Pakistan Independence Day 2020: National Resilience Amid Deadly COVI19 Pandemic

[Riaz Haq]

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

Pakistan Car Sales. 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

https://www.youtube.com/embed/NWTkfhiwsG4"; width="560"></iframe>" height="315" src="https://img1.blogblog.com/img/video_object.png" width="560" style="color: #000000; font-family: times; font-size: medium; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; background-color: #b2b2b2;" />


Related Links:

Haq's Musings

South Asia Investor Review

COVID19 in Pakistan: Test Positivity Rate and Deaths Declining

Pakistan's Pharma Industry Among World's Fastest Growing

Is Pakistan's Response to COVID19 Flawed?

Pakistan's Computer Services Exports Jump 26% Amid COVID19 Lockdown

Coronavirus, Lives and Livelihoods in Pakistan

Vast Majority of Pakistanis Support Imran Khan's Handling of Covid1...

Pakistani-American Woman Featured in Netflix Documentary "Pandemic"

Coronavirus Antibodies Testing in Pakistan

Can Pakistan Effectively Respond to Coronavirus Outbreak? 

How Grim is Pakistan's Social Sector Progress?

Pakistan Fares Marginally Better Than India On Disease Burdens

Trump Picks Muslim-American to Lead Vaccine Effort

Democracy vs Dictatorship in Pakistan

Pakistan Child Health Indicators

Pakistan's Balance of Payments Crisis

Panama Leaks in Pakistan

Conspiracy Theories About Pakistan Elections"

PTI Triumphs Over Corrupt Dynastic Political Parties

Strikingly Similar Narratives of Donald Trump and Nawaz Sharif

Nawaz Sharif's Report Card

Riaz Haq's Youtube Channel

PakAlumni Social Network

[Riaz Haq]

S&P Says Pakistan’s long-term outlook ‘stable’. #Pakistan had made solid progress toward important fiscal & #economic reforms prior to the start of the global #coronavirus outbreak, and reform momentum should return once the #pandemic was better contained https://www.dawn.com/news/1575582

ISLAMABAD: The Standard & Poor’s (S&P) rating agency on Thursday affirmed Pakistan’s ‘B-’ long-term and ‘B’ short-term sovereign rating while maintaining ‘stable’ long-term outlook.

The New York-based rating agency also affirmed ‘B-’ long-term issue rating on Pakistan’s senior unsecured debt and sukuk trust certificates. It said the country’s rating remains constrained by a narrow tax base and domestic and external security risks, which continue to be high.

Although the country’s security situation has gradually improved over the recent years, ongoing vulnerabilities weaken the government’s effectiveness and weigh on the business climate.

It said the Covid-19 pandemic exacerbated Pakistan’s economic downturn but forecast the real GDP to recover to 1.3 per cent during the current fiscal year. “We expect the sovereign’s credit metrics to remain under pressure for the next two to three years”, said the S&P.


The agency, nevertheless, noted that the government had made solid progress toward important fiscal and economic reforms prior to the start of the global coronavirus outbreak, and reform momentum should return once the pandemic was better contained. Multilateral and official funding will remain critical to Pakistan’s external debt sustainability.

It said the stable outlook reflected rating agency’s expectations that funding from the International Monetary Fund (IMF) and other partners, along with a recent improvement in Pakistan’s balance of payments position will be sufficient for the country to meet its considerable external obligations over the next 12 months.

The rating agency said it may lower its “ratings if Pakistan’s fiscal, economic, or external indicators deteriorate further, such that the government’s external debt repayments come under pressure”. Indications of this would include external or fiscal imbalances higher than expected.

Conversely, it may raise ratings on Pakistan if the economy materially outperforms expectations, strengthening the country’s fiscal and external positions more quickly than forecast. It said the progress on reforms was likely to be delayed amid the pandemic.

The ratings reflect the fallout of the Covid-19 pandemic on the country’s already-weak economy, considerable external indebtedness and liquidity needs and an elevated general government fiscal deficit and debt stock.

“While Pakistan had made progress toward consolidating its fiscal accounts during the first nine months of its Extended Funding Facility programme with the IMF, related imbalances have been worsened by much slower economic growth since March 2020”, it noted.

The agency noted in particular that domestic demand in the economy remained very weak, as evident from contractions in both real consumption and imports in the fiscal year ended June 2020. Prospects for a near-term recovery have dimmed following strict domestic virus containment measures implemented between March and June, and in the face of a much weaker global economic outlook.

Despite having stabilised in the first three quarters of the fiscal year, a deep downturn in the April-June period led the Pakistani economy to a full-year contraction of nearly 0.4pc in fiscal year 2020. Renewed weakness in the economy will undermine revenue generation while complicating the government’s efforts to curtail expenditure.

The government is likely to focus on implementing last year’s new revenue measures in the current fiscal period, rather than to introduce additional policies against a backdrop of poor business and consumer sentiment.

[Riaz Haq]

In Pakistan – the world’s fifth-largest country by population – 24 million breadwinners rely on daily wages or are self-employed in the informal economy. For them, life came to a standstill with the implementation of a lockdown in March, causing a widespread loss of income that began fueling civil unrest and rioting.


by Sania Nishtar


https://www.thenews.com.pk/print/703439-the-ehsaas-experience



To mitigate the pandemic’s socioeconomic damage, Pakistan’s government created the Ehsaas Emergency Cash program, the largest social-protection program in the country’s history. Rolled out ten days after lockdown began, it is delivering one-time cash grants totaling more than $1.2 billion to more than 16.9 million households, covering around 109 million people – approximately 50 percent of the country’s population. Recipient families are given Rs12,000 ($75) to cover their immediate subsistence needs.

---------------

Prior to the delivery of Ehsaas cash, I saw unspeakable suffering among people from many walks of life. There were day laborers and hawkers, hotel and restaurant staff, and domestic servants, security guards, and drivers. There were also laid-off public-transport employees, fishermen and miners, beauticians and barbers, and millions of shopkeepers – all on the verge of hunger, with their savings used up. They, along with private-school teachers, electricians, welders, painters, carpenters, plumbers, car mechanics, taxi drivers, and construction workers, did not know where their next meal would come from.

These stories were repeated across industries and regions, with even those used to earning a decent living suddenly wondering if their finances would ever add up again. But the handouts brought stability and comfort to millions of families, and the whole country watched as countless tragedies were averted.

Beyond the immediate crisis, the success of Ehsaas Emergency Cash offers Pakistan and other middle- and low-income countries invaluable experience in speedily delivering a massive national program in a complex and uncertain context. In order to share this knowledge, the government recently released a report describing the knowhow we gained through the program’s design and implementation, as well as the operational challenges we encountered and how they were addressed. The report can be accessed at: https://www.pass.gov.pk/Document/Downloads/EECreportAugust10.pdf

[Riaz Haq]

With #Coronavirus controlled, #Shanghai Electric Accelerates #Pakistan's Thar Block-1 Integrated #Coal Mine Project to achieve annual output of 7.8 million tons & 2 660-MW coal-fired power plants capable of providing electricity for 4 million households. https://prn.to/2CO9gES

The first charter plane arranged by Shanghai Electric and Air China took off from Shanghai's Pudong International Airport on August 4, taking the first batch of construction team consisting of hundreds of Shanghai Electric's workers, engineers and managers to Pakistan as part of the support to speed up the progress of Thar Block-1 Integrated Coal Mine Power project, a major energy project of the China-Pakistan Economic Corridor (CPEC).

The construction progress of the project has been interrupted by the pandemic-induced travel restrictions which have made it difficult for the workers to enter the country, causing a substantial shortage of the on-site workforce and slowing down the overall progress. The construction projects in Dubai and Pančevo are also facing the same challenge.

With the assistance and guidance of the Shanghai municipal government, Shanghai Electric coordinated with Air China to arrange multiple charter planes for thousands of technical and managerial staff to accelerate the progress of the three major projects. All flights are operated with the highest health and safety measures throughout the journey to guarantee the safety of all construction personnel. The first batch of over 4 tons supplies including personal protective equipment, daily necessities, office essentials and emergency drugs were also shipped to the destinations.

The team was received by the company's officials at Jinnah International Airport on August 4 and will replace the local Chinese engineers and managers whose return were delayed due to the outbreak of the COVID-19 pandemic. All construction personnel will follow the quarantine measures in accordance with the local regulations upon arrival. The construction procedures are required to operate in line with the anti-pandemic guidelines, and the infection prevention measures have been put in place by Shanghai Electric to create a bio-secure working environment, protecting the safety and health of all on-site workers.

Located in Thar Desert in the southeastern part of Pakistan's Sindh Province, Thar Block-1 Integrated Coal Mine Power Project covers an area of over 9,000 square kilometers with the coal mine expected to achieve an annual production capacity of 7.8 million tons and two 660-megawatt coal-fired power plants capable of providing affordable and reliable electricity for 4 million Pakistani households.

"As a priority project of both the 'Belt and Road' initiative and CPEC, the completion of Thar Block-1 Integrated Coal Mine Power Project will go a long way in advancing Pakistan's energy development. However, the COVID-19 has posed an unprecedented difficulty to the construction operations," said Mr. Song Zaile, Executive Director of Thar Coal Block-1 Power Generation Company (PVT) Ltd (SPV of Shanghai Electric in Pakistan).

"To address the challenges, we have been working on many fronts to keep the disruption caused by this global health crisis at a minimum while adopting the upgraded anti-pandemic measures to prevent on-site virus transmission," he added.

[Riaz Haq]

#China, #Pakistan agree to push on with #rail and #power projects after a meeting of foreign ministers in the south China island of Hainan. Both are part of the US$62 billion #CPEC which is enjoying a “mini-revival” ahead Pakistan visit by President Xi. https://www.scmp.com/news/china/diplomacy/article/3098419/china-pak...

China said it has agreed with Pakistan to push ahead with rail and power projects under the China Pakistan Economic Corridor (CPEC), as the two nations remain locked in border stand-offs with their mutual neighbour India.
Beijing made the announcement on Friday following a meeting between Chinese Foreign Minister Wang Yi and his Pakistani counterpart, Shah Mahmood Qureshi, in the south China island province of Hainan.

“The foreign ministers of China and Pakistan agreed that the joint construction of the belt and road should be accelerated to bring more benefits to the two peoples,” Wang was quoted as saying in a statement by the Chinese foreign ministry.
“The construction of the China-Pakistan Economic Corridor has entered a new stage of high-quality development and will continue to play an important role in the revitalisation of Pakistan,” he said.


The CPEC is a US$62 billion project that forms part of the Belt and Road Initiative, Beijing’s multibillion-dollar infrastructure development plan to boost connectivity across Asia and beyond.

China is the largest foreign investor in Pakistan, accounting for US$27 million of the US$114.2 million logged last month, according to figures from the State Bank of Pakistan.
Andrew Small, a senior fellow with the Asia programme of the German Marshall Fund, a non-profit organisation in Washington, said the CPEC was enjoying a “mini-revival” ahead of a possible visit to Pakistan by Chinese President Xi Jinping.

Xi was expected to visit earlier in the year but the trip was cancelled because of the coronavirus pandemic. A revised date has not been set.

“Given its status as the belt and road’s flagship, the Chinese government wants to ensure a narrative of momentum and success around the CPEC, especially with the additional spotlight a visit [by Xi] would shine on it,” he said.
“There is no chance that they would have been able to sustain that narrative without a new investment package, given the slowdown that CPEC has experienced in recent years.”

Earlier this month, Pakistan approved a US$6.8 billion scheme – known as the Main Line 1 upgrade project – to improve the South Asian country’s main railway line, which runs for almost 1,900km (1,180 miles) from Karachi to Peshawar.
The much-delayed project is the most expensive to date under the CPEC. Until 2018 it had a budget of US$8.8 billion but that was slashed by Islamabad over debt concerns.
Other CPEC projects have also suffered delays and funding problems. A key section of highway missed a construction deadline in December, as government ministries slashed payments for it.

[Riaz Haq]

Asia’s best-performing stock market is just getting started.
Pakistan’s key index is up 36% since March after rate cuts

https://www.bloomberg.com/news/articles/2020-08-24/asia-s-best-perf...

https://twitter.com/FaseehMangi/status/1298000534385950720?s=20

The rebound that’s helped make Pakistan equities Asia’s best performers since the end of March isn’t done yet, according to some money managers.

The nation’s central bank has been among the most aggressive globally in cutting interest rates this year to cushion the economy amid the coronavirus pandemic. That has reduced the double-digit returns from fixed income and bolstered the bullish case for equities.

“Given the abrupt fall in interest rates, locals are still early in their re-allocation from bonds to equities,” said Ayub Khuhro, chief investment officer at Faysal Asset Management Ltd., whose assets have tripled to 35 billion rupees ($210 million) in the past year. “If rates remain at these levels for some time, they will continue to drive the market.”

Pakistan’s KSE-100 Index is up 36% from the end of March, the best rebound among major Asian equity indexes for the period. A slowdown in the rate of new infections coupled with measures to boost an economy that shrank for the first time in seven decades prompted the Dubai-based FIM Partners in July to make Pakistan its biggest exposure after the Philippines.

“I see Pakistan becoming our largest exposure in the next six months,” said Mohammed Ali Hussain, research head at FIM Partners, which manages $1.6 billion. “Even after the rebound, there’s room for re-rating assuming the macro picture remains on track,” he said. In dollar terms, the KSE-100 Index is still down more than 50% from its life-time high reached in May 2017, he said.

Tundra Fonder AB, the Stockholm-based money manager known for its early bet on Pakistan, said the nation has the largest allocation in its frontier fund.

“Covid-19 interrupted everything but our argument from July last year that the next four-five years should be very good for Pakistani equities is valid,” said Chief Investment Officer Mattias Martinsson. “Given the low foreign appetite for emerging and frontier markets, it remains to be seen if foreigners participate.”

So far, overseas funds aren’t joining their local peers in buying the nation’s shares. They’ve pulled a net $346 million this year, mirroring withdrawals seen in big Asian markets excluding China.

A year after winning a $6 billion International Monetary Fund loan to fend off a balance-of-payments crisis, Pakistan sought another loan to fight the fallout of the pandemic. The nation faces the risk for a resurgence in infections, which can stall economic recovery.

“There is a hanging sword of a second wave,” Haroon Ahmad Khan, Chief Executive Officer at Waves Singer Pakistan Ltd., a producer of fridges, washing machines and deep freezers, said at a briefing. “We are cautiously optimistic about the future.”

Stock bulls say the high volumes accompanying the rebound -- the KSE-100 Index saw its highest turnover in 13 years on Aug. 13 -- is a sign the rally is backed by the wider public after the 625-basis point cut in borrowing costs.

“Make hay while the sun is shining and that sun is the historically low interest rate,” Faysal Asset’s Khuhro said. “We expect this liquidity-fueled rally to continue.”

[Riaz Haq]

The State Bank of Pakistan (SBP) elaborated on its Twitter handle that the strong turnaround in the remittances and exports is achieved "with support from several policy and administrative initiatives taken by the SBP and the federal government.

https://tribune.com.pk/story/2261170/pakistans-economy-rebounds-des...

"This is the fourth monthly surplus since last October," the central bank said in its second tweet.

The export of goods increased to $1.89billion in July compared to $1.58billion in June. It was, however, 14% lower than $2.22billion export in July 2019, according to the bank.

The remittances hit a record high of $2.77billion in the single month of July compared to $2.47 billion in June and $2.03 billion in July 2019.

The import of goods enhanced by 2% to $3.63 billion in the month compared to $3.56 billion in the previous month. It was, however, 13% lower than $4.18 billion import of July 2019.

"The balance of the current account in surplus is in line with the market expectations," Next Capital Managing Director Muzammil Aslam said. "The growth in workers' remittances was, however, surprising [in the month of July 2020]."

"Now the question is whether the balance in the current account would be maintained in surplus, going forward," Aslam questioned.

He said the encouraging number –the balance in surplus – would at least help the economy to absorb shocks if it encounters any due to unexpected higher import payments in the remaining 11 months of the fiscal year. "The account in surplus has created a buffer to absorb the shocks."

The government has targeted to record the current account balance in deficit in the range of 1-1.25% ($3-3.5 billion) in the year 2020-21 compared to 1.1% (around $3 billion) in the previous fiscal year 2019-2020. "The surplus in July has made it easier to achieve the set target of the current account deficit," he said.

Earlier, International financial institutions and global credit rating agencies have anticipated widening of the current account deficit to 1.6-2% of the gross domestic product (GDP) in the fiscal year 2021.

They foresaw a drop in inflow of remittances and export earnings during the year due to COVID impact, going forward. Besides, imports may increase with the reopening of the domestic economy from the four-month-long lockdown.

S&P Global Ratings said last week: "We expect the current account deficit to remain below 2% of the GDP over the next few years as the economy continues to rebalance, although higher capital imports associated with the restart of the China-Pakistan Economic Corridor (CPEC) projects could widen the deficit again."

"Gross external financing needs remain elevated, at approximately 140% of current account receipts and usable foreign exchange reserves at the end of fiscal 2020.

“We expect this figure to gradually decline to nearly 119% by the end of fiscal 2023, but a rekindling of import demand or higher commodity prices would challenge that trend," it added.

[Riaz Haq]

#China-#Pakistan Economic Corridor (#CPEC) is growing again...now openly championed by #PakistanArmy, In short term it will inject much needed aid and #investment into the #Pakistani #economy and bolster Pakistan’s security against arch-rival #India. https://foreignpolicy.com/2020/08/26/the-pakistan-armys-belt-and-ro...

When Pakistan entered its 22nd International Monetary Fund program last year, plenty of observers assumed that the China-Pakistan Economic Corridor (CPEC)—described by Beijing as a “flagship project” in its broader Belt and Road Initiative—would be one of the casualties.

After all, with the IMF mandating cuts in public sector spending, a reduction of Pakistan’s deficit, and tightening of monetary policy, it made sense that the vast loans and spending associated with CPEC would have to stop. And further, China had already started to have misgivings about lending and investment in poorly governed frontier markets like Pakistan. It was said that CPEC—billed as a $62 billion connectivity initiative linking China’s landlocked Xinjiang region with Pakistan’s Arabian Sea ports—would likely continue only symbolically so as to enable the two stalwart allies to save face.

But today, over a year into its latest IMF program, Pakistan is actually doubling down on CPEC as a major vehicle for economic growth and investment. New or stalled hydroelectric and rail projects are moving forward. And as CPEC regains momentum, it has a new steward: the Pakistan Army, which has gone from a behind-the-scenes role in championing the project to publicly overseeing its overall implementation.

For Pakistan, the renewed emphasis on CPEC and the growing role for the Army are double-edged swords. In the short term, paired together, they will inject much-needed aid and investment into the Pakistani economy. And a tighter embrace with China will bolster Pakistan’s security against archrival India.

But, in the long term—absent civilian ownership, renegotiated terms, and structural reforms—CPEC may burden Pakistan with unaffordable electricity and unsustainable debt, cannibalize its federal budget, entangle Pakistan in broader U.S.-Chinese tensions, and further entrench the Army in the country’s politics and economy.

The announcement of CPEC in 2013 marked a departure in China-Pakistan relations, adding an emphasis on economic development to a relationship that had been largely confined to the diplomatic and military realms. The scheme paved the way for a surge in aid and investment from Beijing, and by giving Pakistan’s democratically elected civilian leadership the power to determine how tens of billions of dollars in Chinese aid and investment would be directed, it also gave the civilians a big say in the country’s most vital strategic relationship.

That never quite sat well with the Army—in part because the prime minister at the time was Nawaz Sharif, a man the military twice deposed from office. When Sharif came to power, he continued to call for the prosecution of Pervez Musharraf, the general who had sacked him in 1999, for high treason. In pushing for Musharraf’s treason trial, which could have resulted in the former general’s execution, Sharif crossed a red line for the Army, which would in turn keep his government on the defensive until he was permanently disqualified from holding public office by the Supreme Court in 2017.

The former prime minister and his brother were buoyed by easy access to Chinese financing for energy and infrastructure projects.

Such tensions would be enough to sink a different civilian government. But in this case, the former prime minister and his brother Shehbaz Sharif, who was serving as chief minister of Pakistan’s most populous province, Punjab, were buoyed by easy access to Chinese financing for energy and infrastructure projects. They directed these funds toward boosting road, digital, and economic connectivity with China; addressing Pakistan’s endemic power shortages; and strengthening their party’s fortunes ahead of elections slated for 2018.

[Riaz Haq]

#Pakistan Army takes over Belt & Road (#BRI) project. New #CPEC Authority will still report directly to #ImranKhan but it will have wide-ranging autonomy to implement its #infrastructure program, part of leaning toward #China. #economy https://www.ft.com/content/f675981c-83b7-40e4-9b0b-1a4c52963e6f via @financialtimes

The proposed legislation comes shortly after Islamabad approved the most expensive CPEC project yet, a railway upgrade worth $6.8bn to be largely financed by China.

The government has also approved in the past two months two hydropower projects worth $3.9bn to be built in Pakistan-occupied Kashmir and again financed by Beijing.

------------------------
It would also give the CPEC Authority — whose strategic decision-making committee is co-chaired by China’s National Development and Reform Commission, Beijing’s top planning agency — greater financial autonomy from Islamabad.

“It’s basically building a new institution that is parallel to the government. We are in a phase of hybrid martial law,” said Ayesha Siddiqa, research associate at the School of Oriental and African Studies in London, who studies Pakistan’s military.

“The military is taking decisions without any accountability,” she said. “It has become very dangerous. It’s a matter of long-term commitment of national resources.”

The development highlights the growing influence of the Pakistan military after Mr Khan struggled to mount a swift response to the coronavirus pandemic and rescue the faltering economy.

Ahsan Iqbal, Pakistan’s former planning minister and opposition MP, said that the proposed CPEC Authority was “superfluous” and weakened the civilian government while ceding even more responsibility to the military.

“The incompetence of the [Khan] government is destroying our civil administration and putting an additional burden on the military,” said Mr Iqbal.

“We will certainly put forward our reservations. We are not in favour of having the CPEC Authority,” he said. “CPEC is the domain of the civil government, if it can’t do that then what good is it for?”

Proponents of the BRI programme argue that CPEC will give Pakistan the infrastructure boost needed to kickstart its economy at a time when Islamabad is struggling to attract international investors.

The US, however, has criticised CPEC as a debt trap that will leave Islamabad in thrall to Beijing.

While the new CPEC Authority would still report directly to Mr Khan, it would have wide-ranging autonomy to implement its infrastructure programme without civilian government oversight, critics said.

The CPEC Authority “shall be responsible for conceiving, implementing, expanding, enforcing, controlling, regulating, co-ordinating, monitoring, evaluating and carrying out all activities” related to the corridor, according to a draft document of the legislation seen by the Financial Times.

A senior government official in the planning ministry, who did not wish to be named, told the FT that a new draft of the legislation would be circulated for cabinet approval before being presented to parliament. The official said criticism that the military was encroaching on the civilian government was "absolute bs" and because the scope of CPEC had "significantly widened" there was a need for “an institution focused on just this and nothing else."

----------

Three army-run companies — the Frontier Works Organization, the National Logistics Cell and the Special Communications Organization — have won lucrative CPEC contracts.

“CPEC is the military’s baby,” said Adnan Naseemullah, an international relations lecturer at King’s College London. “It’s a strategic project.”

[Riaz Haq]

FAO: Effective measures diminish migration risk of desert #locusts in #Pakistan. Pak deployed 1,000 teams of about 6,000 staff which used 750 vehicles to carry out a ground operation to control the spread of the locusts by spraying pesticide. #agriculture http://www.xinhuanet.com/english/2020-08/30/c_139328767.htm


Quoting a report by the Food and Agriculture Organization (FAO) of the United Nations, Dawn News said Saturday that the country has made good progress against the first generation of hopper groups and bands formed in the desert areas of its south Sindh province.

The country formed more than 1,000 teams of about 6,000 staff which used 750 vehicles to carry out a ground operation to control the spread of the locusts by spraying pesticide to remove them, the organization said.

The country's Federal Minister for National Food Security and Research Syed Fakhar Imam chaired a meeting of the National Locust Control Center on Friday, saying that teams are working in a coordinated manner for the eradication of desert locust in Pakistan.

Earlier, the FAO said an increase in the number of locusts in Pakistan was feared during August with more hatching and band formation which may lead to a second generation of egg-laying from early September onwards.

Timely action against the pest has helped control its further migration to other areas. Currently, a Beaver aircraft is taking part in an aerial spray of pesticide against the locusts, together with ground teams in the desert area Tharparkar of Sindh, the Ministry of National Food Security and Research said.

An earlier report by the World Bank said that "Pakistan is located at a crossroads for migration of desert locusts in South Asia. Therefore, effectively controlling the locust crisis is not only crucial for Pakistan itself but also is critical for the entire Southwest Asia region." Enditem

[Riaz Haq]

#Pakistan's V-shaped #economic recovery after success against #COVID19 #pandemic: Kia Lucky #Motors in #Pakistan Starts Double-Shift #production to Meet High #auto Demand. #manufacturing #industry #economy #coronavirus #PTI #ImranKhan https://propakistani.pk/2020/09/08/kia-lucky-motors-starts-double-s...

Lucky Cement, a company owned by Yunus Brothers Group (YBG) released their annual report yesterday that spoke ambitiously of the progress that they have made in the 2019-20 financial year.

As per the report, the group has indeed had a phenomenal year, despite all the natural and man-made challenges that the company has had to endure through. One of their most promising offerings to the public has been Kia Lucky Motors (KLM).

The company was reintroduced to the Pakistani market in 2017 after 8 years of absence. Upon their arrival, Kia Lucky launched the Grand Carnival and the Frontier K-2700 light pickup truck in Pakistan. In mid to late 2019, Kia Lucky introduced the Picanto mini Hatch-back to rival the Suzuki Cultus, and the Sportage to rival the Toyota Fortuner.

Needless to say that both cars did very well against all odds, as the company is now gearing up for a double-shift production schedule to meet the rising demand of the Sportage as well as the Picanto among the buyers. In the annual report, the CEO of Kia Lucky Motors made the following statement:

Ever since the commencement of KIA Lucky Motors, the Company has received overwhelming response from the consumers for both of its models i.e. Sportage and Picanto. The order intake has increased multifold and currently the Company is planning to start the second shift to meet the customer demand from January 1, 2021.

Kia Lucky’s recent success in Pakistan can also be testified by the fact that the company has established over 20 dealerships all across Pakistan in just about a couple of years. Also, there’s been news of Kia planning to take-on the family sedan market of Pakistan by introducing the new Cerato in Pakistan. With their pace in terms of development, Kia Lucky is indeed set to become one of the biggest automakers in the Pakistani Market.