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]

@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.

-----------

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.

[Riaz Haq]

#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.

[Riaz Haq]

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.”

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

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.

[Riaz Haq]

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.

[Riaz Haq]

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.