Connect with us

Business

Russian rouble edges higher ahead of FX intervention update

Published

on

Russian rouble edges higher ahead of FX intervention update

The Russian rouble edged higher in morning trade on Friday as markets await details from the government about its plans to intervene in the currency markets for the month ahead.

The rouble was 0.1% higher against the US dollar at 70.43 at 0715 GMT.

It climbed 0.6% against the euro to 76.72 and was up 0.2% against the Chinese yuan to 10.43. Russia’s finance ministry was expected later on Friday to outline its plans for foreign currency sales for the next month.

Analysts expect the government will sell around 79.75 billion roubles ($1.1 billion) in the period between Feb. 7 to Mar. 6, up from 54.5 billion roubles in the previous period, a Reuters poll showed.

Advertisement

Russia sells down its foreign currency reserves to reduce the rouble’s volatility to global energy prices and to fill gaps in the state budget.

The sales are likely to be conducted in Chinese yuan, which has become a vital currency instrument for the Russian government and companies in the face of Western sanctions banning access to Western financial markets.

Russian rouble hovers near 69.50 vs dollar as exporters pay taxes

Geopolitics and energy also remained in focus, with the next stage of the European Union’s price cap on Russia’s oil exports – including premium refined products such as diesel – set to come into force from Feb. 5.

Russian stock indexes were falling. The dollar-denominated RTS index was down 0.4% at 999.8 points and the rouble-based MOEX Russian index had also fallen 0.4% to 2,235.8 points. 

Advertisement

Business

Securing external financing to one of the most urgent issues for next Pakistan govt: Fitch

Securing external financing to one of the most urgent issues for next Pakistan govt: Fitch

Published

on

By

Securing external financing to one of the most urgent issues for next Pakistan govt: Fitch

Fitch Ratings says the close outcome of Pakistan’s election and resulting near-term political uncertainty may complicate the country’s efforts to secure a financing agreement with the IMF, to succeed the Stand-By Arrangement (SBA) expiring in March 2024.

“A new deal is key to the country’s credit profile, and we assume one will be achieved within a few months, but an extended negotiation or failure to secure it would increase external liquidity stress and raise the probability of default,” one of the top global rating agency said in a report.

The latest warning comes after as the Moody’s Investors Services last week pointed to the threats related to the political instability following the Feb 8 elections and said uncertainty around Pakistan’s ability to quickly negotiate a new IMF programme after the current one expires in April 2024 remained very high.

Read more: Political instability, rising cost of doing to business drags KSE-100 down by over 1.82pc

Advertisement

Citing the recent improvement in the country’s foreign reserves, Fitch said the trend was low relative to projected external funding needs, “which we expect will continue to exceed reserves for at least the next few years”.

“We estimate Pakistan met less than half of its $18 billion funding plan in the first two quarters of the fiscal year ending June 2024 (FY24), excluding routine rollovers of bilateral debt.”

In this scenario, Fitch says, “The sovereign’s vulnerable external position means that securing financing from multilateral and bilateral partners will be one of the most urgent issues on the agenda for the next government.”

About the future government, the rating agency sees a PML-N and PPP coalition. “Negotiating a successor deal to the SBA and adhering to the policy commitments under it will be critical to most other external financing flows, not just from the IMF, and will strongly influence the country’s economic trajectory in the longer term.”

Moreover, the Fitch predicts even more stringent IMF conditions in the future arrangement, “which may be resisted by entrenched vested interests in Pakistan”.

Advertisement

“Nonetheless, we assume any resistance will be overcome, given the acute nature of the country’s economic challenges and the limited alternatives.”

At the same time, Fitch sees delay in finalising a deal with the IMF thanks to political instability as we well as assistance from other multilateral and bilateral partners and hampering the implementation of reforms [a reference to privatisation and market-based tariffs].

“We believe a government will assume office and engage with the IMF relatively quickly, but risks to political stability are likely to remain high. Public discontent could rise further if PTI remains sidelined – the election revealed continued strong public support for the party.”

Fitch noted that Pakistan have a poor record of completing IMF programmes – less than half of its 24 IMF programmes have disbursed more than 75 per cent of the funding available. “However, there has been fair progress on targets under the current SBA. Moreover, we perceive there is stronger consensus within Pakistan on the need for reform, which could facilitate the implementation of a successor arrangement.”

The report also lists risks that Pakistan may face. “Policy risks could rise again over time if external liquidity pressures ease, either as a result of initial reform successes or developments outside Pakistan, such as a substantial drop in oil prices.”

Advertisement

“This could lead to the renewed build-up of economic and external imbalances. We believe Pakistan’s external finances will remain structurally weak until and unless it develops a private sector that can generate greater significantly more export income, attract FDI or reduce import dependence.” 

Continue Reading

Business

Electricity prices: CPPA seeks higher fuel cost adjustment for Jan amid stubborn inflation

Electricity prices: CPPA seeks higher fuel cost adjustment for Jan amid stubborn inflation

Published

on

By

Electricity prices: CPPA seeks higher fuel cost adjustment for Jan amid stubborn inflation

Just days after the latest increase in fuel prices, people in Pakistan must brace for further hike in their electricity bills for the month of March, as the Central Power Purchasing Agency (CPPA) wants the fuel cost adjustment (FCA) hike.

The reason behind this request submitted to the National Electric Power Regulatory Authority (Nepra) is that use of expensive fuels for power generation after Pakistan failed to diversify its energy mix with cheaper alternative energy sources coupled with the rupee devaluation which makes the imported fuels more expensive.

Read more: Can Nepra refuse power tariff hikes? Will it protect consumers against govt inefficiency?

At the same, the county has been unable to secure new long-term liquefied natural gas (LNG) contracts from countries like Qatar despite the drop in prices, resulting in continued lower production by LNG-fired plants and the increase in the use of diesel and furnace oil.

Advertisement

The CPPA says the FCA for the month of January should be fixed at Rs7.13 per unit after the Nepra calculated the amount at Rs4.56 for December, translating into a net increase of Rs2.59.

People have experiencing a continuous increase in electricity prices due to the repeatedly hiked FCA in recent months thanks to the increase in the use of costly imported diesel and furnace oil.

In its latest calculation for January, the CPPA says 100 million units of electricity were produced by using diesel at a cost of Rs45.65. It was followed by a production cost of Rs35 per unit in the case of furnace oil, which had been used to generate 750 million units.

The purchasing power of people in Pakistan has stretched to an unbearable level as a stubborn inflation and stagnant wages are resulting in diminishing purchasing power.

It is a vicious circle as the reduced power consumption isn’t reflected in their monthly bills as they have to pay the rising capacity charges in the shape of quarterly tariff adjustment (QTA).

Advertisement

The capacity charges are the amount which the government has to pay to power producers even if the electricity they produce isn’t consumed.

Read more: Securing external financing to one of the most urgent issues for next Pakistan govt: Fitch

On the other hand, Fitch Ratings in its latest assessment has predicted even tougher IMF conditions for a future deal with the new elected government, which was described as a “key to the country’s credit profile”.

“We believe a government will assume office and engage with the IMF relatively quickly, but risks to political stability are likely to remain high. Public discontent could rise further if PTI remains sidelined – the election revealed continued strong public support for the party.”

Advertisement
Continue Reading

Business

Lack of govt spending and crumbling infrastructure — Fixing UK potholes now needs billions

Lack of govt spending and crumbling infrastructure — Fixing UK potholes now needs billions

Published

on

By

Lack of govt spending and crumbling infrastructure -- Fixing UK potholes now needs billions

Dotting the asphalt, they come in various shapes and sizes, costing drivers a fortune in vehicle repairs and even lives. In Britain, potholes are increasingly a scourge and an obsession.

Potholes across the UK are thought to number more than one million, according to vehicle-breakdown company RAC, owing to a widely-perceived lack of government investment for long-lasting repairs.

The bothersome road craters are formed in the winter when water that seeps into road cracks, freezes and bursts.
For some, the poor state of Britain’s roads is symptomatic of the crumbling state of infrastructure across the country, including Victorian-era hospitals, schools and sewers.

“Our roads are in a horrendous state because of lack of investment over decades by successive governments and authorities,” lamented Mark Morrell, an ardent 63-year-old activist, dubbed “Mr Pothole”.

Advertisement

“The UK road network is like the blood supply to the UK economy and it’s been neglected,” he told AFP.
Morrell’s eye-catching social media content includes floating rubber ducks in a pothole, filling another with instant noodles and riding a bright orange tank to parliament in London.

He pleads for a long-term road maintenance policy, to avoid the return of the craters at the slightest frost.

Morrell predicts that potholes will be among the five biggest issues in the UK general election expected this year.

They have also caught the attention of Prime Minister Rishi Sunak, whose Conservative party is trailing badly behind the main opposition Labour in polls.

Sunak in November pledged to tackle “the scourge of potholes” with an “unprecedented” $10.5 billion of funding over 11 years for road repairs in England.

Advertisement

Controversially, the money forms part of savings delivered after Sunak scrapped a key leg of a planned new high-speed railway, HS2, due to soaring costs.

Morrell meanwhile claims the amount set aside is a fraction of what is needed.

Potholes are not unique to Britain and nor do they all look the same, earning them different nicknames.

“There’s no escaping” the Alcatraz, or cluster of potholes, RAC claims in a light-hearted assessment on its website.

The Sniper is hard to spot, while a chasm-like Canyon is “a complete nightmare for two-wheelers”.

Advertisement

To mark National Pothole Day, Britain’s biggest vehicle-breakdown company, the AA, said it dealt with nearly 632,000 pothole-related incidents in 2023, the highest in five years.

It added that pothole damage cost UK motorists £474 million last year.

According to the Asphalt Industry Alliance, more than £14 billion is needed to fix a backlog of repairs in England and Wales.

In 2022, singer Rod Stewart was filmed filling a pothole with gravel near his plush home close to London.

The performer, who released “Hard Road” in 1974, said at the time: “My Ferrari can’t go through here at all.”

Advertisement

Morrell is meanwhile not alone in harnessing his creative side to highlight the UK’s pothole plague. Across the country, people spray paint around the damage, hoping it will force local councils to act quickly.

Such artistic endeavours also alert drivers and riders, even more so when a hole is surrounded by a phallus, as drawn by the artist known as Wanksy, in Manchester, northwest England.

Comedy on the road can be found also in Essex, the county where Stewart carried out his DIY work. A resident there creates pothole scenes using his grandchildren’s toys.

One shows a Playmobil figure water skiing in a rain-filled hole, while another features a model Loch Ness Monster partially submerged.

Taking inspiration from street artist Banksy for his alias, Wanksy got to work after seeing his cyclist friends end up in hospital.

Advertisement

In the last decade, 23 cyclists have died in accidents blamed on potholes and other road defects, noted Duncan Dollimore at lobbyists Cycling UK.

The organisation’s work involves having local councils fix potholes.

“It’s partially successful but the big win would be to move them into a culture of maintaining the roads before the defect arises,” he told AFP.

Repair techniques may soon be transformed, however.

The University of Liverpool is helping to develop a pothole-filling robot powered by artificial intelligence.

Advertisement

Continue Reading

Trending

Copyright © GLOBAL TIMES PAKISTAN