CMYK
9 August, 2020 I 18 Dhu-Hijjah, 1441 I Rs 25.00 I Vol XI No 40 I 36 Pages I Lahore Edition
Moody’s Maintains Pakistan’s B3 rating g
MOODy’S FOrecASTS cUrreNT AccOUNT DeFIcIT FOr ONGOING Fy21 AT 2 Per ceNT OF GDP cOMPAreD TO 1.1 Per ceNT recOrDeD IN Fy20
LAHORE staff report
M
OODy’s on Saturday confirmed Pakistan’s credit rating at B3 with the outlook at stable after it had initiated a review for downgrade in May earlier this year. The stable outlook reflects Moody’s view that the pressures Pakistan faces in the wake of the coronavirus shock and prospects for its credit metrics, in general, are likely to remain consistent with the current rating level. The rating agency said it expects Pakistan’s economic growth to be positive but will be low around 1pc-2pc for the ongoing fiscal year 2020-21 ending June 2021, after experiencing a recession in the previous fiscal year 2019-2020. It added that Pakistan’s economy was relatively closed with a low reliance on exports and movement restrictions due to the pandemic will keep economic activity below the preoutbreak levels for some time. Meanwhile, Moody’s shared that the
slow economic recovery will impact government revenue, keeping the fiscal deficit wide at around 8-8.5 per cent of GDP in the ongoing fiscal year (Fy21) which will be at similar levels compared to Fy20. This, in turn, will result in the government’s debt burden remaining high at around 90 per cent of GDP by the end of Fy21. However, external financing needs have declined compared to the fiscal year 2018-19 because of a narrow current account deficit, which occurred due to macroeconomic adjustments over the past two years and continues to be assisted by effective policies including currency flexibility. Moreover, it forecast the current account deficit (cAD) for ongoing Fy21 at 2 per cent of GDP compared to 1.1 per cent recorded in Fy20 and substantially narrower than the average of around 5.5 per cent in Fy19. “Stability in the balance of payments will, in turn, allow the State Bank of Pakistan, the central bank, to keep monetary policy accommodative as inflation declines. This keeps a lid on borrowing costs for the government domestically and lends
Coronavirus in
Pakistan
further support to debt affordability,” it explained. “The coronavirus pandemic is weighing on economic activity in Pakistan, resulting in lower tax revenue, a wider fiscal deficit, and a higher debt burden for the government. While the continued spread of the virus poses downside risks to the economy and government finances, financial and technical support from development partners mitigates external vulnerability and liquidity risks,” said Moody’s. “The government’s commitment to its current International Monetary Fund (IMF) extended Fund Facility (eFF) continues to unlock a large financial envelope that Moody’s expects will cover its external financing needs over the next 12-18 months and provides an anchor for ongoing fiscal reforms. ‘V-SHAPED RECOVERY’: Meanwhile, Federal Minister for Planning and Development Asad Umar tweeted on Saturday that assigning a ‘stable’ outlook to Pakistan by Moody’s Investor Services is a ‘testimony’ to the country’s ‘V-shaped’ recovery amid the coronavirus pandemic. “Moody’s reconfirmed Pakistan’s credit rating with a stable outlook. In the middle of a global pandemic it is a testimony to the V-shaped recovery Pakistan has seen with PM Imran Khan balanced approach to safeguarding national health & livelihoods, delivering success on both counts,” Umar wrote in a tweet post. economic Affairs Minister Hammad Azhar also lauded Moody’s confirmation of Pak’s B3 rating, terming the development an ‘encouraging sign’ for Pakistan’s economy. “Pak’s rating was downgraded to B3 negative in June 2018 based on data/policies of pmln’s term. In Dec 2019, after econ stabilsation by PTI govt, rating was upgraded to B3 Stable,” he stated on social media.
283,787
16
RECOVERED:
259,604 SINDH:
123,546
NEW CASES:
842
DEATHS:
6,071
PUNJAB:
94,223
KP:
BALOCHISTAN:
AJK/GB:
ISLAMABAD:
34,539
11,821
2,301/2,129 15,214
ISLAMABAD sHaHZaD paraCHa
The International Monetary Fund (IMF) would review Pakistan's performance under the extended Fund Facility (eFF) in the last week of September. According to sources, the IMF team is scheduled to visit Pakistan to review the government's economic performance during the first quarter of the current fiscal year (Fy21), besides reviewing pending issues with regard to power tariff adjustments as well as amendments in National electric Power regulatory Authority (NePrA), mobilization of taxes and autonomy of the State Bank of Pakistan (SBP). Pakistan has so far received two tranches from the IMF under the 39month eFF programme. It may be noted that the third review of Pakistan's performance could not be held due to covid-19 outbreak, while the IMF provided Pakistan with $1.4 billion 'rapid Financing Instrument' in April 2020 to cope with the pandemic. Sources said the above-stated time-bound action plan is compulsory if Pakistan wants to continue this programme. Highlighting some constraints that the economic team may face during the review, sources said presently, one elected and two non-elected people were seeing the matters of the Power Division due to which the government was
Imran thanks Mahathir for highlighting Indian ‘injustices’ in Kashmir
CONFIRMED CASES:
DAY'S DEATH TOLL:
IMF programme in limbo as key targets remain unfulfilled
ISLAMABAD staff report
Prime Minister Imran Khan on Saturday thanked former Malaysian prime minister Mahathir Mohamad for again speaking in support of Kashmiris, as the latter vowed to continue to raise the issue of India’s “injustices” in the disputed region. “I want to thank Dr Mahathir Bin Mohamad for speaking in support of Kashmiris and against Indian repression in IIOJK (Indian illegally occupied Jammu and Kashmir) — this time at a function on 8 Aug to mark a year of the illegal Indian actions in IIOJK,” Imran wrote on Twitter.
His statement followed a series of tweets by Mahathir, who defended his right to speak up against India’s human rights violations in occupied Kashmir, saying doing so would be to “stand up for humanity”. “I had chosen to speak out despite being aware of the potential backlash,” Mahathir, 95, wrote, referring to his remarks at last year’s United Nations General Assembly where he criticised India’s “invasion” of occupied Kashmir. His criticism led to backlash from India, Malaysia’s largest importer of palm oil, in the form of order cancellations and import bans. “To my mind, keeping quiet
is not an option when all the telltale signs were pointing towards another situation whereby a big and powerful country imposed its will with impunity on a small and defenceless nation,” he said, referring to India’s repression in occupied Kashmir. Mahathir, who announced on Friday he was setting up a new political party as he seeks to take on the government, said the developments that transpired following his “contentious speech” at the UNGA “only served to prove that what I had said [was] mild and to a certain degree, restrained”. “I offer no apology for what I had said though I am sorry that it had affected our palm oil export to India. I don’t know if that is a high price to pay for speaking out against such injustices,” he added. He said now that he is no longer the prime minister “I take it that I can now speak without restrain and address the Kashmir issue without threats of boycotts and such”. Mahathir, the world’s oldest leader until his resignation in February, suggested he would speak about the issue at an event in Kuala Lumpur about “Kashmir’s one year lockdown since August 5, 2019″.
finding it difficult to build consensus on power sector reforms. The NePrA Act was introduced in the National Assembly, as the government wanted to pass on the cost of inefficiency and power theft to electricity consumers through the imposition of surcharges. However, the bill was not approved. Meanwhile, another worrisome area for the government was power sector arrears that have escalated to rs2 trillion. Sources said that the IMF also wanted clarity on how Pakistan plans to improve its revenue in Fy21. The government had set a revenue target of rs4,963 billion for Fy21 after the approval of IMF but the incumbent FBr chairman, who was appointed for three months, seems only interested in the reshuffling of officials. There was no comprehensive working on the reform programme despite the IMF as well as World Bank directions, they added. Sources said the SBP reforms had stalled due to the central bank and Ministry of Finance's differences over the proposed amendments in this regard. The IMF had pressed Pakistan to give complete autonomy to SBP in decision making. Sources said that the SBP, however, has maintained the foreign reserves in a good position despite the hot money leaving the country and Pakistan paying $1 billion to Saudi Arabia.
more inside
Rain death toll rises to 11 as heavy rain continues to lash Karachi STORY ON PAGE 02
Sindh mulls reopening businesses on Sept 15 STORY ON PAGE 03
Top Afghan council urges release of all Taliban inmates STORY ON BACK PAGE in today’s issue
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