PAKISTAN READER

Photo : Dawn

Finally, Pakistan and IMF reach an agreement on the bailout

In Brief
ECONOMY
Finally, Pakistan and IMF reach an agreement on the bailout
On 20 March, the IMF stated that it had reached a staff-level agreement with Pakistan on the final review of a USD three billion bailout, under which Pakistan will receive USD 1.1 billion after approval from the Fund’s Executive Board. In a statement, the IMF claimed that the agreement “recognizes the strong program implementation by the State Bank of Pakistan and the caretaker government in recent months, as well as the new government’s intentions for ongoing policy and reform efforts to move Pakistan from stabilisation to a strong and sustainable recovery.” They further expect the “review to be considered by the IMF’s Board in late April.” The IMF mission chief in Pakistan, Nathan Porter, commended Pakistan’s economic and financial situation, which has “improved in the months since the first review, with growth and confidence continuing to recover on the back of prudent policy management and the resumption of inflows from multilateral and bilateral partners.” However, he noted that growth is “expected to be modest this year,” though the new government is “committed to continue policy efforts.” The government is expected to continue efforts “towards broadening the tax base, and continue with the timely implementation of power and gas tariff adjustments to keep average tariffs consistent with cost recovery while protecting the vulnerable through the existing progressive tariff structures, thus avoiding any net circular debt accumulation.” On the other hand, the central bank will remain “committed to maintaining a prudent monetary policy to lower inflation and ensure exchange rate flexibility.” After this, shares on the Pakistan Stock Exchange climbed by 374 points.
 
On 19 March, Pakistani authorities and members of the IMF mission concluded the staff-level talks as part of the final review of the current short-term loan agreement, paving Pakistan’s way to securing the final tranche worth USD 1.1 billion. Finance Minister Muhammad Aurangzeb and the IMF mission chief in Pakistan, Nathan Porter, led their respective teams, and after the conclusion of the meeting, ambassadors of the US and China to Pakistan discussed “matters of mutual interests” with Aurangzeb. The IMF is set to issue an “end of mission” statement after clearance from the IMF headquarters, and following approval from the IMF’s executive board, the remaining funds would be disbursed. Following this, both sides will coordinate a meeting to take up Pakistan’s case from 15 April, when the country will formally take up its request for another bailout package under the Extended Fund Facility. As per sources, both sides reached a consensus on the Memorandum of Economic and Financial Policies (MEFP) and other worksheets on performance data and future macroeconomic projections, as well as a set of contingency measures to meet gaps till 31 March. Provinces also extended an assurance that they would meet their budgetary projections for providing cash surpluses, in order to achieve a 0.4 per cent primary deficit during FY24. The government shared plans to digitalize the tax system for the real estate and retail sectors, as part of which the related legislation and subordinate legislation will be made part of the upcoming federal budget. On the matter of increasing the rate of petroleum development levy on the sale of major oil products, it was decided that an upper limit of PKR 100 may be incorporated in the Finance Bill 2025. As part of the next IMF programme, privatizing state-owned enterprises (SOEs) would be the main theme, along with a commitment to freeing the electricity and gas circular debt. For both sectors, the government will have to adhere to the legal and regulatory stipulation, as violating this has caused revenue slippages and a liquidity crisis in the past. From 1 July, the base electricity tariff and consumer-end gas tariff would both be revised upward.
 
On 18 March, the visiting staff of the IMF mission and Pakistani authorities decided to extend talks overnight to conclude the Memorandum of Economic and Financial Policies (MEFP), as an understanding was reached during the final review of the USD three billion Standby Arrangement (SBA). While “most of the work on the documentation is already complete,” as per an ‘informed source,’ the letter of intent and MEFP on behalf of the minister and governor of the central bank will be finalized on 19 March. As per Dawn’s sources, both sides have agreed on a set of contingency measures to address gaps in data till 31 March and would remain in contact regularly in the run-up to securing approval from the Fund’s executive board with regard to the disbursement of the final tranche of about USD 1.1billion in the first part of April. On 18 March, they held talks on enhancing the Anti-Money Laundering (AML) and the Combating the Financing of Terror (CFT) laws following international practices and also spoke on secrecy safeguards with relation to access of bank data to assets documentation of public officials. According to sources, while the banks would be bound to share data with the FBR, there would be standard protocols to be followed while doing so. There is also a chance of increasing the rate of petroleum development levy on sales of major oil products. Pakistani officials shared a detailed plan on completely freezing electricity and gas circular debt with the IMF, in which the gas electricity tariff would be revised from 1 July to allow consumers to face predictable monthly fuel costs. Similarly, the consumer-end gas tariff would be revised upward from 1 July. This revision would be part of the next ‘longer and larger’ programme with the IMF. Sources added that the government shared the FBR’s digitalization programme with the IMF mission, with tax rates for non-filers in real estate transactions being increased and monitored.
 
On 14 March, Pakistan and the visiting IMF staff mission began discussions on the second and final review of the current USD three billion short-term bailout package, in which authorities assured full compliance with the benchmarks. There were also separate and combined sessions held with the ministries of finance, energy and petroleum, the Federal Board of Revenue and the State Bank. Finance Minister Aurangzeb Khan “welcomed the mission and expressed the government’s commitment towards working with IMF on the reform agenda for economic growth and stability of Pakistan.” He had earlier expressed the government’s decision to request a longer and larger loan programme to sustain macroeconomic stability. Discussions were also held on “the overall macroeconomic indicators, government’s efforts on fiscal consolidation, structural refo­r­­ms, energy sector viability, and SOE (state-owned enterprises) governance.” As per the Ministry of Finance, Pakistan met all structural benchmarks, qualitative performance criteria, and indicative targets that were required for a successful completion of the IMF review. Energy Minister Musadik Malik assured the IMF mission that the government would meet the power sector’s circular debt target of PKR 2.31 trillion, with the government on track so far. He also stated that energy sector reforms would be undertaken and the government was already working on measures to contain energy prices by reducing generation costs and controlling theft. Malik provided details on the plan to provide maximum local gas to four LNG-based power plants in Punjab, which is now in its final stages under which maximum allocation of local gas could be ensured. (“IMF, Pakistan reach staff-level agreement on final bailout review,” Dawn, 20 March 2024; Khaleeq Kiani, “Fingers crossed as talks with IMF conclude,” Dawn, 20 March 2024; Khaleeq Kiani, “Pakistan, IMF extend talks to conclude SBA review,” Dawn, 19 March 2024; Khaleeq Kiani, “Govt begins final IMF review talks,” Dawn, 15 March 2024)

AF-PAK
Border remains relatively calm on both sides despite earlier clashes
On 19 March, there was relative calm on both the Pakistan and Afghanistan sides of the border, a day after the former launched air strikes, leading to clashes along the border. Pakistani military launched air strikes in Afghanistan on 18 March, in response to an attack in Mir Ali on 16 March. Following this, Afghan forces used heavy weapons to target troops across the border in Kurram and North Waziristan. This led to the closure of multiple border crossings and educational institutions on both 18 and 19 March. In Kurram, both sides agreed to a temporary truce on 18 March following talks between local elders on both sides of the border. The elders then met on 19 March and determined that the issue should be resolved by both countries diplomatically. Trade activities remained suspended at the Kharlachi border crossing in Kurram. However, the calm was interrupted by clashes in the Angoor Adda border crossing of Lower South Waziristan, where shells landed near the bunkers of both sides; however, a police official claimed that there were no damages. (Javed Hussain, “‘Relative calm’ follows skirmishes on Afghan frontier,” Dawn, 20 March 2024)

POLITICS
PTI files petition in IHC to seek permission to organize a “peaceful protest” against alleged rigging
On 19 March, the PTI approached the Islamabad High Court (IHC) in an attempt to seek permission for a public gathering in the federal capital later in March. PTI leader Amir Mughal filed a petition through lawyer MNA Sher Afzal Marwat, which will be heard by a single-member bench on 20 March. Earlier, Mughal sought permission from the Deputy Commissioner’s Office twice since 15 March to organize a “peaceful protest” against alleged election rigging. Following a lack of response, Mughal claimed to have sent another reminder to the office, requesting to “exercise its constitutional right of holding peaceful public gathering” in Islamabad on 23 March or 30 March. He further assured that the party’s workers and protestors would “remain peaceful and the party will make sure that the participants adhere to the instructions and code of conduct issued by your office for the peaceful holding of the event.” Mughal stated that Imran Khan had given Marwat the responsibility of ensuring arrangements for the public meeting. He went on to lament that the PTI had allegedly been “deprived of almost 90 seats of the National Assembly,” and thus wanted to “hold a public meeting and protest against the alleged rigging in the” polls. (Munaweer Azeem & Ikram Junaidi, “PTI moves IHC for Islamabad rally permission,” Dawn, 20 March 2024)
 
Interior minister underscores need for “better laws” to regulate social media
On 19 March, with disruptions of X entering its fifth week, Interior Minister Mohsin Naqvi highlighted the need for “better laws” in Pakistan to regulate internet free speech. When asked whether his ministry was responsible for shutting down X, he asserted: “Expression is fine, but making false allegations against people is wrong — it’s happening and needs to be fixed.” He also said it was important to “reassess” the existing laws and “look into what is being missed.” Naqvi took the example of the US, where a “ban has been imposed on TikTok” after criticism, and said that Pakistan also needed to review its “laws to regulate social media,” as alleged smear campaigns were being run on social media platforms against state institutions. However, he evaded questions on how Pakistan’s top officials, including the prime minister, were using VPNs to access X. On the same day, the Pakistan Telecommunication Authority Chairman, Hafeezur Rehman, said he would raise the issue of the ban on X with the interior ministry. He emphasized: “Either the matter should be cleared or someone should take responsibility for it. The closure of social media forums is always directed by the interior ministry.” (Zulqernain Tahir, “Interior minister calls for revisiting social media laws,” Dawn, 20 March 2024)
 
ATC issues non-bailable arrest warrants for PTI leaders, including KP’s CM Gandapur
On 19 March, a Rawalpindi anti-terrorism court (ATC) issued non-bailable arrest warrants for multiple PTI leaders, including the Chief Minister of Khyber Pakhtunkhwa (KP), Ali Amin Gandapur, in a case related to the 9 May riots. The warrants were issued by ATC Judge Malik Ejaz Asif, who also directed authorities to produce Gandapur before the ATC on 2 April. During the 9 May protests, the rioters targeted civil and military installations, leading to the arrest of multiple PTI workers and senior leaders. Warrants have also been issued for PTI’s Shireen Mazari, Mussarat Jamshed Cheema, and Saad Jamil Abbasi. They were all nominated after statements recorded by suspects Wasiq Qayyum, Umer Tanveer Butt and Sadaqat Abbasi. In response, the Adviser to the Chief Minister on Information, Barrister Mohammad Ali Saif, criticized the warrants and stated: “The mandate theft government lodged fake cases [against PTI leaders].” He warned that action would be taken as per law on the cases filed while questioning how no action was being taken against the brother of Punjab’s Chief Minister Maryam Nawaz, who allegedly stole billions of rupees from the country. (Shabbir Dar, “May 9 riots: Non-bailable arrest warrants issued for KP CM Ali Amin Gandapur,” The News International, 19 March 2024)
  
JUDICIARY
Imran Khan’s counsel argues that cipher probe began before complaint was filed
On 19 March, when the Islamabad High Court (IHC) took up Imran Khan’s appeal against his conviction in the cipher case, his counsel, Barrister Salmad Safdar argued that the inquiry in the case was started before the complaint regarding the office had been registered. Safdar said to the division bench, comprising of Chief Justice Aamer Farooq and Justice Miangul Hassan Aurangzeb, that the Ministry of Interior filed the complaint before the Federal Investigation Agency (FIA) on 12 October 2022; however, Safdar was entrusted the inquiry in the case on 5 October, almost a week before the complaint was registered. Farooq sought documentary evidence, while Aurangzeb questioned the reason for initiating the probe under the secrets law. Safdar responded by saying that the federal cabinet referred the inquiry to the FIA but the inquiry’s foundation was flawed. He further contended that during the trial, the judge did not give enough time to the defence and concluded the trial in haste, and added that the trial court judge appointed two state counsels as prosecutors even though the defence counsels were cooperating with the court. Aurangzeb assured that the court would compare Safdar’s assertions with that of the defence team. (Malik Asad, “Cipher probe began before complaint, says Imran’s lawyer,” Dawn, 20 March 2024)
 
NAB petitions for more time in the Toshakhana vehicles case
On 19 March, the National Accountability Bureau (NAB) petitioned for time in order to compile a comprehensive report on its investigation. An accountability court, presided by Judge Nasir Javed Rana, heard the Toshakhana vehicle reference which implicated multiple political heavyweights, including the president and prime minister. The Deputy Prosecutor of NAB, Azhar Maqbool Shah, told the court that Prime Minister Nawaz Sharif had petitioned for a joint investigation, and assured that this would be initiated upon the availability of the investigating officers. After this, a thorough report would be submitted, indicating whether a case against Sharif could proceed. The court thus adjourned the proceedings until 17 April. As per an earlier reference submitted by the NAB to the accountability court, the then co-chairman of the PPP, Yousuf Raza Gilani, President Asif Ali Zardari, and Sharif were allegedly granted vehicles from the Toshakhana in violation of the law. (“NAB seeks time in Toshakhana vehicles case,” The Express Tribune, 20 March 2024)
 
EXTERNAL
US Assistant Secretary of State expresses concern over poll irregularities and Pakistan’s economy
On 19 March, the US Assistant Secretary of State, Donald Lu, submitted a written statement containing Washington’s concerns over irregularities in the 8 February elections, and the need to stay engaged with Pakistan to help it through its multiple crises. Lu is the same diplomat whose apparent warning to the former Pakistan Ambassador to the US, Asad Majeed, was the matter of the cipher document which Imran Khan claimed was an American attempt to oust the PTI. On 20 March, Lu will testify before a subcommittee of the US House Committee on Foreign Affairs as part of a hearing titled ‘Pakistan After the Elections: Examining the Future of Democracy in Pakistan and the US-Pakistan Relationship.’ In the statement, Lu highlighted Washington’s concerns about irregularities such as restrictions on freedoms, violence, and allegations of interference. He pointed out how several political leaders faced challenges, like the inability to register specific candidates and political parties, and further underscored the harassment and abuse faced by many journalists at the hands of party supporters. The statement also highlights positives, such as a turnout of 60 million voters, and a record number of women and minority candidates. Lu noted the importance of fortifying Pakistan's democratic institutions, fostering economic stability, and bringing in economic reforms to combat mounting debt. He advised: “Pakistan needs economic reforms and private sector-led investments that will deliver economic growth for the Pakistani people and not dig their government deeper into debt.” Further, he emphasized the importance of counterterrorism cooperation with Pakistan and advocated for respecting human rights and religious freedoms. (Anwar Iqbal, “Donald Lu highlights poll irregularities in House testimony,” Dawn, 20 March 2024)
 
Ambassador urges Pakistan to avail benefits of Vietnam FTAs
On 20 March, The Express Tribune reported on Vietnam’s Ambassador to Pakistan, Nguyen Tien Phong, calling on Pakistan to avail the opportunities arising from free trade agreements (FTAs) signed between Vietnam various countries including the US and the EU, while Vietnam could benefit from Pakistan’s GSP Plus status. While talking to the Lahore Chamber of Commerce and Industry (LCCI) President Kashif Anwar, Phong highlighted the potential for increasing trade between Pakistan and Vietnam, by forging business-to-business and people-to-people contacts and potentially issuing e-visas to promote business. The sectors he mentioned included tourism, textile, yarn, and cotton. He also noted information technology as a critical area as Vietnam “is currently associated with Japan, India, South Korea and other countries.” Phong further noted that agriculture is an important sector, as Vietnam went from being a food-insecure country to the third biggest rice exporter from 1986 to 1989. Anwar acknowledged the sound diplomatic relations shared by both countries for more than 50 years and stated: “On the path of rapid economic growth, Vietnam made impressive progress in industrial, agricultural and services sectors. It was the result of broad-based economic transformation, which opened the Vietnamese economy to international markets and foreign trade.” (“Pakistan asked to reap benefits of Vietnam FTAs,” The Express Tribune, 20 March 2024)
 
COAS and Saudi Arabian crown prince discuss enhancing bilateral ties
On 20 March, the Inter-Services Public Relations (ISPR) issued a statement, saying that the Chief of Army Staff, General Asim Munir. and Saudi Arabia’s Crown Prince, Mohammed bin Salman bin Abdulaziz Al-Saud, held talks on regional peace and security, bilateral defence and security cooperation. The statement added: “Prince Mohammad Bin Salman highlighted that KSA and Pakistan have historic brotherly and strong relations, and both countries have always stood up for each other.” Abdulaziz Al-Saud further expressed the desire to enhance bilateral ties and assured that Saudi Arabia would stand by Pakistan in the future. In response, Munir “thanked the Saudi leadership for the warm sentiments and support for Pakistan.” (“COAS Munir, Saudi crown prince discuss defence, security cooperation,” Business Recorder, 20 March 2024)
  
SOCIETY
Peira instructs private schools to offer free education to ten per cent of students
On 19 March, multiple private schools across Pakistan received a notification from the Private Education Institutions Regulatory Authority (Peira), instructing the principles to ensure free education to ten per cent of students. The notification stated: “Strict compliance of offering ten per cent seats to needy students will be monitored, and private educational institutions failing to fulfil this directive will be subject to necessary action, whereas private schools with the highest numbers of scholarships offered to needy students will be duly recognised… [by the] government.” It added that scholarships to students had to be highlighted during the annual admission drive and on social media channels. Peira instructed schools to display at their entry points the ten per cent seats for students, and highlight this on their websites and prospectus. The institution appreciated contributions from private schools towards the education ministry’s ‘zero out-of-school-children (OOSC) campaign,’ and stated: “Continuing this effort, it is desired from the highest level of the government for a formal and structured action to ensure the right to free and compulsory education for children as reflected under Peira policy. Providing 10pc need-based scholarships is made compulsory for registration, as reflected on the Peira registration certificate as well.” An ‘official’ commended Peira’s notification but warned that “without a strict monitoring mechanism this directive cannot be implemented.” (Kashif Abbasi, “Private schools told to ensure 10pc need-based scholarships,” Dawn, 20 March 2024)
 
PM Sharif asks for report on relief operations conducted in rain-hit areas
On 19 March, Prime Minister Shehbaz Sharif sought a detailed report on whether the relief and rehabilitation operations conducted in areas hit by rains and floods were completed judiciously. As per a statement by the Prime Minister’s Office (PMO), Sharif directed the National Disaster Management Authority (NDMA) to work with the provinces and issue a joint survey report, to help provinces cope with future calamities. He also asked for an implementation report regarding the technical improvement of the NDMA. Officials of the NDMA briefed Sharif and other officials on the relief and rehabilitation activities after rains and told him that with the assistance of provinces, especially Balochistan, the NDMA would complete a collective verification survey over several destroyed and partially damaged houses. Sharif also asked for transparency in distributing 7,66,000 kilograms of dry ration in Gwadar till 24 March, and 97,000 kilograms of ration in Quetta and Dalbandin. (Syed Irfan Raza, “PM seeks report on relief operation in areas hit by rains,” Dawn, 20 March 2024)
 
PROVINCES
Khyber Pakhtunkhwa: Information adviser asks Punjab government to “hand over” Imran Khan to them
On 19 March, Khyber Pakhtunkhwa’s (KP) Information Adviser, Barrister Dr Muhammad Ali Saif, said if the Punjab government was unable to “provide security” to Imran Khan at Adiala Jail, then he should be “handed over to the KP government.” This statement was made in light of the restrictions imposed on visitors to Adiala Jail due to “security threats.” Claiming that these restrictions created “difficulties” for all the prisoners, Saif went on to say: “The Punjab government should not make the people suffer because of its ‘incompetence’ and ‘fear of Imran Khan’.” He stated that a “drama’ is being played in Punjab to hide the ‘incompetence’ of its government,” as Punjab’s Chief Minister Maryam Nawaz was busy with “photo shoots” while Defence Minister Khawaja Asif was engaged in “useless gossip” in the parliament. (“Hand over Imran to us, K-P tells Punjab,” The Express Tribune, 19 March 2024)
 
Punjab: 3,288 profiteers arrested for overcharging in first week of Ramzan
On 19 March, during a meeting at the Civil Secretariat, Punjab Chief Secretary Zahid Akhtar Zaman was informed that 3,288 persons were arrested and 1,181 cases registered during a crackdown on profiteers overcharging consumers in Punjab during the first week of Ramzan. Inspections were conducted at 4,35,000 spots by price control magistrates, with more than PKR 40 million worth of fines imposed on violators. In the meeting, there was a review of price control measures and the provision of ration bags under the Ramzan package. Zaman ordered an expedition of the ongoing crackdown on profiteers, asked the administrative officers to ensure the price lists of essential commodities were implemented, and asserted that the supply of ration bags should be accelerated. As per the secretaries of industries and agriculture who were present at the meeting, 3.8 million ration bags were delivered under the Nigheban Ramazan package. A day earlier, the meeting was told that 1,13,000 consumers benefited from the agriculture fair shops at Ramzan bazaars, where a PKR 20 million subsidy was being given gaily on 13 items. (“3,288 held during crackdown on profiteers,” Dawn, 20 March 2024)
 
Balochistan: CM Bugti labels corruption and bad governance as the province’s “biggest issues”
On 19 March, Balochistan’s Chief Minister, Sarfraz Ahmed Bugti, claimed that corruption and bad governance are the “biggest issues of Balochistan,” and vowed that his government would act to strengthen institutions, such as the Anti-Corruption Establishment. He asserted that his government would have a “zero tolerance policy” toward corruption while lamenting that government departments’ performance was affected as they were “under the influence of mafias.” On the issue of the missing persons, Bugti said the matter was given a political colour as there were differences in the data on the missing persons available with the government and the claims made by their heirs and political parties. However, he assured that he wanted to resolve the issue soon. He further assured: “The cabinet will be formed according to the formula agreed between the four-party alliance [of PPP, PML-N, BAP and ANP].” (Saleem Shahid, “‘Corruption, bad governance biggest issues of Balochistan’,” Dawn, 20 March 2024)

Human Rights Democracy and Religious Freedom are three fundamental pillars of any society to progress and excel. Congressional Hearing today on Democracy in Pakistan is the result of months of struggle and first Concrete step towards accountability but not the last option. Let’s hope to pass a clear message for the better future of 250 million people of Pakistan. -Dr Asif Mahmood   Players of Pakistani professional cricket team Islamabad United celebrated their winning at the Pakistan Super League by raising the Palestine flag. -Lyndsey   Azerbaijan and Chinese troops have arrived to participate in Pakistan Day parade, expressing pride in joining this special occasion. Major Mehran Craiozo from Azerbaijan Army stated, 'Pakistan is our brother country, and we are delighted to be here.' Major Craiozo also mentioned the successful rehearsal, boosting morale. Parade Coordinator, Major Retd. Tahir Saifullah, welcomed the Chinese forces, expressing happiness about their participation alongside Azerbaijani troops. -Balochistan Current Affairs

“There is a need for a fundamental reassessment of priorities and spending.” -An editorial in Dawn, ‘Austerity theatre’