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What lies ahead for Pakistan’s Economy…

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April 23, 2019 (MLN): The forthcoming month has a series of events lined up for Pakistan, all of which carry ample importance in light of their impact on Pakistan’s macroeconomic indicators and economy in general.

All eyes on IMF:

A delegation of the International Monetary Fund (IMF) will visit Pakistan this month to finalize the deal.

While briefing the National Assembly’s Committee on Finance, Revenue and Economic Affair last week, ex finance minister Asad Umar said that Pakistan and International Monetary Fund (IMF) have reached a consensus on all outstanding issues to finalize the bailout package.

He further informed that the government expects the bailout package to give around $6 to 8 billion. 

FATF to conclude its review:

A delegation of FATF will visit Pakistan in the third week of May to review the implementation efforts. 

Pakistan’s third report on its progress concerning measures recommended by Financial Action Task Force (FATF) and its regional affiliate the Asia-Pacific Group (APG) to curb terrorism financing and money laundering, was submitted to the watchdog last week, on April 15, 2019.

In total, Pakistan was supposed to submit four such reports which means that after the submission of the latest report, the country will have to present one last report before its final review in June 2019.

An FATF review group will pore over this report in a meeting which is scheduled to take place in May. This meeting shall hold high importance as the country will be evaluated based on its performance.

The watchdog will assess Pakistan’s general progress based on global standards against financial crimes to permit its exclusion from its grey list.

Latest budget announcement on the way:

Advisor on Finance, Dr. Hafeez Shaikh affirmed said the Budget will be presented on May 24, as originally planned.

During a media talk in Islamabad a few days back, Dr. Hafeez said that he has spoken to the secretary finance on budget preparation, as well as having directed for the preparation of a medium term strategy paper on revenue and expenditure which will be sent to the Cabinet by April 30.

Tax Amnesty Scheme; yay or nay?

A Tax Amnesty Scheme is pending Prime Minister Imran Khan’s sanction after it was submitted to the Federal Cabinet meeting on April 17, 2019, and was ultimately postponed for approval in the next meeting.  

Following this, Dr. Abdul Hafeez Shaikh, Adviser to PM on Finance, Revenue and Economic Affairs reviewed the proposed Assets Declaration Scheme – 2019 in detail with FBR officials on Sunday April 21, 2019.

His discussion focused on the scope and the features of the scheme. The Adviser instructed FBR to fine tune the scheme to make it simple to understand and easy to implement.

However, as per media reports, the IMF has disagreed with the Scheme altogether, firmly stating that “such schemes fail to achieve their intended objectives and are quite damaging to the moral of obliging taxpayers.”

MSCI Review; fingers crossed:

An MSCI review of the existing indices is scheduled for May 13, 2019 in which Pakistan might be considered for a downgrade to the Frontier Market (FM) Index given that the country was only 3 bps of the Emerging Market (EM) index as of March end.

Moreover, the fact that MSCI has recently revised its minimum market capitalization limits for Emerging and Frontier Markets and Habib Bank Limited (HBL)’s market capitalization was below the minimum market size criteria for EM as of March 27, 2019, brews a ripple of concern for Pakistan.   

Election at then neighbors’:

The 2019 Indian general election is currently underway and political parties in India are busy in drawing battle lines on various issues of national importance, among which the relationship with Pakistan carries adequate importance.

Given the recent events that unfolded at the border, the two countries do not have a relationship at this moment which means that if India elects a new government, the two nations would have to work on their relationship from scratch.

The recent history of a shift in Indian mindset after the election of the BJP government from having some semblance of a secular democracy to an absolute Hindu Nationalist county, the election in India might give a chance, to what’s left of the secular parties, to try and stop the momentum of right wing politics.

However, as far as relations with Pakistan are concerned, the damage caused by BJP’s jingoistic policies will be harder to repair, and a pattern which is set after imaginary and aborted ‘surgical strikes’, which forced Pakistan to retaliate, will be harder to undo.

Anticipating Pakistan’s fate in the Reko Diq case:

High levels officials are allegedly preparing themselves for another round of dialogues on the Reko Diq case, reportedly aiming for an out of court settlement on the matter.

The country is currently faced with $11.43 billion damage claims in the Reko Diq mining case, before an international jury, owing to inefficient methods carried out by successive governments in Baluchistan.

Unfortunately, an out of court settlement seems highly unlikely right now, as ICSID has declared that Pakistan is liable to pay up its charges.

A senior lawyer with experience on such cases has also declared that an out of court settlement on matters such as these is potentially out of question.

Progress at Kekra-1 Well

Following the completion of cementing and casing at Kekra-1 well in Pakistan’s deep sea, the process of drilling has reportedly recommenced.

Once the target depth is reached, proper tests will be carried out to determine whether there is oil or if the well dry.  

The process is expected to take a few more weeks before tests can be carried out.

Copyright Mettis Link News

Posted on: 2019-04-23T15:24:00+05:00

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