Economy

Pakistan’s Belt-Tightening Begins in High Places

Published

2 years ago

February 22, 2023

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(Bloomberg) — Pakistani ministers can no longer fly business class or stay in five-star hotels abroad. And the government thanks them for taking salary cuts.

The South Asian nation fighting to stay solvent and avoid a debt default has unveiled $764 million of cost-cutting measures needed to help revive a $6.5 billion of International Monetary Fund bailout. The government will follow up with further austerity measures in the next budget in July, Prime Minister Shehbaz Sharif said Wednesday.

“This is need of the hour,” he said after a cabinet meeting in Islamabad. “We have to show what the time demands from us and that’s austerity, simplicity and sacrifice.”The world’s fifth most populous country has descended dangerously close to a debt default in recent months. The $350-billion economy, with just $3 billion of foreign-exchange reserves by one estimate, also faces a dollar squeeze that tests its external stability. Supply disruptions caused by flooding, food shortages and steps the government took to meet IMF’s preconditions for the rescue may push inflation above 30% for the first time on record, according to Bloomberg Economics.

Pakistan-IMF Deal Due ‘Any Day’ to Boost Economy, Minister SaysAs common people come out on streets to protest crippling conditions, the government is trying to show austerity begins at the highest levels. Several federal and state ministers besides high-ranking government officials have volunteered to forgo salaries and perks, Sharif said. The government has also banned the purchase of luxury items and cars until next year, he added.

What Life is Like in Crisis-Hit Pakistan as Inflation Soars

Parliament this week voted to roll out tax increases including higher levies on luxury imports. The government had raised energy prices and let the currency weaken after the IMF called on the nation to scrap subsidies and enable a market-determined exchange rate.

Meanwhile, the State Bank of Pakistan has raised the benchmark rate by 725 basis points since the start of 2022 and signaled more monetary tightening is coming. SBP will hold its next policy review on March 16.Pakistan faces $542.5 million of coupon repayments this year, according to data compiled by Bloomberg. In all, the country has $8 billion in dollar bonds debt due by 2051 with the next payment of $1 billion due in April next year. Most of the nation’s external debt of about $100 billion is sourced from concessional multilateral and bilateral sources.

—With assistance from Selcuk Gokoluk and Tasos Vossos.

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Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

6 hours ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

1 day ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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Economy

Statistics Canada says manufacturing sales fell 1.3% to $69.4B in August

Published

1 day ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.

The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.

The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.

Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.

Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.

Overall manufacturing sales in constant dollars fell 0.8 per cent in August.

This report by The Canadian Press was first published Oct. 16, 2024.

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