaring date of general elections
On 26 May, Pakistan Tehreek-e-Insaf (PTI) chairman, gave a six-day ultimatum to the coalition government to dissolve the assemblies and announce fresh elections or else he would be back in the capital to throw them out with ‘a sea of people’ from all over the country. The PTI chairman said that the Pakistan Peoples Party (PPP) and other political parties staged a march during his government but they did not create any hurdle or fired teargas at their workers. According to various sources, minimum 3 police officers were martyred in line of service during Azadi March of PTI in various parts of Punjab. (Fazalsher and Zulfiqar Ahmed, “PTI chairman issues 6-day ultimatum after disbanding march,” Business Recorder, 27 May 2022)
ECONOMY
USD 2 billion worth of projects to be financed by ADB after thorough consultations
On 26 May, while speaking at at a meeting at the Lahore Chamber of Commerce and Industry (LCCI), Deputy Country Director of Asian Development Bank (ADB) said: “ADB supports projects in developing member countries that create economic and development impact, delivered through both public and private sector operations, advisory services, and knowledge support. Strategy 2030 sets the course for ADB’s efforts to respond effectively to Asia and the Pacific’s changing needs.” On the need to find the objectives in financing projects in Pakistan, he asserted that projects related to food security, health, irrigation and education were pivotal in overall economic development in Pakistan. LCCI president in his address stressed that Pakistan needs to ensure macroeconomic stability, fiscal consolidation and consistent improvement in the business environment through better facilitation of private sector and pivotal role of private sector in transformation of the economy. (“$2bn projects for Pakistan in the pipeline: ADB official,” Business Recorder, 27 May 2022)
Power division and World Bank resume weekly talks regarding PACE 1
On 27 May, Business Recorder reported on resumption of regular talks between Power Division and World Bank to progress on Programme for Affordable Energy (PACE-1). PACE 1 is a policy action around six reforms, ranging from National Energy Policy (NEP), Transmission System Expansion Plan (TSEP), financial sustainability and the circular debt, the importance of transitioning to renewable energy, in particular solar power, which can help to meet daytime cooling demand and retargeting of subsidies. (Mushtaq Ghumman, “WB, Power Div to hold weekly talks,” Business Recorder, 27 May 2022)
Forex reserves down by USD 11 million in a week
On 26 May, according to the weekly foreign exchange reserves report issued by the State Bank of Pakistan (SBP), the total foreign exchange reserves held by the country stood at USD 16.150 billion as of 20 May, 2022 from USD 16.161 billion as of 13 May, 2022. During the week under review, the SBP reserves decreased by USD 75 million to USD 10.089 billion due to external debt repayment. However, net foreign reserves held by commercial banks rose by USD 63 million to USD 6.061 billion. The government is making efforts to build the foreign exchange reserves and recently, Saudi Arabia has announced to rollover the $3 billion deposits with Pakistan. (“Forex reserves down $11m,” Business Recorder, 27 May 2022)
Finance Minister refuses to impose CVT and raise tax on salaried classes
On 27 May, The Tribune Express Reported quoted finance minister Miftah Ismail’s position on not imposing Capital Value Tax (CVT) on the total value of the stock market and to not introduce single rate 30 per cent tax on salaried class who earn in the range of PKR 104,000 to PKR one million. The measures were sought by IMF from FBR (Federal Bureau of Revenue) to increase fiscal target of PKR 6.8 trillion. According to the news report, Pakistani authorities had proposed their own revised tax slabs, which were collecting additional PKR 35 million, one third of IMF’s expectations. According to IMF, the economy is to grow at 5 per cent while inflation will hover at inflation of 11 per cent for the next financial year, this surge will create scope additional PKR 900 billion in the kitty of FBR. (Shahbaz Rana, “1% CVT on bourse rejected,” The Express Tribune, 27 May 2022)
China proposes RMB circulation system
On 26 May, Bank of China and State Bank of Pakistan (SBP) held talks with to review the proposal of the Chinese authorities to set up RMB Capital Circulation System to promote trade and transactions in the Chinese currency. The exchange rate between the currencies of both countries should be set in the China Foreign Exchange Trading System (CFETS) and in authorized banks declared as cross-border currency markets in China and Pakistan, according to the documents. (Irshad Ansari, “Pakistan urged to set up RMB Capital Circulation System,” The Express Tribune, 27 Mat 2022)
PROVINCES
Balochistan: CM wont resort to revenge after no confidence motion against him fails
On 26 May, while addressing a press conference after no trust against him failed, CM Bizenjo said: “I will contact those members who brought the no-trust motion against the government and will ask them to jointly work for the uplift of the province and prosperity of its people.” (Saleem Shahid, “Balochistan CM Bizenjo says won’t seek revenge over no-trust,” Dawn, 27 May 2022)
PHC orders restoration of gas supply to cement factory
On 26 May, Peshawar High Court directed the Sui Northern Gas Pipelines Limited (SNGPL) to ensure uninterrupted gas supply to a major cement factory in Lakki Marwat district. The bench was hearing a petition filed by the Lucky Cement Limited against the severing of gas supply to its cement manufacturing plant in Lakki Marwat. Advocate general Shumail Ahmad Butt told a bench consisting of Justice Lal Jan Khattak and Justice Abdul Shakoor that the province produced more natural gas than its need but even then, its industries and other consumers were subjected to gas cuts by the federal government in violation of the Constitution. Lawyer for the SNGPL Yasir Saleem opposed the petitioner’s contentions insisting that the case of the cement manufacturer was different from the textile mills. (“PHC orders restoration of gas supply to cement factory,” Dawn, 27 May 2022)
Sindh: Provincial government to request delay in LG polls
On 26 May, spokesperson for the Sindh government and Administrator Murtaza Wahab confirmed to Dawn that the major opposition parties, including the Pakistan Tehreek-i-Insaf, Muttahida Qaumi Movement-Pakistan and Grand Democratic Alliance wanted deferment of LG polls till the structure of the local government and powers of the local bodies were reviewed and agreed upon in the new LG law. He said that opposition members were of the view that the reforms in the LG law would become infructuous if the polls were held on the previous law. (Tahir Siqqidui, “PPP, opposition want postponement of LG polls in Sindh,” Dawn, 27 May 2022)
JUDICIARY
IHC issues notices to AGP regarding Rana Shamim indictment
On 26 May, Islamabad High Court issued pre-admission notices to Jang Group’s owner Mir Shakilur Rahman and its senior journalists Ansar Abbasi and Aamir Ghauri on the appeal of former Gilgit-Baltistan chief justice Rana Shamim against his indictment in a contempt of court case. The contempt case stemmed from a report published in The News International last year that highlighted Mr Shamim’s affidavit in which he accused former chief justice of Pakistan Saqib Nisar of instructing a high court judge to keep PML-N leaders Nawaz Sharif and his daughter Maryam Nawaz incarcerated until 2018 general elections. (“Pre-admission notices issued in ex-GB judge Rana Shamim's case,” Dawn, 27 May 2022)
SC expresses concern over removal of names from ECL in 'perceived interference' suo motu case
On 27 May, a five-member bench of the Supreme Court expressed concern over the removal of names from the Exit Control List (ECL) and questioned the procedure for doing so as it heard a suo motu case on apprehensions that criminal justice might be undermined by people in positions of authority. CJP Asked: "According to the rules, [those facing cases related to] corruption, terrorism, tax evaders and loan defaulters cannot go abroad. On whose asking did the cabinet amend the rules related to tax evaders and [those suspected of] corruption?" (Haseen Bhatti, “SC expresses concern over removal of names from ECL in 'perceived interference' suo motu case,” Dawn, 27 May 2022)
PAKISTAN ON TWITTER
“No government can quit in the face of IK’s threats and win an election. So this PDM govt has decided to stay and slug it out. It thinks IK’s threatened second long march may not materialize and even if it does it will amount to less than yesterday’s.”- Nazam Sethi
“Madness at pumps. Just drove past two and the lines were very very long.
Those waiting in a 1300cc or bigger car to fil up before the price hike, pleased do the math and find out how much you’re actually saving by doing this and figure out whether it’s worth your while.”- Khurram Hussain
“Petroleum prices raised by 30 rupees per litre, higher education budget slashed by half. Some others make hay while the sun shines for them.”- Farhatullah Babar
ALSO READ
Editiorial: Stabilisation, default and autarky
Pakistan’s total debt and liabilities to GDP ratio declined from 93.8 per cent in June 2020 to 86.2pc in June 2021. Due to this improvement, the February 2022 IMF Staff Report for Pakistan found its public debt to be sustainable. It, however, highlighted “the risks to debt sustainability from delayed implementation of fiscal and structural reforms and from the continuation of low growth”.
Editorial: History of interest rates in Pakistan
The most notable difference is observed on the time lag between policy changes. On average it takes the SBP, one year and two months to start increasing rates after the last cut, however it starts reducing rates on average just 7 months after the last rate hike. This has implications for where we stand today and demonstrates the bias of central banks towards supporting growth over stabilisation at the earliest available opportunity.
Editorial: Pakistan and FATF mandate
Non-compliance with FATF action plan is directly linked to economic and foreign relations. Moreover, our foreign direct investment and funding from various institutions are intrinsically attached to compliance with FATF mandates. The delay in addressing these concerns will further deteriorate our economic conditions. Time is right for the incumbent civil and military leaderships to make this issue a priority and address the remaining action items on a war footing before June 2022 plenary to save the country from further global embarrassment.
Editorial: The downward spiral of the power sector
a bitter pill that the nation must swallow is that if electricity is becoming so expensive, it must be treated as a luxury. Faced with similar messy situations, Sri Lanka resorted to nationwide power cuts of up to 7.5 hours to save costs, a practice that is continuing to some extent today as well. In a recent video interview, former PM Shahid Khaqan Abbasi also shared that one hour of load-shed can actually save the country USD 125 million (or approximately PKR 25.19 billion). As recently as 2021, countries like China were sensitizing citizens on reducing personal consumption.
Editorial: Elite capture of the Pakistani economy
According to the UNDP’s National Human Development Report (NHDR) for Pakistan, which was released last year, the richest 20% of Pakistanis hold around 50% of the national income. On the other hand, the poorest 20% hold just 7% of the country’s national income.
Quote of the day:
“The political landscape in Pakistan is morphing, albeit at a gradual pace. The country has the second highest rate of urbanization in South Asia, which is altering the manner in which people vote and elect their representatives.”
-An opinion in The News International on “Who gets to do politics in Pakistan?”
In Brief
INTERNAL
FM Bilawal promises to strengthen Sino-Pak cooperation
On 22 May, Foreign Minister Bilawal Bhutto Zardari while addressing a press conference during his maiden visit to China said that the Sino-Pak relationship is “based on solidarity, trust, mutual respect and support.” He claimed, “The two nations enjoy a unique, unrivaled and time-tested brotherhood.” Further, he reiterated Pakistan’s commitment to providing safety to Chinese citizens in the country. Bilawal was on a two day visit to China at the invitation of FM Yi. ("Bilawal assures China of its citizens’ security in Pakistan," The Express Tribune, 23 May 2022)
USA’s report on fall of Afghan government discusses role Afghan soldiers fleeing the field
On 23 May, Dawn reported on report by the office of the Special Inspector General for Afghanistan Reconstruction which revealed that Afghan soldiers started crossing into Pakistan weeks before Kabul fell to the Taliban in August 2021. The UN refugee agency UNHCR reported early this year that more than 300,000 Afghans had fled to Pakistan between August 2021 and January 2022. But it did not say how many of those were from the military. (Anwar Iqbal, “Many Afghan soldiers fled to Pakistan after Kabul’s fall, says US report,” Dawn, 23 May 2022)
INTERNAL
Parvez Elahi survives a no-confidence motion; PML-N submits resubmits another no-confidence motion
On 22 May, Punjab Assembly Speaker Parvez Elahi survive a no-confidence motion after he managed to get it disposed of even before the mover could enter the house. The PML-N’s lawmakers claimed that they were delayed because they were not being allowed to enter the assembly premises. However, the PTI lawmakers denied these claims stating that they were not involved in any efforts to stop the PML-N lawmakers. Meanwhile, the chair announced that the “the motion is declined” and adjourned the house proceedings till 6 June. Following this, the PML-N resubmit another no-trust motion against him. ("PML-N tricked as no-trust against Elahi scuttled," The Express Tribune, 23 May 2022)
March against the “imported government” to begin on 25 May, says Imran Khan
On 22 May, Imran Khan announced that the PTI’s march against the “imported government” to Islamabad will start on 25 May. He stated that the main demands of the march were the immediate dissolution of the assemblies and announcing a date for the next general election. He said, “If the nation brings the current government back to power then I will accept it. However, no other country would be allowed to impose them on us.” Further, he said that the army had remained true to its word of staying “neutral.” ("PTI marchers to descend on capital on May 25," The Express Tribune, 23 May 2022)
PTI's long march has no significance, says Maulana Fazlur Rehman
On 22 May, Maulana Fazlur Rehman stated that the PTI’s “Azadi March” on Islamabad has no significance and that people would not suppet such agitations. He said, “They (supporters of PTI) will come to Islamabad only for wasting time and I request media not to give importance to the march.” Further, he claimed that the march would bring the PTI’s politics to an end, stating that such ‘negative’ activities were in no one’s interest. ("PTI march on Islamabad has no significance: Fazlur Rehman," Dawn, 23 May 2022)
Imran Niazi wants to initiate a civil war in the country, says PM Shehbaz Sharif
On 23 May, Prime Minister Shehbaz Sharif claimed that Imran Khan wants a civil war in the country. He said, “Imran Niazi wants to initiate a civil war in the country. But he is mistaken. The nation will never forgive him [for the sin] and will hold him by the collar.” ("Imran out to start civil war: PM Shehbaz," Dawn, 23 May 2022)
PROVINCES
Sindh: Information minister complaints against discriminatory water distribution of Indus among provinces
On 22 May, Information Minister Sharjeel Inam Memon expressed concern over that water shortage in Sindh’s barrages had aggravated to an alarming level, he mentioned that Kotri Barrage was facing 72 per cent water shortage, adding that water supply to industries was now likely to be affected amid a crisis of irrigation and potable water. The information minister said that Indus River System Authority (Irsa) had failed to implement the 1991 Water Accord and added that Irsa had been following the three-tier formula for distribution of water among provinces for many years which was illegal and against its mandate. (“Water shortage in Sindh has reached alarming level, says Sharjeel Memon,” Dawn, 23 May 2022)
ECONOMY
IT sector exports to grow by leaps and bounds, says minister for Information Technology and Telecommunication
On 21 May, while speaking at the inauguration of a National Incubation Centre (NIC), minister discussed that an investment target of PKR 600 million was fixed for the IT sector which had attracted USD 75 million investment in fiscal 2019-20. He added that around 47.4 per cent increase was recorded in IT exports and by June 30, USD 3 billion mark would be touched. That figure would touch USD 5 billion-mark next year, he added. (“IT exports to touch $5bn mark in next fiscal year, says Aminul Haq,” Dawn, 23 May 2022)