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Israel-Hamas conflict damaging regional economies, warns IMF chief

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11 months ago

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The ongoing conflict between Israel and Hamas is not only causing human suffering but also taking a toll on regional economies, Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva said Wednesday. 

Speaking at the Future Investment Initiative (FII) in Riyadh, Saudi Arabia, Georgieva highlighted the economic repercussions that neighbouring countries of Israel are experiencing, particularly those reliant on tourism, such as Egypt, Lebanon, and Jordan.

The conflict erupted when Hamas, a Palestinian group, launched a surprise attack on Israel on October 7, resulting in casualties and the taking of hostages.

 Israel responded with a sustained campaign of air strikes and a comprehensive land, sea, and air blockade on Gaza. The Hamas-run health ministry in Gaza reported that the war has claimed the lives of 6,546 Palestinians.

The economic implications of this conflict extend beyond the immediate war zone. Wall Street experts have warned that the ongoing hostilities could negatively impact the global economy, particularly if other countries become embroiled in the crisis. Georgieva expressed her concerns about the economic challenges faced by countries in the region.

Uncertainty and insecurity are detrimental to countries dependent on tourism, and investors may become cautious about the region. This caution extends to the cost of insurance for goods transportation, which could rise due to heightened risks. Furthermore, the influx of refugees into countries already accommodating displaced populations poses additional economic challenges.

The Future Investment Initiative (FII), often called “Davos in the Desert,” has historically been a platform for Saudi Arabia to showcase its domestic economic reforms and regional stability. Saudi Arabia had recently taken steps to improve relations with Iran and Syria, sought a lasting ceasefire in Yemen, and was in discussions regarding recognising Israel before the conflict erupted on October 7.

While Saudi officials have indicated that the normalisation of ties with Israel may be paused for now, regional stability remains a top priority. Saudi Finance Minister Mohammed al-Jadaan emphasised the importance of preserving the de-escalation efforts that were underway before the outbreak of hostilities.

Bahrain’s Finance Minister, Shaikh Salman bin Khalifa Al Khalifa, who recognised Israel as part of the US-brokered Abraham Accords in 2020, advocated for regional integration. He stressed that past ethnic and religious divisions should not hinder future cooperation.

Jared Kushner, a former White House advisor and key figure behind the Abraham Accords, suggested that the attack by Hamas was intended to disrupt the normalisation of relations. 

The Abraham Accords, which aimed to establish diplomatic ties between Israel and several Arab nations, have been viewed as a potential threat by those opposed to such diplomatic progress.

Despite the ongoing regional turmoil, many at the FII remain optimistic about Saudi Arabia’s resilience. As the world’s largest oil exporter, Saudi Arabia is well-positioned to withstand shocks and finance its Vision 2030 agenda. 

This ambitious plan, spearheaded by Crown Prince Mohammed bin Salman, seeks to diversify the Saudi economy by promoting tourism, business, and mega-projects such as NEOM, a futuristic city with a $500 billion price tag.

While the region grapples with the ramifications of the Israel-Hamas conflict, Saudi Arabia aims to press ahead with its economic transformation, offering opportunities for companies and investors from around the world in the Middle East’s largest economy and construction market.

In conclusion, the Israel-Hamas conflict is not only a humanitarian crisis but also has far-reaching economic consequences for neighbouring countries and the broader region, impacting tourism, investment, and political stability. The situation remains complex, and efforts to restore peace and stability are crucial for the well-being of both people and economies in the Middle East.

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It is anticipated that 150 ships would arrive at Gwadar by the year 2045, allowing the port to handle fifty percent of all imports.

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3 days ago

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In an effort to strengthen the port’s economic importance, the Federal Government has made the decision to direct fifty percent of all imports from the public sector to Gwadar Port.

By taking this action, which has the backing of the Special Investment Facilitation Council, the port’s financial situation is going to be improved.

The Cabinet will be presented with a summary of imports through Gwadar by the Ministry of Maritime Affairs, which will take place after Prime Minister Shehbaz Sharif’s recent trip to China.

When the next Cabinet Meeting takes place, Ahsan Iqbal, the Federal Minister for Planning, Development, and Special Initiatives, will examine the Chinese offer for the Karachi to Hyderabad Section of the ML-1 Project and bring it to the Cabinet.

Company preparations for the Shanghai International Import Expo, which will take place in November 2024, are being made by the Board of Investment and the Ministry of Commerce of Pakistan.

One of the most important aspects of the China-Pakistan Economic Corridor is the Gwadar port, which serves as a significant commerce route connecting China, the Middle East, Africa, and Europe. At this time, the Gwadar Port is able to accommodate two huge ships, and by the year 2045, it is anticipated that it would be able to handle up to 150 ships.

By developing the Gwadar Port, regional connectivity would be improved, employment will be created, and international investment will be attracted.

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The price of gold in Pakistan has experienced a significant surge.

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3 days ago

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Gold prices in Pakistan surged significantly on Thursday following two consecutive days of decline, with the price per tola rising by Rs2,000 to reach Rs262,100. This increase was in accordance with the downward trend in international market values.

The All-Pakistan Gems and Jewellers Sarafa Association (APGJSA) reported that the price of 10 grams of 24-karat gold rose by Rs1,714, reaching Rs224,708.

Conversely, the world gold market experienced an upward trajectory. According to the APGJSA, the global price of gold surged to $2,503 per ounce following a $22 gain during the trading session.

The local market experienced a significant decline in silver prices, decreasing from Rs50 to Rs2,900 per tola after a prolonged period.

The local market’s gold prices remain subject to the ever-changing dynamics of the international market, as well as domestic considerations such as currency exchange rates and domestic demand.

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The government has not met the deadline set by the International Monetary Fund (IMF) for the approval of a $7 billion loan.

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4 days ago

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On Tuesday night, there were virtual talks between representatives of the Finance Ministry and the IMF delegation, with the main topics being external finance and income generation.

According to people familiar with the situation, no date has been set for the IMF’s Executive Board to approve the loan despite the ongoing negotiations.

Officials from the Finance Ministry informed the IMF mission about the government’s initiatives to get outside funding during the discussions. Updates on loan rollovers and fresh finance commitments from allies were included in this. According to sources, the IMF has received a schedule, and loan rollovers are expected to be finished by the end of next week.

The $12 billion in debt must be rolled over before the loan can be approved by the Executive Board, according to the IMF mission.

In the virtual discussions, representatives of the Federal Board of Revenue (FBR) conversed with the IMF team over the revenue deficit. The FBR must reach its revenue goals for this month, according to the IMF mission. As a result, the IMF has asked the FBR to submit a thorough strategy outlining how it will close the gap left by the shortfall and guarantee that revenue goals are reached.

Apart from the conversations on outside funding, there are rumors that the Finance Ministry is actively holding talks with commercial banks in order to obtain new funding. According to reports, negotiations are taking place with four distinct sources for commercial loans, which are anticipated to support the government’s overall financial plan.

Finance Minister Muhammad Aurangzeb disclosed on Tuesday that the IMF was in favor of introducing targeted subsidies. He said that qualifying recipients might receive these subsidies through the Benazir Income Support Programme (BISP).

In order to guarantee consistency, the minister announced that this week’s talks with chief ministers will focus on implementing a similar policy across the country. He was having a casual conversation in parliament with the journalists.

In response to queries about outside funding, Aurangzeb revealed a $2 billion deficit and said that talks to close this gap are progressing. He stressed how crucial it is to obtain business loans.

He went on, “At this point, there’s a need to secure an agreement for commercial loans, not exactly their issuance,” emphasizing that debt rollover negotiations are nearing their conclusion and doing well. The minister expected that these developments would shortly be reported to the governments of allied countries by relevant authorities.

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