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YEARLY INFLATION DROPS TO 27.4% IN AUGUST, BUT CHALLENGES LOOM AHEAD Saturday, 2 September, 2023 I 15 Safar, 1445
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INCREASED FUEL COSTS AND DOLLAR RATE INDICATE HIGHER FUTURE INFLATION PROFIT
GHULAM ABBAS
AKISTAN’s headline inflation showed a slight decline in August, as reported by the Pakistan Bureau of Statistics (PBS). The year-on-year inflation rate stood at 27.4%, slightly lower than July’s figure of 28.3%. However, on a month-on-month basis, the inflation increased by 1.7%. This development has resulted in the average inflation rate for the first two months of the fiscal year 2023-24 (2MFY24) rising to 27.85%, higher than the average of 26.10% recorded during the same period in the previous fiscal year (2MFY23). The Consumer Price Index (CPI) reading for August also marks the lowest inflation rate in the calendar year 2023. However, experts warn that this may be short-lived as several economic factors come into play. It is also important to note that even the best inflation figures of 2023 are above 25%, which means a quarter of last year’s prices. It has also been warned that the depreciating value of the Pakistani rupee, soaring energy tariffs, and record-high fuel prices are expected to place additional burdens on consumers in the coming months. The caretaker government recently announced yet another hike in petrol and diesel prices, raising them to
prices, despite the high interest rate. Urban vs. Rural Inflation: The PBS provided insights into the urban and rural inflation rates: – CPI inflation in urban areas increased to 25.0% year-on-year in August 2023, compared to 26.3% the previous month and 26.2% in August 2022. – On a month-on-month basis, urban inflation rose by 1.6% in August 2023, compared to a 3.6% increase in the previous month and a 2.6% increase in August 2022. Meanwhile CPI inflation in rural areas increased to 30.9% year-on-year in
Rs 305.36 and Rs 311.84 per litre, respectively. This means petrol prices have surged by nearly 21%, or Rs 52.36, since the beginning of August. This increase will quickly translate into prices of goods and services across the board. Furthermore, the State Bank of Pakistan (SBP) is scheduled to hold its Monetary Policy Committee (MPC) meeting on September 14. The current key policy rate stands at a record 22%, and most analysts anticipate another rate hike. While the State Bank is currently running an inflation targeting regime, it has been unable to control the rising
Public debt exceeds 60pc of GDP limit under FRDL Act g
Rs 15.00 | Vol XIV No 63 I 8 Pages I Islamabad Edition
TOTAL PUBLIC DEBT STAND AT RS59.247 TRILLION IN MARCH 2023 PROFIT
SHAHZAD PARACHA
The finance ministry has disclosed that total Public Debt of the government over the last five years has exceeded the prescribed limit of 60 % of GDP under the Fiscal Responsibility and Debt Limitation Act 2005. The Finance ministry in its fiscal Risk Statement 2023-24 states that total public debt (TPD) is a measure of government indebtedness. The total public debt has reached to Rs59247 billion in March 2023 from Rs 24953 billion in FY 2018. This included debt of the government (including the Federal Government and the Provincial Governments) serviced out of the consolidated fund and debt owed to the IMF, under the FRDL Act, 2005. In addition, the external debt and liabilities have recorded $126 billion in March 2023 which was $95.2 billion in FY2018. The violation of FRDL Act is primarily due to consistent fiscal deficits, averaging 6 % of GDP since 2010, which have led to a rapid build-up of debt. Total Public Debt can increase due to both budgetary and non-budgetary factors, such as unfavorable movements in interest and exchange rates and the realization of contingent liabilities The report states that ongoing fiscal deficits require refinancing of the Government’s maturing debt while raising additional debt to fulfill the fiscal shortfall. A high level of short-term debt creates potentially significant refinancing challenges during periods of slower economic growth, higher fiscal deficits, and lower investor confidence. To manage the refinancing risk, it is important for the government to achieve and maintain a longer average time to maturity (ATM) of its domestic as well as external debt. This means that the government should issue debt with longer maturities, which will reduce the frequency of debt rollovers and decrease the refinancing risk, in line with the current Medium Term Debt Strategy. The Finance Division sets the target for domestic debt at 4 years ATM and 7 years ATM for external debt with GFN/GDP at 27 percent in its Medium Term Debt Strategy 2019-2023. For FY2022, the ATM of Domestic Debt was reported at 3.6 years, falling short of the targeted ATM of 4 years. However, the government is determined to implement stronger fiscal discipline, decrease its fiscal deficit, reduce its borrowing requirements, and rely on longer term instruments for domestic borrowing. These actions are expected to meet its targets.
August 2023, compared to 31.3% the previous month and 28.8% in August 2022. – On a month-on-month basis, rural inflation rose by 1.9% in August 2023, compared to a 3.3% increase in the previous month and a 2.2% increase in August 2022. Special Price Index (SPI) and Wholesale Price Index (WPI): SPI inflation was also recorded at 27.9% on a year-on-year basis, in August 2023, compared to 29.3% the previous month and 34.0% in August 2022. On a month-on-month basis, SPI inflation increased by 4.1% in August 2023, compared to a 2.8% increase in the previous month and a 5.2% increase in August 2022. WPI inflation on a year-on-year basis increased to 24.3% in August 2023, compared to 23.1% the previous month and 41.2% in August 2022. On a month-onmonth basis, WPI inflation increased by 4.2% in August 2023, compared to a 2.5% increase the previous month and a 3.1% increase in August 2022. While August brought some relief with a marginal decrease in inflation, the challenges ahead, including rising energy costs and exchange rate volatility, suggest that Pakistan’s inflationary pressures are far from over. The upcoming SBP meeting will be closely watched as it could determine the course of monetary policy in these economically challenging times.
Capital Police re-arrest Pervaiz Elahi under 3 MPO after LHC orders release LAHORE
STAFF REPORT
The Islamabad Capital Police on Friday re-arrested PTI President Chaudhry Pervaiz Elahi from near his residence on Zahoor Elahi Road on orders of a magistrate under Section 3 of the Maintenance of Public Order (MPO), hours after the Lahore High Court (LHC) released him in the Asset Beyond Means case. “Ch Pervaiz is being shifted to jail,” the capital police said on X (erstwhile Twitter). Section 3 of MPO empowers the government to arrest and detain suspected persons. It states: “The government, if satisfied that with a view to preventing any person from acting in any manner prejudicial to public safety or the maintenance of public order, it is necessary to do, may, by an order in writing, direct the arrest and detention in such cus-
tody […] and [the] government, if satisfied that for the aforesaid reasons, it is necessary so to do, may extend from time to time the period of such detention, for a period not exceeding six months at a time.” The district magistrate’s order said that law enforcement agencies had intimated to the judge at various times that Ch Pervaiz Elahi was the PTI president and “remained involved in creating unrest and disturbance and has further potential to disrupt the public peace and tranquillity, if set free”. It further said that in the past as well, “he has provoked PTI supporters to take law into their own hands … The intelligence agencies have further reported that they have credible information that he would be a threat and can worsen the law and order situation along with his supporters if he has not detained.” The order added that it was
also reported by agencies that multiple cases were registered against Ch Pervaiz Elahi in different police stations for his involvement in disruption of peace, law and order. The magistrate said it was highlighted in various reports from intelligence and law enforcement agencies that Ch Pervaiz Elahi has “planned actions against law enforcement, public infrastructure and property”, adding that the Intelligence Bureau and Islamabad’s assistant inspector general and senior superintendent of police had also recommended the PTI president’s detention under Section 3 of the MPO to prevent public disorder. The order added that a district intelligence committee meeting was convened on the above reports on Thursday and not only endorsed them but also recommended a detention order for Ch Pervaiz Elahi.
Future of fuel prices bleak as global crude peaks for 2023
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IN UNDER 24 HOURS OF PETROLEUM PRICES BEING REVISED, PAKISTAN HAS WOKEN UP TO A ROARING GLOBAL CRUDE MARKET PROFIT
DANIYAL AHMAD
From dire to disastrous. Within a mere day of the Government of Pakistan recalibrating petroleum prices in light of the Rupee’s depreciation, Pakistanis have been jolted awake as global crude markets skyrocketed. Future contracts for all three benchmark crudes — Brent, West Texas Intermediary, and Dubai Fateh — have reached their peak since October of last year. More critically, the spot prices of all the principal oil blends that Pakistan imports have also reached their penultimate level in 2023. This, in fact, may be the sole glimmer of hope in this situation. However, when taking into account the wider macroeconomic landscape, this portends nothing short of a calamity if prices do not nosedive again on Monday. “The escalating energy prices in the immediate
term will ignite higher fuel prices at the pump for us,” forewarns Ahfaz Mustafa, CEO of Ismail Iqbal Securities. He elaborates, “This will inevitably sustain high inflation and exert additional pressure on the Rs USD parity.” He cautions, however, that this scenario will only come to fruition if the prices persistently remain elevated. So, what on earth is going on? Why have crude prices peaked? Mustafa elucidates that global oil prices have surged due to constricted supplies, stemming from depleting US inventories and the likelihood of oil production cuts by OPEC+. What does he imply by that? On August 31st, Deputy Prime Minister Alexander Novak was quoted by Russian media as saying that “Russia has agreed on further curbs to its oil exports with OPEC+ partners, and the full details of the deal will be announced next week.”
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NAB Law amends rendered evidence gathered through int’l legal help unacceptable: CJP ISLAMABAD
STAFF REPORT
Chief Justice of Pakistan Umar Ata Bandial on Friday observed that evidence collected through international legal help were not acceptable after the NAB amendments which potentially raised questions about who would benefit from these changes. CJP Umar Ata Bandial made the observation during hearing a plea filed by the PTI chairman against the amendments introduced to NAB Law by the coalition government of PDM. A three-member bench led by CJP Bandial and comprising Justice Ijazul Hassan and Justice Mansoor Ali Shah is hearing the petition. As the proceedings began and Khawaja Haris, the counsel for the PTI chief started arguments, the CJ intervened and asked Haris that he wanted to ask Makhdom Ali Khan a question. The CJP said it was observed yesterday that the status of evidence obtained through mutual legal cooperation had been eliminated under the [NAB amendments] and that the bureau would be paying extra for seeking legal services. “You earlier said that in addition to mutual legal cooperation, a report pertaining to foreign properties has been received but it’s not acceptable under the law,” the CJP noted. The chief justice opined that Federal Board of Revenue (FBR) record obtained from abroad could not be submitted as acceptable evidence in the court of law. “Does the constitution of Pakistan list the rights of an applicant.” A report was also submitted during the hearing, detailing the return of references following the NAB amendments. Notably, the Park Lane reference against former President Asif Zardari and former Prime Minister Shahid Khaqan Abbasi were among those returned by the accountability courts. The report also indicated that cases involving individuals such as Khurshid Anwar Jamali, Manzoor Qadir Kaka, Anwar Majeed, Hussain Lawai, and Abdul Ghani Majeed of the Omni Group had been transferred out of NAB’s jurisdiction. On the occasion, Justice Ijazul Hassan asked if NAB had submitted an edited report. To which the NAB prosecutor confirmed the submission of the report. Chief Justice Bandial questioned whether the rights of complainants were enshrined in Pakistan’s Constitution. Lawyer Makhdoom Ali Khan responded that the Constitution primarily focused on the rights of the accused and fair trial, rather than the rights of complainants. Justice Ejazul Hassan added that Swiss cases against individuals like Asif Zardari were overdue and not necessarily due to a lack of evidence. The proceedings also shed light on the challenges in seeking assistance from Swiss authorities. Furthermore, it was discussed that information obtained by the Federal Board of Revenue (FBR) from abroad could not be presented as admissible evidence in court. Lawyer Makhdoom Ali Khan emphasized that it was NAB’s responsibility to prove the evidence obtained from abroad. In his concluding remarks, Chief Justice Bandial underscored the importance of delivering justice, particularly in criminal cases, where conviction rates were below 70%. He emphasized that providing justice was a fundamental function of the state. Chairman PTI’s lawyer, Khawaja Haris, explained the process of obtaining evidence from abroad through mutual legal cooperation, highlighting the significance of the verification process. He highlighted that the amendments had abolished the status of evidence obtained under mutual legal cooperation, potentially making the process more costly for NAB. The hearing shed light on the complexities surrounding NAB amendments and their potential impact on legal proceedings. The debate continues as the Supreme Court of Pakistan assesses the implications of these changes in the NAB law. This ongoing legal debate raises significant questions about the balance between the rights of the accused and the interests of justice in Pakistan’s legal system.
ECP reduces delimitation time frame, to finalise constituencies by Nov 30 CONTINUED ON PAGE 03
ISLAMABAD
STAFF REPORT
The Election Commission of Pakistan (ECP) on Friday announced that it will be reducing the time required to complete the delimitation of constituencies and that the publication of constituencies would now be final by November 30. “To complete the consultation and feedback process with political parties and delimitation of constituencies as early as possible, the ECP has further reduced the time frame for delimitations,” a statement released by the supervisory body read. “Now the final publication of constituencies will be on November 30, 2023”.
“The purpose of reducing the duration of delimiting constituencies is to ensure holding elections as soon as possible,” it explained. The statement also added that under the purview of the revised date for the finalisation of constituencies “the election schedule will also be announced”. The statement was issued today after the ECP summoned an ’emergency meeting’ following discussions with different stakeholders. The election watchdog had of late conducted back-to-back meetings with officials of different political parties to take into stock their position regarding elections and delimitation, among other things. In this key meeting, chaired by Chief Election Commissioner (CEC) Sikandar Sul-
tan Raja in Islamabad, the ECP deliberated on how it could reduce the time period for completing the delimitation process. A day earlier, the watchdog had vowed to expedite the delimitation of constituencies and announce a schedule for the upcoming general polls thereafter, alleviating concerns that the ballot could be deferred for an indefinite period to extend the rule of the interim government. The election supervisor gave assurance to the delegations of the Pakistan Peoples Party (PPP) Pakistan Muslim League-Quaid (PML-Q) and the Tehreek-e-Labbaik Pakistan (TLP) in separate consultative meetings at the ECP Secretariat in the federal capital. The meetings with these parties came in the backdrop of the ECP ruling out elections
this year. Earlier this week, the Pakistan Bureau of Statistics (PBS) provided the required data for the digital census 2023 to the polls supervisory body. The digital census was conducted in March-May this year. The results were published after their approval from the Council of Common Interest (CCI) on August 5, just days before the dissolution of the National Assembly. Following the approval of the census, the ECP is bound to conduct the upcoming general polls on the basis of the latest census whereas the election supervisor has already announced a schedule for revamping the constituencies. Former prime minister Shehbaz Sharif had dissolved the National Assembly on August 9,
three days ahead of its mandated period. The 90-day limit for the ECP to hold elections under the Constitution ends on November 9. On August 17, the election supervisor had announced that it would revamp all the national and provincial assemblies’ constituencies in light of the digital census within 120 days. On the other hand, with the apex court having dismissed the ECP’s review petition against its April 4 order to hold polls for the Punjab Assembly on May 14, pressure is mounting on the electoral body either to hold the general elections within 90 days or to approach the court to seek guidance on the question of conducting new delimitation based on the 7th Population Census.