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The IMF has reached an agreement with Pakistan on a new $1.3 billion loan program, alongside a review of an existing bailout that could unlock an additional $1 billion. This 28-month deal aims to support Pakistan's climate change efforts, contingent on the approval of the Fund's executive board. Pakistan, having narrowly avoided default in 2023, is under strict conditions to enhance tax revenue and reduce power subsidies as part of its ongoing fiscal reforms. The IMF noted significant progress in Pakistan's macroeconomic stability over the past 18 months despite global challenges.
Pakistan's inflation is projected to remain between 1-1.5% in March 2025, following a significant drop from a peak of 38% in May 2023 due to rising food and fuel costs. The Finance Division anticipates a slight increase to 2-3% in April, supported by positive economic indicators and seasonal factors boosting remittances and trade. The government aims for sustainable growth, with expectations of foreign exchange reserves exceeding $13 billion by June, despite challenges in financial inflows.
Tough regulations in the UAE and reduced volatility in the Pakistan Rupee have impacted hawala money flows. The gap between the official and parallel market rates for the PKR has narrowed from 9% to around 1.5%, with the current rate at 281.08 to the dollar, down from 315 in August 2023.
The IMF has proposed a tax target exceeding Rs 15 trillion for Pakistan's upcoming budget, aiming to raise the tax-to-GDP ratio to 13%. This recommendation follows the IMF's insistence that Pakistan's Special Investment Facilitation Council refrain from granting tax exemptions to international investment projects, including the significant Chaghi-Gwadar railway project. As discussions progress, the government anticipates a growth rate of over 4% in the next fiscal year, despite challenges in meeting previous tax collection targets.
The global debt crisis is intensifying, with developing nations facing unprecedented challenges as their external debt reached $11.4 trillion in 2023, consuming more than their export earnings. Countries like Sri Lanka and Pakistan exemplify the dire consequences of unsustainable borrowing, leading to defaults and economic turmoil. Urgent reforms and innovative solutions, such as debt-for-climate swaps, are essential for fostering sustainable development and financial stability amidst rising global trade uncertainties.
Pakistan has increased the petroleum development levy by Rs10 to Rs70 per liter, as part of its efforts to secure a new $1 billion payment from the IMF. The IMF confirmed that Pakistan is making progress toward receiving the second installment of the $7 billion loan agreement established last year.
Careem Pay has launched its remittance service to Egypt, allowing UAE residents to transfer money directly to Egyptian bank accounts at competitive rates. With a market size of around US$10 billion, Egypt is a key destination for remittances from the UAE, particularly among the large Egyptian expatriate community. The service promises near-instant transfers and rates that are significantly lower than traditional banks, especially for Careem Plus members, coinciding with the increased remittance activity during Ramadan.
Pakistani telco Jazz has partnered with Huawei to implement solar power at 1,000 mobile sites using iSolar technology, aiming to cut energy costs by up to 96%. This initiative supports Jazz's goal of achieving carbon neutrality by 2050 and is expected to serve as a scalable model for future expansions. With over 71 million subscribers, Jazz is the largest mobile carrier in Pakistan, having undergone several ownership changes since its founding in 1994.
VEON Ltd, a UAE-based digital operator, has signed a solar power deal with Huawei in Pakistan. The company provides a range of mobile and fixed-line telecommunications services, including voice, data, and internet, under various brands such as Jazz and Beeline, across multiple countries.
AD Ports Group has signed a deal with the Pakistan Board of Investment to develop an industrial zone near Karachi. This collaboration aims to enhance industrial growth and investment opportunities in the region, signaling a significant step towards economic development.
Pakistani Rupee
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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