Pak president's no to ordinance, Fitch sees possibility of default

Pakistan's President Dr Arif Alvi has turned down the federal government’s request to approve an ordinance, seeking to imposing new taxes to raise additional revenue in line with the conditions of International Monetary Fund (IMF) to revive the stalled $6.5 billion bailout package. As per The Express Tribune report, Finance Minister Ishaq Dar on Tuesday called on the president and apprised him of the progress in talks with the IMF and all modalities that had been agreed upon.the president advised that it would be more appropriate to take the parliament into confidence on this important subject, and that a session be called immediately so that the bill was enacted without delay.

Meanwhile, the Fitch Ratings agency on Tuesday downgraded Pakistan’s long-term foreign-currency issuer default rating (IDR) to ‘CCC-’, from ‘CCC+’ due to worsening liquidity, political volatility and decline of foreign-exchange reserves to critically low levels.A CCC minus rating denotes a very high level of default risk. Fitch explained that the downgrading reflects further sharp deterioration in external liquidity and funding conditions and the decline of foreign exchange reserves to critically low levels. It said that shortfalls in revenue collection, energy subsidies and policies inconsistent with a market-determined exchange rate have held up the 9th review of Pakistan’s IMF programme, which was originally due in Nov 2022.Pakistan is battling a serious economic crisis as the prices of all utilities have gone up. Prices of loose milk have gone up to Pakistani 210 rupees per litre while chicken has shot up to 780 rupees per kg.