The pharmaceutical industry in Pakistan is struggling to replenish its supplies amid a shortage of essential life-saving drugs and other surgical instruments

Pakistan Faces Shortage Of Medicines, Surgical Equipment

The pharmaceutical industry in Pakistan is struggling to replenish its supplies amid a shortage of essential life-saving drugs and other surgical instruments as the country is facing an economic crisis, The Express Tribune reported.

The economic crisis faced by Pakistan is caused by a number of factors, including the refusal of commercial banks to issue new Letters of Credit (LCs) on account of a shortage of US dollars that have impacted drug companies, as per The Express Tribune report.

Pharmaceutical companies have been facing difficulty to maintain stocks of essential life-saving drugs. As experts have warned of the economy “sinking into near-paralysis”, top pharmaceutical firms are facing difficulty to get raw materials to manufacture drugs while being forced to reduce production as patients suffer in hospitals, The News International reported citing sources.

The crisis comes as Pakistan’s foreign exchange reserves touched an eight-year low of USD 4.3 billion and talk with the International Monetary Fund (IMF) hang in balance.

Due to the ongoing economic crisis, Pakistan is unable to buy basic imports, including medicine and active pharmaceutical ingredients (API), several vaccines, and biological products for the treatment of cancer and other diseases, as per the news report.

As per the news report, the operation theatres are left with less than a two-week stock of anesthetics which is important for highly sensitive surgeries. Pharmaceutical companies are left with raw materials that will last for only four to five weeks, The Express Tribune reported.

Stakeholders of medical companies have called on Pakistan Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar to address their concerns and call on the state bank as well as commercial banks to resolve their issues.

Medical companies have warned that the crisis could create further severity as the raw materials needed for creating medicines have been held up at the Karachi port due to a shortage of dollars. Shipping containers with essential food items are stuck at the port in Karachi for weeks.

Meanwhile, interest expenses in Pakistan have increased to Pakistani Rupees (PKR) 2.57 trillion in the first half of this fiscal year, amounting to 65 percent of the annual debt servicing budget, and is forcing the Pakistan government to reduce its other expenses, except those on defense, The Express Tribune reported. The development comes amid the government’s reluctance to opt for debt restructuring.

With a net income of PKR 2.5 trillion, Pakistan’s total spending on debt servicing and defense reached over PKR 3.2 trillion more than the government’s net income, which indicates that Pakistan will remain debt trapped as the tax collection has increased, however, the expenses have not been reduced, as per the news report.

In comparison to a massive expenditure of PKR 3.2 trillion on debt servicing and defense, only PKR 147 billion was spent on development, the report said, adding that the expenditure on development is 49 percent less in comparison to the previous fiscal year. (ANI)

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China Acting As An Impediment To Sri Lanka’s IMF Deal

The uncertainty and lack of clarity regarding the extent and time frame of China’s restructuring of its debt to Sri Lanka are delaying Sri Lanka’s bailout package from the IMF, according to Asian Lite.

Debt restructuring is one of the prerequisites of the IMF’s bailout package for Sri Lanka. The process is, however, getting delayed due to Sri Lanka’s dire situation and a delay in concrete commitment from China, the island nation’s largest bilateral lender. Sri Lanka seems to be missing its December deadline.

According to the Opposition legislator from the Tamil National Alliance, Shanakiyan Rasamanickam, China is acting as an impediment to Sri Lanka’s IMF deal and has been paying bribes to force down unnecessary projects.

“If China is truly Sri Lanka’s friend, ask the Chinese to help with the [debt] restructuring and the IMF programme.” Referring to Rajapaksa-era mega infrastructure projects in Hambantota and Colombo funded by the Chinese, the Batticaloa MP, as quoted by Asian Lite, said: “That is not China being Sri Lanka’s friend, that is China being Mahinda Rajapaksa’s friend.”

The Chinese Embassy refuted the allegations and claimed that bilateral negotiations are on after working teams of different Chinese banks visited the island nation. Rasamanickam’s allegations are incorrect, said the embassy.

The Chinese investments under the BRI and bilateral projects with other countries have always been seen with suspicion for their lack of economic feasibility as well as debt-creating potential. Now as Sri Lanka is negotiating with China for debt restructuring and China has claimed to have shown readiness for restructuring its debt to Sri Lanka, “It will be the first time a major Asian Belt and Road Initiative borrower is going through the process… China’s approach to Sri Lanka’s debt restructuring and the extent of debt relief offered will set a precedent for China’s role and behaviour in other countries as well,” said the research report, according to Asian Lite.

Another country, Djibouti, at the heart of China’s multibillion-dollar “Belt and Road Initiative,” is struggling under mounting financial pressure and has suspended debt repayments to China, its main bilateral creditor, reported European Times.

Djibouti, a tiny nation at the intersection of the Red Sea and the Gulf of Aden, owed a total of USD 2.68 billion to external creditors at the end of 2020, according to the World Bank.

The African country struggling to repay Chinese loans has brought criticism to the Chinese model of project financing for creating dept traps for developing countries.

In its latest report on Djibouti, the World Bank stated that in 2022, Djibouti’s debt servicing costs tripled to USD 184 million from USD 54 million in 2021. A further increase to USD 266 million has been predicted for 2023.

The International Monetary Fund (IMF) after considering the sharp projected increase in Djibouti’s external debt servicing, in late 2021, declared Djibouti’s debt as being unsustainable. (ANI)

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Pakistan's total debt

Pak’s Debt Surges To Rs 12 Trill In First Quarter

Pakistan’s total debt and liabilities spiked by Pakistani Rupees (Rs) 12 trillion or 23.7 percent in the first quarter of the current fiscal year, the loan trance from the International Monetary Fund and the devaluation of the rupee pushed the numbers up significantly, The News International reported citing analysts.

In the fiscal year, 2022-2023, in July-September the debt and liabilities stood at Rs 62.46 trillion which is more than the same period of last fiscal year, accounting for Rs 50.49 trillion.
The country’s debt rose 24.7 percent to Rs59.37 trillion, while total liabilities increased 23 percent to Rs3.56 trillion.

Fahad Rauf, head of research at Ismail Iqbal Securities said the increase in the debt was mainly by external sources. “Mostly the IMF [International Monetary Fund] loan tranche of USD 1.2 billion and the impact of the rupee depreciation on overall external debt.”

The government’s domestic debt increased by 18.7 percent to Rs 31.40 trillion. The foreign debt stood at Rs 17.99 trillion in July-September FY2023, 30.2 percent up from a year earlier, according to the figures from the State Bank of Pakistan (SBP), according to The News International.

Total external debt and liabilities jumped 33.4 percent to Rs 28.94 trillion.

“Managing debt obligations is one of the biggest challenges facing the government,” said Mustafa Mustansir, head of research at Taurus Securities.

However, there are concerns about the conclusion of the ninth review of the IMF’s bailout package.

Although the date has not yet been set, the IMF staff mission is anticipated in Islamabad by the end of this month because the Fund needs Pakistan to make necessary modifications first.

The government is requesting some exceptions on performance criteria due to flood losses and the Fund’s insistence on maintaining the agreed tax-to-GDP ratio of at least 11 percent.

The delay in the IMF’s review is making foreign investors more anxious, reported The News International.

Meanwhile, Pakistan’s risk of default, measured through the five-year currency default swap (CDS) index, on Monday increased by 4.2 percentage points reaching a new high at 64.2 percent. The development indicates that Pakistan did not have the resources to make the growing import payments and foreign debt repayments in time, The Express Tribune reported.

Pakistan is due to repay USD 1 billion against a five-year Sukuk (Shariah-compliant bond) which is scheduled to mature on December 5, 2022. According to Topline Research, the yield (rate of return) on the Sukuk increased by 964 basis points in a day to 69.96 percent. The increase in the yield is hinting that investors were thinking that Pakistan might default on the $1 billion Sukuk.

State Bank of Pakistan (SBP) Governor Jameel Ahmad has said that Pakistan had foreign exchange reserves of “over USD 9 billion, which are more than enough” for paying imports and repaying foreign debt.

The five-year CDS indicated a high risk of default after Pakistan announced that Saudi Arabia’s Crown Prince Mohammad bin Salman had postponed his visit to Islamabad, as per reported by The News International. (ANI)

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Bright Spot In A Dark Horizon'

IMF Praises India As ‘A Bright Spot In A Dark Horizon’

The International Monetary Fund on Thursday praised India as a “bright spot in a dark horizon” due to the rapidly-growing economy even in these difficult times, adding that the country will leave a mark on the world for years to come during next year’s presidency of G20.

Addressing a press briefing, IMF’s Managing Director, Kristalina Georgieva said, “India deserves to be called a bright spot in this otherwise dark horizon because it has been a fast-growing economy, even during these difficult times, but most importantly, this growth is underpinned by structural reforms. “

The top IMF official made this comment on the sidelines of annual meetings of the Boards of Governors of the International Monetary Fund (IMF) and the World Bank Group (WBG) in Washington.

Praising India’s digital economy, Georgieva said that the remarkable success of digitisation in India is the digital ID that provides all services and support on the basis of “digital access.” She further added that digitisation is a huge factor in India’s success.

Responding to a question regarding her expectation from India while heading the G20 group, IMF Managing Director said, “The country (India) is now stepping into taking the lead on G20 from that position of strength which makes me strongly believe that we will see India leaving a mark on the world for years to come during next year’s presidency.”

The IMF top official said that India will leave a mark in the areas of digitalisation and digital money. She further added, “We know that we need regulation of crypto, we know that we need some more attention to cross border payments, we are proposing public investments in the infrastructure of the cross border payment platform.”

While addressing the presser, Georgieva said that India can bring more fairness to IMF. It has been a very strong voice and also financially strong, and could bring fair representation in IMF.

Talking about renewable energy, IMF’s Managing Director said, “India has really leapfrogged in terms of solar and other forms of renewable energy. So I very much look forward to next year and I am sure that it would make the people of India, the whole nearly one point four billion of them very proud.”

Answering a question about the G20 representative, IMF top official said, “India is the next chair of G20 and they are very committed to a strong quarter-based well resourced IMF and we might see more engagement that comes under their leadership.”

This praise for India’s economy comes as the country continues to maintain its position as the fastest-growing major economy in the world.

In its latest World Economic Outlook report, the IMF noted, “The outlook for India is for growth of 6.8 per cent in 2022, a 0.6 percentage point downgrade since the July forecast, reflecting a weaker-than-expected outturn in the second quarter (April-June) and more subdued external demand.”

In its July 2022 report, the IMF had pegged India’s GDP growth for 2022 at 7.4 per cent. The IMF’s latest projection on India’s GDP growth is lower than the 7 per cent growth pegged by the Reserve Bank of India (RBI) for the financial year 2022-23. (ANI)

US Inflation Signs Of Cooling Off

Indian Forex Reserves Dip By $4.85bn, Lowest Since July 2020

India’s foreign exchange (forex) reserves slumped by $4.854 billion to $532.664 billion for the week ended September 30, the lowest level since July 2020, as the Reserve Bank of India (RBI) used its kitty to defend the rupee, which has hit record lows.

This is the lowest level of India’s forex reserves since July 24, 2020. The forex reserves had slumped by $8.134 billion during the week ended September 23, 2022, the previous reporting week.

As per the Reserve Bank of India’s weekly statistical supplement, foreign currency assets, which are the biggest component of the forex reserves, dipped by $4.406 billion to $472.807 billion during the week ending September 30.

Expressed in US dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-dollar currencies like the Euro, UK’s Pound Sterling, and Japanese Yen held in the foreign exchange reserves.

The value of gold reserves dropped by $281 million to $37.605 billion during the week ended September 30.

The value of India’s Special Drawing Rights (SDRs) with the International Monetary Fund declined by $167 million to $17.427 billion during the week under review, the RBI data showed.

However, India’s reserve position in the International Monetary Fund (IMF) remained unchanged at $4.826 billion during the week ended September 30, as per the RBI Weekly Statistical Supplement. (ANI)

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