Business

Pakistan ‘very comfortably’ placed to meet IMF targets, SBP chief assures global investors

Published

1 year ago

Farwa

Pakistan on-track to address structural weaknesses, says SBP chief.
Hopeful of achieving sustainable economic growth in medium term.
Says stabilisation measures have started yielding results.

MARRAKECH: State Bank of Pakistan (SBP) Governor Jameel Ahmad on Friday assured investors that the country is “very comfortably placed to meet” International Monetary Fund’s (IMF) targets for end-September, net international reserves (NIR) and net domestic assets (NDA).

The governor made the assurance during his meeting with key international investors during events organised by global banks, including Barclays, JP Morgan, Standard Bank, and Jefferies on the sidelines of the IMF-World Bank meetings in Marrakech, Morocco.

As per a State Bank press release, the investors were briefed about the recent macroeconomic developments, policy responses to current challenges, and the outlook of Pakistan’s economy, and also answered their questions.

The governor informed the investors that the “current policy mix is geared” to achieve stabilisation by addressing the “macroeconomic imbalances”.

He stated that the SBP was among the first central banks that began to tighten monetary policy in the wake of the rising inflation globally. However, certain domestic challenges such as the 2022 floods had “complicated SBP’s efforts to bring down inflation”.

“Stabilisation measures have started yielding results. Inflation has come down to 31.4% in September 2023 after peaking at 38.0% in May 2023 and is expected to continue its downward trajectory over the coming months, whereas the external account has improved considerably and foreign exchange buffers are being built up,” the governor was quoted.

He added that the central bank expects inflation to “come down significantly during the second half of this fiscal year”.

“Going forward, the Stand-By arrangement with the IMF is expected to support the ongoing policy efforts to stabilise the economy,” said the governor.

He stated that the “foreign exchange buffers are improving with both build-up in reserves and reduction in forward foreign exchange liabilities”.

He explained that since January 2023, SBP’s foreign exchange reserves improved from a low of $3.1 billion to $7.6 billion as of the end of September 2023. The reserve build-up was largely supported by non-debt-creating inflows amid favourable market conditions.

“At the same time, SBP’s forward foreign exchange liabilities have declined and the forward book target of $4.2 billion for end-September 2023 agreed with the IMF has already been met by a wide margin. Similarly, SBP is also very comfortably placed to meet the other end-September IMF targets, including Net International Reserves (NIR) and Net Domestic Assets (NDA),” said the governor.

The governor also informed the investors that Pakistan is “on-track to address the longstanding structural weaknesses”, adding that with the support from multilateral and bilateral partners the country “would be able to achieve sustainable and inclusive economic growth” in the medium term.

Pakistan likely to receive next IMF tranche

Last week, a brokerage firm report had stated that Pakistan was likely to receive the next tranche of the $3 billion stand-by arrangement with the IMF even though it may miss a few deadlines.

Topline Securities said the country had met the targets for net international reserves, net domestic assets, and foreign currency swap/forward position as of the end of June 2023 but highlighted that Islamabad had missed the targets of the primary deficit, which measures the fiscal balance excluding interest payments, and for external public debt disbursements.

The report also said that Pakistan is yet to implement the gas price adjustment it had agreed with the global lender. The adjustment was a prior action for the completion of the second review of the program.

Pakistan got the first installment from the IMF in the amount of $1.2 billion in July after the Executive Board of the lender approved the bailout package to stabilise the country’s economy.

Under the agreement, the remaining $1.8 billion from the IMF has to be disbursed in two tranches after reviews in November and February.

The latest IMF programme has set nine performance criteria, four indicative targets, and 10 structural benchmarks for the upcoming review.

Business

The amount of trade between Saudi Arabia and Pakistan hits $700 million.

Published

13 hours ago

Farwa

Through the Special Investment Facilitation Council (SIFC), Pakistan’s trade connections with Saudi Arabia have grown significantly, with bilateral trade volume rising from $546 million to $700 million and exports to the Kingdom growing by 22%.

As bilateral economic cooperation continues to grow, Saudi investors have shown a strong interest in Pakistan’s construction, energy, agricultural, and information technology sectors. The objective for exporting IT services between the two countries has been raised from $50 million to $100 million.

Saudi Arabia has set up a help desk dedicated to making it easier for Pakistani IT companies to register in the Kingdom in order to expedite commercial procedures. The goal of this program is to speed up economic collaborations between the two countries and lower administrative barriers.

The well-known Saudi restaurant chain AlBaik has revealed plans to open locations in Pakistan, which is a big step for the food service industry and should lead to the creation of new job possibilities in the area.

Officials have noted that stronger business links between the two countries lead to greater economic stability, and the SIFC has played a crucial role in promoting these trade advancements. For bilateral trade and investment projects, the Council remains a crucial facilitator.

According to a trade official with knowledge of the developments, “the establishment of dedicated support mechanisms, such as the help desk for IT companies, demonstrates a commitment to long-term economic partnership,” The goal of these programs is to improve the conditions for commercial collaboration between the two nations.

The increasing amount of trade and the diversity of investment sectors show that Saudi Arabia and Pakistan’s economic ties are changing as both countries seek to deepen their business alliances in a number of industries.

Business

After more than 50 years, Bangladesh and Pakistan resume direct trade.

Published

13 hours ago

Farwa

After more than 50 years, the two governments will resume direct bilateral trade, with Bangladesh’s food ministry announcing Sunday that it will receive a supply of 25,000 tonnes of rice from Pakistan next month.

After former Prime Minister Sheikh Hasina was overthrown last August, relations between Bangladesh and Pakistan have begun to improve after decades of tense relations.

Since then, there have been increased bilateral interactions between Bangladesh and Pakistan. Nobel laureate Muhammad Yunus, the interim government’s senior adviser, has met twice with Pakistani Prime Minister Shehbaz Sharif.

According to the food ministry, Dhaka completed an agreement earlier this month to import grains from Pakistan.

“On March 3, the first shipment of 25,000 tonnes will reach Bangladesh,” Zia Uddin Ahmed, a ministry assistant secretary, told Arab News.

“This is the first time that Bangladesh has started importing rice from Pakistan at the government-to-government level since 1971.”

Following direct maritime contact between the two South Asian countries in November—a Pakistani cargo ship stopped in Bangladesh for the first time since 1971 with imports and exports arranged by private companies—their trade relations grew.

Resuming trade with Pakistan is a significant step for Bangladesh, according to Amena Mohsin, a lecturer at North South University and a specialist in international relations.

“We want to see progress in our bilateral relationship with Pakistan. Most significantly, we are currently going through a low point dispute with India, even though we constantly diversify our partnerships.

This most recent move to purchase rice from Pakistan is really significant in this context,” she told Arab News.

Business

The total amount of Pakistan’s liquid foreign reserves is $15.95 billion.

Published

3 days ago

Farwa

As of February 14, Pakistan’s total liquid foreign reserves were $15,947.9 million, with the State Bank of Pakistan’s (SBP) holdings being $11,201.5 million.

Official figures for the week ending February 14, 2025, show that the central bank’s liquid foreign exchange reserves rose by $35 million to $11,201.5 million.

Commercial banks maintained net foreign reserves of $4,746.4 million during the period under review, according to the breakdown of foreign reserves.

The nation’s total liquid foreign reserves as of the week ending February 07, 2025, were $15,862.6 million.

Of these, the central bank held $11,166.6 million in foreign reserves, while commercial banks kept $4,696 million in net reserves.