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Pakistan needs IMF support to breathe again

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Pakistan has been suffering from its worst economic age, where the International Monetary Fund (IMF) has already slashed the growth outlook for the cash-strapped country, forecasting its economic growth 0.5pc this year, down from 6 percent in 2022.

Pakistan has been facing around 27pc inflation this year as per IMF prediction that could harm the country of an over 230 million people.

The global lender also warned that the country will struggle with unemployment this year and also last year’s deadly flood that resulted in the death of 1,739 people, has caused a damage of $30 billion.

To cover the current economic crisis, the coalition government of Pakistan’s Prime Minister Shahbaz Sharif is in talks with the IMF to receive a key tranche of a $6 billion package.

Sharif’s predecessor, Imran Khan, who is now a key opposition, has signed the package in 2019.

On Tuesday morning, Sharif held a telephonic conversation with IMF Managing Director Kristalina Georgieva, and the talks were centered around matters related to the IMF program.

Pakistan hopes to get bailout funds in a day or two

During the conversation, Sharif had expressed hope that the lender would announce a decision pertaining to the release of bailout funds within a day or two, according to local media.

Pakistan’s ninth review by the IMF under the 2019 Extended Fund Facility (EFF) for the release of a $1.2bn tranche is still pending with fewer than 10 days remaining until the program’s expiry on June 30, Dawn reported.

Pakistan was expected to get around $1.2 billion from the lender in October last year, but it has not been preceded and the IMF says Pakistan is not able to meet important prerequisites required for the budget.

The IMF Managing Director Kristalina Georgieva (L) met Pakistani Prime Minister Shehbaz Sharif (R) in Paris (Pakistan Prime Minister’s Office)

Now, when the deadline is about to expire, Pakistan’s primer held back-to-back meetings with Georgieva in Paris last week, to make sure it gets the money to deal with current economic difficulties.

“In connection with the meetings held in Paris, the IMF director general acknowledged efforts by the finance minister and his team for completion of the program,” said a handout released by the Prime Minister’s Office (PMO).

Sharif also reiterated his determination to achieve the goals of improving the economic situation through joint efforts, according to the handout.

Several observations on parts of budget

The IMF had earlier this month brought several eye-brows over Pakistan’s budget for fiscal year 2024. It made it clear that Islamabad has proposed some measures which are against the EFF program’s condition.

Esther Perez Ruiz, IMF representative for Pakistan, had earlier said Pakistan needed to satisfy the IMF on three counts, including the budget for the upcoming fiscal year, before its board will review whether to release the pending tranche, according to Dawn.

Considering the expiry of the program which some days remain, it seems Pakistan has failed to convince the IMF creating fear that the budget would not be materialized this time again.

Meanwhile, the government of Sharif is doing what it can to address IMF’s concerns and said Islamabad is flexible on the budget and expressed readiness to engage with the lender to eventually reach an good-natured solution.

Reportedly, the government of Pakistan last week has brought some changes to the fiscal year’s budget, including fiscal tightening measures dictated by the IMF in a last-ditch effort to secure critical funding, according to Dawn.

Pakistan’s Finance Minister Ishaq Dar had recently said that Pakistan and IMF had detailed negotiations for the last three days as a last effort to complete the pending review.

The changes include Rs215bn additional tax measures, a Rs85bn spending cut, withdrawal of an amnesty on foreign exchange inflows, lifting of import restrictions, a Rs16bn hike in Benazir Income Support Program allocations, and the powers to increase the petroleum levy from Rs50 to Rs60 per litre, Dawn reported.

Almost all irritants between two sides addressed

“Almost all the irritants between the IMF staff and the Ministry of Finance were addressed hours before the finance minister’s wind-up speech,” Dawn quoted an official.

Speaking on condition of anonymity, the official also said that it was now up to the IMF’s mission to line up the precise dates for the lender’s executive board approval and disbursement of funds.

However, he acknowledged that it was not on the calendar until June 30, when the $6.5 billion Extended Fund Facility agreed in 2019 is set to expire.

Pakistan primer Sharif during his visit to France also met with this expatriate community there. During the meeting, Sharif explained to them the circumstances in which the coalition government assumed office as well as the “mammoth economic, diplomatic and political challenges” that the government had to deal with over the last one year.

“I also outlined the broad contours of the Economic Revival Plan to put the economy back on track through long-term policies. Achieving economic self-reliance remains the overriding goal for the government,” Sharif added.

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Afraid of the gun; Taliban supreme leader fears of a coup

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Hibatullah Akhundzada, the supreme leader of the Taliban, has ordered the security institutions that without his permission, “no one can distribute or use the military equipment registered by the ministries of defense and interior, the directorate of intelligence and other independent institutions.”

Experts and analysts have considered this move by Hibatullah as last resort to weaken the position of defense minister, Yaqoob Mujahid, interior minister, Sirajuddin Haqqani and the head of Taliban intelligence, Abdul Haq Wasiq in order to prevent a possible internal coup that was initiated by these three top officials.

In the first article of the order, it is mentioned that no person can distribute military equipment registered in the reserves of the ministries of defense, interior and intelligence, or issue an order to distribute it without the order of Hibatullah.

This decree titled “Regarding the distribution, protection and supervision of registered military equipment”, specifies that whenever an Emirate entity (Taliban-related entity) needs weapons, ammunition, night vision cameras, telecommunications and other military equipment” must receive the approval order from the leader of the Taliban.

Also, in the second article of this decree, it is stated that whenever one of the military departments of the Taliban needs military equipment, it must send its request to Hibatullah’s office in Kandahar.

In the third article of the decree, it is emphasized that if the military equipment was distributed or used without the permission of the Taliban leader before the issuance of this decree, they must be returned to the reserves.

Ministries of defense, interior and head of intelligence department are banned from disturbing military weapons.

According to this article, Hibatullah entrusted the ministries of defense and interior, as well as the general directorate of Taliban intelligence, with the responsibility to report the list of available military equipment to the directorate of registration, and protection of military equipment.

This order of the Taliban leader has been considered as another step in the direction of concentrating more power in the hands of Mullah Hibatullah in Kandahar. Many have seen it as a sign of Hibatullah’s increasing distrust of senior Taliban officials in Kabul. Previously, some senior Taliban officials, including Sirajuddin Haqqani, have openly disobeyed Hibatullah’s order to prohibit photography and filming and have not followed the order of their supreme leader.

(R) Defense Minister Mullah Yaqoob Mujahid and (L) Interior Minister Sirajuddin Haqqani.

Previously, several reports have been published about the sale of military equipment left over from the US troops and Afghan security forces during the republic government. Even the US-elected president Donald Trump, repeatedly mentioned this issue during his election campaigns. Not long ago, the government of Pakistan also announced that the Pakistan security forces have discovered and confiscated a car carrying US weapons smuggled from Afghanistan.

Pakistani media reported that this equipment included M4 assault rifles, night vision cameras and thousands of rounds of ammunition, which were transported in a truck carrying vegetables. Pakistani security officials have estimated the total value of weapons smuggled from Afghanistan in this truck to be 126,354 US dollars.

The cost of US’s remaining equipment in Afghanistan estimated over 7 billion US dollars

The Pentagon has already announced that after the withdrawal of US forces from Afghanistan, about 7 billion dollars of military equipment fell into the hands of the Taliban. This equipment reached the hands of the Taliban after the fall of Afghanistan on 15 August, 2021.

It has been reported that when the US forces left Afghanistan, there were 78 US-made aircrafts in the country, whose value reached 1 billion dollars. According to CNN, with the end of the US military presence, a total of more than 9,000 air-to-ground munitions worth more than six and a half million dollars have remained in Afghanistan.

The report also states that out of a total of 96,000 military vehicles, more than 40,000 units, including 12,000 Humvees (armored tanks), fell into the hands of the Taliban. Moreover, out of a total of more than 400,000 weapons that the US gave to the forces of the former Afghan government, about 300,000 remain in the country.

Almost all “communications equipment, including mobile base stations, portable and hand-held commercial and military radio systems, and associated transmitters and encryption devices, all remain in Afghanistan,” according to the report.

The report added that “almost all” of the equipment for night vision cameras, surveillance, biometric and positioning equipment,” a total of nearly 42 thousand pieces of specialized equipment, remained in Afghanistan.

Meanwhile, Five Mi 17 helicopters of the then Afghan army, which were transferred to Ukraine for repair before the collapse of the government, have also returned to Afghanistan and now are used by the Taliban.

It should be noted that the internal rivalries in the Taliban, especially among the different factions of this group, is one of the important reasons for Mullah Hibatullah’s distrust of some Taliban officials. Some officials, including interior minister Sirajuddin Haqqani and defense minister Mohammad Yaqub Mujahid, gained a lot of power, especially during the Taliban’s war against foreign forces, and Mullah Hibatullah may be worried that these officials are trying to expand their power, which is a clear threat to his position as the Taliban leader.

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China’s BYD prepares to launch latest SUV, the Sealion 07, in Europe despite EU tariffs

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BYD, the world’s largest electric vehicle (EV) maker, is set to launch its latest SUV, the Sealion 07, in Europe, undeterred by recent tariff increases on Chinese-made electric vehicles. This strategic move highlights BYD’s commitment to expanding overseas sales despite economic barriers.

Deliveries of the Sealion 07 are scheduled to begin in 2025, marking BYD’s seventh all-electric model in the European market, the company announced on Wednesday. Additionally, BYD plans to enter the South Korean market next year, adding to its existing presence in 95 countries worldwide.

This European expansion comes on the heels of the European Union’s decision last month to impose new tariffs—ranging from 17% to 35.3%—on Chinese electric vehicles following an anti-subsidy investigation. BYD’s EVs are subject to a 17% tariff, in addition to the standard 10% tariff applied to all pure electric cars imported from China. These tariffs, which took effect last month, will remain in place for five years. Meanwhile, U.S. tariffs on Chinese-made EVs increased from 25% to 100% as of September, citing similar concerns.

Despite the added costs, BYD’s vehicles continue to hold strong appeal in export markets. “BYD’s vehicles remain attractive even after the additional tariffs, so it’s not really a big problem for the company,” said Chen Jinzhu, CEO of Shanghai Mingliang Auto Service, a leading industry consultancy. “The Sealion 07 exemplifies how BYD’s cost advantage enables it to counteract such trade barriers in key export markets.”

Shenzhen-based BYD has yet to disclose the European pricing for the Sealion 07. On the mainland, the SUV—featuring a range of 450 kilometers—starts at 189,800 yuan (approximately US$26,272), with deliveries beginning in May.

According to a report last year from UBS analysts, BYD has a sustainable cost advantage of 25% over traditional European brands.

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Singles’ day promotions target overseas Chinese as China’s domestic demand slows

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After last year’s Singles’ Day shopping festival in China was dubbed the “quietest in history,” China’s e-commerce platforms focused on a new strategy this year.

For this year’s Singles’ Day event, major e-commerce companies such as Alibaba, JD.com, and Pinduoduo invested heavily in expanding overseas markets, targeting the estimated 100 million Chinese living abroad with offers like discounts and free or low-cost shipping.

The central question, however, is not whether these efforts will succeed in the short term, but rather if this shift can help platforms grow their user bases as online sales growth in China reaches a bottleneck.

“Domestic consumption is quite weak right now, and every company is certainly considering new ways to drive growth for Singles’ Day,” said an executive at a leading online retailer, who requested anonymity. “The overseas market is widely seen as a promising source for additional growth,” he added in an interview with Nikkei Asia.

Singles’ Day, a one-day sales event launched by Alibaba in 2009 as a celebration for singles, has since evolved into a month-long campaign with special offers and deep discounts, culminating on or around November 11.

This year, China aimed to revitalize its retail sector with the event. Total consumer goods sales rose by 3.3% year-on-year in the first three quarters of 2024, though high-end consumer spending remained stagnant. Cosmetics sales fell by 1%, while gold and silver jewelry sales declined by 3.1% year-on-year.

Last month, Alibaba’s Taobao launched a significant marketing campaign in Hong Kong and Taiwan, flooding subway stations with advertisements for “free shipping on orders over 99 yuan,” among other offers. According to the company, the campaign cost 2 billion New Taiwan dollars ($61.7 million) in Taiwan and 1 billion yuan ($138 million) in Hong Kong.

Following Alibaba’s move, JD.com announced it had invested 1.5 billion yuan to offer discounted product prices and cheaper shipping to Hong Kong shoppers. Bargain platform Pinduoduo took it a step further, offering free shipping via courier SF Express for Hong Kong shoppers, regardless of the item’s price. All products on these platforms are shipped from mainland China.

A spokesperson from Alibaba’s International Digital Commerce Group noted that since the overseas initiative launched in October, Taobao Hong Kong has achieved double-digit growth in both orders and gross merchandise value (GMV)—a metric that excludes canceled orders—on both a monthly and year-on-year basis.

The platforms are also targeting Chinese shoppers in Malaysia, Thailand, and Singapore.

This year, unlike in previous years, shoppers could combine online discounts with a subsidy program introduced by the Chinese government to boost domestic consumption, primarily for home appliances and household products. Analysts suggest these incentives will likely boost sales for JD.com, which is known for selling high-quality large appliances and offering after-sales services.

While JD.com has yet to release sales or GMV figures for home appliances during the shopping festival, it is expected to share its June-September results, along with Alibaba, later this week.

Last year, data provider Syntun estimated that total GMV on major e-commerce platforms grew by only 2.1% to 1.14 trillion yuan, falling short of the 2.9% growth forecast for 2022. Similarly, consultancy Bain predicted that Singles’ Day sales would reach 1.15 trillion yuan in 2023.

On Tuesday morning, Alibaba announced “strong GMV growth” and a “record number” of active shoppers for this year’s Singles’ Day event.

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