-Central bank reserves drop to $6.7 billion|Sugar Mills Association ordered to maintain existing prices amid up-to 100,000 MT export|UN warns funds for flood-hit Pakistan to run out in weeks
-LSM drops 7.75% in October, led by Textile, Automobiles
BY ALI IMRAN
ISLAMABAD: In a move aimed at boosting foreign reserves, the Economic Coordination Committee (ECC) approved on Thursday the export of 100,000 metric tonnes of sugar.
The decision was taken in a meeting presided by Finance Minister Ishaq Dar. “The ECC considered and approved a summary of the Ministry of National Food Security and Research regarding the export of sugar during FY 2022-23 and allowed the export of sugar up to 100,000 MT,” a statement issued from the Finance Division said.
It stated that the committee would review the situation on a fortnightly basis. “The ECC further directed and PSMA (Pakistan Sugar Mills Association) committed that the existing price of sugar will not increase in the domestic market at least till January 31, 2023,” the press release added.
According to data released by the Central Bank on Thursday the foreign exchange reserves held by the State Bank of Pakistan (SBP) dropped $15 million from last week and stood at $6.7 billion as of December 9.
According to SBP data, the central bank’s reserves were last recorded below this level on Jan 18, 2019, when it had some $6.64bn.
Net foreign reserves held by commercial banks now stand at $5.9bn, meaning the country’s total liquid foreign reserves are now $12.6bn.
Besides, the United Nations on Thursday said emergency food aid for devastated flood-hit communities in Pakistan would run out in January after a funding appeal received only a third of its target.
The country was lashed by unprecedented monsoon rains over the summer that put a third of the country underwater, damaged two million homes and killed more than 1,700 people.
“It is a big concern for us to ensure food security in the coming days and weeks for the people affected by rains,” UN Resident Coordinator for Pakistan Julien Harneis told a press conference in Islamabad.
The UN had appealed for more than $816 million but said its agencies and other NGOs have only received $262 million from international donors.
“It is deeply worrying as other emergency responses around the world get a far higher percentage of response and we’re not getting that financing here,” Harneis added. The UN’s World Food Programme will run out of funds for Pakistan on January 15, said the director of its mission in the country Chris Kaye.
“We have a major and frankly, I think, very serious crisis ahead of us as we go into 2023 unless we get the required support,” he added. The number of people in need of life-saving food assistance will grow from the four million previously identified to 5.1 million during the winter, said Kaye.
Between eight million and nine million have been pushed below the poverty line by the floods. The monsoon washed away vast tracts of crops, with many already impoverished families losing their livelihoods.
While most of the floodwater has receded, some homes remain submerged, leaving families living on elevated roads or in displacement camps. Some people have been pushed into child labour, child marriage, or trafficking, the UN said.
Pakistan places highly in the ranking of nations vulnerable to extreme weather caused by climate change but is responsible for less than one percent of global greenhouse gases.
On the other hand, Large-Scale Manufacturing (LSM) declined by 7.75 per cent year-on-year in October, with the textile, machinery and equipment, and automobiles sectors shrinking, data shared by the Pakistan Bureau of Statistics (PBS) showed on Thursday.
The LSM had swung to growth in September, posting an annual increase of 0.1pc compared to August, official data showed. That was quite an improvement from July when the LSM shrank 1.4pc year-on-year. However, economists had raised concerns about an economic slowdown caused by record energy and raw material prices.
Commenting on the latest figures, former finance ministry adviser Dr Khaqan Najeeb said, “Facing a balance of payments challenge, the authorities have taken a number of measures to slow down the economy. These include tightening of monetary policy as well as administrative measures to curtail imports. These measures coupled with challenges of floods, energy shortfalls and a slowing global economy have resulted in contraction of the LSM output.”
The economic slowdown, however necessary to stabilise the economy, has been quite pronounced, Najeeb said. “It is important to ease the severe dollar liquidity crunch by increasing inflows and maintain a realistic exchange rate so that manufacturing is not disincentivised,” he added.
The main contributors to the YoY decline were automobiles (down 30.56pc); textile (24.62pc); machinery and equipment (38.01pc); wood products (81.75pc); computer, electronics and optical products (25.66pc); and pharmaceuticals (18.56pc).
On the other hand, the furniture sector grew 105.41pc, followed by football (65.46pc) and wearing apparel (34.14pc). PBS data showed that LSM dipped by 3.62pc in October over the preceding month.
Moreover, in the July-October period, LSM shrank 2.89pc compared to the first four months of the previous fiscal year.
“The production in July-October 2022-23 as compared to July-October 2021-22 has increased in wearing apparel and furniture while it decreased in food, tobacco, textile, coke & petroleum products, pharmaceuticals, rubber products, non-metallic mineral products, fabricated metal, electrical equipment, machinery and equipment, automobiles and other transport equipment,” the PBS said.
The slowdown had started in June when manufacturing activity grew only 0.2pc compared to the previous month. In the previous fiscal year, large-scale manufacturing grew 11.7pc year-on-year.
