Business

IMF deposits $1.2 billion into SBP’s account: Ishaq Dar

Published

1 year ago

Farwa

SBP’s reserves have risen by $4.2 billion during this week.
FinMin Dar thanks PM Shehbaz for his efforts in IMF deal.
“Pakistan is on the road to development,” FinMin Dar adds.

The International Monetary Fund (IMF) has deposited $1.2 billion into the State Bank of Pakistan’s (SBP) account, boosting the cash-strapped nation’s hope for economic stability, as it teetered on the brink of default for several months.

The IMF’s executive board late last night approved a $3 billion Stand-By Agreement (SBA) under a nine-month programme, which came after eight months of tough negotiations over fiscal discipline.

Pakistan reached a staff-level agreement with the lender last month, securing a short-term pact, which got more than expected funding for the crises-hit country of 230 million.

In a televised address from Islamabad, Finance Minister Ishaq Dar said Pakistan would receive the balance amount after two reviews — the second in November and the third in February.

This inflow will increase Pakistan’s foreign exchange reserves, he said, noting that during the ongoing week, the central bank’s reserves have moved up by around $4.2 billion.

“Our foreign exchange reserves will close at around $13-$14 billion on July 14 […] and the SBP will release the exact numbers later on,” the finance minister said, as he thanked Prime Minister Shehbaz Sharif for his efforts in securing the programme.

The prime minister played a key role in convincing the IMF to agree to the new programme as he repeatedly interacted with the lender’s chief in Paris and on phone calls.

In a statement, the IMF said its executive board gave the green light to the nine-month standby arrangement in order “to support the authorities’ economic stabilization program.”

“Pakistan is on the road to development […] we must all make efforts to make gains through this,” Dar added.

The South Asian nation has suffered from a balance-of-payments crisis as it attempts to service crippling external debt amid a fraught political environment — following the removal of the country’s former prime minister Imran Khan.

Inflation has rocketed, the rupee has reached a record low against the dollar, and the country is struggling to afford imports, causing a severe decline in industrial output.

Pakistan has brokered close to two dozen arrangements with the IMF, most of which have gone uncompleted.

In the days before the decision was approved, Pakistan received $3 billion in deposits from Saudi Arabia and the United Arab Emirates.

The money from the two Gulf countries boosted Pakistan’s foreign reserves to $7.5 billion — more than double last week’s account balance.

Business

Gold prices in Pakistan approach an all-time high.

Published

21 hours ago

Farwa

Following a substantial surge the prior day, gold prices in Pakistan are ascending to unprecedented levels with an additional gain on Thursday, coinciding with a rise in global precious metal rates.

The price of 24-karat gold in the local market rose by Rs700 per tola, reaching Rs277,900, as reported by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).

Likewise, the cost of 10 grams of 24-karat gold increased by Rs600, currently priced at Rs238,254.

Globally, gold prices exhibited an upward trend, increasing by $7 throughout the day. The APGJSA reports that the international gold price was $2,682 per ounce.

Notwithstanding the increase in gold prices, the silver market exhibited stability, with the price of silver maintained at Rs3,050 per tola.

In the previous month, gold prices in Pakistan reached an unprecedented high of Rs 277,000 a tola, driven by substantial gains in the worldwide market.

Business

World Bank: Power industry subsidies soar by 400% in just five years.

Published

21 hours ago

Farwa

Ninety-four percent of domestic customers will benefit from the budgetary subsidy in 2024, according to a World Bank report, which credits the increase in protected consumers with contributing to the weight of subsidies.

In the current fiscal year, the electricity sector subsidy has increased by an astounding Rs. 954 billion, from Rs. 236 billion in the 2020 fiscal year to Rs. 1190 billion.

Notwithstanding changes, the circular debt has averaged Rs. 400 billion yearly over the last four years due to the incapacity to minimize losses and inadequate recovery of electricity payments.

According to the World Bank, the government must solve the fundamental problems in the power industry in order to lower the burden of subsidies and circular debt, as rising electricity prices and inadequate tax collection will only serve to worsen the circular debt crisis.

The rise in Pakistan’s power sector circular debt has raised worries from the World Bank (WB) despite an unprecedented increase in energy pricing.

Within the last six years, the debt has grown by 1241 billion rupees, according to the World Bank’s study. Between 2019 and 2021, the debt climbed by 1128 billion rupees.

The electricity sector’s circular debt has been increasing at an alarming rate, according to a World Bank analysis. Between 2022 and 2024, there was a substantial increase of 113 billion rupees.

Pakistan’s electricity industry has 2393 billion rupees in total circular debt as of 2024.

Restructuring is required to solve the circular debt issue, according to the World Bank.

Business

Final settlement: Govt to pay five IPPs Rs 72 billion.

Published

22 hours ago

Farwa

On October 10, Prime Minister (PM) Shehbaz Sharif declared that the agreements with five IPPS would be terminated in the first phase. Sources claim that the government will give Rs 15.5 billion to Rousch Power and Rs 36.5 billion to Hubco.

In a same vein, the federal government would pay Lalpir Power Rs 12.8 billion, Atlas Power Rs 15.5 billion, and Sapphire Power Rs 6 billion.

The sources state that late payment fees are not included in the settlement. With effect from October 1, the agreements with the five IPPs will be considered officially ended.

PM Shehbaz earlier remarked that the termination was carried out with the owners of the IPPs’ mutual permission while presiding over the federal cabinet meeting in Islamabad.

The Prime Minister notified the Cabinet that the only money that will be paid, interest-free, to these IPPs is the outstanding balance.

According to him, the national exchequer will gain over 411 billion rupees from the termination of these contracts, while power customers will save roughly sixty billion rupees.

According to Prime Minister Shehbaz Sharif, it was the result of the arduous teamwork of the entire government. In this regard, he also acknowledged the contributions and assistance of the associated parties. He specifically mentioned General Asim Munir, the Chief of Army Staff, who showed a personal interest in the situation.

The prime minister characterized the development as the start of a trip that will ultimately lead to the advancement and prosperity of the populace.

PM Shehbaz Sharif also brought up the assistance that the Punjabi and Federal governments gave to power users over the summer.