Commentators emphasize on India-Pakistan détente and trade potential, but also caution on J&K and BJP’s ideology; Government announces nine per cent increase in gas rate to meet “prior action†of IMF
In Focus
IMF deal by July, says finance minister while announcing increased tax on salaried class
On 30 June, as President Asif Ali Zardari signed the Finance Bill for 2024-25 into law, Finance Minister Muhammad Aurangzeb separately remained unable to defend new tax exemptions for the armed forces, pensioners, and real estate sales. He stated that the extension of the exemptions was to secure a “good staff-level agreement” from the IMF within July. On the increase in the tax burden on the salaried class, he said he could “only empathize and sympathize” with those facing the increase. Aurangzeb highlighted how IMF officials remained worried about tax authorities’ ability to increase revenue through enforcement measures, and how the tax burden had fallen again on those already making significant contributions. For the outgoing fiscal year, there was a PKR 100 billion revenue shortfall against the PKR 9.415 trillion target, which Aurangzeb described as “hardly anything.” Crucial measures that have to be undertaken include returning to international markets, increasing the tax-to-GDP ratio to 13 per cent in three years, and taking sustainable structural reforms in the power and petroleum sectors.
Aurangzeb announced that virtual discussions with the IMF were progressing positively, and an extended fund facility worth USD six to eight billion will be agreed upon in July. He detailed that the “goal is to ensure this is the final IMF programme,” which will last for approximately three years. For 2024-25, the federal government adopted a budget worth PKR 18.9 trillion, which included raising taxes on the salaried class, normalizing taxes for exporters, and a petroleum levy increase in order to meet requirements to secure the IMF bailout. While the IMF programme is an “assurance” for macroeconomic stability, the challenge is “how to make this macroeconomic stability permanent.” The “major focus areas include increasing exports, attracting direct foreign investment and continuing discussions with Saudi Arabia and the United Arab Emirates,” along with work on the second phase of the China Pakistan Economic Corridor (CPEC). From 1 July, the new pension system will apply to civil employees, while armed forces, who have been given a one-year exemption to adjust their service sector, will be given a new pension system from next year. All tax refunds till 30 June, worth over PKR 50 billion, will be paid within two to three days and exporters’ DLTL payments are also expected to be settled soon.
Speaking on the outgoing fiscal year, Aurangzeb noted stable economic indicators such as reduced fiscal and current account deficits, a stable currency, and a reduction in inflation. The government will digitalize the Federal Board of Revenue’s (FBR) operations to counter corruption and tax evasion, as “corruption cannot happen from one side alone.” On the sales tax corruption worth PKR 750 billion, he called for reducing human involvement in the FBR. For this fiscal year, tax revenue collected grew by 30 per cent to reach PKR 9.3 trillion. Aurangzeb also spoke on measures to abolish tax exemptions worth PKR 3.9 trillion in the real estate sector and said that while relief with economic improvement would be given to the public, the tax increases are needed to stablilize the economy. With regard to the energy sector, Aurangzeb acknowledged the work against electricity theft. (Israr Khan, “Aurangzeb expects $6-8bn IMF deal by July,” The News International¸1 July 2024; Khaleeq Kiani, “‘Prior actions’ buoy hopes for IMF deal in July,” Dawn, 1 July 2024; Mubarak Zeb Khan, “Govt introduces new tax measures to meet IMF criteria,” Dawn, 29 June 2024)
In Focus
Commentators emphasize on India-Pakistan détente and trade potential, but also caution on J&K and BJP’s ideology
During the last few weeks, especially after the recent elections and the formation of the government, there have been a few comments, including from the political leadership in Pakistan, regarding normalizing relations with India. Despite cautionary notes, especially relating to India’s new approach to J&K and criticisms on India’s values relating to pluralism and secularism, there is a debate within Pakistan on how to restart the relationship.
Sahibzada Riaz Noor, a former Chief Secretary in the KP province, writes in the Express Tribune, (“Elections in India, Pakistan and chances of rapprochement,” The Express Tribune, 1 July 2024) that the situation is ripe for a détente between India and Pakistan. Commenting on two new governments following the elections in 2024, he makes a case that this is the right time. According to Noor: “There is a strong lobby which believes that the best opportunity — if ever one were to arise, in the present, new, regional geopolitical environment, for some movement to be made, however tentative and risky, towards a semblance of an Indo-Pak entente — can be when Modi is at the helm in Delhi and Nawaz Sharif is in a position of a political godfather of his ruling party. In addition the government can count upon the active support of other main coalition partners.”
Political developments within Pakistan, and the economic gains for Pakistan are projected as two primary reasons. According to Noor, “For once there seems to be a moment where, on the Pakistan side, both the military as well as the political government seem to see eye to eye on the issue of improvement of relations with the eastern neighbour, realising the vast economic gains that may accrue to Pakistan through trade opening, which itself could wield up to USD 30-40 billion as gains to Pakistan in commodity trade, besides other economic spillover effects. Opening of land-based trade should help in appreciable reduction in inflation of consumables, bringing immediate relief to the common man.”
Fatima S Attarwala, basing her argument on the volume of informal trade and smuggling between India and Pakistan, writes about the “potential benefits of normalised trade” (“Potential thaw on the horizon in India trade ties?” Dawn, 1 July 2024). She quotes a former President of Lahore Chamber of Commerce and Industry saying, “about USD one billion of USD ten billion of machinery imports and USD one billion of USD ten billion of raw material imports can be sourced from India,” that would reduce the freight costs than procuring through Dubai. According to him, “businesses pay around USD 3,000 to USD 4,000 per container for imports from further away. However, importing from India could drastically reduce these costs, bringing them down to USD 300 to USD 400 per container.”
However, not everyone is as positive as Noor and Attarwala. Maleeha Lodhi, in her commentary for Dawn (“Resistance by other means,” Dawn, 1 July, 2024) argues that the BJP government wants to give an impression that normalcy and stability has returned to J&K, but Kashmiris would aspire for “for freedom from Indian occupation.” According to Ms Lodhi, “the post-2019 period saw almost every aspect of life for Muslims in occupied J&K come under assault by the BJP government. A series of steps — administrative, demographic, electoral — were taken to disempower and disenfranchise Kashmiris and alter the Muslim identity of Kashmir.” Commenting further on India’s plan to hold elections for the state legislative assembly, she writes “the people of occupied Kashmir will reject any regime foisted on them and continue, one way or another, to express their aspiration for freedom from Indian occupation.”
Abdul Rafay Azal, argues in the Express Tribune (“Modi’s rule: a threat to India’s pluralism?” The Express Tribune, 30 June 2024). “The BJP’s ideology, rooted in Hindutva, marginalises other religious communities, particularly Muslims and Christians. The propagation of Hindutva has led to a surge in religious intolerance, with minorities feeling increasingly vulnerable. Construction of Ram Mandir at the place of Babari Mosque is also one of the recent developments under the Modi regime.”
In Brief
ECONOMY
Auto sector players remain positive on the entry of China’s BYD into Pakistan
On 30 June, Dawn reported on the optimism of auto sector players regarding China’s BYD entering Pakistan in collaboration with Hub Power Company Ltd (Hubco), to locally assemble electric vehicles (EVs) to benefit exports. GM Marketing Division, MG JW Automobiles Syed Asif Ahmed, advised that BYD’s entry “in Pakistan should be looked at from a global perspective instead of [a] regional one,” saying that China would focus on other potential EV markets following restrictions in North America, Europe, and India. This means that “Pakistan can benefit from this global shift by converting its internal combustion engine (ICE) to electric cars, thus reducing fuel bills.” Ahmed noted the importance of bursting “myths” about how EV production in Pakistan would cost more than fossil fuel vehicles and explained: “The breakeven period at the current price of EV versus petrol/diesel-driven vehicles is 1.8 years. The breakeven is calculated taking into consideration the acquisition, operational and maintenance cost of EV versus burners.”
On a question of why assemblers are focusing on EVs instead of introducing petrol-driven cars for low and middle-income classes, he said that Pakistan has an inverted pyramid for the automotive market as the demand for high-priced cars is higher. With regard to the future expectations of sales of EVs given limited buyers in Pakistan, he said that since the adoption rate is rapidly increasing, EVs will take less than three years to experience high demand if given the right environment. Currently, in Pakistan, six brands are actively promoting EVs while foreign and local investors are waiting for a conducive business environment in which they can develop charging infrastructure. (Aamir Shafaat Khan, “More competition to amp up electric vehicles adoption,” Dawn, 30 June 2024)
Government announces nine per cent increase in gas rate to meet “prior action” of IMF
On 30 June, the government issued a notification saying that there would be a nine per cent increase in gas rates for industrial captive power units from 1 July in order to meet a “prior action” of the IMF. During a special meeting of the Economic Coordination Committee (ECC), presided over by Finance Minister Muhammad Aurangzeb, the decision was taken to comply with the IMF’s prior action for a three-year loan programme. The Oil and Gas Regulatory Authority (Ogra), which had set a PKR 180 per unit reduction in gas prices for FY25 to meet gas companies’ requirements, later went on to ask the government to absorb a PKR 132 billion price cut to combat circular debt. In a summary to the ECC, Ogra stated that “for the anticipated surplus revenues, they may include previous years’ shortfall to the extent of cushion available in the upcoming revenue requirement.” Following this, the ECC approved a 9.1 per cent increase in the gas sale rate to captive plants of the general industry. Meanwhile, the petroleum division stated that Ogra had determined estimated revenue requirements (ERR) for FY25 for Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL). The “cumulative revenue requirements of both the Sui companies are PKR 897 billion for 2024-25,” with SNGPL requiring PKR 607 billion revenue and SSGCL requiring PKR 289 billion. Further, the ECC was notified that 349 industrial units had captive power plants for 523 gas connections. (Khaleeq Kiani, “Gas rates for industry hiked to meet IMF demand,” Dawn¸1 July 2024)
EXTERNAL
Pakistan must act as a sovereign state without foreign interference, says editorial in Dawn
On 1 July, an editorial in Dawn titled ‘Resolution 901’ wrote about Pakistan’s decision to dismiss Resolution 901 passed in the US House of Representatives, as “interference” in Pakistan’s internal affairs and an “attempt to undermine the state.” However, while the US Congress saw 85 per cent of its membership voting 98 per cent in favour of a “full and independent investigation of claims of interference or irregularities” in the 8 February elections, Pakistan’s counter-resolution “did not pass with the same overwhelming support.” The simple majority in Pakistan’s parliament was mainly due to the PTI’s refusal to vote in favour as it was “not consulted.” Instead, the party revelled in the “world’s self-appointed ‘democracy police’ rebuking the Pakistani government.” The editorial opined that the failure of Pakistan’s lawmakers to “stand united in the face of foreign criticism may not have been unexpected, given the vitiated political climate,” but lamented that matters have reached a point where “representatives do not care if the world perceives Pakistan as a house divided.” Those who did not vote in favour were branded as ‘terrorists’ and ‘enemies of the state’ who did not deserve to “call themselves Pakistanis.” Considering this “propensity to spew venom against political opponents,” it is unsurprising that parliamentarians cannot find common grounds “even where questions of national sovereignty are concerned.” The editorial emphasized that though incidents of violence and arbitrary detention highlighted in Resolution 901 are “realities for the Pakistani people, it is not up to a foreign parliament to dictate” how Pakistanis should run Pakistan. Thus, the demand for a transparent inquiry into the elections can only be made by the people of Pakistan. In conclusion, the editorial argued that the “US has its own messy legacy to consider of sabotaging democratic governments and propping up dictators around the world.” Pakistan’s problems are its own to resolve, and it must “learn to act as a sovereign state” after suffering from foreign interference.” (“Resolution 901,” Dawn, 1 July 2024)
China is committed to its diplomatic philosophy of creating a mutually-beneficial system, notes opinion in The News
On 1 July, in an opinion in The News International titled ‘Five principles in modern China’s policy, practice,’ Shakeel Ahmad Ramay underscored the importance of historical context when understanding China’s diplomatic philosophy and international relations policy. China’s aspiration to “transform enemies into friends and friendship into brotherhood, a testament to the transformative power of diplomacy,” is reflected in its Five Principles of Peaceful Coexistence. These were presented by the then-Chinese Prime Minister Zhou Enlai during the signing of the Sino-India agreement. Though China’s adherence to this philosophy has faced challenges such as the “harsh behaviour of Western powers,” it has successfully remained resilient and committed to its diplomatic philosophy. Ramay outlined two distinctive characteristics of the five principles- the first is that the principles “ask us to depart from the past mentality of alliances and work on building partnerships,” and the second is that they “encourage engagement for a win-win economic and development cooperation.”
China uses these principles as both rhetoric and also a framework in which it takes “practical actions to demonstrate its will to move on the path of peaceful co-existence,” as part of which it has “successfully avoided alliance-building by working on partnership-building.” Ramay noted the consensus among the community of leaders and experts who believe that China “never pursued hegemony” and instead strived for a “fair and people-centric governance system” along with “dignity-based interaction.” However, China’s President Xi Jinping thinks that since China is now a major power, it will have to be “more dynamic” and adopt a “proactive approach” to shape a respectful and mutually beneficial global system. The opinion noted that this vision “triggered a transition from peaceful co-existence to cooperative, peaceful, and prosperous co-existence.” As part of a community with a shared future, China launched initiatives such as the BRI and GDI. Ramay concluded by stating that this vision is helping eliminate the End of History and the “self-assumed righteous behaviour of Western countries,” which is why an “overwhelming majority of countries have subscribed to the vision.” (Shakeel Ahmad Ramay, “Five principles in modern China’s policy, practice,” The News International¸1 July 2024)
SECURITY
Government should be more transparent about Azm-i-Istehkam, says editorial in Dawn
On 1 July, an editorial in Dawn titled ‘Nebulous definition’ expressed concern over the uncertainty surrounding Operation Azm-i-Istehkam, saying that it is “worrying that a major counterterrorism initiative announced amidst a dramatic surge in violent incidents seems so untethered from specifics.” The government for its part has “prevaricated about its actual scope and intent,” and has resorted to playing “down its ambitions” after facing “stiff resistance from representatives of the battle-fatigues areas” where the operation is expected to be executed. Though unnamed security sources have confirmed that there would be no mass displacement of civil population or a large-scale military action, it has raised even more questions as to what the operation will be. The editorial mentioned how Pakistan’s ambassador to the US, Masood Khan, recently sought “small arms and modern equipment from Washington” for the operation. During this, he explained that the initiative has “three components: doctrinal, societal and operational.” Separately, Defence Minister Khawaja Asif spoke about potentially “pursuing terrorists in hideouts based in Afghanistan.” However, the editorial argued that these developments seemed to “contradict assurances of the limited scope of kinetic operations” and also contradict what Asif “recently stated about Pakistan not seeking help from Washington for the initiative.” The editorial therefore questioned why there is a “glaring disconnect between what the government intends to do and what it is publicly stating.” If the government wants the operation to be successful, it should “communicate clearly and share a consolidated programme with all stakeholders.” (“Nebulous definition,” Dawn¸1 July 2024)
SOCIETY
Government must eliminate myths surrounding polio vaccine, argues editorial in The News
On 1 July, an editorial in The New International titled ‘A stubborn virus’ lamented how the lifelong medical condition of polio, of which there are eight recorded cases in 2024, “could have been avoided had the child received the crucial vaccination.” In 2023, there were six cases, but in the first six months of 2024, the tally has been surpassed already with six cases in Balochistan and two in Sindh. Though environmental sampling helps indicate the virus’ presence, “there has not been any significant action towards tackling the problem.” While Pakistan managed to eradicate polio a few years ago, the “lack of care shown towards maintaining the now-lost status has led to a situation where the polio keeps reappearing now and then.” Official sources have claimed that “thousands” of Pakistani parents “refused to get their children vaccinated” during the last campaign, proving that “anti-vaccine misinformation and propaganda” is still “one of the most formidable barriers to polio eradication.” The editorial pointed out how the virus reemerged during and after the PTI government, showing the possible failure of the Imran Khan-led administration to handle a “top public health priority.” This misinformation, which may have spread more rapidly during the Covid era, has resulted in a dangerous atmosphere for polio workers.
Calling on the government to acknowledge that “even one child is too many,” the editorial explained that the government had continuously ignored the “myths and conspiracy theories surrounding the polio eradication programme.” In order to change this “rigid mindset,” the government should take different approaches such as informing parents on the importance of vaccines at the time of their child’s birth and asking schools to gift children in lower grades if they show their vaccination certificates. While the government’s door-to-door campaign is “commendable,” more must be done to “eradicate this stubborn virus” from Pakistan. (“A stubborn virus,” The News International, 1 July 2024)
Punjab ready to launch sixth polio eradication campaign of 2024
On 1 July, the Punjab province will roll out its sixth special polio eradication campaign of 2024 in five districts, including Lahore, Rawalpindi, Bahawalpur, Lodhran and Muzaffargarh, as part of which over 4.5 million children will be immunized. The head of the polio programme in Punjab, Khizer Afzaal, announced the campaign which will involve over 32,000 polio workers and last for five to seven days, to prevent the local transmission of the virus caused by the movement of mobile populations. He vowed: “With successful campaigns, all samples will be turned negative and children be safeguarded.” Afzaal also expressed confidence in the province’s polio surveillance network to detect any virus circulation and launch a timely response. During a special ceremony of the campaign, Afzaal was joined by renowned cricketers, who urged parents to cooperate with polio teams. (“Punjab set to launch anti-polio drive today,” The News International¸1 July 2024)
AF-PAK
Afghanistan “cannot sit idle for reasons of complicity,” says an editorial in The Express Tribune
On 1 July, an editorial in The Express Tribune titled ‘Evolving discord’ highlighted a “visible discord” between Pakistan and Afghanistan as a result of the security situation, and blamed Kabul’s “vendetta-laden rejoinder to Defence Minister Khwaja Asif’s submission that Islamabad could opt for hot pursuit” as being the “root of confusion.” The Taliban leadership had “failed to evaluate where it had blinked,” and Asif thus highlighted the “pathetic equation on the borders” and the Taliban’s failure to keep its promise of “checking non-state actors.” As per data cited by the editorial, in the last five months of 2024, there was a spiral of 80 per cent of terrorist activities inside Pakistan since the TTP remained “unchecked on Afghan soil,” a violation of the Doha Accord 2020 under which the Taliban must “exterminate terror characters apart from ushering in an inclusive government.” The editorial argued that it is “high time for the reclusive dispensation in Kabul to realize that Pakistan has gone out of its way to support the Afghan brethren,” and advised that Afghanistan should act against “unscrupulous elements that are out to destabilize the region” instead of resorting to “knee-jerk reactions.” As a result of the uptick in terrorism that Pakistan is facing, it was compelled to redraft a “counter-intelligence operation in the name of Azm-e-Istehkham.” The editorial concluded by asserting that since the regrouping of the “terror apparatus is an existential threat,” Afghanistan cannot “sit idle for reasons of complicity” and thus must act “in all sincerity.” (“Evolving discord,” The Express Tribune, 1 July 2024)
PROVINCES
Sindh: Poor governance has turned Karachi “into ruins,” argues editorial in The News
On 1 July, an editorial in The News International titled ‘This city we once knew’ described Karachi as a city where “prolonged load-shedding of gas and electricity” has become a norm and street crime a “never-ending saga,” making the city an “unlivable” one where “life is at its worst.” Citing the Economist Intelligence Unit (EIU) in which Karachi is among the five least livable cities, the editorial stated that living in Karachi “has become a soul-crushing experience for almost all classes.” While the elite are protected from financial issues but are vulnerable to a “dismal law-and-order situation,” poor and low-income households face challenges including minimal job opportunities, lack of affordable housing, and water and gas shortages. Meanwhile, the authorities continue to “ignore the plight of the residents” and instead shame them for their “lack of civic habits.” The editorial noted how “improper planning” has resulted in residential neighbourhoods turning into multi-storey buildings “with poor facilities,” to make up for the “ever-increasing housing demand and as a solution to government inaction.” This situation in Karachi, which has stayed the same for years, is largely due to the “lack of political activities” as the city “does not have impassioned candidates interested in governing.” The editorial concluded by questioning for how long stakeholders would “continue to abandon the country’s metropolis,” which has now “turned into ruins.” (“This city we once knew,” The News International¸ 1 July 2024)
|
Pakistan demands that TTP militants hiding in Afghanistan be brought to justice. Right.
Yesterday, Afghan govt demanded that Taliban militants hiding in Pakistan be brought to justice. That too was right.
Let's first prosecute those who sheltered Taliban militants in Pakistan.
-Farhatullah Babar
First result of PM Shehbaz Sharif and FM Aurangzeb’s pro poor-pro salaried class budget!
Due to 18% GST and 2.5% retailers tax, packaged milk per liter price is increased from Rs295 to Rs370 per liter. The increase is Rs75 or 25%.
-Shahbaz Rana
The FWO organized a free medical camp in Lorak village, Kohistan district, examining over 1,100 patients, including women and children. FWO doctors and paramedics provided free treatments and medicines. This is the second camp in three months, alongside FWO's ongoing 21 MW hydropower project and educational initiatives in Tanger Valley. Locals appreciated FWO's efforts and commitment to future medical camps.
-Balochistan Current Affairs
|
|
|
