Pakistan’s Prime Minister Shehbaz Sharif. File
| Photo Credit: Reuters

Cash-strapped Pakistan will privatise all state-owned enterprises, including the loss-making Pakistan International Airlines, Prime Minister Shehbaz Sharif announced on May 14, broadening the government’s initial plans to make only loss-making state firms private.

The announcement to privatise state-run enterprises barring strategic ones comes a day after Pakistan started negotiations with the International Monetary Fund (IMF) for a new long-term Extended Fund Facility (EFF).

Mr. Sharif announced this while chairing a review meeting on the privatisation process of loss-making state-owned enterprises (SOEs), according to media reports.

During the meeting, he said that apart from strategic state-owned firms, all other enterprises — profitable or loss-making — will be privatised, Geo News reported.

Asserting that the government’s job is not to do business but to ensure a business and investment-friendly environment, Mr. Sharif directed all ministries to take action and cooperate with the Privatisation Commission.

Underscoring the need for the privatisation process to be transparent, he ordered the privatisation process of Pakistan International Airlines (PIA) to be televised, including the bidding and other important steps. The PIA’s privatisation is in its final stage, the report said.

Pakistan’s ailing national flag carrier stood as the country’s third-highest public sector loss-making entity, requiring Pakistani Rs. 11.5 billion per month solely for servicing its debts.

The process of privatisation of other institutions will also be broadcast live, the report said.

A roadmap of the Privatisation Programme 2024-2029 was also presented during the meeting, The Express Tribune newspaper reported.

Ministers were informed that loss-making SOEs were to be privatised on a priority basis and that a pre-qualified panel of experts was being appointed in the Privatisation Commission to speed up the sell-off process, the report said.

Prime Minister Sharif-led government has pushed for the privatisation of several state-owned enterprises to tackle the burden on the exchequer and the prevailing financial crunch.

Previously, debt-struck Pakistan had plans to privatise only loss-making state-owned enterprises, the Dawn newspaper reported.

On May 12, Finance Minister Muhammad Aurangzeb said that privatisation is necessary to achieve economic stability in the country.

“You have to move towards privatisation if you want economic stability in the country,” Mr. Aurangzeb said while speaking at the Pre-Budget Conference 2024-25 here.

Last week, Deputy Prime Minister Ishaq Dar said the government would limit its business only to strategic and essential SOEs under its domain and their number would be reduced from 40 after scrutiny.

Privatisation has long been on the Washington-based IMF’s list of recommendations for Pakistan, which is struggling with a high fiscal shortfall, the report said.

Pakistan narrowly averted default last summer, and the economy has stabilised after the completion of the last IMF programme, with inflation coming down to around 17% in April from a record high of 38% last May.

The country is still dealing with a high fiscal shortfall, and while the external account deficit has been controlled through import control mechanisms, it has come at the expense of stagnating growth, which is expected to be around 2% this year compared to negative growth last year.

Pakistani traders went on strike against the soaring cost of living, including higher fuel and utility bills and record depreciation of the rupee against the dollar, which has led to widespread discontent among the public. File
| Photo Credit: AP

Pakistan’s inflation rate rose to 31.4% year-on-year in September from 27.4% in August, statistics bureau data showed on Monday, as the nation reels from high fuel and energy prices.

The country is embarking on a tricky path to economic recovery under a caretaker government after a $3 billion loan programme approved by the International Monetary Fund in July averted a sovereign debt default, but with conditions that complicated efforts to rein in inflation.

On a month-on-month basis, inflation climbed 2% in September, compared to an increase of 1.7% in August

Reforms required by the IMF bailout, including an easing of import restrictions and a demand that subsidies be removed, have already fuelled annual inflation, which rose to a record 38.0% in May.

Interest rates have also risen to their highest at 22%, and the rupee hit all-time lows in August before recovering in September to become the best performing currency following a clampdown by authorities on unregulated FX trade.

On Friday, the Ministry of Finance said in its monthly report that it anticipated inflation remaining high in the coming month, hovering around 29-31% due to an upward adjustment in energy tariffs and a major increase in fuel prices.

The report added that inflation was, however, expected to ease, especially from the second half of the current fiscal year that starts on January 1.

On Saturday Pakistan cut petrol and diesel prices from a record high, after two consecutive hikes. The Finance Ministry cited international prices of petroleum products and the improvement in the exchange rate, following the clampdown on unregulated FX trade.

Inflation has been elevated, hovering in double digits, since November 2021. The South Asian country targeted inflation at 21% for the current fiscal year, but it averaged 29% during the first quarter.

Worsening economic conditions, along with rising political tensions in the run-up to a national election scheduled for November, triggered sporadic protests in September, with many Pakistanis saying they are struggling to make ends meet.

Analysts said the inflation reading was in line with market expectations.

Tahir Abbas, head of research at Arif Habib Limited, a Karachi-based investment company, said inflation appeared to have peaked for the current fiscal year and would subsequently recede.

“The higher reading is mainly due to the low base effect which was also mentioned in the last monetary policy statement. Going forward, in the next few months, we expect inflation to ease to around 26-27%,” said Fahad Rauf, head of research at Ismail Iqbal Securities, a Karachi-based brokerage firm.

Mr. Rauf said higher inflation statistics should not impact monetary policy.

Islamabad:

Pakistan’s 40 per cent of the population lives below the poverty line, as per the World Bank, Dawn reported.

Dawn is a Pakistani English-language newspaper.

The country now needs to take a look at its policy decisions driven by strong vested interests of military, political and business leaders, as per the World Bank.

The warning by the financial institution comes ahead of the new election cycle so that the upcoming government can make early choices.

The World Bank has asked Pakistan to tax its agriculture and real estate to achieve economic stability through steep fiscal adjustment of over seven per cent of the size of the economy, as per Pakistan-based The Express Tribune newspaper.

The lender on Friday also revealed that poverty in Pakistan shot up to 39.4 per cent as of last fiscal year with 12.5 million more people falling into the trap due to poor economic conditions. About 95 million Pakistanis now live in poverty.

The Washington-based lender unveiled the draft policy notes that it prepared with the help of all stakeholders for the next government.

The lender identified low human development, unsustainable fiscal situation, over-regulated private sector, agriculture and energy sectors as the priority areas for reforms for the next government.

The World Bank proposed measures that immediately increase the tax-to-GDP ratio by five per cent and cut expenditures by about 2.7 per cent of GDP, aimed at putting the unsustainable economy back on a prudent fiscal path, according to the Express Tribune.

Meanwhile, the WB’s lead country economist Tobias Haque said the bank is deeply concerned about the economic situation of today.

Pakistan is facing serious economic and human development crises and it is at a point where major policy shifts are required, he added.

The bank’s note on strengthening government revenues showed a host of measures to improve the revenue-to-GDP ratio by five per cent through the withdrawal of tax exemptions and increasing the burden of taxes on the real estate and the agriculture sectors, as per The Express Tribune.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Petrol and diesel have become costlier by 20% since the caretaker government took over in August in Pakistan.
| Photo Credit: Reuters

Amid double-digit inflation, Pakistan’s caretaker government has effected yet another hike in the prices of petrol and diesel taking them to a historic high — over (Pakistani) Rs 330 per litre — prompting immediate protests and a legal challenge too.

As on Saturday, $1 was equivalent to 296.41 Pakistani Rupee.

The Ministry of Finance on Friday night announced the price hike of petrol by Rs 26.02 and diesel by Rs 17.34 per litre.

After the hike, petrol and high-speed diesel (HSD) are costing over Rs 330 at the filling stations, “a psychological barrier that has been crossed for the first time in the country’s history,” the Dawn newspaper wrote.

The fuel price hike comes on the heels of over 27.4% increase in the rate of inflation in August, putting an unbearable burden on the masses, as petrol and HSD are used by all private and public service vehicles.

The caretaker government on September 1 jacking up the petrol and diesel prices by over Rs 14.

The rise is on top of Rs 32.41 and Rs 38.49 per litre increase in petrol and HSD prices since August 15.

Petrol and diesel have become costlier by 20% since the caretaker government took over in August.

Meanwhile, the hike in the petrol and diesel prices has prompted Pakistan’s opposition parties to vociferously criticise it even as a judicial activist challenged it in the Lahore High Court.

Rejecting the massive increase in petroleum prices, Jamaat-e-Islami (JI) announced sit-ins outside the governors’ houses in all four provinces of Pakistan. JI chief Sirajul Haq said the government has made the life of a common man miserable by increasing the petroleum prices on the directions of the IMF, Dunya News channel’s website reported on Saturday.

Sardar Abdul Rahim of the Grand Democratic Alliance too rejected the increase as he said that the PDM, i.e. the consortium Pakistan Democratic Movement’s agreement with IMF has “proved to be fatal for Pakistan’s economy.” In Lahore, advocate Azhar Siddique, the head of the Judicial Activism Panel, has filed an application in the Lahore High Court, in which the caretaker federal government has been made a party, Dunya News said in another report.

The petitioner pointed out how there was no mechanism to determine the prices of the products and that the increase in prices of petroleum products would lead to a new wave of inflation.

Earlier, the Finance Ministry blamed “the increasing trend of petroleum prices in the international market” for revising the existing consumer prices of petroleum products.

The government is charging Rs 60 per litre petroleum development levy (PDL) on petrol and Rs 50 each on HSD under the commitment with the International Monetary Fund (IMF).

In July, the IMF transferred $1.2 billion to cash-strapped Pakistan, part of the $3 billion bailout programme for nine months to support the government’s efforts to stabilise the country’s ailing economy. Pakistan’s economy has been in a free fall mode for the last many years, bringing untold pressure on the poor masses in the form of unchecked inflation.

Pakistani shopkeepers close their businesses during strike against inflation in Lahore, Pakistan, on September 02, 2023. They protested the soaring cost of living, including higher fuel and utility bills and record depreciation of the rupee against the dollar.
| Photo Credit: AP

Thousands of Pakistan traders shuttered their shops on Saturday, striking over soaring energy and fuel bills stirring widespread discontent ahead of national elections.

Decades of mismanagement and instability have hobbled Pakistan’s economy, and this summer Islamabad was forced into a deal with the International Monetary Fund (IMF) to avert default.

However, the global lender demanded that popular subsidies cushioning living costs be slashed. Petrol and electricity prices have rocketed.

There were widespread market closures on Saturday in Lahore, Karachi and Peshawar, where abandoned bazaars were posted with placards decrying “the unreasonable increase in electricity bills and taxes”.

Also Read: Pakistan caretaker PM Anwarul Haq Kakar calls inflated electricity bills “non-issue”

“Everyone is participating because the situation has become unbearable now,” Lahore’s Township Traders Union president Ajmal Hashmi told AFP.

“Some relief must be given so people can put food on the table.”

Traders wield immense power in Pakistan, and with an election due in the coming months the government faces the delicate task of keeping them onside while sticking to IMF austerity measures.

Pakistan has historically been hamstrung by chronically low tax takings — including from traders — which have seen it accrue huge foreign debts it struggles to pay down.

The IMF hopes to end a cycle of bailouts which have propped up the economy for decades.

On Friday, caretaker Prime Minister Anwaar ul Haq Kakar said citizens would have to pay inflated bills as there is no “second option”.

“When you subsidise, you shift your fiscal obligations to the future. Rather than addressing the issue, you just delay it,” he told reporters in Islamabad.

The government raised petrol prices past the threshold of 300 Pakistan rupees ($1) per litre for the first time this week.

That exchange rate against the U.S. Dollar is the lowest in the nation’s 76-year history.

Also Read: Pakistan’s poll body pledges to hold general elections by mid-February

Meanwhile, fresh data showed year-on-year inflation in August stood at 27.4%, with motor fuel bills up 8% in July.

“The bills we have received this month exceed our earnings,” said Babar Mahmood, president of the Electronics Market Traders Union in Lahore.

“There is a growing disconnect between the general public and those in positions of power.”

A caretaker government has been ruling Pakistan since Parliament was dissolved last month, charged with ushering in elections, although no date has yet been announced.

The interim leadership, and the terms of the IMF deal, were hashed out by previous prime minister Shehbaz Sharif at the head of a shaky coalition which battled to turn around the economy in its short tenure after ousting Imran Khan in 2022.

Mr. Khan, Pakistan’s most popular politician, is in prison battling a slew of legal cases he says are intended to keep him from contesting the polls.

Meanwhile, the nation also faces a worsening security situation with nine soldiers killed in a suicide attack on Thursday.