Pakistan Economy : Updates and Discussions
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Clearance from FATF must for IMF loan: Dr Pasha
Khalid Mustafa I May 14, 2019
ISLAMABAD: Dr Hafeez Pasha, Pakistan’s one of the distinguished economists and former finance minister, has said that the IMF press release following the staff level agreement on $6 billion loan programme with Pakistan, has indicated that the Executive Board of IMF will approve the loan only after the FATF clears Pakistan from anti-money laundering and terror financing charges.
Speaking his mind over the staff level agreement with IMF, Pasha mentioned a specific reference in the IMF press release, which has asked the government of Pakistan to show commitment against money laundering and terror financing, meaning thereby that FATF clearance is mandatory to qualify for the programme.
The Financial Action Task Force (FATF) is scheduled to be held in Beijing from May 15 to May 17 and will minutely examine Pakistan’s compliance report on total 19 points, including risk assessment to currency smuggling for money-laundering and terror-financing through cash couriers. The executive board of the Fund, where US is the major shareholder of the total fund which is 16.52 per cent and has the voting power of 831,407, will go through the staff level agreement with Pakistan and will give their final nod. The Executive Board will approve the loan after keeping in view the FATF report about Pakistan on money-laundering and terror-financing conditions of the Fund that the government of Pakistan has accepted.
The DNA of IMF is quite different this time from the past as the US, NATO forces and India who are out to use the tools of FATF and IMF to tame Pakistan and more importantly force Pakistan to ensure the smooth exist of US forces from Afghanistan.
Coming to the loan programme of $6 billion that Pakistan will have 39 months from IMF, Dr Pasha argued in the first three months Pakistan will be groping in the dark and will have no tranche after the agreement as the tranches will start after three months provided Pakistan fulfills all the prior actions. He further said it is basically not $6 billion loan, instead it is $3 billion as Pakistan has to pay back to IMF $3 billion loan in next three years. The amount is meager and is not enough to help Pakistan bridge the financing gap. Astonishingly the Fund is not ready to roll over its loan, but it has asked Pakistan in the press release to ask its international development partners to rollover their loans.
Dr Pasha said the IMF has basically asked Pakistan to have commitment from China, Saudi Arabia and UAE to rollover their loans to Pakistan. He said on one hand the IMF is not willing to rollover its loan, but on the other hand it is asking Pakistan to arrange breathing space to cope with the financing gap from the said countries by arranging the rollover.
Dr Pasha said this is one of the prior actions which Pakistan has to complete prior to qualify for approval of loan programme from the Executive Board of IMF. He said China’s loan stands at about $19 billion mainly in project financing and $7 billion are from Chinese commercial banks and $4 billion are parked in the reserves. Saudi Arabia has given Pakistan $3 billion and UAE $2 billion. The Fund wants the rollover of these loans. It is quite strange that IMF is not willing that Pakistan owns the said loan which is against the international norms and practices.
More importantly in the press release, the IMF asked the government to balance the NFC award between federation and provinces which is tantamount to breach of the Constitution of Pakistan. He said after the 18th Amendment the share of provinces in the NFC Award cannot be reduced.
The most alarming thing mentioned in the press release, he said, is that Pakistan government is bound to bring down the primary budget deficit to 0.6 per cent in next budgetary year from over 2 per cent. ‘This simply means that IMF has asked Pakistan to place cut on the defense budget which is not possible as our forces are engaged on both the eastern and the western borders of the country.’
Pasha explained the primary deficit means total revenue less non-interest expenditure. This means that Pakistan will have no option but to place huge cut on defense budget. The IMF wants Pakistan government to ensure the primary budget surplus of 2.5 per cent by reducing the defense budget and keeps central bank away from the exchange rate leaving it to the market forces.
Meanwhile, Arif Habib Limited Research on expected features of IMF programme worked out that in the wake of free float of exchange rate, US dollar will appreciate to Rs147 by June 2019 that will further increase to Rs152 by December this year. This will yield additional devaluation of Pak rupee by 10-13 per cent. The research also said the discount rate from existing level will also increase by 50-75 basis points. And to lower the fiscal deficit, and to ensure the higher revenue, GST will be increased to 18 per cent and a Value Added Tax will be introduced.
Once we went into Fund’s programme, the growth will remain stagnant at 3 per cent, and the middle class will squeezed more and more people will go down below the poverty line.
According to Dr Hafeez Pasha about one million people be unemployed because of slowing down of the economy whereas 4,000,000 people have already gone down the poverty line so far and in next two fiscal years, about 8000,000 more people are feared to go down below the poverty line. During the IMF three years period, the growth will remain at 3 per cent in the next two years and a generation of Rs700 billion through taxation measures in next budgetary year will serve nothing but ruin the economy as people will not pay more when the growth will be at the lowest ebb.
Clearance from FATF must for IMF loan: Dr Pasha
Clearance from FATF must for IMF loan: Dr Pasha
Khalid Mustafa I May 14, 2019
ISLAMABAD: Dr Hafeez Pasha, Pakistan’s one of the distinguished economists and former finance minister, has said that the IMF press release following the staff level agreement on $6 billion loan programme with Pakistan, has indicated that the Executive Board of IMF will approve the loan only after the FATF clears Pakistan from anti-money laundering and terror financing charges.
Speaking his mind over the staff level agreement with IMF, Pasha mentioned a specific reference in the IMF press release, which has asked the government of Pakistan to show commitment against money laundering and terror financing, meaning thereby that FATF clearance is mandatory to qualify for the programme.
The Financial Action Task Force (FATF) is scheduled to be held in Beijing from May 15 to May 17 and will minutely examine Pakistan’s compliance report on total 19 points, including risk assessment to currency smuggling for money-laundering and terror-financing through cash couriers. The executive board of the Fund, where US is the major shareholder of the total fund which is 16.52 per cent and has the voting power of 831,407, will go through the staff level agreement with Pakistan and will give their final nod. The Executive Board will approve the loan after keeping in view the FATF report about Pakistan on money-laundering and terror-financing conditions of the Fund that the government of Pakistan has accepted.
The DNA of IMF is quite different this time from the past as the US, NATO forces and India who are out to use the tools of FATF and IMF to tame Pakistan and more importantly force Pakistan to ensure the smooth exist of US forces from Afghanistan.
Coming to the loan programme of $6 billion that Pakistan will have 39 months from IMF, Dr Pasha argued in the first three months Pakistan will be groping in the dark and will have no tranche after the agreement as the tranches will start after three months provided Pakistan fulfills all the prior actions. He further said it is basically not $6 billion loan, instead it is $3 billion as Pakistan has to pay back to IMF $3 billion loan in next three years. The amount is meager and is not enough to help Pakistan bridge the financing gap. Astonishingly the Fund is not ready to roll over its loan, but it has asked Pakistan in the press release to ask its international development partners to rollover their loans.
Dr Pasha said the IMF has basically asked Pakistan to have commitment from China, Saudi Arabia and UAE to rollover their loans to Pakistan. He said on one hand the IMF is not willing to rollover its loan, but on the other hand it is asking Pakistan to arrange breathing space to cope with the financing gap from the said countries by arranging the rollover.
Dr Pasha said this is one of the prior actions which Pakistan has to complete prior to qualify for approval of loan programme from the Executive Board of IMF. He said China’s loan stands at about $19 billion mainly in project financing and $7 billion are from Chinese commercial banks and $4 billion are parked in the reserves. Saudi Arabia has given Pakistan $3 billion and UAE $2 billion. The Fund wants the rollover of these loans. It is quite strange that IMF is not willing that Pakistan owns the said loan which is against the international norms and practices.
More importantly in the press release, the IMF asked the government to balance the NFC award between federation and provinces which is tantamount to breach of the Constitution of Pakistan. He said after the 18th Amendment the share of provinces in the NFC Award cannot be reduced.
The most alarming thing mentioned in the press release, he said, is that Pakistan government is bound to bring down the primary budget deficit to 0.6 per cent in next budgetary year from over 2 per cent. ‘This simply means that IMF has asked Pakistan to place cut on the defense budget which is not possible as our forces are engaged on both the eastern and the western borders of the country.’
Pasha explained the primary deficit means total revenue less non-interest expenditure. This means that Pakistan will have no option but to place huge cut on defense budget. The IMF wants Pakistan government to ensure the primary budget surplus of 2.5 per cent by reducing the defense budget and keeps central bank away from the exchange rate leaving it to the market forces.
Meanwhile, Arif Habib Limited Research on expected features of IMF programme worked out that in the wake of free float of exchange rate, US dollar will appreciate to Rs147 by June 2019 that will further increase to Rs152 by December this year. This will yield additional devaluation of Pak rupee by 10-13 per cent. The research also said the discount rate from existing level will also increase by 50-75 basis points. And to lower the fiscal deficit, and to ensure the higher revenue, GST will be increased to 18 per cent and a Value Added Tax will be introduced.
Once we went into Fund’s programme, the growth will remain stagnant at 3 per cent, and the middle class will squeezed more and more people will go down below the poverty line.
According to Dr Hafeez Pasha about one million people be unemployed because of slowing down of the economy whereas 4,000,000 people have already gone down the poverty line so far and in next two fiscal years, about 8000,000 more people are feared to go down below the poverty line. During the IMF three years period, the growth will remain at 3 per cent in the next two years and a generation of Rs700 billion through taxation measures in next budgetary year will serve nothing but ruin the economy as people will not pay more when the growth will be at the lowest ebb.
Clearance from FATF must for IMF loan: Dr Pasha
Absolutely loved this report! music to thy ears, long hail IMF, all hail Imran Khan's Naya Pakistan!!!
Just wait for CPEC to become operational, IMF will be taking loans from Pakistan!
I'm sorry I went back to 2015 for a second there...
I'm sorry I went back to 2015 for a second there...
A comparative graphical analysis of India and Pakistan economy throughout the years :https://www.imf.org/external/datamapper/NGDPD@WEO/PAK/IND
India :
Pakistan :
The GDP growth figures and the inflation rates are basically flipped over for the two countries. You don't need to be an economist to figure out the economic futures of the two nations.
India :
Pakistan :
The GDP growth figures and the inflation rates are basically flipped over for the two countries. You don't need to be an economist to figure out the economic futures of the two nations.
@_Anonymous_ @BlackOpsIndia @randomradio @vstol Jockey @Ashwin @Falcon @LoneWolfSandeep
Bas yehi din dekhna baki tha. Islamic atomic bomb wala mulk ke pas oil nahi hai. Yah allah, merd-e-moumin pe yeh julm kyun ?
Offshore drilling near Karachi completed and the results are shocking for Pakistan: Sources
18 May, 2019
ISLAMABAD – Offshore drilling in Kekra 1 expected oil field near Karachi have been completed and the results are shocking for Pakistan, Sources have revealed.
No reservoir of oil and gas was found from the sea after drilling, revealed sources.
They said that the testing process had been completed after the drilling. “No reservoir of oil and gas could be found from sea,” they disclosed.
The sources said that Prime Minister Imran Khan had been informed about the results. An amount of Rs14 billion has been incurred on drilling up to 5,000 meters during four months.
Pakistan, after a gap of nine years, began offshore drilling to find estimated huge oil and gas deposits. The US firm ExxonMobil , one of the world’s largest oil and gas firms, in collaboration with Italian firm Eni Pakistan Limited, drilled in ultra-deep waters some 280 kilometres away from Karachi coast.
They drilled Kekra-1 well in Indus-G block, which is located some 280 kilometres away from the Karachi coast. For this purpose, ExxonMobil had brought one major drilling ship, three supply vessels and two helicopters on the site.
Besides, Pakistan state-owned Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) were part of the joint venture. Each of the four firms have a 25% participating interest in the block.
It was the 18th attempt to find hydrocarbons from deep waters in Pakistan. Some of the surveyors had found the block ‘Indus-G’ similar to Indian offshore Bombay High oilfields, which produces 350,000 barrels per day (bpd) of crude oil, while some define it like wells producing hydrocarbons in the oil and gas rich country, Kuwait in the Gulf.
Exxon Mobil Corporation, through ExxonMobil Exploration and Production Pakistan BV (EEPP), had acquired 25% participating interest in May 2018 in Offshore Indus-G Block.
Offshore drilling near Karachi completed and the results are shocking for Pakistan: Sources
Bas yehi din dekhna baki tha. Islamic atomic bomb wala mulk ke pas oil nahi hai. Yah allah, merd-e-moumin pe yeh julm kyun ?
Offshore drilling near Karachi completed and the results are shocking for Pakistan: Sources
18 May, 2019
ISLAMABAD – Offshore drilling in Kekra 1 expected oil field near Karachi have been completed and the results are shocking for Pakistan, Sources have revealed.
No reservoir of oil and gas was found from the sea after drilling, revealed sources.
They said that the testing process had been completed after the drilling. “No reservoir of oil and gas could be found from sea,” they disclosed.
The sources said that Prime Minister Imran Khan had been informed about the results. An amount of Rs14 billion has been incurred on drilling up to 5,000 meters during four months.
Pakistan, after a gap of nine years, began offshore drilling to find estimated huge oil and gas deposits. The US firm ExxonMobil , one of the world’s largest oil and gas firms, in collaboration with Italian firm Eni Pakistan Limited, drilled in ultra-deep waters some 280 kilometres away from Karachi coast.
They drilled Kekra-1 well in Indus-G block, which is located some 280 kilometres away from the Karachi coast. For this purpose, ExxonMobil had brought one major drilling ship, three supply vessels and two helicopters on the site.
Besides, Pakistan state-owned Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) were part of the joint venture. Each of the four firms have a 25% participating interest in the block.
It was the 18th attempt to find hydrocarbons from deep waters in Pakistan. Some of the surveyors had found the block ‘Indus-G’ similar to Indian offshore Bombay High oilfields, which produces 350,000 barrels per day (bpd) of crude oil, while some define it like wells producing hydrocarbons in the oil and gas rich country, Kuwait in the Gulf.
Exxon Mobil Corporation, through ExxonMobil Exploration and Production Pakistan BV (EEPP), had acquired 25% participating interest in May 2018 in Offshore Indus-G Block.
Offshore drilling near Karachi completed and the results are shocking for Pakistan: Sources
Rupee slides further to Rs150 against USD; stock market down 2.4pc
Reuters, Updated May 17, 2019
The rupee continued to fall to record lows on Friday, after the government agreed in principle to a $6 billion loan from the International Monetary Fund (IMF).
The rupee, which lost 3.6 per cent on Thursday to close at 146.2 against the US dollar in the interbank market, dropped further on Friday, dealers said, selling at Rs149.50 in the interbank market and Rs150 in the open market.
The fall reflects the IMF's condition for a “market-based exchange rate mechanism, which will see limited intervention by the central bank now,” said Saad Hashmi, chief economist and research director at Topline Securities in Karachi.
The stock market also declined on Friday, with the benchmark KSE-100 index shedding 804.5 points to close at 33,166.6, down 2.4 per cent.
The market opening at 33,971 remained today's high, whereas the benchmark KSE-100 Index hit a day's low at 33,006 points. As many as 63.3 million shares — worth Rs2.7 billion — of the benchmark index companies changed hands during the session.
According to a Topline Securities advisory, the fall in the index level is due to devaluation of rupee against dollar for last two working days, expected hike in policy rate in the next monetary policy meeting on Monday, and selling pressure from mutual funds [net selling of US$14m in 4 sessions].
While the exact conditions of a final IMF deal are still unknown, Sunday's Staff-Level accord, which must still be approved by the Fund's board in Washington, said a “market-determined” exchange rate would help the financial sector.
That pointed to less support from the State Bank of Pakistan, which at present underpins the rupee in a de facto managed float system.
Late on Thursday, the SBP issued a statement saying the sharp fall in the rupee “reflects demand and supply conditions in the foreign exchange market” and would help in correcting market imbalances.
However, the drop presents a political problem for the government, which came to power last year promising to build a new social welfare system and vowing not to seek what would be Pakistan's 13th bailout since the 1980s.
With the economy facing a sharp slowdown in growth, the government is expected to have to raise taxes or impose heavy spending cuts to reduce its ballooning budget deficit at a time when household budgets are increasingly squeezed.
While many analysts see the rupee as overvalued and say the SBP has wasted billions defending it, a weaker currency is likely to fuel inflation, which is already over 8pc, with power and fuel prices hit especially hard.
Hashmi noted market talk that oil imports were already facing payment pressure.
The SBP, which is due to announce its latest interest rate decision on Monday, said late on Thursday that its foreign exchange reserves fell $138 million in the week ending May 10 to $8.846 billion, less than needed to cover three months of imports.
Rupee slides further to Rs150 against USD; stock market down 2.4pc - Pakistan - DAWN.COM
Reuters, Updated May 17, 2019
The rupee continued to fall to record lows on Friday, after the government agreed in principle to a $6 billion loan from the International Monetary Fund (IMF).
The rupee, which lost 3.6 per cent on Thursday to close at 146.2 against the US dollar in the interbank market, dropped further on Friday, dealers said, selling at Rs149.50 in the interbank market and Rs150 in the open market.
The fall reflects the IMF's condition for a “market-based exchange rate mechanism, which will see limited intervention by the central bank now,” said Saad Hashmi, chief economist and research director at Topline Securities in Karachi.
The stock market also declined on Friday, with the benchmark KSE-100 index shedding 804.5 points to close at 33,166.6, down 2.4 per cent.
The market opening at 33,971 remained today's high, whereas the benchmark KSE-100 Index hit a day's low at 33,006 points. As many as 63.3 million shares — worth Rs2.7 billion — of the benchmark index companies changed hands during the session.
According to a Topline Securities advisory, the fall in the index level is due to devaluation of rupee against dollar for last two working days, expected hike in policy rate in the next monetary policy meeting on Monday, and selling pressure from mutual funds [net selling of US$14m in 4 sessions].
While the exact conditions of a final IMF deal are still unknown, Sunday's Staff-Level accord, which must still be approved by the Fund's board in Washington, said a “market-determined” exchange rate would help the financial sector.
That pointed to less support from the State Bank of Pakistan, which at present underpins the rupee in a de facto managed float system.
Late on Thursday, the SBP issued a statement saying the sharp fall in the rupee “reflects demand and supply conditions in the foreign exchange market” and would help in correcting market imbalances.
However, the drop presents a political problem for the government, which came to power last year promising to build a new social welfare system and vowing not to seek what would be Pakistan's 13th bailout since the 1980s.
With the economy facing a sharp slowdown in growth, the government is expected to have to raise taxes or impose heavy spending cuts to reduce its ballooning budget deficit at a time when household budgets are increasingly squeezed.
While many analysts see the rupee as overvalued and say the SBP has wasted billions defending it, a weaker currency is likely to fuel inflation, which is already over 8pc, with power and fuel prices hit especially hard.
Hashmi noted market talk that oil imports were already facing payment pressure.
The SBP, which is due to announce its latest interest rate decision on Monday, said late on Thursday that its foreign exchange reserves fell $138 million in the week ending May 10 to $8.846 billion, less than needed to cover three months of imports.
Rupee slides further to Rs150 against USD; stock market down 2.4pc - Pakistan - DAWN.COM
Attachments
Kekra-1: Exxon Mobil all set to pack up and leave
by News Desk , (Last Updated 32 mins ago)
Hours after Prime Minister Imran Khan told the nation to expect good news regarding the discovery of oil and gas reserves off Karachi coast, his special assistant on petroleum Nadeem Babar announced that offshore drilling in Kekra-1 well has been stopped owing to no oil reserves.
Amid much hype, Pakistan was hopeful of finding large oil and gas reserves in its territorial waters in the Arabian Sea.
The prime minister, on numerous occasions, said he was still hopeful that Pakistan would discover major gas reserves in offshore drilling being carried out in the Arabian Sea.
He said the nation could receive good news within two weeks. The prime minister asked the nation to offer special prayers so that the expectations attached to the drilling project come true. Imran Khan said, if found, the gas reserves would be enough to meet Pakistan’s needs for the next 50 years.
According to a report on May 15, a joint venture of four oil exploration companies completed the offshore drilling process after four months.
A consortium comprises of, Exxon Mobil, ENI, Oil and Gas Development Company, and Pakistan Petroleum Limited conducting the drill stem test to determine the real size of the oil and gas reserves in the Kekra-1 well, located around 280 kilometres away from Karachi, sources said.
The planned drilling of 5,470 meters was achieved at a cost of Rs14 billion.
The Drill Stem Test (DST) would be completed in the next three days. After the completion of the DST, a report will be prepared about the total quantity of the oil and gas reserves within a week, sources further said.
In initial estimates, the availability of around nine trillion cubic feet of gas with a large quantity of oil was assessed in the Kekra-1 well.
Due to the critical situations faced in the Kekra-1 well drilling, the exploration venture had to spend an additional $100 million in order to procure surplus steel and cement etc to drill the Kekra-1 well in another direction.
Kekra-1: Exxon Mobil all set to pack up and leave
Remember BCCI vs PCB court case in the ICC's court of arbitration about India not playing cricket with Pakistan ? Back then Pakistan lost the court case and had to compensate BCCI for the cost of legal procedures, lawyers etc. Same story here, not only did they not find the much hyped oil, now they have to pay a hefty price to Exxon and the gang for trying.
In the words of a Pakistani comic :
by News Desk , (Last Updated 32 mins ago)
Hours after Prime Minister Imran Khan told the nation to expect good news regarding the discovery of oil and gas reserves off Karachi coast, his special assistant on petroleum Nadeem Babar announced that offshore drilling in Kekra-1 well has been stopped owing to no oil reserves.
Amid much hype, Pakistan was hopeful of finding large oil and gas reserves in its territorial waters in the Arabian Sea.
The prime minister, on numerous occasions, said he was still hopeful that Pakistan would discover major gas reserves in offshore drilling being carried out in the Arabian Sea.
He said the nation could receive good news within two weeks. The prime minister asked the nation to offer special prayers so that the expectations attached to the drilling project come true. Imran Khan said, if found, the gas reserves would be enough to meet Pakistan’s needs for the next 50 years.
According to a report on May 15, a joint venture of four oil exploration companies completed the offshore drilling process after four months.
A consortium comprises of, Exxon Mobil, ENI, Oil and Gas Development Company, and Pakistan Petroleum Limited conducting the drill stem test to determine the real size of the oil and gas reserves in the Kekra-1 well, located around 280 kilometres away from Karachi, sources said.
The planned drilling of 5,470 meters was achieved at a cost of Rs14 billion.
The Drill Stem Test (DST) would be completed in the next three days. After the completion of the DST, a report will be prepared about the total quantity of the oil and gas reserves within a week, sources further said.
In initial estimates, the availability of around nine trillion cubic feet of gas with a large quantity of oil was assessed in the Kekra-1 well.
Due to the critical situations faced in the Kekra-1 well drilling, the exploration venture had to spend an additional $100 million in order to procure surplus steel and cement etc to drill the Kekra-1 well in another direction.
Kekra-1: Exxon Mobil all set to pack up and leave
Remember BCCI vs PCB court case in the ICC's court of arbitration about India not playing cricket with Pakistan ? Back then Pakistan lost the court case and had to compensate BCCI for the cost of legal procedures, lawyers etc. Same story here, not only did they not find the much hyped oil, now they have to pay a hefty price to Exxon and the gang for trying.
In the words of a Pakistani comic :
Hahaha best news in months, coke head was living in his own world thinking this will cure Pakistan of all problems and they won't have to give up terrorism. Guess what Jihadis your time is up, signal from the almighty, not even luck is coming to rescue you this time.
Garibi main Aata Gila hogaya......
Mugerlal Imran ke Haseen Sapne Khatam, Ramsay IMF ke darawane sapne shuru....
Heard Nawaz Sharif took away all the oil and gas abroad, what's the fault of handsome Imran in this? He will bring back every drop of that oil I am sure.
No oil found on 18th attempt, Exxon Mobil leaves, but Zaid Hamid thinks its Amreeki and Jew conspiracy
Next they should order Bushra Begum to DRILL Niazi Imran Khan's BACK I am sure they will find lots of GAS even if it is stinky.......