Pakistan Independence Day 2020: National Resilience Amid Deadly COVI19 Pandemic

On Pakistan's 73rd Independence Anniversary, the people of the South Asian nation have demonstrated their resilience yet again. They have defied all foreign and domestic doomsayers, including media, activists and think tanks of all varieties. Pakistan has successfully fought off the deadly COVID19 virus and begun to bounce back economically. Moody's rating agency has raised Pakistan's economic outlook from "under review for downgrade" to "stable". Pakistan's Planning Minister Asad Umar is talking of a "V-shaped recovery". Large Scale Manufacturing (LSM) is recovering. Monthly cement sales have rebounded to the pre-pandemic level, fertilizers sales are setting records, fuel sales have increased, tax collection is up,  exports are rising and the Karachi stock market is booming again. Prime Minister Imran Khan and Army Chief General Qamar Javed Bajwa have been on the same page in tackling the health and economic crises faced by Pakistan. Contrary to the critics of Pakistan's civil-military ties,  Khan-Bajwa cooperation has been one of the keys to the country's success in dealing with the twin crises.

Coronavirus Pandemic:

Foreign and domestic media, activists and think tanks lived up to their reputation when it comes to the coverage of coronavirus pandemic in Pakistan. They all made dire predictions of imminent collapse of the state and society. That has been the case in the past when Pakistan faced terrorist threats and natural disasters.  As in the past, they all turned out to be wrong. Pakistan successfully tacked the pandemic and brought it under control. This success has drawn praise from the likes of Bill Gates known for his global health activism and philanthropy. Speaking on CNN Global Public Square, Gates said:

"Pakistan had a pretty bad peak in Karachi but those numbers have come down and now they look like Europe. India is still sadly in growth phase as is South America...in Africa South Africa is top...in the rest of Africa we've been funding a lot of testing because it's a bit opaque..what goes on in the lungs..you are more exposed to indoor and outdoor particulates even at younger ages you can get disease compared to let's say a rich country"

CNN Screenshot of Pakistan's COVID19 Progress

Civil-Military Relations:

Attacking Pakistani military and describing Pakistani civilian leadership as "puppets" has been one of the favorite hobby horses of foreign and domestic media, activists and think tanks. It seems that they would like nothing better perpetual conflict between the two power centers. So far, these critics have miserably failed in igniting the civil-military conflict in Pakistan.

Prime Minister Imran Khan and Army Chief General Javed Bajwa have been on the same page in tackling health and economic crises faced by Pakistan. This has been one of the keys to country's success in dealing with the twin crises.

Pakistan Stock Market Best Performing in Asia. Source: Bloomberg

Large Scale Manufacturing:

In spite of COVID19 pandemic, Large Scale Manufacturing (LSM) went up 16.81% in June 2020 from May 2020, but still down 7.74% from June, 2019.  LSM  declined 10.17% in fiscal 2020 from fiscal 2019.
Pakistan Manufacturing Output. Source: Bloomberg

Cement Sales:

Cement is a basic building material. Its sales are seen as a very important economic indicator of development activity. The cement sales jumped 37.75% from 3.512 million tons in July 2019 to 4.838 million tons in July 2020, the first month the new fiscal year 2020-21.

Pakistan Cement Sales. Source: Bloomberg


According to the data released by Pakistan's cement industry group APCMA, the local uptake of cement in July 2020 increased by 32.67% to 3.953 million tons from 2.979 million tons in July 2019 while exports rose 66.14% to 0.885 million tons, up from 0.533 million tons in same month last year.

Fertilizer Sales:

Sales of urea, a barometer of agriculture activity, have surged 83% to 1.18 million tons in June 2020 from a year ago.  The surge came after a decline 7% YoY to 2.6 million tonnes in the first half of CY20, partly due to COVID19 related lockdown in the country.

Export Performance:

As the COVID19 pandemic eased in Pakistan, the country's exports bounced up to $1.998 billion in July 2020 against $1.889 billion in the same month of the last fiscal year 2019, up 5.8% in dollar terms year-over-year. The imports stood at $3.54 billion in July 2020 against $3.696 billion in the same month of 2019, recording a decline of 4.2 percent. The overall trade balance reduced by negative 14.7% as it stood at $1.542 billion in July 2020 compared with $1.8 billion in same month of 2019.

Pakistan is trying to address various impediments to growing exports. “More than half of Pakistani exporters struggle with domestic and foreign regulatory barriers,” said Invisible Barriers to Trade – Pakistan 2020: Business Perspectives. The report was prepared in collaboration with the World Bank Group’s country office in Pakistan. There's significant upside to exports if Pakistani government and exporters can join hands to address these "invisible barriers to trade".

Naya Pakistan Housing:

Inn spite of the pandemic, Pakistani Prime Minister Imran Khan announced a new housing construction incentives package that includes down payment assistance and expansion of home loans portfolios by commercial banks at discounted rates for affordable housing for the poor.

Shariah compliant financing is also included in it. Pakistan’s mortgage finance to GDP ratio is just 0.25%, among the lowest in the world, according to the World Bank. The average for South Asia 3.4%.  New housing drives a large number of sectors of the economy from banking and building materials to construction and manufacturing of furniture and home appliances. These incentives are designed to stimulate the economy, boost employment and deal with the growing shortage of affordable housing in the country.


CPEC Gains Momentum:

The work on China-Pakistan Economic Corridor (CPEC) has gained momentum in spite of the pandemic that has slowed many sectors of the country's economy.

Pakistan has begun construction on major dam projects worth $11 billion. Diamer Bhasha dam will store 6.4 million acre-feet (MAF) of water and generate 4,500 MW of electricity. Azad Pattan hydro-electric project will produce 700 MW of electricity.

Financing for the $6.8 billion ML-1 railway project has been agreed. It will be the first major upgrade of the train track since Pakistan's independence in 1947. This project will upgrade Pakistan’s existing 2,655km railway tracks to allow trains to move up to 165km/h – twice as fast as their current speed.

Nine special economic zones (SEZs), including Rashakai in Khyber-Pakhtunkhwa, Allama Iqbal in Punjab and Dhabeji in Sindh province, have been launched. Some 1,000 acres of land had been procured for Rashakai SEZ, the groundbreaking of Allama Iqbal SEZ in Faisalabad had been done and tenders opened for Dhabeji SEZ, which would be built on 3,000 acres of land.

Pakistan's Human Development: 

One of the biggest areas of concern is Pakistan's laggard performance in human development. This requires closer civil-military cooperation to deliver better education and health care to improve the country's competitiveness in the world.

There's reason for optimism, however. Key indicators show that education and health care in Pakistan are improving but such improvements are slower than in other countries in South Asia region. Pakistan's human development ranking plunged to 150 in 2018, down from 149 in 2017. It is worse than Bangladesh at 136, India at 130 and Nepal at 149. The decade of democracy under Pakistan People's Party and Pakistan Muslim League (Nawaz) has produced the slowest annual human development growth rate in the last 30 years. The fastest growth in Pakistan human development was seen in 2000-2010, a decade dominated by President Musharraf's rule, according to the latest Human Development Report 2018. One of the biggest challenges facing the PTI government led by Prime Minister Imran Khan is to significantly accelerate human development rates in Pakistan.

Summary:

Pakistanis have defied all foreign and domestic doomsayers, including media, activists and think tanks of all varieties. Pakistan has successfully fought off the deadly COVID19 virus and begun to bounce back economically. Moody's rating agency has raised Pakistan's economic outlook from "under review for downgrade" to "stable". Pakistan's Planning Minister Asad Umar is talking of a "V-shaped recovery". Monthly cement sales have rebounded to pre-pandemic level, fuel sales have increased, tax collection is up,  exports are rising and the Karachi stock market is booming again. Prime Minister Imran Khan and Army Chief General Javed Bajwa have been on the same page in tackling the health and economic crises faced by Pakistan. Contrary to the critics of Pakistan's civil-military ties,  Khan-Bajwa cooperation has been one of the keys to the country's success in dealing with the twin crises.

Here's a brief video clip of Bill Gates' remarks on CNN:

https://youtu.be/NWTkfhiwsG4

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Comment by Riaz Haq on August 11, 2020 at 1:03pm

Host Fareed Zakaria disses Pakistan's success against COVID19 but his guest Bill Gates does not agree. https://www.youtube.com/watch?v=KpAMVLwBJkM

Here's an excerpt from Fareed Zakaria GPS show aired on Aug 9, 2020.

ZAKARIA: So let's talk about the rest of the world. When you look at COVID from a global standpoint, what strikes you? Because it still, to me, seems odd that you have such variation. You know, if you look at a place like Sri Lanka or Pakistan, Pakistan which has done almost nothing as far as I can tell, you know, infections are not going crazy, death rates are not going crazy, there may be some underreporting, of course.

Then you have the fact of places like Vietnam or Taiwan, where they have really a stunningly low death rate. And then you have, of course, northern Italy, New York. What is all this telling you? Are you drawing any conclusions about the nature of the virus?

GATES: Well, there's a few patterns. Countries that had MERS or SARS episodes realized that in their checklist if a respiratory disease came along, they needed to reach out to the commercial testing groups and get capacity and get turnaround. And because they caught it early with competent testing, which the U.S. did not, they had such low level of cases, then contact tracing works. South Korea being a fantastic example of that.

Some, you know, people have very good health systems like Vietnam. We also believe now that the related coronavirus exposure, because there's so many bats in -- as you get into Southeast Asia there, that they probably, you know, within a few months will really understand this. They probably had this cross-protection that meant the spread of the disease was not as strong there.

Also having a young population, you know, was beneficial. Pakistan had a pretty bad peak in Karachi, but now they look like Europe. Those numbers come down. India is still, sadly, in a growth phase as is lots of South America. Africa, we know South Africa is tough. The rest of Africa we've been funding a lot of testing there because it's a bit opaque what goes on. And the lungs in Africa, you're more exposed to indoor and outdoor particulate, so it looks like even at younger ages you can get a serious disease compared to, say, a rich country.

http://transcripts.cnn.com/TRANSCRIPTS/2008/09/fzgps.01.html

Comment by Riaz Haq on August 11, 2020 at 10:34pm

#Indian #Hindu temple reports huge #coronavirus outbreak as cases surge with 700 cases of the novel coronavirus among its staff in the past 2 months, as cases in the country surged past 2.2 million with 45,000 deaths. 62,064 new cases in the past 24 hours. https://reut.rs/30JyoGc

A well-known Hindu temple in India has seen more than 700 cases of the novel coronavirus among its staff in the past two months, a temple official said on Monday, as cases in the country surged past 2.2 million.

India reported a near-record 62,064 new cases of the virus in the past 24 hours, according to federal health data released on Monday, taking its total number of cases to more than 2.2 million.

India has fewer cases than only the United States and Brazil, though it has reported a relatively low number of deaths, at fewer than 45,000, although epidemiologists say the peak of its outbreak could be months away.

Cases in India have been spreading from urban areas to smaller towns and the countryside, where health infrastructure is already over-burdened.

The Lord Venkateswara temple in the town of Tirumala in south India, one of the biggest and most wealthy Hindu shrines in the world, said two of its staff and one former employee had died of COVID-19 since June 11, when it reopened to the public after a government lockdown.

In all, 743 temple employees had been infected by the virus, it said.

“We are providing the best medication to those infected. We are taking utmost precaution, social distancing norms are followed, devotees and others are wearing masks,” said the chairman of the temple’s trust organisation, Y. V. Subba Reddy.

It was not clear how many of the temple’s thousands of daily visitors had contracted the virus.

The trust employs about 22,500 workers including 300 priests and controls 10 temples, including the main Venkateswara temple where it employs 36 priests.

India started a phased re-opening after a strict lockdown that was imposed on March 25. Temples and other places of worship were allowed to open in June.

Places of worship draw many thousands of people in India and premises are often cramped, making social distancing difficult.

Comment by Riaz Haq on August 12, 2020 at 7:35am

#India and the world were already heavily #debt-ridden when #COVID19 hit, hence there will be massive #bankruptcies in a businesses. : NYU professor emeritus Edward Altman https://www.moneycontrol.com/news/business/exclusive-india-and-the-...

Built back in 1968 by Edward I Altman, then a professor at New York University the model is still being used across the world. It helps predict the possibility of a business going bankrupt. And that perhaps explains why Altman is considered an authority in bankruptcy prediction.

Comment by Riaz Haq on August 12, 2020 at 7:38am

Analyst Muzzammil Aslam's Tweet:


Pakistan recovering quickly from Covid-19 shocks, evident from Large Scale Manufacturing up 16.81% in June 2020 from May 2020, but down 7.74% YoY. In FY20, LSM down 10.17% YoY. Given FBR exports, cements, steel, fertilisers sales recorded in July. One can expect bumper FY21!


https://twitter.com/MuzzammilAslam3/status/1293470668982489090?s=20

Comment by Riaz Haq on August 12, 2020 at 4:35pm

Car sales rebound in #Pakistan as #COVID__19 #pandemic eases. #Toyota sales jump 60% month-to-month, followed by Pak #Suzuki 28% & #Honda 23%. Honda motorbike sales of 94,003 units in July, up by 17% year-over-year & 4% on a month-on-month. #manufacturing https://www.samaa.tv/money/2020/08/suzuki-limps-as-toyota-honda-sal...

Pak Suzuki sales declined 40% in July as compared to the same period last year, despite the Indus Motor Company (Toyota) and Honda Atlas reporting 68% and 46% growth, respectively.

The overall sales of the industry dropped 8% to 11,501 units during the month, according to the Pakistan Automotive Manufacturers Association.

Kia Lucky Motors, a new player in the industry, sold around 1,500 units, according to Hammad Akram of Topline Securities. Kia’s data is not available on the PAMA website as it is not a member of the association.

The auto industry struggled during the Covid-19 pandemic and the subsequent lockdowns. However, car sales showed an increasing trend with 36% growth on a month-on-month basis as the government eased lockdown restrictions. Car assemblers are now ramping up production levels to meet demand. It is evident from one to three months of delivery time from the date of booking.

All the three main car assemblers in Pakistan have reported an increase in sales on a month-on-month basis. IMC reported the highest increase of 60% followed by Pak Suzuki at 28%. Honda reported 23% increase.

Atlas Honda, the bike manufacturers, reported motorbike sales of 94,003 units in July, up by 17% on a year-on-year and 4% on a month-on-month basis.

“We expect demand for cars to grow stronger as lower interest rates for auto financing have revived demand for new cars,” Akram said.

Out of a total of 11 automobile companies, stocks of ten companies, including Suzuki, Toyota and Honda, listed on KSE-100 remained red on Wednesday.

Comment by Riaz Haq on August 12, 2020 at 6:01pm

#BRT #Peshawar buses to start operating tomorrow. It’s a 3rd gen rapid transit project with 27 km long main corridor from Chamkani to Karakhano crossing, & 5 off-corridor routes connecting different parts of the city to it, adding up to 59 km.- #Pakistan

https://www.dawn.com/news/amp/1573928

The chief minister said his two years at the helm were tough as there was so much criticism of the project.

CM says project deadline set by his predecessor was a mistake

“For me, it was a situation like caught between a rock and a hard place,” he said.

Mr Mahmood said the government would gradually meet all those things, which the project lacked.

He praised the BRT managers over efforts for the project’s launch.

“All of them worked very hard to make the project’s timely inauguration a reality,” he said.

Fayyaz Khan, the chief executive officer of the government-owned TransPeshawar company, which has been set up to operate the project, highlighted the features of the initiative.

He said BRT was a third generation project, which had a 27 kilometers long main corridor from Chamkani to Karakhano crossing, and five off-corridor routes connecting different parts of the city to the main corridor.

“The Kohat Adda-Shah Alam on Charsadda road off the corridor link will be 18 kilometers long, while the length of the Chamkani-Pishtakha Chowk section is 19 kilometers. The three other routes will connect different parts of Hayatabad and Karkhano crossing with each other,” he said.

Mr Fayyaz said 30 BRT stations had been set up along 27 kilometers long BRT corridor at a distance of 900 meters.

He said three depots and staging facility were under construction.

The TransPeshawar CEO said the company had a fleet of 200 diesel hybrid air-conditioned buses, which would cover 59 kilometers of the main and off-corridor routes.

He said the project also had a bicycle sharing system and 360 buses had been purchased for the purpose.

Mr Fayyaz said the BRT would also have an express service, which would make stops at only seven stations of the main corridor, while the regular bus service would be available at all stations.

He said the commuters would have to pay Rs10 per five kilometers, while the fare would go up by Rs5 for every five kilometers.

“A ride from Chamkani to Karakhano crossing will cost a commuter Rs35,” he said.

About the existing public transport, the TransPeshawar chief said the company had registered 618 vehicles and of them, 418 had been compensated.

He said the company had distributed 100,00 Zu BRT cards free of charge among the residents.Work on the bus project was launched in Oct 2017 with the then chief minister, Pervez Khattak, setting six months deadline for its completion at a cost of Rs49 billion.

However, the frequent design changes and retrofitting not only caused the project to miss the first deadline but it also increased the project cost by Rs17 billion to a staggering Rs66.43 billion.

Thereafter, the project managers changed the launch dates from May 20 to June 30 to Dec 31 in 2018 to March 23, 2019, to June 2020. However, the project wasn’t launched due to design and other issues.

In the meanwhile, a National Accountability Bureau probe ordered by the Peshawar High Court into the alleged corruption in BRT project was stopped in Sept 2018 by a Supreme Court bench headed by the then chief justice, Saqib Nisar.

In Dec 2019, the Peshawar High Court ordered the Federal Investigation Agency to investigate that alleged corruption.

A five-member FIA team formed in line with the court’s judgement had submitted its report to the court at the end of Jan. However, the apex court stopped the probe in Feb.

Comment by Riaz Haq on August 14, 2020 at 9:49pm

#China to Supply #Coronavirus #Vaccine to #Pakistan, one of its closest allies. State-owned Sinopharm is set to work with #Karachi University on vaccine trials, including enough doses to vaccinate about one-fifth of Pakistan’s population. #COVID19 #CPEC https://www.wsj.com/articles/chinato-supply-coronavirus-vaccine-to-...

The agreement, among the first China has reached as part of its efforts to test its coronavirus vaccine in populations beyond its borders, comes amid a global competition for access to vaccines that are now entering trials and expected to come to market in coming months.

Negotiations are under way with a second Chinese company to try out its vaccine in Pakistan, officials said.


Developing countries often lack both a pharmaceutical industry to develop, test and produce vaccines and the money to purchase them from elsewhere. That has forced governments to seek supplies from allies or from international groups attempting to obtain vaccines for poor countries.

China hasn’t been a major vaccine producer globally. It needs to test its Covid-19 vaccines outside its borders because coronavirus cases in China have dwindled and it is harder to find the population diversity required.

Beijing is leveraging its coronavirus vaccines to build global influence, especially in the developing world. “Covid-19 could be a turning point for China, as we are seeing a vacuum in global leadership,” said Jennifer Bouey, senior policy researcher at the Rand Corporation. “China could build solidarity with developing countries and become a more influential player in global health.”

The U.S. has spent at least $9 billion to buy up vaccine supplies in advance from non-Chinese companies to cover its entire population.

Neither the U.S. nor China have joined the global initiative backed by the World Health Organization that aims to raise $18 billion to purchase and distribute the vaccine equitably.

State-owned China National Pharmaceutical Group, also known as Sinopharm, has tied up with Karachi University’s International Centre for Chemical and Biological Sciences for the Pakistani trials.

Financial terms haven’t yet been worked out, the officials said.

Given intense global demand for the vaccine, the best that many countries can hope for before 2022 is to source enough vaccine for its most vulnerable people.

Pakistan has been a showcase for Beijing’s global infrastructure-building program, the Belt and Road initiative, in recent years. The initiative has been another way China has sought to increase its overseas clout.

Pakistani officials say that in addition to any vaccine from China, they are open to sourcing immunizations from elsewhere if they are affordable.

China has three indigenous coronavirus vaccines being developed in Phase 3 trials. They all use the traditional inactive virus technology. Chinese companies are also conducting final trials elsewhere, including in the United Arab Emirates and Brazil.

Some Western vaccines are also in final trials, including vaccines being developed by Oxford University and U.S.-based Moderna Inc.

Some countries including Brazil have a local vaccine-manufacturing capability. They have worked out an agreement with a Chinese company to produce the vaccine locally after trials there. But countries without that capability, such as Pakistan, are particularly vulnerable.

While Pakistan’s coronavirus figures have declined, officials say there are hot spots where the vaccine could be tested. They fear a second wave could arrive in coming months, as economic activity increases and restrictions on movement are lifted.

Comment by Riaz Haq on August 17, 2020 at 7:48am

#Pakistan #diaspora sent home a record $2.67 billion in #remittances in July 2020, an increase of $740 mn (or 36.5%) over July 2019 and an increase of $302 mn (or 12.2%) over June 2020. This is the highest ever recorded workers’ remittances in a single month..Via
@StateBank_Pak


http://www.sbp.org.pk/press/2020/Pr-17-Aug-20.pdf


Workers’ Remittances rise to record monthly high in July 2020
1. In July, workers' remittances rose to US $ 2,768.1 million. This is the highest ever level of
remittances in a single month in Pakistan.
2. In terms of growth, remittances increased by 36.5 percent over July 2019 (y/y) and 12.2 percent
over June 2020 (m/m). Given the impact of Covid-19 globally, this increase in worker’s remittances
is encouraging.
3. In July, sizeable amounts of workers' remittances were received from Saudi Arabia (US $ 821.6
million), UAE (US $ 538.2 million), UK (US $ 393.9 million) and USA (US $ 250.6 million).
4. The growth rate in remittances compared to the same month in the previous year is around twice
as high as the Eid-ul-Adha related seasonality typically experienced over the last decade.
5. Several factors have likely supported the growth in remittances to date, including orderly
exchange rate conditions and policy steps taken by the State Bank and the Federal Government
under the Pakistan Remittance Initiative. These steps include reducing the threshold for eligible
transactions from USD 200 to USD 100 under the Reimbursement of Telegraphic Transfer (TT)
Charges Scheme, an increased push towards adoption of digital channels, and targeted marketing
campaigns to promote formal channels for sending remittances.
To improve data quality and better capture the source country of the remitter, the compilation
methodology for ‘country wise’ workers’ remittances has been strengthened from this month.
Therefore, country-by-country trends will be available on a consistent basis from August 2020
onwards. Importantly, the new data collection method does not affect the reporting of the level
of remittances arriving into Pakistan. Further information on the improvement in the data
reporting is available at the following link: http://www.sbp.org.pk/ecodata/Homeremit.pdf
http://www.sbp.org.pk/ecodata/Homeremit.xls
6. Importantly, the revised country shares under the improved data do not necessarily imply that
remittances from one country have increased over another. Instead they demonstrate that the
source country of remittances is being recorded more accurately now.

Comment by Riaz Haq on August 17, 2020 at 10:12pm

After Moody's, Fitch Ratings also affirms #Pakistan’s long-term rating at ‘B-’ with a stable outlook, anticipating a surge in foreign exchange reserves to a 4-year high of $16 billion, even after #Saudis withdraw $2 billion. #economy #IMF #credit #eating https://tribune.com.pk/story/2259975/fitch-affirms-pakistans-rating


It expects Riyadh would withdraw the remaining deposit of $2 billion from the State Bank of Pakistan’s (SBP) foreign exchange reserves on the scheduled timeline of 2022. Besides, the country has plans in place to float Eurobond and Sukuk to borrow more from the international market by December 2020, the global credit rating agency noted.

The foreign currency reserves stood at $7.7 billion about a year ago, it said.

“Fitch Ratings has maintained Pakistan’s sovereign rating at ‘B-’ with a ‘stable outlook’, which further confirms Moody’s assessment published earlier this month. Once again, this is a clear affirmation of the government’s well-considered and effective economic and financial policies in some of the most challenging circumstances in living memory created by the Covid-19 pandemic,” the finance ministry tweeted on Monday.

Fitch Ratings, in its rating action commentary on Monday, stated, “The external finances appear resilient to shock due to the authorities’ policy actions and continuing multilateral and bilateral financial support.”

It expected economic revival in FY21, expecting gross domestic product (GDP) growth of 1.2% compared to a contraction of 0.38% in FY20.

It also found Pakistan’s policy actions on the economic front like a tight monetary policy and a flexible rupee-dollar exchange rate regime very much sound.

The Covid-19 outbreak, however, prompted authorities to significantly cut the benchmark interest rate by 625 basis points to 7% to help households and businesses to cope with the pandemic. With this, the real interest rate has fallen to negative.

Moreover, the net foreign exchange reserves dropped to negative and the rupee depreciated further mainly due to panic pullout of investment by foreigners from rupee-denominated treasury bills and Pakistan Investment Bonds (PIBs) to the tune of $3 billion since the Covid-19 emergence.

The current challenges to the economy like weak public finances, large fiscal deficits, high government debt-to-GDP ratio and large external debt repayments against low foreign exchange reserves led Fitch to rate Pakistan’s long-term foreign currency issuer default rating (IDR) at ‘B-’.

“The coronavirus pandemic has exacerbated these challenges by depressing economic growth and pressuring public finances,” it said.

Pakistan may face challenges in collection of revenue in taxes and workers’ remittance may drop due to Covid-19 challenges. It, however, finds it difficult for authorities to announce a second stimulus package for individual and businesses to cope with Covid-19 challenges.

The situation may increase debt-to-GDP ratio to 90% in FY21 and expected to reduce to 85% by FY25, Fitch estimated.

The agency, however, strongly expected the country’s economic indicators to improve growing forward, as Pakistan is committed to implement the economic reform agenda under IMF loan programme.

“Foreign holdings (in T-bills/PIBs) have stabilised since then (Cvoid-19), and reserves have been restored through multilateral and bilateral disbursements. The central bank’s net forward position has increased somewhat in the past months and net reserves remain negative, even though they have narrowed,” Fitch said.

Pakistan’s current account deficit narrowed to 1.1% of GDP in FY20, from a peak of 6.1% in FY18, due mainly to import compression and lower oil prices. Fitch forecasts a slight widening of the current account deficit to 1.7% in FY21 due to a modest recovery in imports and declining remittances.

“Remittances rose unexpectedly by 7.3% in 4QFY20, but we view this as temporary and expect a decline of about 10% in FY21 due to the impact of the global economic shock on Pakistan’s overseas workers.”

Comment by Riaz Haq on August 18, 2020 at 6:56pm

#ImranKhan says #Pakistan had "elite capture" with a small minority having all facilities & advantages. "They think think have a privileged position and are above the law". #Karachi "is Pakistan's economic engine". #NawazSharif #Zardari #corruption #sugar https://www.dawn.com/news/1575107

"My entire life has been a struggle," he said, talking about his decision to become a cricketer early on and to later set up the Shaukat Khanum Memorial Cancer Hospital. "Politics was the biggest struggle."

But when you keep at it continuously, you learn how to do it, he said. "You no longer fear ups and downs. What happens is that when people don't struggle for something, they become worried when there are ups and downs."

So many people made political parties, but I think they gave up during bad times, he said. "Because I had an idea, I was constantly learning and getting back up on my feet."

These two years were the biggest struggle yet, because there were several challenges, the premier said. "The country's economy had crashed, we were defaulting on payments, we didn't have money to pay our debts [...] departments had collapsed and government corporations were in debt.

"There was no one place to concentrate on," he said, adding that this was a learning experience.

So in the first two years, we understood the challenges the country was facing and then I tried to change its path towards what it was originally made for, a welfare state, he said.

"Today if you ask me what I have tried to do, I will say I have tried to put the country on the path to becoming a welfare state. If we want to progress, we have to go back to that model."

He stated that Pakistan had an "elite capture", where a small minority had access to facilities and were taking advantage of the system.

"They think think have a privileged position and are above the law. If you think about it, in the past two years, steps were taken for the very first time to bring them under the law."

'I was attacked on Covid-19 response'
Commenting on the country's success in controlling the coronavirus pandemic, the premier stated that he had always thought about the poor and the vulnerable segment of society when told to impose a lockdown to curb the spread of the illness.

"I was attacked, saying that I don't understand and am ruining the country but the lowest segment of society should be your priority," he said, adding that he was being told to impose a total lockdown by the opposition and by certain members of his own party.

"But our conditions were not like that of Italy and Spain. What would we have done about the common man, the labourers, the six to seven people living in one room if we imposed a lockdown? That is why I resisted," he said.

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