Shehbaz Sharif meets the business community in Karachi; World Bank chief economist says energy sector’s subsidy policy is “regressive”
In Brief
EXTERNAL
Iran-Pakistan vow to transform their border into a “border of peace and friendship”
On 24 April, Pakistan and Iran issued a joint statement as the Iranian President Ebrahim Raisi’s three-day visit came to an end. Both countries agreed to transform their common border into a “border of peace and friendship” and announced a slew of measures to deepen bilateral cooperation. The joint statement highlighted “the historical, cultural, and religious and civilization ties between the two neighboring and Muslim countries.” The two sides emphasized their commitment and towards further “strengthening the bond through the promotion of academic, cultural and tourism activities, and by enhancing tourism to historic religious sites in both countries.” With an emphasis on fostering economic cooperation, both countries agreed to expedite the process of the signing a free trade agreement (FTA), increasing bilateral trade to USD 10 billion over course of next five years and setting up of “joint border markets, economic free zones and new border openings.” They stressed the importance of collaboration in the energy sector with a focus on- trade in electricity, power transmission lines and IP Gas Pipeline Project. (“Pakistan, Iran renews IP gas pipeline cooperation,” The Express Tribune, 24 April 2024)
POLITICS
Shehbaz Sharif meets the business community in Karachi; calls for boosting exports
On 24 April, Prime Minister Shehbaz Sharif met with the business community in Karachi on his first visit to the city after the elections. His enthusiasm for boosting exports was met with skepticism as attendees argued that it was difficult to do so under present circumstances with “high energy costs and inconsistent government policies.” The business community members commended the government for moving ahead with the IMF negotiation as it had brought about the much needed stability in to the money market and brought inflation under control. In a bold move, the chief of Arif Habib Group – a capital market giant- Arif Habib urged him to shake hands with India and patch up with Imran Khan to bring about political stability. The chief of the Trade Development Authority of Pakistan (TDAP), Zubair Motiwala, highlighted the increasing cost of doing business which has impacted exports adversely. He stated “Due to the increasing cost of doing business with these gas and electricity prices, our competitors would soon take us over and get Pakistan’s export orders. It is surprising that we want to increase exports and local manufacturing, but we are increasing energy prices by including cross-subsidies, which has resulted in a gas tariff of PKR 2,600 per unit for industrial heating and PKR 3,100 per unit for captive power.” (Imran Ayub, “Business leaders in Karachi give PM food for thought,” Dawn, 25 April 2024)
Bill aimed to fasten tax recovery tabled
On 24 April, the government tabled a bill in the National Assembly to facilitate and fasten the process of recovery of over PKR 2 trillion tied up in litigation before the Appellate Tribunal Inland Revenue (ATIR). The bill, titled Tax Laws (Amendment) Act 2024, was tabled by Law Minister Azam Nazeer Tarar on behalf of the finance minister. It seeks to amend the Sales Tax Act 1990. Referring to the problem of recovery, the law minister stated that the pending tax cases amounted to PKR 2,700 billion across various appellate forums and hampers recovery. Further, 72,000 tax cases are pending at various forums while there were only 20 ATIRs. The amendment bill aims to increase this number to 35. The bill also aims to shift the power of appointment of the members of AITR’s from the prime minister to “through an open competition and conduction of tests through reputable institutions like IBA, NUST and LUMS.” (Amir Wasim, “Bill to recover Rs2.7tr held up in tax litigation,” 25 April, 2024)
JUDICIARY
In a rare judgement, Rawalpindi Drug Court hands out prison terms for ‘substandard’ drug
On 25 April, Dawn reported that in a rare judgment, the Rawalpindi Drug Court has imposed a hefty fine and handed out prison sentences to the CEO and three employees of the pharmaceutical company GlaxoSmithKline (GSK) which is considered a credible company across globe. The case involved a tablet Septran, batch number HSBDS manufactured by GSK, a sample of which was found ‘substandard.’ In its judgment, the court stated that despite possessing optimum capacity- “an estimated net worth of USD 82.38 billion, has production and quality control units” – the drug manufacturer neither recalled the drug nor initiated and inquiry regarding allegation against the drug. The court found the company’s CEO, production manager, quality control manager and warrantor guilty. The CEO was fined PKR 4.7 million and will face a prison term of three months if she fails to pay the fine. The three employees have each been awarded a two year sentence and a fine of PKR 600,000. In response, GSK Secretary Agha Salman Taimur has conveyed the company’s intention to appeal the judgment. The judgment has sparked a debate due to its rarity among legal experts and within the pharma industry. Pakistan Drug Lawyers Forum President Noor Muhammad Mahar has argued that “there was nothing wrong with the quality of the medicine” and fears that this might lead to a campaign for watering down the Drug Act so as to retain fines and do away with prison sentences. (Ikram Junaidi, “Drug court hands down prison terms, fines in rare verdict,” Dawn, 25 April 2024)
SOCIETY
Pakistan needs democratization of digital development, argues and editorial in Dawn
On 25 April, an editorial in Dawn titled “Digital growth”, analyzed the findings of the findings of a new UNDP report on Pakistan- “Doing Digital for Development — Access, Adopt, Anticipate, Accelerate.” The report has revealed that “noticeable differences in human development can be seen between those districts that have embraced digital transformation compared to those that have lagged behind.” The report also reiterated the importance of “equitable and safe access to technology” as a way to improve human lives. It has termed the digital development in Pakistan at best as “moderate.” The editorial reveals that over half the country lacks internet access and “women remain grossly unreserved.” 83.5 percent of the women who do have access, reveal that their access is policed by their spouses. Additionally, “digital development among the richest 20 per cent of its population is 15 times greater than in its poorest quintile.” The editorial argues that this digital divide needs to “urgently addressed” as Pakistan ranks low in both the UNDP’s Human Development and Gender Inequality indices. The editorial also argues that democratization of digital development will “catalyze” and improve human development indicators in Pakistan. (“Digital growth,” Dawn, 25 April, 2024)
ECONOMY
World Bank chief economist says energy sector’s subsidy policy is “regressive”
On 25 April, The Express Tribune reported that at a high-level panel discussion on national economic reforms organized by the UNDP, SDPI and World Bank as part of the “Prosperity for Pakistan” initiative, World Bank Chief Economist and acting Country Head for Pakistan Tobias Haque criticized subsidy policy in energy, the fertilizer and gas sectors as “regressive.” He also stressed that “the fiscal cost of state-owned enterprises is contributing to fiscal pressures in Pakistan.” He reiterated that the “burden of reforms” needed to be adequately spread out and there was a need direct measures to “ensure an increase in tax returns at the top of income distribution.” Other leading national and international policy experts who attended the meeting agreed that economic reforms in Pakistan geared at stabilizing the economy must have a “human face” so as to not burden the underprivileged and to improve human development indicators. (“World Bank criticizes subsidies,” The Express Tribune, 25 April 2024)
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Congratulations to all the workers, supporter, and every member of Pakistan Tehreek-e-Insaf (PTI) on the 28th foundation day!
-Hamza Haider
ISF needs to be strengthened across Pakistan. We need more young leaders especially from Punjab and Sindh.
-Ahmed
The number of people living in poverty in Pakistan has climbed to nearly 40%. And price hikes for electricity and fuel in September 2023 led to protests, with thousands taking to the streets and burning their electricity bills.
-Mohammad Hayat
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Ali Tauqeer Sheikh, ‘Debt, climate, inflation’
Dawn, 25 April 2024
“It is too early to know exactly what was decided at the spring meetings. The details will emerge slowly and be reflected in the G20 policy decisions during the year. While Pakistan was busy negotiating the Extended Fund Facility with the IMF, key issues of particular interest to it were discussed at the spring meetings: i) reversal of development gains and increase in poverty levels, ii) addressing the burden of public debt that is crowding out crucial investments, iii) strengthening global cooperation and multilateralism, and iv) reaffirming the commitment to the SDGs.”
Editorial, ‘Campus crackdowns’
Dawn, 25 April 2024
“Joe Biden has tarred the protesters with the brush of antisemitism, terming the Columbia demonstrations “reprehensible and dangerous”. President Biden should know what is particularly reprehensible is the grotesque violence unleashed by Israel on Gaza, and Washington’s ironclad support for it, not American students denouncing this butchery. American and other Western protesters clearly have the moral high ground here, whereas their governments have no leg to stand on.”
Editorial, ‘Digital growth’
Dawn, 25 April 2024
“This needs to be urgently addressed. Pakistan is already among the lowest-ranked countries in the UNDP’s Human Development and Gender Inequality indices. It would appear that sound digital development policies alone can greatly strengthen its present dismal standing in these areas. It is encouraging, in this context, to note that Planning Minister Ahsan Iqbal has described access to digital resources and modern technologies as a fundamental human necessity, just like electricity, healthcare or education.”
Imran Jan, ‘The erosion of democracy’
The Express Tribune¸ 25 April 2024
“The aid package for Ukraine and Israel is quite interesting in one aspect. Ukraine is fighting against Russia’s hegemonic designs. That is a conflict in the Russian backyard. Nobody has come up with a convincing answer as to why it should be America’s business. Imagine if Russia started providing weapons to Cuba and convinced it to take Florida back from the United States by using Russian money and weapons.”
Sahibzada Riaz Noor, ‘Consumerism and economic implications’
The Express Tribune, 25 April 2024
“Pakistan’s economy is highly skewed towards consumption which forestalls and militates against export- oriented, high value added growth. Most investments occur in speculative and consumption goods with niggardly scope for upgraded products such as engineering and mechanical products, IT, value added agricultural goods, etc.”
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“There is a calm in economic numbers, but below the surface trouble is brewing.”
-An opinion in Dawn, ‘The looming test’
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