Day: July 18, 2023

A senior Pakistani envoy will travel to Afghanistan on Wednesday for bilateral talks with Taliban leaders amid growing allegations Afghan-based fugitive militants have stepped up cross-border terrorist attacks in Pakistan.

Asif Durrani, Islamabad’s newly appointed special representative on Afghanistan, will hold meetings in Kabul, focusing on mutual trade and economic and security cooperation, said a Pakistani official Tuesday. He spoke to VOA on condition of anonymity because he was not authorized to interact publicly with the media.

Durrani told VOA in the run-up to his Kabul visit that Pakistan’s trade with and through landlocked Afghanistan had increased since the Taliban reclaimed control of the country two years ago. Bilateral trade currently stands at more than $2 billion, according to official data.

The Pakistani envoy also hailed the growth of Afghanistan’s trade with other neighbors, including China and Iran. Durrani said that “the relative Afghan peace” has enabled Pakistan to increase its trade with landlocked Central Asian countries through Afghan transit routes to nearly $200 million from $55 million two years ago.

“It is good for Afghanistan and will help address many issues; especially it will reduce the poverty rate, which is close to 95% per the U.N. estimates. It is a promising process, but it will take a while,” Durrani said.

“An increase in economic activity will also help deal with the humanitarian crisis amid reports that international donors may reduce their aid contribution for Afghanistan. So, the coming winters are likely to be much harsher for Afghans,” the Pakistani envoy said.

Durrani’s visit coincides with a surge in militant attacks in Pakistan, particularly in districts adjacent to the country’s nearly 2,600-kilometer Afghan border. The violence has killed more than 400 people this year, mostly security forces, with the Pakistani military losing 12 soldiers in a single day on July 12. The violence is mainly claimed by or blamed on an alliance of outlawed groups, known as the Tehrik-i-Taliban Pakistan or TTP, conducting attacks against the Pakistani state from sanctuaries in Afghanistan, according to officials in Islamabad.

Pakistan has urged the Taliban to adhere to their February 2020 agreement with the United States and prevent terrorists from using Afghan soil to threaten other countries.

On Monday, Washington joined Islamabad in calling on the Taliban to meet their counterterrorism commitments.

We have made very clear that we believe the Taliban has the responsibility to prevent Afghanistan from being used as a safe haven for launching terrorist attacks,” U.S. State Department spokesman Matthew Miller told reporters.

Last week, the Pakistani military sternly warned the Taliban against allowing the TTP and other terrorist groups on their soil to threaten the country.

“The armed forces of Pakistan have serious concerns on the safe havens and liberty of action available to TTP in Afghanistan,” a military statement said on Friday. “Such attacks are intolerable and would elicit an effective response from the security forces of Pakistan.”

Pakistani security officials have also confirmed seizing U.S. military weapons from militants killed in recent counterterrorism operations, saying members of the Afghan Taliban also took part in last week’s terrorist attacks in southwestern Baluchistan province.

The Geneva-based independent Small Arms Survey published a report earlier this month warning that the TTP and other militants continue to have access to weapons of now defunct Afghan security forces that were trained and equipped by the U.S. military.

Taliban authorities rejected Pakistani allegations that the TTP or other groups were using Afghan soil for cross-border terrorism. Chief Taliban spokesman Zabihullah Mujahid urged Islamabad on Saturday to share the evidence with Kabul so they could investigate the claims.

On Monday, the White House National Security Council coordinator for strategic communications, John Kirby, ruled out the possibility of Afghan refugees participating in terrorist attacks in Pakistan.

“We’ve seen no indication that Afghan refugees in Pakistan or along that border are guilty of acts of terrorism…And we’ll continue to work with Pakistan, as we have on their legitimate terrorism threats and their challenges in counterterrorism,” Kirby told reporters in Washington.

Pakistan hosts more than three million Afghan refugees and economic migrants fleeing decades of conflicts and poverty in their country.

Source: Voice of America

Pakistan, Uzbekistan and Afghanistan have signed a tripartite agreement to connect the three countries through a rail network.

The joint protocol for the Trans-Afghan project, which aims to connect Uzbekistan’s and Pakistan’s railway networks through Afghanistan, was signed in Pakistan’s capital Islamabad on Tuesday in presence of “high-ranking” railway officials of the three countries, state-run Radio Pakistan reported.

In a tweet, Afghanistan’s Railway Authority — run by the Taliban administration — also confirmed the development.

Pakistan’s Finance Minister Ishaq Dar and Railway Minister Saad Rafiq also attended the signing ceremony.

As planned, the rail route will pass through Termiz, Uzbekistan, Afghanistan’s Mazar-e-Sharif and Logar provinces, and culminate in Pakistan via the Kharlachi border crossing in the Kurram tribal district near the Afghan border.

The line will facilitate both passenger and freight services and “would contribute in regional trade and economic growth,” said the protocol.

The project is scheduled to be completed by the end of 2027, and trains could carry up to 15 million tonnes of goods a year by 2030.

The 760-kilometre railroad is expected to reduce delivery times of cargo between Uzbekistan and Pakistan by about five days, aside from reducing the cost of goods transport by at least 40 percent, according to estimates.

Source: TRTworld.com

The government has committed to the International Monetary Fund (IMF) that it stands ready to consider further action in the next Monetary Policy Committee (MPC) in July and the coming months, until inflation expectations are on a clear downward path, the IMF said in its Staff Report.

“To anchor inflation expectations and support the exchange rate, we raised the policy rate to 22 percent on June 26, 2023; and stand ready to consider further action in the next MPC in July and the coming months, until inflation and inflation expectations are on a clear downward path, with the exact pace of future adjustments dependent on inflation data, exchange rate developments, the strength of the external position, and the fiscal-monetary policy mix”, the Pakistani authorities informed the Fund.

It further stated “to this end, we will aim to ensure that the real policy rate returns to positive territory on a forward-looking basis to signal our commitment to bring inflation within the target band within fiscal year 2026. In addition to the policy rate increase, we have reduced the interest rate gap between the policy rate and the interest rate on the two major refinancing schemes (EFS and LTFF) to 3 percentage points. To strengthen monetary policy transmission, these rates will continue to be linked to the policy rate and will adjust automatically.

Tightening Cycle Should Continue

The Fund stated that the recent policy rate hike is welcome, but the tightening cycle should continue, if needed, to reduce inflation and facilitate external rebalancing. In the short term, the forward-looking real policy rate should return to positive territory to re-anchor expectations and achieve the State Bank of Pakistan’s (SBP) inflation objective over the medium term. Implementing the plan to phase out the refinancing schemes will strengthen monetary policy traction and will bring transparency to these schemes. Importantly, the independence of the SBP should be strengthened and protected.

The Fund stated that a tighter monetary policy stance is critical to reduce inflation, re-anchor expectations, and support external sector rebalancing through the exchange rate. Although the latest policy rate move from the SBP is a welcome step, the authorities have generally been sanguine about inflationary pressures quickly receding and returning to their 5-7 percent inflation target range by end-FY25. Staff emphasized that the SBP will need to continue its tightening cycle to re-anchor expectations given that inflationary pressures are expected to persist over the coming year, including because the impact of exchange rate corrections will continue to reverberate through the economy.

The SBP agreed to maintain a tight monetary policy stance—higher rates and prudent use of liquidity injections— as needed, given incoming data, to achieve real positive interest rates, on a forward looking basis, and place inflation and inflation expectations on a clear downward path. At the same time, improving the monetary transmission and the monetary operation framework will be important. The SBP is also committed to not introduce new refinancing schemes and to keep the outstanding credit of the refinancing facilities below their current limits.

The Fund stated that inflation has proven to be quite stubborn in Pakistan. To anchor expectations and combat inflationary pressures, the monetary policy was tightened considerably as the policy rate has been raised by 800 bps since August 2022. It currently stands at 22 percent, compared with 7 percent 2 years ago. The authorities agree to maintain the tight monetary policy stance as long as necessary as they intend to return to 5-7 percent inflation target band by end June 2024.

SBP further removed all FX restrictions with the purpose of ensuring full market determination of the exchange rate and has also capped the rates on its refinancing scheme facilities. Since movements in the exchange rate earlier this year, the market liquidity and functioning have improved considerably. The authorities have requested temporary approval of exchange restrictions considering the limitation on advance payments for imports against LCs. Both exchange restriction and MCP are nondiscriminatory and are being maintained for BOP reasons, which we intend to remove by the end of the program.

The report noted that in the last six months, inflation has continued to rise, in part due to rising food prices and the past through from the depreciation, but also as the abovementioned shortages placed upward pressure on prices. Price dynamics became increasingly broad-based with core inflation reaching 22.8 percent (YoY) and headline inflation reaching 38 percent in May 2023, a record high, hurting especially the poor.

Despite the mounting pressures, actions by the SBP lacked clarity, as it kept its policy rate unchanged in Monetary Policy Committee meetings in August, October, and early June, expecting that the price rises had peaked and would subside, but hiked rates in November, March, April, and late June. The last hike brought policy rates to 22 percent (cumulatively, an 825 bps (basis points) increase since the beginning of FY23).

Source: Pro Pakistani

Pakistan has committed to the International Monetary Fund (IMF) to sustainably raise additional revenue by targeting undertaxed sectors like agriculture and construction, broadening the tax base, and improve progressivity.

In the Letter of Intent (LOI) submitted to the IMF, the government has reiterated its commitment not to launch any new tax amnesties or grant further any new tax exemptions in 2023-24 including through the budget or Statutory Regulatory Orders without prior National Assembly approval.

According to the IMF report released on Tuesday, the IMF has projected Rs. 9,415 billion as the revenue collection target of the Federal Board of Revenue (FBR) for 2023-24. Out of this, direct taxes have been estimated at Rs 3,884 billion; sales tax at Rs. 3,607 billion; customs duty at Rs. 1,324 billion and the target of federal excise duty has been projected at Rs. 600 billion.

IMF said “Passed by the National Assembly on June 25, 2023 and signed into law by the president on June 26, 2023, our FY24 budget advances fiscal consolidation through a primary surplus of Rs. 401 billion (0.4 percent of GDP)—built on a set of credible measures that help:

Sustainably raise additional revenue by targeting undertaxed sectors (such as agriculture and construction), broaden the tax base, and improve progressivity;

Restrain non-priority spending (including through energy sector measures aimed at credibly containing energy sector subsidies, the public wage bill, and pensions) while making fiscal room to protect the generosity level of the Benazir Income Support Programme (BISP) Kafalat program. As in previous years, IMF is also working with the provinces to sign Memoranda of Understanding (MoUs) with the federal governments on their provincial fiscal targets consistent with the FY24 budget.

Source: Pro Pakistani