Four Afghanistan-based militants arrested in southwest Pakistan, were planning ‘major attack’ — state media

KARACHI: Financial experts on Thursday remained divided over whether the International Monetary Fund’s (IMF) ongoing first review of Pakistan’s $7 billion bailout program will lead to the central bank increasing or decreasing the interest rate next week. 

The central bank’s Monetary Policy Committee (MPC) is set to meet and review the interest rate on Mar. 10. The development takes place as a delegation of the IMF is reviewing Pakistan’s economic performance in Islamabad under its $7 billion Extended Fund Facility program.

The State Bank of Pakistan (SBP) has reduced borrowing rates by a cumulative 1,000 basis points since June 2024 to 12 percent to spur economic growth. Shankar Talreja, director of research at brokerage firm Topline Securities, told Arab News he expected the central bank to maintain the interest rate at 12 percent and not introduce a further cut. 

“We expect the central bank to remain prudent and observe the status quo in upcoming meeting,” Talreja told Arab News. 

Talreja explained that since Pakistan is facing a revenue shortfall and to achieve the desired tax-to-GDP ratio, the IMF can push the government to impose additional tax measures. These in turn can lead to inflation which would cause the SBP to maintain the interest rate at 12 percent rather than slash it further. 

The IMF has expressed concern over Pakistan facing a revenue shortfall of about Rs600 billion in this fiscal year.

The international lender wants cash-strapped Pakistan to increase its revenues by scrapping energy subsidies and imposing taxes on agriculture, real estate and retail sectors.

Talreja said the anticipated tax measures may bring pause to the interest rate easing cycle “for a few months.”

He said certain tax measures were already outlined in the IMF’s detailed report, such as the increase in advance income tax on imports of machinery, withholding tax on supplies and increase in federal excise duty on sugary drinks.

“Any shortfall over and above Rs500 billion will trigger additional tax measures to be taken by the government in its new budget for the financial year 2026,” Talreja explained. 

A majority of market participants said they expected a rate cut ranging from 50 basis points to 150 basis points, a survey conducted by Topline Securities said last week. 

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Pakistan’s top trade body, on Wednesday called for a 500-basis-point (bps) cut in the policy rate. The body said businesses remained dissatisfied with monetary policy and demanded a cut due to easing inflation. 

Muhammad Waqas Ghani, head of research at JS Global Capital Ltd., disagreed with Talreja. He said the IMF can set a lower tax target for Pakistan, which would not trigger further inflation. 

“We believe that the IMF review and the miss in tax collection targets will not impact the SBP’s decision,” Ghani told Arab News.

Pakistan’s macroeconomic indicators have gradually improved since it secured the IMF bailout last summer. The country’s consumer price index (CPI) inflation rate, maintaining a downward trend on Monday, hit a more than 9-year low at 1.51 percent year-on-year in February. 

If the IMF approves the first review of the loan, the country is in line to receive about $1 billion as the second installment of the loan package.

ISLAMABAD: The German Junior Hockey Team, world champions, arrived in Pakistan on Thursday for a four-match series, marking the return of international hockey to Pakistan after nearly a decade and a half, the government’s press department said in a statement. 

Pakistan marked the first international hockey match played in the country for seven years when Chinese played four matches here in what was dubbed as the ‘Friendship Series’.

Before that, Pakistan had last staged an international match in 2004 when it hosted the Champions Trophy in Lahore but after that foreign teams refused to play in the country due to security concerns.

Since the September 11 attacks in the United States, foreign teams have been reluctant to travel to Pakistan in many sports and the South Asian country was left completely isolated as a sporting venue after militants attacked the Sri Lankan cricket team in Lahore in March 2009.

“Under the vision of Prime Minister Shehbaz Sharif, this initiative aims to provide Pakistani junior players with international exposure and reestablish Pakistan as a hub for global hockey,” PID said about the four-math series between Pakistan and Germany.

“The series will feature one match in Islamabad and three in Lahore, promising a thrilling competition for fans.”

The two teams will face each other in Lahore on Mar. 6, 8 and 11 while one match will be played in Islamabad on Mar. 13.

“The series holds great significance for both teams as they prepare for the Hockey Junior World Cup being played 2025 in India,” state media reported. 

Field hockey, Pakistan’s national sport, once propelled the country to Olympic gold and global glory, but the game has waned in popularity and participation over the past two decades. Poor management, lack of infrastructure and the rise of cricket has contributed to the decline. The failure to adapt to modern demands, including fitness and artificial turfs, has further deepened the crisis.

According to the latest rankings released by the International Hockey Federation, Pakistan is ranked number 15 in the world in field hockey.