PAKISTAN READER

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Moody’s provides positive outlook for Pakistan’s banking sector

In Brief
ECONOMY
Moody’s provides positive outlook for Pakistan’s banking sector
On 7 March, in light of solid profitability, stable funding and liquidity, Moody’s Investors Service changed its outlook on Pakistan’s banking sector to ‘stable’ from ‘negative.’ The agency claimed that these factors provided “an adequate buffer” to withstand the macroeconomic and political challenges facing the country. It further forecasted that due to subdued activity in 2023, the economic growth rate would return to two per cent and inflation would fall from 29 per cent to 23 per cent. The agency underscored: “Pakistani banks remain highly exposed to the government via large holdings of government securities that amount to around half of the total banking assets, which links their credit strength to that of the sovereign.” However, it also warned that high-interest rates and inflation would continue to “curb private-sector spending and investment.” Since banks were funding the sovereign’s fiscal deficits, there was not much left to loan to the real economy. Moody’s pointed out that the banking sector’s asset risk was tied to high government securities exposure, given that government securities accounted for 51 per cent of total assets in Pakistani banks. The agency made several other predictions, including a gradual decline in profitability, a stabilization of operating expenses following “easing inflation and banks’ cost-control efforts,” and a broadly stable capital. (“Moody’s changes outlook on Pakistan’s banking sector from negative to stable,” Dawn, 7 March 2024)
 
IMF “stands ready” to send a mission for reviewing SBA
On 7 March, the IMF’s Director of Strategic Communications, Julie Kozack, stated that the IMF was “ready to hold a mission for the second review of the Stand-by shortly after a new cabinet is formed” in Pakistan. She highlighted the focus on completing the current Stand-by Arrangement (SBA), which ends in April 2024, after the IMF would work with “the new government on policies to ensure macroeconomic stability.” Kozack pointed out that on 11 January, the first review of the SBA was approved by the IMF’s Executive Board, bringing total disbursements under the Stand-by to USD 1.9 million. She detailed that the SBA support programme underpinned “the authority’s efforts to stabilize the economy with a strong emphasis on protecting the most vulnerable segments of the population.” Further, Kozack lauded the caretaker government for maintaining “economic stability through strict adherence to the fiscal targets while protecting the social safety net,” and for continuing to build foreign exchange reserves while simultaneously implementing “timely adjustments in tariffs to shore up the viability of the energy sector.” (“Transcript of IMF Press Briefing,” International Monetary Fund, 7 March 2024)
 
SBP struggles to maintain foreign exchange reserves, experiences fall for two consecutive weeks
On 8 March, Dawn reported that the foreign exchange reserves of the State Bank of Pakistan (SBP) declined further by USD 54 million during a week, increasing the vulnerability of the exchange rate. This second consecutive drop in the central bank’s reserves highlighted imbalances in dollar inflows and outflows. While the SBP regularly buys dollars to maintain reserves at a certain level, inflows are insufficient to hold reserves even at USD eight billion. According to financial sector experts, while the next USD 1.2 billion IMF tranche could help boost reserves, the increase would be temporary as there is still USD six billion worth of unresolved debt payments. Though the government has been trying to borrow money, political and economic instability has caused the international market to remain unresponsive to Pakistani bonds. (“SBP reserves post second straight fall,” Dawn, 8 March 2024)
 
PAKISTAN ELECTIONS 2024
PR EXCLUSIVE UPDATE #80
PTI to challenge alleged tampering of Form-45s in the Supreme Court
On 7 March, PTI’s Senator Barrister Ali Zafar said his party would “challenge the matter” of the alleged tampering of Form-45s in the elections “before the Supreme Court” (SC). Zafar alleged that the Election Commission of Pakistan (ECP) was responsible for publishing tampered Form-45s, and blamed it for depriving the Sunni Ittehad Council (SIC) of reserved seats. He further claimed that the Peshawar High Court’s decision to bar members of other parties who were given SIC’s reserved seats from taking oath in the National Assembly till 13 March, was in the PTI’s favour. On the same day, PTI leader Asad Qaiser stated that the PTI would form a grand alliance with other parties whose mandates had allegedly been stolen, including the JI, and conduct an organized campaign against alleged election “rigging.” Asserting that those who succeeded in the elections based on the “original” Form-45s should have the right to form the government, he said to the PML-N lead coalition: “You don’t have the power to form the government and cabinet.” Separately, following a report by the Pakistan Institute of Legislative Development and Transparency (Pildat), which noted that the elections in 2024 ranked below the previous two elections in terms of fairness, a PTI spokesperson called for an impartial audit of the electoral results. (Ikram Junaidi, “PTI will go to SC against ‘tampered’ Form-45s,” Dawn, 8 March 2024; “Qaiser hints at grand alliance against ‘rigging’, The Express Tribune, 8 March 2024)
 
POLITICS
New government launches PKR 7.5 billion Ramzan package for poor families
On 7 March, the PKR 7.5 billion PM Ramzan package, which was approved in a meeting chaired by Prime Minister Shehbaz Sharif, began and is set to continue till 9 April, a day before Eid. This package will provide roughly 40 million poor families essential items at subsidized rates from utility stores across the country. A subsidy of PKR 77 per kg will be given on a 20 kg bag of wheat flour, and PKR 70 on ghee. Sharif instructed authorities to not compromise on the quality of products, and establish special sale points for flour distribution. He also emphasized that strict monitoring should be done to ensure that no one faces problems during the distributions, with action taken against hoarders who may create an artificial price hike. To maximize the benefits, Sharif called for launching a nationwide awareness campaign that would make the system more integrated and effective for the redressal of complaints. (Syed Irfan Raza, “PM launches Rs7.5 billion Ramazan relief package,” Dawn, 8 March 2024)
 
PM Shehbaz Sharif highlights the need for collective efforts to address Pakistan’s crises
On 6 March, Prime Minister Shehbaz Sharif highlighted the need for collective efforts of all political forces and stakeholders to tackle the multiple challenges facing Pakistan. He stated: “If I were to say that the prevailing challenges are bigger than the Himalayas, it would not exactly portray the real picture [of the crisis].” This statement was made during a dinner reception where heads of all political parties in the PML-N-led coalition were present. Sharif claimed that after chairing meetings on the economic situation of Pakistan over the last few days, he was told that the circular debt of gas and electricity has crossed PKR five trillion, and the loss due to electricity theft has surpassed PKR 500 billion annually. He thus stated: “The roots of the country’s economy are being weakened under a dedicated move. We have to steer the boat to the shore… If we manage to do so, we will be remembered forever; otherwise, history will not forgive us.” Additionally, he called on the PTI to work with the government and assured that the Centre would cooperate with the PTI-led Khyber Pakhtunkhwa government. (Syed Irfan Raza, “PM Shehbaz urges unity among coalition to counter rising economic challenges,’ Dawn, 8 March 2024)
 
Imran Khan’s interim bail extended in 9 May cases
On 7 March, an anti-terrorism court (ATC) extended the interim bail of Imran Khan till 15 March in cases related to attacks on the Jinnah House, Askari Tower and the torching of Shadman police station on May 9, 2023. ATC Judge Muhammad Naveed Iqbal conducted the proceedings and sought arguments from parties on the next date of the hearing. Earlier last week, another ATC confirmed the interim bail of Khan in four cases relating to an attack on police outside Zaman Park, the murder of PTI activist Zille Shah, the torching of Pakistan Muslim League-Nawaz office in Model Town and a container at Kalma Chowk. (“ATC extends Imran’s bail in May 9 cases,” The Express Tribune, 8 March 2024)
 
INDIA VIEW
Foreign Office claims Indian PM’s visit to Kashmir as an effort to “project normalcy”
On 7 March, Pakistan’s Foreign Office (FO) spokesperson Mumtaz Baloch described Indian Prime Minister Narendra Modi’s visit to Kashmir as “efforts to project normalcy” that were a “façade” in reality. Baloch said that tourism could not be “promoted in a situation where local people are being intimidated and their rights and freedoms are being denied.” Modi had justified his decision by saying that “dynastic politics” had limited Kashmir’s potential and emphasized during his visit that he was “working hard” to win over the Kashmiri people. Baloch claimed that following the formation of the new Cabinet, there would be clarity on Pakistan’s foreign policy and relations with other countries. While this clarity would help shed light on how new policies would “impact Pakistan’s interaction with India in the coming days,” Baloch added that “impact Pakistan’s interaction with India in the coming days.” (Baqir Sajjad Syed, “FO flays efforts to portray ‘normalcy’ in held Kashmir,” Dawn, 8 March 2024)
 
EXTERNAL
US hopes for “peaceful and productive relations” between India and Pakistan
On 7 March, US’ statement expressed hope for productive and peaceful talks between India and Pakistan. US Department Spokesperson Matthew Miller stated: “We… welcome [PM Modi]’s statement. The United States values its relations with both India and Pakistan, and we want to see them have a peaceful and productive relationship.” (“US hopes for productive talks after Shehbaz-Modi exchange,” Dawn, 8 March 2024)
 
First ‘Pakistan Heritage and Resolution Month’ organized by NYPD
On 6 March, the New York Police Department (NYPD) organized its first ‘Pakistan Heritage and Resolution Month’ at its headquarters, in a move to pay tribute to more than 600 Pakistani officers who have contributed to the department. Both the Pakistani-American Law Enforcement Society and the Pakistan Consulate in New York sponsored the event, which was attended by Pakistan’s Ambassador to the US Masood Khan, New York Mayor Eric Adams, and NYPD Chief Jeffrey Maddrey, among others. Khan congratulated the Pakistani-American police officers and described the event as a testament to the strength of Pak-US ties. He noted: “The growing visibility and outstanding performance of Pakistani-Americans in all walks of life reflects the huge potential of our people. It is also indicative of the deepening bonds between Pakistan and the United States.” Adams appreciated the officers for serving the community, and stated: “Today’s event is an excellent opportunity to celebrate the services of Pakistani New Yorkers in law enforcement who strive to keep The Big Apple safe as well as deepen our understanding of Pakistani culture.” (“NYPD celebrates ‘Pakistan Heritage and Resolution Month’,” The Express Tribune, 8 March 2024)
 
JUDICIARY
Supreme Judicial Council finds SC judge guilty of misconduct
On 7 March, the Supreme Judicial Council (SJC) found Supreme Court (SC) Justice Sayyed Mazahar Ali Akbar Naqvi guilty of misconduct, and recommended that he “should have been removed from the office of the judge.” Earlier on 10 January, a day before SJC proceedings, Naqvi resigned from the high office while facing nine complaints under Article 209(6) of the constitution. A ‘senior counsel’ said to Dawn that on the matter of Naqvi receiving post-retirement benefits, the SJC maintained that it was for the government to interpret or amend the Presidential Order 1997 which deals with the benefits of the judges. The SJC also reviewed six other complaints against judges. Naqvi in response claimed that the SJC’s proceedings against him were ex parte, and added that the president had acknowledged his resignation. (Nasir Iqbal, “SC judge found to be ‘guilty of misconduct’,” Dawn, 8 March 2024)
 
SECURITY
Two terrorists killed following separate security operations in KP
On 7 March, the Inter-Services Public Relations (ISPR) said that during an intelligence-based operation in Khyber and a separate operation in Dera Ismail Khan in Khyber Pakhtunkhwa (KP), two terrorists were killed. As per the ISPR, weapons and ammunition were recovered from the terrorists who were “actively involved in numerous terrorist activities against security forces.” They allegedly also engaged in extortion and targeted killings of civilians. A day earlier on 6 March, two soldiers and two militants were killed in an exchange of fire in the Lakki Marwat district of KP. (Iftikhar Shirazi, “2 terrorists killed in separate operations in Khyber, Dera Ismail Khan districts: ISPR,” Dawn, 7 March 2024)
 
PROVINCES
Sindh: Provincial assembly passes resolution to declare Zulfikar Ali Bhutto a “National Democratic Hero”
On 7 March, the Sindh Assembly passed a resolution declaring PPP founder Zulfikar Ali Bhutto a “National Democratic Hero,” following the Supreme Court’s (SC) verdict on Bhutto’s death sentence. The assembly unanimously welcomed the SC’s decision and passed a resolution tabled by Sindh Chief Minister Syed Murad Ali Shah. The resolution stated: “This ruling highlights the importance of upholding the principles of justice and ensuring that all individuals, regardless of their status, are entitled to a fair trial by the Constitution. It serves as a reminder of the need to address past injustices and uphold the rule of law in the pursuit of justice, and accountability.” It also endorsed the “sacrifices of Begum Nusrat Bhutto and Shaheed Mohtarma Benazir Bhutto, who sacrificed their lives to seek justice against the cold-blooded judicial murder of Shaheed Zulfikar Ali Bhutto,” and demanded the Sindh government to approach the Centre to declare Bhutto a “National Democratic Hero.” Shah highlighted the importance of necessary amendments to laws to avoid such an “atrocity” in the future. A JI Member of the Provincial Assembly (MPA) endorsed the resolution while emphasizing that “democratic personalities should be given sentences based on concrete evidence, not by force.” Additionally, a PTI-backed independent MPA said that Bhutto’s death sentence proved what happens to an individual who fights for the nation. (Kamran Razi, “Resolution sails through Sindh Assembly to declare ZA Bhutto 'National Democratic Hero',” The News International, 7 March 2024)

This Women's day is special for the women of Punjab and Pakistan, because a woman has broken the glass ceiling and took office as the Chief Minister of Punjab. More power to you Maryam N Sharif, you are an inspiration to all. -Sania Ashiq   On this Women's day, my salute to all the lion hearted women of Pakistan who endured so much the last 2 years. -Jarrar Shah   To all the brave and resilient women of Pakistan. May you shine as an example for what women can achieve. -Omar Mahmood Hayat

“Male dominance in society has led to a perception that women are not capable of making choices and leading their lives independently.” -An opinion in Dawn, ‘Achieving gender equality’