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IMF to revive $6 billion Pakistan funding program

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The International Monetary Fund (IMF) said on Monday it has reached an agreement with Pakistan that will help revive a stalled $6 billion funding program for the South Asian country, which faces growing economic challenges.

"The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the sixth review," the IMF said in a statement.

"The agreement is subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms," it said.

It said completion of the review would make available 750 million in IMF special drawing rights, or approximately $1.059 billion, bringing total disbursements so far to about $3.027 billion, Reuters reported.

Pakistan entered the $6 billion funding program with the IMF in 2019, however, the funding stalled earlier this year due to reforms issues.

Finance Adviser Shaukat Tarin said last week Pakistan has been in talks with the IMF over terms and conditions of the program, which he said had been made harder due to economic losses caused by COVID-19 shutdowns.

He said Pakistan had to complete five reforms before the IMF revived the funding, including legislation on central bank autonomy, withdrawal of tax exemptions and increased energy tariffs.

The agreement was struck after 45 days of discussions between the finance team and the IMF, a Pakistan finance ministry spokesman said.

"This will remove a lot of uncertainties," he said.

Pakistan has been grappling with a historical currency devaluation, high inflation and a current account deficit while investors have become nervous about the outcome of the talks between the government and the IMF.

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Zelenskiy says Ukraine must try to ensure war ends next year through diplomacy

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President Volodymyr Zelenskiy has said Ukraine must do all it can to ensure the war with Russia ends next year through diplomacy.

In a radio interview aired on Saturday, Zelenskiy conceded that the battlefield situation in eastern Ukraine was difficult and Russia was making advances. He said his Russian counterpart Vladimir Putin was not interested in agreeing to a peace deal.

Zelenskiy said U.S. legislation prevented him from meeting President-elect Donald Trump before his inauguration next January. The Ukrainian leader said he would only talk with Trump himself rather than any emissary or advisor.

"I, as the president of Ukraine, will only take seriously a conversation with the president of the United States of America, with all due respect to any entourage, to any people."

"From our side, we must do everything so that this war ends next year, ends through diplomatic means," Zelenskiy said.

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Sri Lankan president’s coalition wins majority in general election

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Sri Lankans handed Anura Kumara Dissanayake a thumping win in a snap general election, giving its new leftist president greater legislative power to pursue policies to alleviate poverty and fight graft as the country recovers from a financial meltdown.

Dissanayake, a political outsider in a country dominated by family parties for decades, comfortably won the island’s presidential election in September, Reuters reported.

But his Marxist-leaning coalition, the National People’s Power (NPP), had just three of parliament’s 225 seats before Thursday’s election, prompting him to dissolve it and seek a fresh mandate.

The NPP won 107 seats, receiving almost 62% or 6.8 million votes in Thursday’s election, putting them past the majority mark in the parliament, latest results on the Election Commission of Sri Lanka’s website showed. A two-third majority appeared within reach of the coalition.

Voters directly elect 196 members to parliament from 22 constituencies under a proportional representation system. The remaining 29 seats will be allocated according to the island-wide proportional vote obtained by each party.

“We see this as a critical turning point for Sri Lanka. We expect a mandate to form a strong parliament, and we are confident the people will give us this mandate,” Dissanayake said after casting his vote on Thursday.

“There is a change in Sri Lanka’s political culture that started in September, which must continue.”

Celebrations were largely muted, with the exception of a few NPP loyalists who lit fireworks in the outskirts of the capital, Colombo.

Just over 17 million Sri Lankans were eligible to elect lawmakers for a five-year term. A record 690 political parties and independent groups were contesting across 22 electoral districts.

Samagi Jana Balawegaya party of opposition leader Sajith Premadasa, the main challenger to Dissanayake’s coalition, won 28 seats and about 18% of the votes polled. The New Democratic Front, backed by previous President Ranil Wickremesinghe, won just three seats.

TENTATIVE ECONOMIC RECOVERY

Sri Lanka typically backs the president’s party in general elections, especially if voting is held soon after a presidential vote.

The president wields executive power but Dissanayake still requires a parliamentary majority to appoint a fully-fledged cabinet and deliver on key promises to cut taxes, support local businesses, and fight poverty.

He also has plans to abolish Sri Lanka’s contentious executive presidency but requires a two-third majority in parliament to implement it.

A nation of 22 million, Sri Lanka was crushed by a 2022 economic crisis triggered by a severe shortage of foreign currency that pushed it into a sovereign default and caused its economy to shrink by 7.3% in 2022 and 2.3% last year.

Boosted by a $2.9 billion bailout programme from the International Monetary Fund (IMF), the economy has begun a tentative recovery, but the high cost of living is still a critical issue for many, especially the poor.

Dissanayake also aims to tweak targets set by the IMF to rein in income tax and free up funds to invest in welfare for the millions hit hardest by the crisis.

But investors worry his desire to revisit the terms of the IMF bailout could delay future disbursements, making it harder for Sri Lanka to hit a key primary surplus target of 2.3% of GDP in 2025 set by the IMF.

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Biden is sending aid to help Ukraine keep fighting next year, Blinken says

NATO countries must focus their efforts on ensuring that Ukraine has the money, munitions and mobilized forces to fight effectively in 2025, Blinken said

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The Biden administration is determined in its final months to help ensure that Ukraine can keep fighting off Russia’s full-scale invasion next year, sending it as much aid as possible so that it might hold Russian forces at bay and possess a strong hand in any potential peace negotiations, US Secretary of State Antony Blinken said Wednesday.

“President Biden has committed to making sure that every dollar we have at our disposal will be pushed out the door between now and Jan. 20,” when president-elect Donald Trump is due to be sworn in, Blinken said.

NATO countries must focus their efforts on “ensuring that Ukraine has the money, munitions and mobilized forces to fight effectively in 2025, or to be able to negotiate a peace from a position of strength,” Blinken said during a visit to Brussels.

The US will “adapt and adjust” with the latest equipment it is sending, Blinken said, without providing details.

The almost three-year war has shown no signs of winding down.

Russia attacked the Ukrainian capital Kyiv with a sophisticated combination of missiles and drones for the first time in 73 days on Wednesday. 

That came a day after the Pentagon said most of the North Korean troops sent to help Moscow’s war effort are fighting to drive Ukraine’s army off Russian soil in the Kursk border region.

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