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SBP ANNOUNCES HIGHLY ANTICIPATED 200 BPS POLICY RATE REDUCTION Tuesday, 17 December, 2024 I 14 Jumada Al-Akhirah, 1446
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BENCHMARK RATE NOW AT 13%, MPC BELIEVES RATE CUT WILL SPUR GROWTH AND EASE INFLATION PROFIT
NEWS DESK
HE State Bank of Pakistan (SBP) has cut its policy rate by 200 basis points, bringing it down to 13%, effective December 17, 2024. The highly anticipated decision, announced during the Monetary Policy Committee (MPC) meeting, reflects confidence in easing inflationary pressures and improving economic prospects. This is the fifth consecutive cut by the SBP, which has cut the rate by 900 basis points cumulatively in the last five monetary policy meetings. The real interest rate after this rate cut now stands at 810 basis points compared to earlier 1010 basis points. Inflation expectations Headline inflation eased to 4.9% year-on-year in November, primarily
due to a continued decline in food inflation and the fading impact of the November 2023 gas tariff hike. However, in its statement, MPC highlighted concerns over core inflation, which remains elevated at 9.7%, and noted that inflation expectations among consumers and businesses remain volatile. Despite these risks, the central bank expects inflation to stabilise within its target range of 5-7% over the medium term. SBP believes that fiscal year 2025 average inflation will fall below the earlier disclosed range of 11.5-13.5%. The exact range of inflation will be disclosed in January 2025. Improving economy The MPC also emphasised recent economic improvements. In agriculture, better-than-expected cotton arrivals and encouraging early data on wheat sowing have improved crop outlooks. Similarly, the industrial sector has shown growth,
with key industries like textiles, food, and automobiles performing strongly. High-frequency indicators, such as sales of cement and fertilisers, suggest sustained momentum in economic activity. The SBP now forecasts GDP growth for FY25 to reach the upper half of the projected 2.5–3.5% range. On the external front, the current account surplus, supported by strong exports and workers’ remittances, has helped build foreign exchange reserves, which now stand at $12 billion. In its post MPC meeting, the Governor remarked that, reserves would be well above the target level of $13 billion by June 2025. Exports grew by 8.7% during JulyOctober FY25, led by high-value-added textiles and rice, while favourable global commodity prices contained the import bill despite increased import volumes. The Governor expects higher current account surplus in November 2024.
The MPC acknowledged fiscal challenges, including a widening shortfall in tax revenues. While FBR revenues grew by 23% year-on-year during July-November FY25, this falls short of the growth needed to meet annual targets. On the expenditure side, declining yields on domestic debt are expected to lower interest payments, partially offsetting the revenue shortfall. The SBP also noted that credit to the private sector has increased substantially, reflecting the easing of financial conditions. While overall money supply growth slowed slightly, consumer financing and private-sector lending recorded significant gains. Looking ahead, the SBP reiterated its cautious approach to monetary easing, stressing that the real policy rate remains appropriately positive to ensure inflation stability while supporting economic growth.
Pakistan, Saudi Arabia commit to joint efforts in narcotics control RIYADH
STAFF REPORT
Pakistan and Saudi Arabia have agreed to take more effective steps for narcotics control under the framework of bilateral cooperation. The agreement was reached during a meeting between Pakistan’s Federal Minister for Interior and Narcotics Control, Mohsin Naqvi, and Saudi Director General of Narcotics Control, Major General Mohammed bin Saeed Al-Qarni, in Riyadh. Speaking at the event, Mohsin Naqvi emphasized
the need for joint international efforts to combat narcotics, stating that no country can tackle this issue alone. He reaffirmed Pakistan’s commitment to continuing its cooperation with Saudi Arabia on anti-narcotics measures. During his visit to the headquarters of the Saudi Directorate of Narcotics Control, the Minister toured the control room and other departments. He was briefed on drug interdiction strategies and systems. Major General Muhammad Al-Qarni, the Saudi Director General of Anti-Narcotics, offered to provide Pakistan with modern narcotics detection tools.
Policeman martyred in attack on polio vaccination team in Karak
KARAK STAFF REPORT
A policeman was martyred while protecting a polio vaccination team during an attack in the Shakarkhel area of Karak district, Khyber Pakhtunkhwa (KP), on Monday. According to media reports, unidentified gunmen launched an attack on the polio vaccination team near the Terai Police Station. The assault resulted in the death of one police officer and left a polio worker injured, causing panic in the area. The slain policeman has been identified as Irfan. District Police Officer (DPO) Khan Khail arrived at the scene, and a search operation has been initiated. Police have cordoned off the area and are actively pursuing the assailants responsible for the attack.
Karak, the district’s administrative headquarters, is home to the Khattak tribe, a Pashtun group. Khyber Pakhtunkhwa remains a critical focus for polio eradication due to the persistence of non-vaccination among less than one percent of the target population. Officials hope that strict measures like Section 144 will support the campaign’s success, bringing Pakistan closer to eradicating the disease. In related news, the polio vaccination campaign in Balochistan has been temporarily postponed for one day due to security concerns. The Home Department of Balochistan requested the delay, citing intelligence information. The seven-day polio campaign was scheduled to begin on Monday. It may be noted that authorities continue to face challenges such as vaccination refusals, missed targets, fake finger marking, and lack of cooperation from district administrations and health officers. Polio, a highly infectious viral disease, can cause irreversible paralysis and death. The virus primarily spreads through the faecal-oral route or contaminated food and water. Initial symptoms include fever, fatigue, vomiting, stiffness of the neck, and limb pain. Health officials emphasize that while polio has no cure, it is entirely preventable through vaccines. Oral polio vaccines (OPV) and inactivated polio vaccines (IPV) have proven safe and effective worldwide, with multiple doses ensuring lifelong immunity.
PM Shehbaz to attend D-8 Summit in Egypt from Dec 18-20 ISLAMABAD
STAFF REPORT
Prime Minister Muhammad Shehbaz Sharif is set to embark on an official visit to Egypt from December 18 to 20 to participate in the 11th Summit of the Developing Eight (D-8) countries being held in Cairo. The theme of the 11th D-8 Summ[]t is “Investing in Youth and Supporting SMEs: Shaping Tomorrow’s Economy”. “At the Summit, the prime minister will underline the importance of investing in youth and SMEs for building a strong and inclusive economy; creating jobs; advancing
innovation; and promoting local entrepreneurship,” a Foreign Office spokesperson said in a statement. “He will express Pakistan’s strong commitment to the ideals of D8; underscore the importance of fostering partnerships for mutual benefit and prosperity; and promoting cooperation in agriculture, food security and tourism,” the statement added. According to the statement, the premier will also underline Pakistan’s incentives for youth empowerment and financial development. On the sidelines of the summit, the prime minister is expected to hold bilateral meetings with participating leaders. Preceding the summit, Deputy
Prime Minister and Foreign Minister Senator Ishaq Dar will attend the 21st Session of the D-8 Council of Ministers on December 18, according to the statement. The summit scheduled to be held in Egypt will be the country’s second time hosting the corporation as it last hosted the member states on February 2, 2021, which was the third Cairo Summit. Established on June 15, 1997, the D-8 Organisation for Economic Cooperation is a cooperation among Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkiye, according to the corporation’s official site.
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Pakistani death toll in Greek migrant shipwreck rises to 4: FO irfan.farooq@pakistantoday.com.pk
ISLAMABAD
STAFF REPORT
The number of Pakistanis killed in a Greek shipwreck last week has risen to four, the Foreign Office said on Monday. At least five migrants drowned after their wooden boat, carrying many Pakistanis, capsized off Greece’s southern island of Gavdos, the coastguard said on Saturday, with witnesses saying many were still missing as search operations continued. In separate incidents, a Maltaflagged cargo vessel rescued 47 migrants from a boat sailing about 40 nautical miles off Gavdos, while a tanker rescued another 88 migrants some 28 nautical miles off the tiny island in Greece’s south. The FO confirmed a day ago that one citizen was among the dead in the incidents while 47 Pakistanis were among the rescued. However, in a statement issued today, the FO said: “We announce with deep sorrow that, as per the latest information shared by the Greek authorities, four Pakistani nationals have been identified among the dead in Saturday’s incidents of capsized boats in the south of Crete Island of Greece.”