Connect with us

Business

New Pakistan govt under PM Sharif may need to roll back fuel, power subsidies

Pakistan’s new government led by Prime Minister Shehbaz Sharif is in internal discussions on whether to roll back fuel and power subsidies that have blown a hole in public finances amid a stuttering economy, officials said.
Former premier Imran Khan who was ousted in a confidence vote this week announced a cut in petrol and electricity prices in February despite soaring global prices in a bid to win back popular support.

For the latest headlines, follow our Google News channel online or via the app.

But that relief measure, estimated at 373 billion Pakistani rupees ($2.06 billion), has stretched government finances in a way that cannot be sustained, the finance ministry’s top bureaucrat said. It has also endangered an ongoing International Monetary Fund rescue program.
“The relief package will add to fiscal deficit which we cannot afford at the moment,” Finance Secretary Hamed Yaqoob Sheikh told Reuters.
“Either it has to be rolled back or compensating reductions in other expenditures would be required to ensure that the primary balance agreed with the IMF is achieved,” he said.
The primary budget balance excludes debt repayment obligations.
The fiscal deficit could go as high as 10 percent of gross domestic product, according to Sharif’s top economic adviser Miftah Ismail, widely expected to be named finance minister.
Sharif met his economic team on Thursday to tackle the subsidies.
“We have been discussing this before (with the previous government) and are discussing it again with the new government as well,” a finance ministry official told Reuters, speaking on the condition of anonymity.
The officials are proposing spreading the subsidies' roll-back over two to three months to soften its impact, he said, adding that the decision was now with the new political leadership.

IMF bailout

Pakistan is in the midst of a $6 billion IMF bailout program and is yet to clear its seventh review that would release over $900 million and unlock other funding that depends on the fund's clearance.
The seventh review started in early March, but no agreement had been reached before the collapse of Khan's government.
“Following the no confidence motion, the IMF stands ready to engage with the Pakistan government and enquire about its policy plans,” IMF’s Resident Representative Esther Perez Ruiz told Reuters.
Pakistan has enough reserves to finance 45 to 50 days’ worth of imports, Ismail said. Foreign exchange reserves held by the central bank fell to $11.3 billion from $16.2 billion in the matter of a month, according to figures released last week.
A reversal of the fuel subsidies will be politically sensitive for the new government trying to shore up popular support at a time when inflation is running at 12.7 percent.
“Either the new government can raise prices which will be politically costly, or they could cover the deficit by reducing other non-development expenditure which will prove politically difficult,” said Kaiser Bengali, a Pakistani economist who has previously held a number of government advisory roles.

Read more:

US congratulates new Pakistan PM Sharif

Shehbaz Sharif elected as Pakistan’s new prime minister

Egypt’s Paymob to start Pakistan operation to tap growing market for digital payments

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published.

Business

Europe ready for Baltics emergency switch-off from Russian grid

European grid operators are ready to implement immediately a long-term plan to bring the Baltic states, which rely on the Russian grid, into the European Union system in the event Moscow cuts them off, three sources familiar with the matter told Reuters.

Concern about depending on Russia for any form of energy has mounted across Europe because of reductions in Russian gas supplies to some countries following Moscow’s invasion of Ukraine.

For the latest headlines, follow our Google News channel online or via the app.

The Baltic states are nervous because Lithuania has clashed with Russia for blocking goods to Moscow’s Kaliningrad enclave.

Thirty years after splitting from the former Soviet Union and 17 years since joining the European Union, the Baltic States of Estonia, Latvia and Lithuania depend on Russia to ensure stable power supplies.

The Baltic States have a long-standing plan to become part of the European decentralized network of power grids, known as ENTSO-E, by 2025.

The sources said that could be implemented immediately if necessary, under contingency plans drawn up by ENTSO-E for such an eventuality. They spoke on condition of anonymity because of the sensitivity of the issue.

The Russian and Continental European systems both operate at a frequency of 50 Hertz, but whereas the Russian system is run from Moscow, the continental European grids are decentralized, meaning each national grid operator is responsible for maintaining the stability of its system.

However, in an emergency, those in the European system can provide help.

Already in March, the EU and Ukraine linked their grids – 2-1/5 years earlier than planned – enabling Ukraine to receive emergency power from Europe if military attacks caused outages.

Ideally, the Baltic States would only disconnect from the Russian grid in 2025, following the completion of investment backed by 1.6 billion euros ($1.68 billion) of EU funding to upgrade their infrastructure.

The sources said, however, the Baltic States would already be able to cope if they have to. The grids would operate in a stable manner but the lack of the infrastructure upgrades could mean higher power prices, one of them said.

Trial run

Lithuania last year installed and successfully tested equipment to link up the Baltic power grid with Poland, an ENTSO-E member.

ENTSO-E was not available to comment on Thursday, and the Polish power grid declined to comment.

A spokesperson for Litgrid, which operates the Lithuanian grid, told Reuters last year’s test of the Lithuanian-Polish LitPolLink connection upgrade showed that “in an emergency, the Baltic countries will receive help and be able to connect to the networks of continental Europe.”

“We coordinate with regional partners and are ready to ensure reliable power supply in all scenarios,” the spokesperson said.

Removing the Baltics from the regional grid would also cut off Russia’s Kaliningrad exclave, which is wedged between Lithuania, Poland and the Baltic Sea, meaning it would have to run the grid independently.

A test of whether Kaliningrad could do this was planned for Saturday but Russia called it off shortly before it was due.

No-one could immediately be contacted in Russia to comment on the Baltic grid plans.

However, Russia has said it is committed to fulfilling its energy supply contracts.

It says reduced gas deliveries this month via the Nord Stream 1 pipeline to Germany were caused by the delayed return of turbine equipment being serviced by Germany’s Siemens Energy in Canada.

Read more: Technical problem with Nord Stream 1 a Russian pretext: German minister

Continue Reading

Business

OPEC+ to maintain oil output policy, steers away from plans for September

OPEC+ said on Thursday it would stick to its planned oil output hikes in August but avoided discussing policy from September onwards as prices have risen on tight global supplies and concerns about the groups' collective ability to pump more crude.

Thursday’s meeting of the group that includes Saudi Arabia, Russia and other major oil producers was held days before US President Joe Biden travels to the Middle East, including Riyadh where he is expected to press the Kingdom for more oil.

For the latest headlines, follow our Google News channel online or via the app.

At its last gathering on June 2, OPEC+ decided to increase output each month by 648,000 barrels per day (bpd) in July and August, up from a previous plan to add 432,000 bpd per month.

Washington welcomed the June 2 decision for a faster production rise, after months of Western pressure on OPEC+, which includes the Organization of the Petroleum Exporting Countries.

Oil prices rocketed to their highest levels since 2008 after the United States and Europe imposed sanctions on Russia over its invasion of Ukraine in February, which Moscow calls a “special military operation.”

Prices has slipped since then but were still above $115 on Thursday on tight supply and concerns that OPEC states had little extra capacity to raise output swiftly.

French President Emmanuel Macron claimed that he had been told Saudi Arabia and the United Arab Emirates, the only two OPEC states considered to have significant spare capacity, could barely raise output.

According to Macron, Sheikh Mohamed said the UAE was at its “maximum” capacity and Saudi Arabia could raise production by only 150,000 bpd.

This report was refuted by the Energy and Infrastructure Minister Suhail bin Mohammed al-Mazrouei, who said: “The UAE is producing near to our maximum production capacity based on its current OPEC+ production baseline, which the UAE is committed to until the end of the agreement,” according to the official WAM news agency.

The UAE is able to produce 4.2 million bpd, according to its declared maximum production capacity.

Read more:

Libya suspends oil shipments from key port amid political crisis

OPEC+ set for brief respite before tough decision on new deal

UAE close to OPEC+ oil output ceiling: Energy minister

Continue Reading

Business

Emirates Airline, MBC partner to provide exclusive Shahid content in the air

Emirates Airline has partnered with MBC-owned streaming platform Shahid to offer over 135 hours of premium on-demand content in the flight cabin’s entertainment system from July.

The partnership makes available 15 exclusive shows on the ‘ICE’ system on board, making it the only other platform to offer this content aside from the subscription-based platform, Shahid.

For all the latest headlines follow our Google News channel online or via the app.

“We are excited to welcome the world’s leading Arabic streaming service content onboard – so passengers can catch up on all their favorite entertainment inflight, just as they do at home,” Patrick Brannelly, Emirates’ Senior Vice President Retail, IFE & Connectivity, said in a statement.

He added that Emirates looks forward to grow the partnership further, signaling the possibility of a larger content availability on board in the future.

“We are excited to offer Shahid’s content for Emirates’ customers to enjoy, just in time for the busiest travel season of the year,” Natasha Matos-Hemingway, Chief Commercial and Marketing Officer (VOD) at MBC Group, said.

The Arabic content programs include subtitles to increase accessibly to an international audience, a statement clarified.

The newly added content from Shahid adds to the extensive collection of Arabic content already available on Emirates, including live television channels, films and shows.

Shahid’s biggest original production Rashash will be streamed for the first time by an airline on-board Emirates. Other original titles include Anbar 6, Hell's Gate, Dor Al Omor, Nemra Etnein, al-Shak, al-Jedar al-Rabea, Rahn El Tahqiq, 2020, Bi Saraha Ma’a, Dofa'at Beirut, Aghani Min Hayati, Kaf w Dafoof, and Salon Zahra.

This content originates from Saudi Arabia, Kuwait, Egypt, and Lebanon.

Read more:

Hajj 2022: Emirates to double flights to Medina, 31 new flights to Jeddah

Renowned TV show ‘The Office’ gets Arabic remake in partnership between MBC and BBC

Twitter, MBC expand partnership to include exclusive content

Continue Reading

Trending