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SBP increases interest rate by 150bps to 10 percent

F.P. Report

KARACHI: The State Bank of Pakistan (SBP) on Friday announced monetary policy for the next two months increasing the interest rate by 150 bps to 10 percent effective from December 3, according to a press statement it issued.

“The economic data released since the last Monetary Policy Committee meeting in September 2018 shows that the positive impact of recent stabilisation measures has started to materialise gradually. Particularly, the current account deficit is showing early signs of improvement,” the SBP said in its statement.

“However, the near-term challenges to Pakistan’s economy continue to persist with rising inflation, an elevated fiscal deficit and low foreign exchange reserves. These concerns are also captured in the results of recent consumer and business confidence surveys.”

The central bank said that in light of the current and evolving macroeconomic situation, the Monetary Policy Committee was of the view that further consolidation was required to ensure macroeconomic stability and therefore had decided to raise the SBP policy (target) rate by 150 bps to 10.0 percent.

It said the average headline CPI inflation during the first four months of FY19 has increased to 5.9 percent as compared to 3.5 percent in the corresponding period of FY18. “This trend is even more pronounced for core inflation, which indicates growing inflationary pressures in the economy. A disaggregated analysis reveals that this is due to both, demand and supply side factors. Considering these developments, SBP projects average headline CPI inflation for FY19 in the forecast range of 6.5–7.5 percent, above the annual target of 6.0 percent.”

The statement further said that although the recent decline in international oil prices could potentially play a positive role in slowing down the current inflation trajectory, the risks currently remain tilted towards the downside.

“Taking a lead from the recent large scale manufacturing data, economic activity is expected to witness a notable moderation during FY19 – reflecting a short term cost of pursuing macroeconomic stability. The lagged impact of the 275 basis point increase in the policy rate since January 2018 and other policy measures is likely to contain domestic demand during the current fiscal year. Furthermore, initial estimates for major crops, except wheat, are expected to fall short of levels achieved in the last year. The slowdown in commodity producing sectors is expected to limit the expansion in the services sector as well. In this backdrop, SBP projects real GDP growth for FY19 at slightly above 4.0 percent,” it read.

“On the external front, import growth decelerated to 5.8 percent during Jul-Oct FY19 from 26.3 percent recorded in the same period last year reflecting the impact of recent tightening measures. Even this growth in imports is mainly explained by an increase in the oil import bill because of higher international oil prices. Non-oil imports contracted by 4.0 percent in the first four months of FY19. This, along with a continued increase in exports and workers’ remittances, narrowed the external current account deficit from US$5.1 billion in Jul-Oct FY18 to US$4.8 billion in Jul-Oct FY19; a net improvement of 4.6 percent. Despite these positive developments, the SBP’s net liquid foreign exchange reserves remained under pressure falling to US$8.1 billion as of 23rd November, 2018 from US$9.8 billion at the end of FY18.”

Going forward, the SBP said, there is an expectation of receiving higher foreign inflows from both private and official sources during the second half of FY19. “Furthermore, recent bilateral arrangements including the deferred oil payments facility would also be available to the market from January 2019 onwards. The projected decrease in the current account deficit could be further supported by the recent decline in international oil prices will instill confidence in the foreign exchange market. These developments would help reduce pressures on the SBP’s net liquid foreign exchange reserves.”

In the first four and a half months of FY19, the central bank stated further, statistics show that almost all liquidity in the banking system is generated through an increase in the Net Domestic Assets (NDA) as the Net Foreign Assets (NFA) continued to contract.

“Besides the increase in budgetary borrowings from SBP, relatively higher credit flows to the private sector have been the major contributors to an increase in NDA. Despite contractionary monetary conditions, an increase in working capital needs due to capacity additions in the last three years and recent substantial increases in input prices, are the main reasons behind relatively higher credit flows to the private sector,” the statement read.

After considering all of these developments, the Monetary Policy Committee noted:

Continued inflationary pressure (and rising inflationary expectations) needs to be checked

Real interest rates remain low

Although narrowing, the current account deficit is still high and the fiscal deficit remains elevated

Unfolding global developments, particularly the gradual but consistent normalisation of monetary policy in the developed economies demands proactive domestic monetary management

On strategies to overcome the country’s recurrent balance-of-payments challenges in the medium term, the committee opined that the adoption of a flexible inflation targeting framework will help anchor inflation expectations with the exchange rate reflecting a demand-supply gap in the foreign exchange market, improving productivity and competitiveness of exports will have to play a prominent role to reduce the external trade deficit, and the fiscal policy will have to be proactive and play a supportive role to generate conditions for a sustainable growth path.

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COAS visits Sialkot Corps formation, appreciates operational proficiency

F.P. Report

SIALKOT: Chief of Army Staff (COAS) General Qamar Javed Bajwa said that Pakistan cannot afford to ignore its preparations and readiness for conventional response despite engagement in the ongoing Operation Radd ul Fasaad, said an Inter-Services Public Relations statement.

The army chief visited formation of Sialkot Corps during its winter collective training exercise, where he witnessed final phase of the operational exercise by an Infantry Division.

The ISPR said the COAS appreciated battle procedures and operational proficiency of the participants.

Speaking at the occasion, the COAS said: “Our experience of sub conventional operations is an add on towards our combat worthiness.”

The army chief said that he takes pride in leading an army “which by the grace of Allah Almighty has served the nation by successfully combating terrorism and is prepared to respond to any conventional threat on borders for defence of the motherland,” said the ISPR.

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Poor living conditions plague Ghazni, Uruzgan IDPs

GHAZNI (TOLONews): Dozens of families who have been displaced due to recent conflicts in Jaghori and Malistan districts in Ghazni province and Khas Uruzgan district in Uruzgan province are complaining about lack of necessary living facilities.

The families who are living in the west of Kabul said they are faced with numerous problems.

From among the displaced families of Ghazni and Uruzgan, nearly 60 of them are living at a mosque in the west of Kabul and the rest are living in other places, mostly at mosques.

The families said that due to lack of hygiene, fuel and other materials needed for the weather, dozens of them are getting sick every day.

According to the families, they want to return to their homes, but insecurity in their districts has forced them to stay in Kabul.

“The situation is not good there. The schools are closed and teachers are all here,” said Juma Khan, member of a displaced family.

“Before this there (Jaghori) was no war, but now we are afraid and cannot go back,” said Nazanin, member of a displaced family.

A young displaced boy, Farhad, said he along with his four brothers, mother and father were injured in clashes between security forces and Taliban in Jaghori district earlier this month.

“The clashes have displaced the people. Before that, I was in school and had schedule for my activities,” Farhad said.

“We were studying our lessons, but we have not attended our exams. W are here right now and we are faced woth lack of food and every day we are sick,” said Ali Ahmad, a resident of Ghazni who has been displaced to Kabul.

Although in a corner of the mosque there are separate places for the displaced families to prepare food and wash their cloths, but they said the facilities are not enough and that they will face more challenges as the weather is getting cold.

“The situation has not changed, still there is war,” said Gul Bakht, a displaced resident of Ghazni.

The families said they are supported by local people in terms of food, accommodation, clothing and other necessary items.

“At least 240 people are living here in a space of 30 to 40 square meters. It is about two weeks they are living in this space which even has not enough oxygen,” said Haji Shah Wali, a local resident.

In the meantime, a prayer ceremony was held in another part of Kabul for 52 people who, their relatives say, they lost their lives in recent clashes in Jaghori, Malistan and Khas Uruzgan districts.

“Over 50 families have held the prayer ceremony in this mosque and every family has lost their members who were mostly their breadwinners,” said Ahmad Shah Nawazi, a resident of Jaghori.

“There are lots of concerns regarding Jaghori, because if the people return to their homes, there is no guarantee over their security,” said Fahim Sadiqi, a resident of Jaghori.

While the families raised concerns over continued insecurity in their provinces that has forced them to remain in Kabul, the Interior Ministry said security will be maintained in Jaghori, Malistan and Khas Uruzgan districts.

“The situation has turned normal there. Residents of Uruzgan, Malistan and Jaghori can go back to their areas without having any worries. You saw that the leadership of government has given them an amount of money to return,” the Interior Ministry’s deputy spokesman Nusrat Rahimi said.

Statistics by the United Nations Assistance Mission in Afghanistan (UNAMA) show that around 4,000 families have been displaced due to recent fights in Ghazni and Uruzgan provinces.

Clashes in Jaghori district started last month when Taliban launched coordinated attacks from few directions on the district. Following the attack on Jaghori, Taliban attacked on the neighbor district, Malistan.

The clashes between security forces and Taliban continued for around two weeks which was followed by sharp critics from the public.

As the attack continued, hundreds of people protested in Kabul and blasted security departments over being negligent regarding the insecurity in the two districts.

Security forces then launched operations in the districts and the Afghan Defense Ministry announced that the two districts have been cleared of insurgents. However, hours after the ministry’s remarks, Taliban clashed with security forces in parts of Jaghori.

The fights in Jaghori and Malistan districts forced hundreds of families to leave their homes. A big number of the families fled to Kabul and Bamiyan provinces.

The fighting in Khas Uruzgan district started before the attacks on Jaghori and Malistan districts.

Dozens of families in Khas Uruzgan were also displaced as a result of the clashes.

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Afghans deserve peace after 4 decades of war: Khalilzad

KABUL (Monitoring Desk): The US Special Representative for Afghanistan Reconciliation Zalmay Khalilzad expressed that the “Afghan people deserve peace”. “We are in hurry to end the Afghan tragedy,” Khalilzad said in an interview with US’s PBS news agency.

Khalilzad commented that it would be good if there is some kind of agreement with the Taliban ahead of the upcoming presidential elections in 2019, “Ideally, of course it would be good to have an agreement with the Taliban first and then have the presidential election because then the Taliban also participate in a possible election or whatever roadmap that the Afghans agreed to.”

Responding to rumours of possible delay in elections he said:

“The election timeline has been announced today and if there would be an agreement among the Afghans, meaning Talibs and others to do so, it’s really a decision of Afghans to make,”.

“For peace to happen, the Afghans must accept each other and must agree on a roadmap to end the tragedy of the last 40 years in Afghanistan,” he added. Similarly for Pakistan, Khalilzad remarked that it is Afghanistan for neighbors of the region to stay in cordial relations.

While responding to a question thrown at him regarding a deadline for peace, Khalilzad remarked, “Everyone, starting with the President, would like to see the war in Afghanistan end, there be reconciliation and peace among the war functions.

We believe that the war factions, including the Taliban, they are saying that they cannot win the war and the Afghan government says that they want a political settlement. We say that we want a political settlement. We lead the international forces that are in Afghanistan so given that, it would be a moment of opportunity.”

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Salang pass closed against heavy traffic following snow

CHARIKAR (Pajhwok): The strategic Salang pass north of Kabul has been closed against heavy traffic following continued snowing, an official said on Friday.

Heavy snow and storm lashed the Salang pass in central Parwan province for two days, prompting authorities to close the highway on Wednesday for heavy traffic to avoid mishaps, the Salang district chief, Sabir Ahmadi, told Pajhwok Afghan News.

He said so far 60 centimeters of snow had been measured in southern Salang, urging drivers to equip themselves with winter gear while plying the route.

The Salang highway connects central capital Kabul with nine northern provinces.

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Shinwar residents shape grand council to help bring security

KABUL (TOLONews): Tribal elders, influential figures and the youth of Shinwar area in Nangarhar province are to form a grand council to provide the security of the Shinwar’s six districts.

In a gathering held Friday, tribal elders said they would no longer remain silent against insecurity and that the council would help security in the districts of Achin, Haska Mina, Nazian, Spinghar and Ghanikhil.

They also warned the armed opposition groups against tribal punishments (fines) if they would deny the peace suggestions offered by the council.

The decision comes after people in the six districts of Nangarhar where the Daesh terrorist group has active presence, suffered significant casualties and losses by the terrorists of the so-called Islamic State.

The participants said people in these six districts would enjoy a peaceful life if the government helps them.

They added that the council would also work to solve problems and differences among different tribes in the Shinwar area.

The council would message to the armed opposition groups to accept their peace offers, or be ready for tribal punishment.

Door Baba is the only district of the province’s 22 districts where people enjoy peace due to activities of a local council and nobody can interrupt their calm life.

People from the Shinwar area now want to follow the Door Baba residents by forming a council to provide security.

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Trump claims win as US, Mexico, Canada sign new trade deal

BUENOS AIRES (AFP): The leaders of the United States, Mexico and Canada on Friday signed a huge regional trade deal to replace the old NAFTA, denounced by President Donald Trump as a killer of US jobs.

“This is a model agreement that changes the trade landscape forever,” Trump said at the signing ceremony in Buenos Aires, on the sidelines of a G20 leaders’ summit.

Trump said negotiating the deal known in Washington as the US-Mexico-Canada Agreement, or USMCA, had seen the leaders take “a lot of barbs and a little abuse.”

But he insisted that the “incredible milestone” would aid US workers, especially in the auto industry, while putting in place “intellectual property protection that will be the envy of nations all around the world.”

Canadian Prime Minister Justin Trudeau was less effusive about the renegotiated pact, but said the USMCA would resolve the threat of “serious economic uncertainty” that “would have gotten more damaging.”

While praising the “historic” nature of the deal, Trudeau also told Trump that the progress gave “all the more reason why we need to keep working to remove the tariffs on steel and aluminum between our countries.”

Mexican President Pena Nieto, on his last day in office, called the revamped version of NAFTA important in shoring up “the view of an integrated North America with the firm belief that together we are stronger and more competitive.”

For Trump — whose G20 diplomacy is overshadowed by legal troubles back home and his abrupt cancellation of a bilateral meeting with Russian President Vladimir Putin — the signing was a victory.

He said he did not foresee a problem in getting congressional approval. “It’s been so well reviewed I don’t expect to have very much of a problem,” Trump said.

On Saturday, he will meet with Chinese counterpart Xi Jinping to address the trade war triggered by Trump’s insistence on China ending what he says have been decades of unfair trade practices.

‘Polluting legacy’

While the leaders presented a united front, Trump’s tearing up of the old NAFTA, which he has repeatedly ridiculed, was a shock to the system that prompted months of severe tensions between the long-peaceful neighbors.

Trump himself acknowledged that it hadn’t been easy, but said “battles sometimes make great friendships.”

Even at the signing ceremony, there were echoes of the uncomfortable background to the USMCA, which Trump has made exhibit number one in his case to voters that he is putting “America first.”

All three leaders stood at lecterns adorned with the US presidential seal, with Trump taking the middle position.

But while Trump proudly refers to the USMCA — a title that again puts the United States in the leading position — Trudeau pointedly called the deal being signed the “new North American Free Trade Agreement” and the “modernizing NAFTA.”

Mexico has its own version in Spanish, accentuating its name first.

For the Sierra Club, a US environmentalist group, the “hastily sealed” deal will promote Trump’s “polluting legacy for years after he leaves office (via) special handouts to corporate polluters like Chevron and ExxonMobil.”

But in a statement, US Treasury Secretary Steven Mnuchin said the updated pact “marks a critical step in modernizing and rebalancing North American trade.”

“The new agreement secures strong outcomes for farmers, ranchers, businesses, and workers across North America, including in areas such as auto manufacturing and intellectual property.”

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Indian pellet guns in Kashmir kill, blind and enrage

SRINAGAR (AFP): Doctors are fighting to save the right eye of Hiba Jan, the 20-month-old who has become an emblem of India s devastating and highly contentious use of pellet-firing shotguns in Kashmir, where a separatist conflict has raged since 1947.

India began deploying the pump-action guns, which spew 600 metal shards at high velocity at a time, in the restive part of Kashmir it controls 2010, since then killing dozens and maiming thousands.

As her husband sobbed, Hiba Jan s mother Marsala said that they were shot at trying to escape from clouds of tear gas during disturbances last Sunday.

Troops were trying to push back thousands of villagers protesting after the deaths of six Kashmiris.

“As soon as I tried to open the metal wire mesh door to get out, a soldier outside fired pellets at us,” Marsala told AFP at the SMHS hospital in Srinagar.

“Instinctively, I covered Hiba s eyes with my hand but pellets broke through the net and one lodged in her right eye,” she said, sat in a dark waiting room crowded with other victims.


Violence in Kashmir since it was split between India and Pakistan in 1947 has killed tens of thousands. This year has been the bloodiest in nearly a decade with at least 530 dead so far.

New Delhi and Islamabad claim the former Himalayan kingdom in full. India has about 500,000 soldiers in the part it controls, where the locals are fighting for independence or a merger with Pakistan.

India introduced the officially “non-lethal” 12-gauge pellet shotgun in Kashmir in 2010 when major anti-India protests and clashes with government forces left over 100 dead.

Reliable aggregate data about the number of injuries and blindings from the pellets is hard to come by.

Government data from 2017 revealed the weapon killed 13 people and injured more than 6,000 in eight months alone, including nearly 800 with eye injuries.

2016 is still recalled by locals as the year of mass blinding in Kashmir, or as the “dead eye epidemic”.

More than 1,200 victims — men, women and children — have organised themselves as an association since 2017, the Pellet Victims Welfare Trust.

Nearly 100 of them have both eyes severely damaged or are completely blinded.

Its chief, Mohammad Ashraf, blind in one eye and with 635 pellets lodged in his body and head, said they came together after meeting and sharing stories in hospital.

“We were like walking dead, emotionless and purposeless, a burden on our families,” Ashraf told AFP. Some of its members report having suicidal feelings.

The local government has paid cash compensation to a handful of victims, but the Trust depends on individual donations and support from numerous mosques in the Muslim-majority territory.

Lethal at close range

India s interior minister said in 2016 that the pellet guns are used as a last resort but refused to stop deploying it for crowd control.

The Central Reserve Police Force (CRPF), the Indian paramilitary deployed in Kashmir, told a court in 2016 that they fired about 1.3 million pellets in just 32 days.

In June this year, a report rejected by India from the UN human rights office called for a major investigation into abuses in Kashmir, highlighting the use of pellet guns as an area of concern.

Amnesty International has urged the Indian government to ban the use of pellet guns, and lawyers and other rights groups have appealed to courts, to little avail so far.

US-based Physicians for Human Rights has called their use “inherently inaccurate (and) indiscriminate”, and potentially “lethal to humans at close range”.

According to Amnesty International, Israel, Egypt and Venezuela have also used the pump action gun for crowd control but rarely against unarmed protestors.

Egyptian activist Shaimaa al-Sabbagh died after he was hit with pellets in Tahrir Square in 2015. His death led one police officer being sentenced to 15 years in prison.

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Ukraine bars Russian men from entry as tensions flare

MOSCOW (AFP): Ukraine on Friday barred Russian men aged 16-60 from entry as tensions mounted between the two countries over Moscow’s seizure of three Ukrainian ships last week.

The move came after Kiev imposed martial law in border regions this week in response to the Russian seizure of the ships and 24 sailors off Moscow-annexed Crimea.

The incident was the most dangerous in years between the ex-Soviet neighbours — who are locked in conflict over Russian-backed separatist regions — and has raised fears of a wider escalation.

“As of today, entry is restricted for foreigners — in the first instance for male citizens of the Russian Federation age 16 to 60,” the head of the border service Petro Tsyhykal said at a meeting with President Petro Poroshenko that was broadcast live.

Poroshenko said the restriction will not apply to “humanitarian cases.”

Moscow slammed the move, but said it will not impose similar restrictions on Ukrainians.

“If someone will try to mirror what is happening in Kiev, it would lead to some kind of insanity,” Russian foreign ministry spokesperson Maria Zakharova told a press briefing Friday.

She called the decision part of the “ill-conceived, wild direction” of the Ukrainian leadership.

Moscow and Kiev have traded angry accusations since Russian navy vessels fired on, boarded and captured the three Ukrainian ships last Sunday.

Courts in Crimea sentenced the 24 Ukrainian sailors to two months detention, despite international calls for their release.

US President Donald Trump scrapped a planned meeting at the G20 summit with his Russian counterpart Vladimir Putin over Moscow’s detention of the sailors.

Russia insists they crossed into Russian waters illegally, with Putin saying the border guards “fulfilled their military duty” in seizing the ships.

Crimea’s human rights ombudsman Lyudmila Lubina on Friday told Russian media that the sailors have been transferred from Crimean jails to Moscow.

Ukraine has called their detention “illegal.”

Kiev imposed martial law for 30 days in 10 regions that border Russia, the Black Sea and the Azov Sea on Wednesday.

The decision came after Poroshenko warned of a build-up of Russian tanks near Ukraine’s borders, escalating the most dangerous crisis in years between the ex-Soviet neighbours.

European leaders this week rebuffed calls from Ukraine for greater support against Russia, after Kiev urged NATO to send ships into waters disputed with Moscow.

German Chancellor Angela Merkel asked Kiev to be “sensible” following the request from Poroshenko, just hours after the European Union failed to agree to threaten new sanctions against Moscow.

But, while blaming Russia for tensions, Merkel showed no signs of being ready to back military support.

Ukraine has also urged Western governments to impose more sanctions on Russia over the incident, but there too it has seen little support.

In a statement on Wednesday, the EU strongly condemned Russia’s actions but, after three days of debate among senior officials, could not agree on a tougher response.

NATO spokesperson Oana Lungescu said the issue would be raised at next week’s regular meeting of alliance foreign ministers in Brussels, where Ukrainian Foreign Minister Pavlo Klimkin is also expected.