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Pakistan’s oil industry faces collapse amid liquidity crunch

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Pakistan’s oil companies have warned that the industry is on the “brink of collapse” as the dollar liquidity crisis persists and their cost of doing balloons due to the Pakistani rupees (PKR) devaluation.

To meet the International Monetary Fund’s (IMF) demand, the government removed the dollar cap, resulting in the rupee falling to a historic low of 276.58 PKR in the interbank market, Geo News reported.

In a letter to the Oil and Gas Regulatory Authority (OGRA) and Energy Ministry, the Oil Companies Advisory Council (OCAC) said that the “sudden depreciation” of the local rupee has caused losses worth billions of rupees to the industry as their letters of credit (LCs) are expected to be settled on the new rates, “whereas the related product has already been sold”.

The government has also restricted LCs due to dwindling foreign exchange reserves, which fell to $3,086.2 million as of January 27, and are enough for just 18.5 days, Geo News reported.

Pakistan is facing a balance of payments crisis and the plummeting value of the rupee is pushing up the price of imported goods.

Energy comprises a large chunk of Pakistan’s import bill.

Pakistan typically meets more than a third of its annual power demand, using imported natural gas, prices for which shot up following Russia’s invasion of Ukraine.

These losses, the OCAC said, not only have an impact on the profitability of the sector, which is already under severe pressure, but also on its viability since these setbacks in some cases might exceed the “entire year’s profit for the sector”, Geo News reported.

“It is requested to urgently revise this mechanism and ensure that exchange losses of the sector are fully reimbursed if the viability of the industry and supplies to retail outlets are to be ensured,” the OCAC told the authorities.

The letter mentioned that OGRA has adopted the practice of not fully passing on the impact of the rupee depreciation and instead putting an immense burden on the sector.

Due to the challenges still being faced by the sector of previous exchange rate adjustments and the enormous impact of the current depreciation, the OCAC said it is crucial that OGRA passes the impact of the exchange rates in one go and not stagger this compensation, Geo News reported.

The council added that due to an increase in oil prices and successive depreciation of the Pakistani rupee over the last 18 months, the trade finance limits available from the banking sector to the industry have become inadequate.

As a result of the recent devaluation alone, the LC limits have overnight shrunk by 15-20 per cent, the OCAC said.

Business

PM Modi meets Keir Starmer in Mumbai for strengthening India-UK ties

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Mumbai, Oct 9: Prime Minister Narendra Modi welcomed UK Prime Minister Keri Starmer at Raj Bhavan and held a meeting as part of the process to strengthen the strategic partnership between the two countries.

The Ministry of External Affairs shared photos of Prime Minister Narendra Modi meeting UK Prime Minister Keir Starmer.

“Together for stronger India-UK ties…,” posted Randhir Jaiswal, the MEA spokesperson, on X.

Earlier, Commerce and Industry Minister Piyush Goyal said his meeting with UK Prime Minister Keir Starmer here further deepened trade and economic partnership for mutual prosperity between the two nations.

Starmer arrived in India for a two-day visit on Wednesday, accompanied by the biggest-ever trade delegation from the country to India.

“Delighted to call on UK Prime Minister Keir Starmer. Discussed avenues to further deepen India-UK trade and economic partnership for mutual prosperity,” Goyal posted on X social media platform.

Goyal earlier met Peter Kyle, the UK’s Secretary of State for Business and Trade, with a view to moving forward with the operationalisation of the India-UK Comprehensive Economic and Trade Agreement (CETA) and doubling the bilateral trade by 2030.

“The meeting marked a significant step towards operationalising the India-UK CETA, with both Ministers agreeing to reposition the Joint Economic and Trade Committee (JETCO) to oversee its implementation and delivery,” according to the Commerce Ministry statement.

Both sides underlined their commitment to ensuring swift, coordinated, and results-oriented implementation of the Agreement, aimed at realising its full potential for businesses and consumers in both countries. The ministers reaffirmed their shared ambition to double bilateral trade by 2030, leveraging the complementarities between the two economies in areas such as advanced manufacturing, digital trade, clean energy, and services.

Emphasising the transformative scope of CETA, they discussed ways to maximise its benefits through regulatory cooperation, addressing non-tariff barriers, and promoting supply chain integration. The highly productive Commerce Secretary and Director General-level meeting set the tone for the Ministerial meeting, which laid a strong foundation for a full day of engaging and forward-looking discussions.

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Business

World Bank flags rising poverty levels in Pakistan

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New Delhi, Oct 8: The World Bank has expressed serious concern over Pakistan’s economy as the country has failed to reduce poverty despite massive loans injected by the IMF.

The current model of growth has failed to ameliorate the conditions of the poor, and the headcount ratio (HCR) has surged to its highest level of 25.3 per cent in the last eight years, which is a 7 per cent increase in HCR since 2023, the World Bank report states.

Instead of concentrating on rural development to reduce poverty, the Pakistan government has been focused more on increasing defence expenditure.

The World Bank report titled “Reclaiming Momentum Towards Prosperity: Pakistan’s Poverty, Equity and Resilience Assessment” released on September 23, mentions that even the country’s aspiring middle class (constituting 42.7 per cent of its population) is “struggling to achieve full economic security”.

Pakistan’s once-promising poverty reduction trajectory has come to a troubling halt, reversing years of hard-fought gains.

After dramatically reducing poverty from 64.3 per cent in 2001 to 21.9 per cent in 2018 — declining by 3 percentage points annually until 2015 before slowing to less than 1 percentage point per year — recent compounding shocks have pushed poverty rates back up to a projected 25.3 per cent by 2023-24, the report states.

The economic model that delivered early wins has reached its limits, with 14 per cent of the population in 2018 remaining vulnerable to falling back into poverty when faced with shocks.

Compounding crises — Covid-19, economic instability, devastating floods, and record-high inflation—have further exposed systemic weaknesses, leaving many in low-productivity activities and unable to cope with these challenges, the report points out.

Bold policy reforms are now essential to address structural imbalances, prevent sliding back into poverty during shocks, and tackle the persistent challenges in remote areas. In this context, this Poverty, Equity, and Resilience Assessment , the first since the early 2000s, looks at how poverty has evolved in Pakistan by combining traditional and non-traditional data, offering detailed analysis and strategic direction on the country’s efforts and challenges to reduce poverty and promote equity.

This comprehensive assessment aims to provide a roadmap for policymakers and stakeholders to address poverty and equity challenges in Pakistan effectively, the report added.

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International News

Rahul Gandhi begins 4-nation South American visit

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New Delhi, Sep 27: Leader of Opposition (LoP) in the Lok Sabha, Rahul Gandhi, has embarked on a South American tour, during which he is scheduled to interact with political leaders, university students, and members of the business community across four nations.

The Congress media and publicity department, incharge, Pawan Khera, announced the development on Saturday but refrained from disclosing the names of the countries LoP Gandhi will be visiting.

In a post on X, Khera wrote, “Leader of the Opposition in Lok Sabha, Shri Rahul Gandhi, has embarked on a visit to South America. He is scheduled to engage with political leaders, university students, and members of the business community across four countries.”

According to the party, this marks LoP Gandhi’s first overseas visit in September and will deepen democratic, trade, and strategic ties, building on historical India–South America cooperation and Global South solidarity.

During his visit to Brazil and Colombia, LoP Gandhi is expected to interact with university students, hold meetings with presidents and senior leaders across multiple countries, strengthening democratic and strategic ties, the party said.

He is also expected to engage with business leaders to explore opportunities as India seeks to diversify trade and partnerships in the wake of US tariffs, it also said.

Earlier this month, he travelled to Malaysia, although the Congress had not issued an official statement regarding that trip. The visit sparked several questions and also drew criticism from the Bharatiya Janata Party (BJP).

The BJP took a dig at his foreign trips and BJP IT cell chief Amit Malviya shared a photograph of Gandhi, claiming that he was vacationing in Malaysia.

Taking to X, Malviya posted, “Rahul Gandhi has slipped away yet again — this time on a clandestine vacation in Langkawi, Malaysia. Looks like the heat and dust of Bihar’s politics was too much for the Congress ‘Yuvraj’, who had to rush off for a break. Or is it another one of those secret meetings that no one is supposed to know about?”

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