
SBP-held foreign exchange reserves decrease $7mn to $11.51bn
Total liquid foreign reserves held by the country stood at $16.60 billion. Net foreign reserves held by commercial banks amounted to $5.09 billion.
'During the week ended on 30-May-2025, SBP reserves decreased by US$ 7 million to US$ 11,508.8 million,' the central bank said.
Last week, SBP-held reserves had increased by over $1 billion after the receipt of the second tranche under the International Monetary Fund's (IMF) Extended Fund Facility (EFF).
The IMF had disbursed SDR 760 million, equivalent to around $1.02 billion, after completing the first review of the EFF programme earlier in May.

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Business Recorder
2 hours ago
- Business Recorder
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'There is always more misery among the lower classes than there is humanity in the upper.' Victor Hugo, Les Misérables. Let's be honest: we don't need another diagnostic. We already know the patient is bleeding. What Pakistan needs now is a surgical plan—practical, bold, and morally sound. For too long, we've accepted poverty as collateral damage in the pursuit of elite consensus and IMF appeasement. But poverty is not an economic inevitability. It's a political choice; we have the tools. The question is: do we dare use them? It begins at the source: revenue. Not just collecting more—but collecting fairly and intelligently. Three big fissures need closing. First, agricultural income: time to stop pretending. We must tax progressively above subsistence thresholds, synchronized across provinces. Digitize land records, use satellite imagery to estimate yields, and enforce returns based on real output. Second, the retail-wholesale sector — our country's backbone — remains untaxed. Use utility, mobile, and point-of-sale data for automatic registration, offer simplified compliance pathways, and blacklist evaders. Third, exemptions: eliminate the alphabet soup of favours. Every tax break must have a limited time-frame or a sunset clause. Any system people don't understand breeds mistrust. The tax code should not be a maze for the honest and a playground for the connected. But it's not just about how much we collect—it's about how we spend. We must flip the budget. Instead of rewarding glossy overpasses, we reward outcomes. Tie provincial transfers to performance on health, literacy, nutrition. Double down on girl-focused primary education—stipends, not just schoolbags. Fund preventive healthcare—immunisation, clean water, maternal support. And if we must borrow, let it be for people, not concrete. That debt pays dividends for decades. The deeper issue is how we define development. We remain stuck in an outdated metric. GDP was never designed to measure human welfare. Nobel laureates like Joseph Stiglitz and Amartya Sen have long argued that a country's economic output is not the same as its people's well-being. Pakistan needs to budget with a dashboard: track HDI by district, inequality via the Gini index, and deprivation through the Multidimensional Poverty Index. Real reform starts when budgets ask, 'How many children ate today?' instead of 'How many bridges did we build?' There's no way forward without confronting what we're doing to our youth. We call it a 'youth bulge,' but without investment, it's more like a ticking bomb. What we need is a national skills guarantee—every Pakistani under 30 should have access to one of three paths: vocational training, digital certification, or an apprenticeship. No excuses. Every district should have youth entrepreneurship hubs—public-private incubators to build solutions in climate tech, fintech, creative services. We should have a Youth Civic Corps that mobilises thousands for literacy drives, urban greening, disaster response. This isn't idealism—it's strategic insurance. If we don't create opportunity, we'll be dealing with unrest. Meanwhile, we must build on what works. The Benazir Income Support Programme remains the country's most robust safety net. But it's frozen in its original form. We need to evolve it. Link payments to real outcomes: school attendance, vaccination, skills completion. Digitally integrate it with NADRA, Sehat Sahulat, Ehsaas, and microcredit channels to build a universal social registry. Add tiers: long-term unconditional support for widows, persons with disabilities, and the elderly. Conditional, time-bound transfers for those who can and want to move up. The goal is not permanent welfare—it's dignity with an off-ramp. But even as we talk reform, let's address the elephant in the drawing room—protocol. We're trying to build a welfare state while financing a spectacle of privilege. Convoys, VIP perks, public security as personal entitlement. Every rupee spent on ceremonial power is one less rupee for public good. Strip it back. Limit police convoys to verified high-risk individuals. Publish the protocol budget of every ministry. Cap perks. All the big-wigs in the state apparatus can fly economy—if they want comfort, they can top up from their own pockets. This isn't about symbolism. It's about credibility. Yet all this will still fall flat without trust. No reform survives without it. The state must show it sees its citizens. Start small but start strong. If you paid for a government service like passport or ID card, and it doesn't arrive within time, it's free. If the passport office has no power, escalate, the portal allows you to complain to next HQ. Create real-time redressal. Provide free legal aid to women, bonded labourers, minorities. A welfare state does not begin with charity—it begins with predictability. With justice. Everything we're proposing here isn't just economic. It's deeply moral. Thomas Piketty, in his work on capital and inequality, showed how unregulated wealth accumulation creates systemic instability. The longer you let inequality fester, the more corrosive it becomes—to social cohesion, to democracy, to the very idea of merit. It's not about punishing the rich—it's about protecting the country, the republic. Richard Wilkinson and Kate Pickett's landmark work 'The Spirit Level' makes a shocking case: unequal societies are not just unfair—they are dysfunctional. They do worse across everything that matters: crime, education, trust, health, productivity. Pakistan must understand that inequality is not just a side effect. It is the engine of dysfunction. When one class is hoarding plots in gated suburbs while another queues up for food rations, it's not just a fiscal problem—it's a fracture in the national soul. We can either have elite consensus or we can have inclusive development. But we can't have both. What we need is a new contract. A contract that says: if you work hard, you can feed your family. If you pay your taxes, your kids go to school. If you obey the law, the law protects you. That's not utopia. That's Republic 101. The elite will not sign that contract willingly. But history shows that when the middle class and the marginalised demand it together — it becomes inevitable. Pakistan does not lack resources. It lacks resolve. It does not lack intelligence. It lacks intent. Let this be the decade we chose differently. Let this be the decade we turned the page. Let this be the decade we ended the politics of poverty—and began the practice of justice. Copyright Business Recorder, 2025


Business Recorder
5 hours ago
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A fragile global recovery: what it means for Pakistan?
The recent IMF's World Economic Outlook 2025 presents a picture of a global economy standing steady but still shadowed by uncertainty. With global growth projected at 3.0 percent for 2025 and 3.1 percent in 2026, the headline numbers may seem encouraging. However, the underlying story reveals a more fragile situation: much of the resilience is not rooted in stable and strong long-term economic fundamentals. Rather, it is driven by front-loaded trade activities in anticipation of higher tariff, short-term tariff adjustments, a weaker US dollar, and inconsistent financial conditions, where credit access and market confidence remain unstable. Recent developments on trade policy further complicate the picture. On May 12, the US and China agreed to lower tariffs imposed after the April 2 escalation, for a 90-day period ending August 12. The US also extended its broader tariff pause for most trading partners to August 1, beyond the earlier July 9 deadline. However, warning letters issued by the US administration in July threaten even higher tariffs than those announced in April, creating renewed uncertainty. Meanwhile, legal proceedings are ongoing in the US regarding the use of the International Emergency Economic Powers Act (IEEPA) as a legal basis for these tariff actions. In the US, the passage of the One Big Beautiful Bill Act (OBBBA) in July brought short-term clarity to fiscal policy but raised concerns about long-term fiscal sustainability. Combined with tariff-induced trade disruptions, this has added to uncertainty in the overall growth outlook. The US current account balance temporarily benefits from these trade measures; the country is still facing widening fiscal deficits. It was initially expected that the combination of tariffs and larger fiscal deficits would lead to an appreciation of the US dollar. However, contrary to expectations, the dollar has depreciated further, adding another layer of complexity to the policy environment. Real GDP decreased in the US at an annualized rate of 0.5 percent. Imports and business investment surged, especially in information processing equipment. These patterns were consistent with aggressive front loading by US firms and households ahead of expected higher prices induced by tariffs. Meanwhile, China's stronger-than-expected growth at 4.8 percent, driven by exports and a depreciating renminbi closely tracking the dollar and with declining sales to the US, more than offset by sales to the rest of the world. The Euro area shows signs of stability by 1.0 percent acceleration in 2025, but only due to outliers like Ireland. The upward revision reflects a historically large increase in Irish pharmaceutical exports to the US resulting from front-loading and the opening of new production facilities. All this points to a distorted recovery; it may not last unless deeper structural reforms and trade peace are achieved. At the same time, inflation trends are sending mixed signals. While global headline inflation has ticked up slightly, core inflation has eased and now sits below 2 percent, particularly in several advanced economies. In the US, however, there are early signs that tariff pass-through and a weaker dollar are pushing up prices in import-sensitive categories. For emerging markets, this evolving inflation landscape creates opportunities for policy easing, but the path remains delicate. Compounding these economic risks are ongoing geopolitical tensions, which continue to weigh heavily on investor confidence and global cooperation. Conflicts in key regions, coupled with rising protectionism and strategic decoupling in trade and technology, are fragmenting the global economy in ways that make collective action more difficult — at a time when multilateralism is most needed. So where does Pakistan stand? Pakistan's economy is projected to grow at 2.7 percent in 2025, a slight upward revision from April's WEO forecast. Though this might appear modest, it reflects cautious optimism amid a tough environment. Pakistan's improvement is backed by macroeconomic stabilization efforts, easing inflation, and a weaker dollar that offers some space for monetary adjustments. However, Pakistan's limited export competitiveness, fragile fiscal buffers, and vulnerability to external shocks like tariff escalation or oil price volatility mean it must tread carefully. Pakistan's real GDP growth is projected to rise further to 3.6 percent in 2026, indicating a gradual recovery trajectory. While still below potential, this two-year outlook reflects growing policy space and an opportunity to build macroeconomic resilience if reforms are sustained. Moreover, the global shift towards protectionism and uncertainty in trade policies poses real threats to export-dependent economies. The IMF rightly warns that rising tariff barriers, especially sector-specific ones like on electronics or steel, could disrupt supply chains and global trade flows. For Pakistan still trying to integrate into global value chains, such fragmentation could be a major setback. Additionally, higher US term premiums and tightening global financial conditions could restrict access to foreign capital, putting further pressure on Pakistan's already strained balance of payments. Yet, amid these concerns, opportunity glimmers. If Pakistan can leverage this moment to strengthen its domestic competitiveness, diversify exports, and invest in labour skills and technology adoption, and capitalize on its strong remittance inflows, estimated at a record USD 38.3 billion in FY2025, which now serve as a backbone of Pakistan's economic resilience, it could be better positioned for a more resilient future. 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Strengthening the country's competitiveness through targeted industrial policy, smart digitalization, and skill development can help ensure that Pakistan not only survives global shocks but thrives through them; the world remains one policy misstep away from fragility. For Pakistan, the path forward lies not in betting on external stability but in building internal strength through smart reforms, targeted investment, and renewed focus on inclusive, export-led growth. Copyright Business Recorder, 2025


Business Recorder
6 hours ago
- Business Recorder
Inflation rises: policy rate cut chances dim?
EDITORIAL: The July Consumer Price Index (CPI) rose to 4.1 percent against 3.2 percent in June, 3.5 percent in May with at the lowest level for decades, registering at 0.3 percent in April 2025. The calculation or average of 2024-25 is 11.09 percent projected to decline to 4.07 percent in the current fiscal year — which is not in synch with either the projection by the Monetary Policy Committee (MPC) nor that of the International Monetary Fund (IMF). The July CPI figure, the first month of fiscal year 2025-26, inches closer to the annual projection repeatedly made by the MPC since March 2025: that inflation would be within the target range of 5 to 7 percent though the Monetary Policy Statements since then cautioned that the outlook is 'susceptible to risks emanating mainly from volatility in food prices, timing, and magnitude of energy price adjustments, additional revenue measures, protectionist policies in major economies and uncertain outlook of global commodity prices.' In this context, it is relevant to note that in December 2024 the CPI was calculated at 4.1 percent and the discount rate announced on 16 December by the MPC was 13 percent — a rate reduced to 12 percent on 27 January 2025, and to 11 percent on 5 May 2025. In other words, given the CPI projected rise, the IMF is likely to be reluctant to approve a reduction in the discount rate in the scheduled meeting on 15 September and, in the event that the CPI further rises, it is unlikely that the discount rate would be reduced in the 27 October and 15 December scheduled MPC meetings. This would make the budgetary projections of a decline in the mark-up payment component of current expenditure, accounting for 50 percent, unlikely — a decline that the Federal Finance Minister noted in the finance committee meetings debating the budget as highly likely. The IMF in the first review documents uploaded on its website in May 2025 noted that consumer prices (period average) rose by 7.7 percent in 2024-25, lower than the 11.07 percent calculated by the PBS and is projected to rise by 6.5 percent in the current year (within the range specified by the MPC). The Fund notes that 'Fiscal Year 25 inflation is also revised down, although it is projected to increase notably in the coming months due to adverse base effects, with a durable return to the target range (5 to 7 percent) expected during FY26 provided policy remains appropriately tight' — a statement that supports the contention that the policy rate is unlikely to be further reduced in months to come. It is relevant to note that any decision that violates an agreement with the Fund would lead to suspension of not only the next tranche but also to the three friendly countries refusing to roll over around 16 billion dollars, which would raise the spectre of an imminent default. The PBS noted that sugar price rose by nearly 30 percent last month, the highest in the food group, and sadly this is squarely attributable to flawed policies of the federal government that, like its predecessors, failed to deal with the inaccurate stock data provided by the sugar millers (members of the politically powerful Pakistan Sugar Millers Association) with representation in the Sugar Advisory Board. The PSMA's objective is to be allowed to export the commodity, which during years when the international price is lower than the domestic price has led to export subsidies at the cost of the taxpayers. The increase in non-food prices, including gas charges (22.91 percent), electricity charges (14.18 percent), transport services (4.77 percent due to the rise in petroleum levy) and motor fuel (4.45 percent), was due to the administrative decisions taken by the government as part of the agreed conditions with the IMF. To conclude, as inflation rises, unemployment at a high of 22 percent and wages of the 93 percent of the country's entire labour force remaining constant for the past five to six years (only the 7 percent who receive a salary from the government at the taxpayers' expense have witnessed a pay raise above inflation), poverty levels have reached an alarming 44.2 percent as per the World Bank. There is a need for the government to acknowledge these disturbing statistics and take appropriate mitigating measures to forestall any civil unrest — a risk highlighted by the Fund time and again. Copyright Business Recorder, 2025