pakistan

Pakistan’s deepening political crisis douses hopes for IMF relief

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1 year ago

May 11, 2023

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The political crisis engulfing Pakistan is eroding hopes that the South Asian country can get its much needed programme with the International Monetary Fund back on track soon and escape a full-blown debt crunch, analysts said.

Deadly clashes between supporters of Imran Khan and police spread across the country after Pakistan’s anti-corruption agency arrested the former prime minister on Tuesday.

The rupture in Pakistan’s febrile politics comes as the 230-million-population nation prepares to hold tightly fought elections in the autumn while facing its worst economic crisis in decades, with dwindling reserves and a stalled $6.5 billion IMF programme that is expiring in June and scarce other financing sources in sight.

“With protesters on the streets, the IMF will be even more wary about restarting the loan deal,” said Gareth Leather, senior economist for Emerging Asia at Capital Economics.

The turmoil since Khan was ousted just over a year ago has scarred the country’s economy and markets.

Pakistan’s rupee has lost nearly 50% over the past 12 months. The main stock index has suffered a double-digit decline over the same period.

On Wednesday, the rupee tumbled some 2% to a fresh record low of 290 to the dollar. The country’s international bonds, already in deeply distressed territory of as little as 32 cents, dropped more than 1 cent in the dollar on the day.

While noisy politics generating volatility was nothing new for Pakistan and its investors, they “really complicated the discussion with the IMF”, said Cathy Hepworth, head of emerging market debt at PGIM Fixed Income, which holds Pakistan bonds.

“It just delays and complicates decisions.”

Time is ticking down. Nearly 100 days have passed since the last IMF staff level mission to Pakistan and the two sides have yet to strike a preliminary deal – a key step to secure the next funding tranche. That is the longest such gap since at least 2008.

Meanwhile foreign exchange reserves at $4.457 billion cover barely a month’s worth of imports.

JPMorgan analyst Milo Gunasinghe said little relief was in sight while the IMF programme remained stalled.

“The latest developments likely dampen any prospect of a political breakthrough across both sides,” Milo said.

The bank recently lowered its 2023 growth forecast for the country from 1.3% to 0.1% and warned of “stagflation shock” due to delays in the IMF talks, while the central bank hiked its key interest rate to a record 21% to fight double-digit inflation.

At a local government bond auction on Wednesday, Pakistan was able to raise only 63 billion rupees ($222 million) against a target of 100 billion rupees with the cut-off yield rising to nearly 20% for three-year maturities.

The nuclear-armed nation faces the risk of a default unless it receives massive support. The gross public debt-to-GDP ratio stands at 73.5%, according to government data as of December.

“The IMF has the capacity and the flexibility to help member counties in a variety of political circumstances,” said Reza Baqir, former central bank governor of Pakistan and global head of sovereign advisory services at Alvarez and Marsal.

“It is usually up to the country to present a credible plan of policies and financing that, in the face of political uncertainty, will credibly address the members’ balance of payment problems.”

The armed forces remain Pakistan’s most powerful institution, having ruled directly for close to half the country’s 75-year history through three coups. The government called in the army on Wednesday to help end deadly unrest.

Hasnain Malik, head of equity research at London-based Tellimer, added that unless martial law was imposed, there was no reason for the IMF to suspend discussions.

“However, instances of violence likely justify a postponement in the election and make credibly committing to painful fiscal cuts even harder,” he said.

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pakistan

Court reserves verdict on PTI founder’s bail plea in May 9 case

Published

21 hours ago

May 16, 2024

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Court reserves verdict on PTI founder's bail plea in May 9 case

The Islamabad district and sessions court has reserved verdict on the bail plea of the Pakistan Tehreek-e-Insaf (PTI) founder in the May 9 case.

Judicial Magistrate Omar Shabbir heard the case against the PTI leader registered in Shahzad Town police station.

Naeem Haider Panjhota, Sardar Masroof and Amina Ali appeared before the judge as counsel for the PTI leader.

The lawyers said the case against the PTI founder had not been pursued by an authorised officer. All cases against him had been instituted on the basis of politics and should, therefore, be quashed, they demanded.

The court after listening to the arguments reserved the verdict.

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pakistan

Rawalpindi court bins plea for initiating case against former commissioner Liaquat Chattha

Published

21 hours ago

May 16, 2024

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Rawalpindi court bins plea for initiating case against former commissioner Liaquat Chattha

The Rawalpindi Sessions Court on Thursday dismissed a petition seeking the registration of a case against former Rawalpindi commissioner Liaquat Ali Chattha.

Additional District and Sessions Judge Hakim Khan issued a two-page written order on the petition.

In its order, the court observed that apart from the Election Commission of Pakistan (ECP), a departmental inquiry was also being conducted against the former commissioner.

If the allegations were proven in the ECP and departmental inquiries, a legal action was certain, the order stated, adding that in this situation, there was no justification for registering a separate case against the former Rawalpindi commissioner.

Two lawyers from Rawalpindi had filed the petition seeking the registration of a case against former commissioner.

In a Feb 18 presser, the former commissioner admitted that elections in his division were “rigged”.

The commissioner accused Chief Election Commissioner (CEC) Sikandar Sultan Raja of being complicit in the rigging and asserted that he, along with the CEC and Chief Justice of Pakistan Qazi Faez Isa, deserved punishment, even the death penalty, for their injustice.

Chattha expressed remorse for forcing his subordinates to engage in wrongdoing and admitted that winning candidates were made to lose on 13 seats in the Rawalpindi division.

Later on Feb 23, Chattha retracted his earlier statement in a written statement submitted to the Election Commission of Pakistan (ECP).

In the statement, Chattha confessed to having supported the narrative of the Pakistan Tehreek-e-Insaf (PTI) about rigging in the general elections and maligning state institutions in exchange for a lucrative position in the future.

He stated he had been made this offer by a Lahore-based PTI leader with whom he had developed a close friendship.

Chattha alleged that “this entire planning had been formulated after consultation and approval of the senior leadership of PTI”.

He stated that this proposal was made by the said [PTI] individual in consideration of the fact that he was about to retire from service after having remained a part of the services for 32 years and enjoyed all the perks and privileges.

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pakistan

IHC orders Zartaj Gul to appear before court with record in ECL name removal case

Published

21 hours ago

May 16, 2024

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IHC orders Zartaj Gul to appear before court with record in ECL name removal case

Islamabad High Court (IHC) has sought the record from Zartaj Gul’s counsel on a petition seeking the name removal of PTI leader and MNA Zartaj Gul from the Exit Control List (ECL).

IHC’s Justice Tariq Mehmood Jahangiri heard the case on Zartaj Gul’s name removal from ECL.

During the hearing, the state counsel stated that Zartaj Gul’s name has been included in the Provisional National Identification List (PNIL).

Upon inquiry from the court, the state counsel informed that Zartaj Gul’s name was included in PNIL on the order of Islamabad and Punjab police, and the Federal Investigation Agency (FIA) was responsible for including the name in PNIL.

Also read: PTI’s Shibli Faraz, Raja Basharat, Zartaj Gul secure bail in May 9 cases

State counsel added that five cases were registered against Zartaj Gul in Islamabad and Punjab.

The petitioner’s counsel, Advocate Usama, disclosed that Zartaj Gul has been granted bail in those cases. He reiterated that the name was being included in the PNIL list despite being on bail.

During the hearing, Justice Tariq Jahangiri inquired about how many cases Zartaj Gul has been granted bail in and ordered the petitioner to appear before the court in the next hearing.

Consequently, IHC has adjourned the case hearing until next week by directing Zartaj Gul’s counsel to appear before the court in the next hearing with records.

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