Comment by Riaz Haq on September 10, 2020 at 8:00am

@javedhassan raises serious issue of fast growing pension liabilities in #Pakistan's public sector. Retirees living longer. Suggests reforms many other nations are implementing to address this issue: Increase retirement age, switch from defined benefits to defined contribution.

https://www.arabnews.pk/node/1732476


One of the more positive postwar global trends has been the fact that on average people are living longer. Pakistan is no different, where average life expectancy has increased from 45 years in 1960 to 67 years presently, and it continues to improve. While this is undeniably good news, it has also contributed to the exponential growth of public sector pension expenses.

The consolidated federal and provincial governments’ pension bills have grown over sixfold, from Rs164 billion in FY2011 to almost Rs1 trillion in FY2021, even before accounting for state-owned enterprises’ (SOEs) retirement liabilities. In the same period, consolidated revenues have increased less than three times. Consequently, retirement payments as a percentage of the consolidated revenues have grown from 7 percent in FY2011 to around 17 percent presently.

The pension system is designed as a defined benefit scheme, where payout is not directly linked to the contributions or taxes paid by individual beneficiaries as would be the case in a pay-as-you-go plan. At the same time there is virtually no provision by the state toward contributing into a pool of funds in order to finance future pension payments, and the unfunded liability is paid from annual budgetary allocations.

An actuarial evaluation by the Punjab government in FY2015 estimated that the present value of liabilities (i.e. current value of a future sum stream of payments) was over 30 times the annual pension expenditure by the provincial government. While it is important to caution that the projections are highly sensitive to actuarial assumptions, if a similar multiple is applied today to estimate the present value of consolidated provincial and federal liabilities, it would range between Rs30 trillion and Rs35 trillion. While an actuarial study needs to be undertaken to get an accurate appraisal, it is safe to assume that the future liabilities are many multiples of the annual budgetary resources currently available, and growing at a faster pace than tax revenues.

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Consequently, the number of retirees as a percentage of government employees in Punjab has increased from 32.5 percent in 2010 to 48.3 percent in 2019. In 1980 they were less than 4 percent. To varying degrees the same behavior is observed among other provincial and federal government employees. Early retirements not only accelerate the growth in the overall number of pensioners, but their replacement on the payroll effectively continues to grow the pension pool.

Adding to the ballooning liability is the fact that the pension schemes allow children and grandchildren to draw 75 percent of the entitlement after the demise of the pensioner and his spouse. The multigenerational nature of the scheme implies that annuities can continue over several decades.

A scheme that was designed for life expectancies that were on average lower than the retirement age and assumed that few would retire early is now not only unviable, but also crowding out fiscal space. After accounting for public servant salaries, debt servicing and pension payments, less than 45 percent of the consolidated federal and provincial budget is available for national security, provision of basic services, and investment in human development.

Reform is therefore required to move pension schemes toward a self-sustaining model that should look into instituting more fundamental changes than simply financial structuring of products such as pension funds and bonds. It will have to address the employee-retiree ratio by considering proposals that raise the retirement age in line with global trends, initially to, say, 65 years and then gradually to 67, as well as amend employment rules to preclude early retirement.

Comment by Riaz Haq on September 14, 2020 at 10:21am

#Pakistan #economy gains strength as #coronavirus cases decline. It's seen from growing cement-to-fuel sales & demand for home appliances to cars. Economist Muzammil Aslam who expects economic expansion at 4%-5% in current FY with demand push https://www.bloomberg.com/news/articles/2020-09-13/pakistan-s-econo... via @markets

https://twitter.com/haqsmusings/status/1305555250925826053?s=20

Evidence of momentum returning can be seen from growing cement-to-fuel sales and demand for home appliances to cars. That’s happening even as Pakistan added fewer than 2,900 cases last week compared with almost 35,000 cases in a week in June, and 96% of the total 300,000 infected have fully recovered.

“It has surprised everybody,” said Muzzammil Aslam, chief executive officer at Tangent Capital Advisors Pvt., who expects economic expansion at 4%-5% in the year started July, higher than the government’s 2.1% target. “The growth is led by an aggregate demand push.”

Cement sales rose 38% from a year ago to 4.8 million tons in July, and near a record level seen in October. A government program to give amnesty to tax evaders, provided they fund construction projects, is expected to fuel activity -- and demand for cement -- as work resumes after the lockdown.

“We expect dispatches to continue their rising run moving forward because of tax measures,” said Saad Khan, research head at IGI Securities Ltd. “Substantial decline in interest rates and mandatory targets given for banks to increase housing and construction financing to at least 5% of private sector credit” will also help, he said.

Cement sales eased to 3.5 million tons in August, mainly because of torrential rains across the country.

Fuel Sales
Gasoline sales in June rose to a record high as people return to work after lockdown measures eased in May, according to A. A. H. Soomro, managing director at KASB Securities Pvt. Sales have stayed elevated in July and August.

Fuel for power generation has increased as well. Fuel oil sales rose in June to the highest in a year while LNG spot cargo purchase resumed in June after a six-month hiatus.

Car Sales
Local car deliveries have recovered to about 10,000 units after four months as the end of lockdown ushered in new demand.

Kia Motors Corp.’s local unit is planning to add a second shift at its factory in Karachi from January.

Manufacturing

Manufacturing output improved for a second consecutive month in June. The overall recovery in large-scale manufacturing will likely be stronger in the October-to-December quarter with worldwide demand picking up, said Khaqan Najeeb, a former adviser to Pakistan’s finance ministry. Home appliances are also seeing “robust demand,” said Haroon Ahmad Khan, chief executive officer at Waves Singer Pakistan Ltd.

Comment by Riaz Haq on September 14, 2020 at 11:34am

WHO Credits Pakistan's Community Health Program For Success Against COVID19

https://youtu.be/uZW9hADNo08

Pakistan Polio Eradication Initiative (PEI) has been on the frontline in the fight against the novel coronavirus pandemic ever since its assets — including surveillance, data, and communication capabilities — were rerouted by the government in March 2020. Their surveillance system has been adopted for COVID-19 contact tracing, tracking the disease’s spread, and creating awareness on prevention and containment. Active surveillance for influenza-like illness (ILI), severe acute respiratory infections (SARI), and suspected COVID-19 cases has been integrated into the ongoing acute flaccid paralysis (AFP) active and passive surveillance system used in the fight against polio. For contact tracing to work, the community needs to be involved. Since polio staff are already trained for door-to-door campaigns and carrying out risk perception in the community, it is now mobilizing defense against the fast-spreading virus. “We have found significant positives amongst those traced via contact tracing and thus it has impacted on reducing further spread via self isolation, education and sensitization of the contacts,” said Dr. Sultan. “Quantification is sometimes not easy, but is being analyzed to see if a numerical value could be assigned with confidence.”

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WHO Director-General's opening remarks at the media briefing on COVID-19 - 7 September 2020

https://www.who.int/dg/speeches/detail/who-director-general-s-openi...

Pakistan deployed the infrastructure built up over many years for polio to combat COVID-19. Community health workers who have been trained to go door-to-door vaccinating children for polio have been utilized for surveillance, contact tracing and care.

There are many other examples we could give, including Cambodia, Japan, New Zealand, the Republic of Korea, Rwanda, Senegal, Spain, Viet Nam and more.

Many of these countries have done well because they learned lessons from previous outbreaks of SARS, MERS, measles, polio, Ebola, flu and other diseases.

That’s why it’s vital that we all learn the lessons this pandemic is teaching us.

Although Germany’s response was strong, it is also learning lessons.

I welcome the announcement by Chancellor Angela Merkel over the weekend that her government will invest 4 billion euros by 2026 to strengthen Germany’s public health system.

I call on all countries to invest in public health, and especially in primary health care, and follow Germany’s example.

Comment by Riaz Haq on September 16, 2020 at 10:22am

The world's largest #schoolsreopening in #Pakistan as 50 million children return to over 300,000 #schools, #colleges and #universities after a six-month-long closure due to the #coronavirus #pandemic. #COVID19 #education https://www.voanews.com/covid-19-pandemic/millions-children-pakista...

Millions of children in Pakistan returned to learning in schools and universities Tuesday after a six-month-long closure due to the coronavirus pandemic.

The largest return to school in the world comes as daily infections and deaths from the outbreak in the country of 220 million have steadily declined. Officials reported around 400 new cases and six deaths in the last 24 hours.

Prime Minister Imran Khan’s government had closed more than 300,000 educational institutions in mid-March as part of a nationwide lockdown to contain the spread of the virus that causes the COVID-19 disease.

Authorities have since gradually lifted all curbs on businesses across Pakistan and opened public places, including gyms, tourist destinations and restaurants, but schools remained closed.

The restriction confined more than 50 million school and university-going Pakistanis to their homes in the South Asian country where officials estimate nearly 23 million children already have no access to education.

“Let us welcome our children and students on the first day of opening of educational institutions,” tweeted Faisal Sultan, a special assistant to the prime minister on national health services.

“Please don't forget basic protective steps. Masks, reduced density in classes, hand hygiene. Parents, school administrators, teachers, students — all together,” Sultan cautioned.

Officials have recorded more than 302,000 cases, including close to 6,400 deaths, while 96% of the patients have recovered.

Pakistan’s countermeasures and supply of emergency assistance to millions of poverty-stricken families directly affected by ensuring economic lockdowns have been widely lauded.

An Asian Development Bank report released Tuesday praised Pakistan for achieving “notable success in containing the dual health and economic challenge" presented by the infection.

The government’s rapid mobilization of a $7 billion relief package comprising emergency financial support to daily wage earners, cash transfers to low-income families, accelerated procurement of wheat, support for health and food supplies and financial support for small and media enterprises helped shield the poor and most vulnerable during the pandemic, the report said.

"As the curve flattens and business activity resumes, the economy is showing signs of resilience and recovery, said ADB country director Xiaohong Yang.

The head of the World Health Organization (WHO) last week included Pakistan among seven countries that he said the world can learn from about how to fight future pandemics.

“Pakistan deployed the infrastructure built up over many years for polio to combat COVID-19. Community health workers who have been trained to go door-to-door vaccinating children for polio have been utilized for surveillance, contact tracing and care,” Tedros Adhanom Ghebreyesus said.

Comment by Riaz Haq on October 30, 2020 at 12:48pm

Shell #Pakistan quarterly profits jump from Rs 570 million last year to Rs 1.8 billion in Q3/2020 in spite of the impact of #coronavirus #pandemic. #oil #energy https://profit.pakistantoday.com.pk/2020/10/28/shell-pakistan-posts...

The Board of Directors of Shell Pakistan Limited on Wednesday announced the company’s financial results for the third quarter ending September 30, 2020.

The company posted an after tax profit of Rs1,812 million in 3Q2020 compared to the profit of Rs570 million in the same period of last year.

“Overall, the financials still present a challenging situation, driven primarily by the unprecedented coronavirus pandemic and its effects, which resulted in declining fuels demand and volatility in the international oil prices,” read a statement issued by the company.

Over the course of the nine months, Pak Rupee devalued against the US dollar by a further 6pc. Although Pak Rupee remained relatively stable during the quarter, its effects were felt in the overall results of the company.

Being part of an import dependent industry where a large percentage of the company’s costs are denominated in foreign currency, this devaluation had an impact on its cost base and, in turn, on its financial performance.

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