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Pakistan plans to seek its largest ever IMF bailout

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ISLAMABAD, Pakistan: The crippling economy left by the previous governments has left Pakistan with no options, but to go knocking at International Monetary Fund’s (IMF) door. Financial Times reported that senior finance officials are already set to present the option of an IMF bailout to prime minister-designate Imran Khan.

Pakistan’s likely next finance minister, in an interview with Bloomberg, said that Pakistan’s financing gap is somewhere between $10 billion to $12 billion, though the new government would need a bit extra so it does not live on the edge.

Pakistan Tehreek-e-Insaf (PTI) leader went on to say Pakistan could turn to the IMF, friendly countries and issue diaspora bonds to bolster the country’s depleting reserves.

However, he said that “no formal work can be started until the government is formed.”

It should be noted that any loan from IMF would see a decrease in public spending and such limits would make it difficult for Pakistan’s charismatic new leader to fulfil some of his election promises such as building an “new Pakistan.”

Imran Khan, former cricket superstar, spend the weekend trying to negotiate deals with potential coalition allies and independent candidates after winning at least 115 national assembly seats – 22 seats short to form a majority – and overturning decades of dominance by the country’s two main ruling families.

Regarding the severe economy crisis, one government adviser told Financial TImes: “We are in a rough area and need help. I can’t imagine we could do that without the IMF’s support.”

The person said the country was likely to need a loan of between $10bn and $12bn — double the $5.3bn the fund lent the country last time in 2013 — in what would be Pakistan’s 13th IMF bailout.

Imran Khan may find himself in trouble as soon as he takes over the office for during the election campaign, he had promised to spend public money on providing access to healthcare for all, upgrading schools and colleges, and working on decreasing the huge income gap that exists in the country.

Analysts, however, have termed these goals as unrealistic given the reality of Pakistan’s current economic situation.

Pakistan’s foreign currency reserves have declined rapidly in recent months, as higher oil prices have pushed up the costs of imports, while exports continue to lag.

According to the latest published figures on July 20, the State Bank of Pakistan had just $9bn in reserves — not even enough to cover two months’ worth of imports.

So far, Islamabad has kept going with the help of loans from Beijing — it borrowed at least $5bn from Chinese commercial banks in the past financial year — and by allowing the Pakistani rupee to depreciate 20 per cent against the dollar. Western economists say they believe the currency is still overvalued and think it could fall at least another 10 per cent.

Mr Khan has not yet said how exactly he plans to deal with the balance of payments crisis he now faces, though he told the FT shortly before the election that his shadow finance minister Asad Umar was developing a policy.

Many analysts, however, believe a return to the IMF is inevitable, and will come with damaging consequences for short-term economic growth and Mr Khan’s own political reputation.

They say the fund is likely to demand a range of actions in return for providing a bailout, including raising electricity tariffs, cutting subsidies for the agriculture sector and selling lossmaking public companies. This year the IMF projects that Pakistan’s fiscal deficit could hit 7 per cent, against a target of 4.1 per cent, meaning the fund is likely to demand deep cuts in planned public spending.

Charlie Robertson, global chief economist at Renaissance Capital, said this could lead to a 1 percentage point slowdown in gross domestic product.

He added: “This is the first time Imran Khan gets his hands on power and he is going to have to make some very tough decisions. He will have to break election promises, at least in the short term.”

One other option remains open to Mr Khan: he could seek to negotiate a deal with Saudi Arabia to defer oil payments, something the Gulf country agreed to in 1998.

Sakib Sherani, a former adviser to the finance ministry, estimated that energy-related imports could account for a third of the country’s total imports this year. “An economic slowdown may also curtail energy imports but still this would be huge,” he said.

 

The story was first reported by Financial Times.

Pakistan News

Independence Day: Sale of Kashmiri flags on the rise

Sale of Kashmiri flags, badges and other decoration items have gained impetus ahead of Independence Day after the federal government had announced to observe August 14 as Kashmir Solidarity Day.

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MUZAFFARABAD, Azad Kashmir/KARACHI, Pakistan: Sale of Kashmiri flags, badges and other decoration items have gained impetus ahead of Independence Day after the federal government had announced to observe August 14 as Kashmir Solidarity Day, ARY News reported on Thursday.

As marking of 73rd Independence Day is right around the corner, the preparations have gained momentum as a huge rush of people were seen at different stalls of Kashmiri flags, national flags buntings, badges, set up by vendors in different areas of Karachi.

READ MORE: Top 10 schools of Pakistan (2018-19)

All Karachi Tajir Ittehad Chairman Ateeq Meer said that people are very enthusiastic and passionate for purchasing celebratory items to mark Independence Day.

It must be noted that government has decided to observe Independence Day; 14 August, as Kashmir Solidarity Day and 15th of this month as Black Day to express harmony and solidarity with Kashmiris in their recent plight caused by the Indian government.

The national flag will fly half-mast on 15th of this month. A notification to this effect has been issued by the Ministry of Interior.

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Pakistan News

Maryam’s interview “stopped forcefully:” Nadeem Malik

An interview of Maryam Nawaz Sharif, a vice president of the PML-N, was “forcefully” taken off air soon after it was run, it was reported on Thursday.

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Maryam Nawaz

ISLAMABAD, Pakistan: An interview of former Prime Minister Nawaz Sharif’s daughter Maryam Nawaz Sharif was taken off air forcefully seconds after it started.

“Just came to know Maryam Nawaz Sharif’s interview has been stopped forcefully just [a] few minutes after it started live,” tweeted show host Nadeem Malik.

Hum News, the channel on which the interview was aired for a few brief moments, released a statement shortly after the incident, saying: “Hum News believes in a free and responsible media. Protecting freedom of expression is one of our core values. At the same time, we stand for the respect and dignity of [the] judiciary in line with our ethical values and the Constitution.”

The development comes days after AbbTakk TV24 News, and Capital TV all had their broadcasts cut after screening a press conference by Maryam Nawaz.

Authorities say the three channels were unavailable due to “technical issues”, but Reporters Without Borders (RSF), a global media watchdog, described the outage as an act of “brazen censorship”.

It slammed the local authorities over the removal of three television channels from the country’s airwaves, saying the move was “indicative of disturbing dictatorial tendencies” as pressure mounts on journalists in Pakistan.

READ MORE: Arrest me if you want to, I won’t run away like your master Musharraf: Hamid Mir

Maryam is the daughter of former prime minister Nawaz Sharif — who is currently behind bars for corruption — and a recent press conference she hosted featured a judge reportedly claiming he had been blackmailed into convicting the former premier.

The move came as Prime Minister Imran Khan’s administration vowed to block any media coverage and interviews of politicians “who are convicts and under trial”.

Earlier this month, Geo News TV abruptly took an interview with former president Asif Ali Zardari off air shortly after it began.

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Several dead and dozens injured in Pakistan train collision

A collision between a passenger train and a stationary freight train near the central town of Rahim Yar Khan in Pakistan has killed at least 10 people, with more than 70 others injured, according to police and hospital officials.

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RAHIM YAR KHAN, Pakistan: A collision between a passenger train and a stationary freight train near the central town of Rahim Yar Khan in Pakistan has killed at least 10 people, with more than 70 others injured, according to police and hospital officials.

The incident on Thursday took place at the Walhar railway station, located about 35km south of Rahim Yar Khan.

“The Akbar Express [passenger train] going from Bahawalpur to Quetta hit a freight train that was parked there at 7.40am,” a local police official told Al Jazeera on condition of anonymity because he was not authorised to speak to media.

Senior police official Umar Salamat told local media the collision took place because the passenger train was diverted onto the incorrect track at the station, hitting the parked freight train.

Rescue operations were under way at the collision site, with workers using equipment to get to some of those trapped in the train wreckage, local media reported.

The injured were taken to a nearby government hospital and to a more advanced facility in Rahim Yar Khan, hospital officials said.

Nine of the dead were taken to the government hospital, with more than 60 people injured in the wreck also treated there, Liaquat Chohan, a senior hospital official, told Al Jazeera.

“The injuries were of multiple types – many had fractures, others had bleeding wounds. Some were crushed under objects,” he said.

At least one dead body was also taken to the Sheikh Zayed hospital in Rahim Yar Khan, where 11 of those wounded in the accident were being treated, hospital official Ilyas Ahmer told Al Jazeera.

“One person’s leg was cut off [in the collision], and another is having serious chest surgery,” he said.

‘Emergency steps’

Pakistan’s aging railway network carries both passengers and goods across the country, but suffers periodic derailments and other accidents due to aging infrastructure.

A major Chinese investment in the country is seeking to upgrade the main railway line that connects the length of the country, raising speeds and safety standards.

Pakistani Prime Minister Imran Khan expressed his condolences for those who were killed and injured, and ordered Railways Minister Sheikh Rasheed Ahmad to speed up work on the country’s rail infrastructure.

“Have asked Railways Minister to take emergency steps to counter decades of neglect of railway infrastructure & ensure safety standards,” Khan tweeted after the accident.

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