Economic & Political Weekly 03 February 2019

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World

Politics-

· US plan to end nuclear treaty with Russia sparks new arms race fears

The United States has announced its intention to withdraw from a key nuclear arms treaty with Russia, sparking fears about a potential new arms race. The White House confirmed that the US is suspending its compliance with the Intermediate-Range Nuclear Forces (INF) treaty and will officially withdraw in six months’ time. It follows warnings by President Donald Trump last year that the US was reassessing the treaty, which was signed by former president Ronald Reagan and Soviet leader Mikhail Gorbachev in 1987.“The United States has fully adhered to the INF treaty for more than 30 years, but we will not remain constrained by its terms while Russia misrepresents its actions,” Mr. Trump said, referring to the cold war-era pact. “We cannot be the only country in the world unilaterally bound by this treaty, or any other. We will move forward with developing our own military response options.”

·  Russia follows US and suspends nuclear weapons pact.

Russia has also suspended the Cold War-era Intermediate-range Nuclear Forces Treaty after a similar move by the United States, President Vladimir Putin said on 2nd February, also instructing the government not to initiate disarmament talks with Washington. Moscow’s relations with the West have been at their lowest over a number of issues, including Russia’s annexation of Crimea from Ukraine as well as allegations of it meddling with the presidential election in the US and being behind a nerve agent attack in Britain.

  • A new index has named Somalia the most corrupt country in the world, while Denmark is the least.

Somalia

The index, released by Transparency International, measures public sector corruption in 180 countries and territories, using 13 expert assessments and surveys of business executives to give each country a score from zero (highly corrupt) to 100 (very clean). The 2018 index is topped by Denmark and New Zealand, with 88 and 87 points respectively, while at the bottom is Somalia with 10, and Syria and South Sudan, both with 13. Pakistan is the 117 least corrupt nations out of 175 countries.

  • Mass street protests designed to drive Nicolás Maduro out of office and into exile have swept cities across Venezuelaagain as Hugo Chávez’s successor fights for his political life and the future of their leftist Bolivarian revolution.

Mr. Maduro, who was first elected after Chávez’s death in 2013 and returned to office last year in a vote widely regarded as manipulated, has overseen a ruinous slide in the South American country’s fortunes. Millions of citizens have fled overseas to escape hyperinflation, soaring crime and crippling shortages of food, medicine and healthcare. A sudden and unexpected challenge has emerged this year in the form of Juan Guaidó, a hitherto little-known opposition politician who shot to fame on January 23rd when he declared himself Venezuela’s rightful interim president. Since then, Mr Guaidó – whose growing coalition of international backers now includes the US, Australia, Brazil, Canada, Colombia and the European parliament – has for many Venezuelans become a desperately-sought symbol of change.

However a Venezuelan air force general has defected from the government of president Nicolas Maduro and urged people to join mass street protests across the country, as the president called for early parliamentary elections.

·  At least 21 dead as sub-zero temperatures persist in US.

At least 21 people have died in the US since Saturday over extremely cold weather, officials say. A blast of icy polar air brought dangerously low temperatures to the US Midwest on 30th January halting postal delivery and forcing residents who pride themselves on their winter hardiness to huddle indoors. At least a dozen deaths related to the weather have been reported in Michigan, Iowa, Indiana, Illinois, Wisconsin and Minnesota, according to officials and media reports.

· Zimbabwe crackdown to continue ‘for foreseeable future’, activists fear.

Activists and lawyers in Zimbabwe fear that the brutal crackdown by security forces will continue “for the foreseeable future” as authorities seek to crush all possible opposition to the ruling Zanu-PF party. Hundreds of activists and opposition officials remained in hiding at the weekend after almost two weeks of arbitrary arrests, beatings, rapes and abductions committed by police and military in the poor southern African country.

·  Gender equality awards in UAE won entirely by men.

Authorities in the United Arab Emirates have been ridiculed after it emerged that all of the winners of an initiative designed to foster gender equality in the workplace were men. Certificates and medals were awarded by Sheik Mohammed bin Rashid al-Maktoum, the vice-president of the United Arab Emirates and ruler of Dubai, in the categories of “best government entity supporting gender balance”, “best federal authority supporting gender balance” and “best gender balance initiative” at a ceremony on 27th January.

· Three dead, 174 injured as powerful tornado hits Cuba.

The president of Cuba says a tornado in eastern Havana has killed three people and injured 174 others. The Cuban capital was battered late on 27th January and in the early hours of 28th January by powerful winds and heavy rains.

·  Red scarves march in Paris to condemn ‘yellow vest’ violence.

Thousands of protesters marched through Paris on 27th January to condemn violence in the “yellow vest” movement that has rocked France for weeks with angry protests over President Emmanuel Macron’s rule. Some 10,000 people turned out for 27th January counter-demonstration, a day after an 11th consecutive Saturday of “yellow vest” demonstrations across France that saw sporadic clashes with police.

·  Philippines cathedral bombing leaves 20 dead, 81 injured.

At least 20 people have been killed and 81 injured after two bombs were detonated at a Roman Catholic cathedral on a southern Philippine island. The first bomb went off inside the cathedral on Jolo island in Sulu province, during Sunday Mass.

·  Historic French Communist newspaper falls victim to facts of capitalism.

The French Communist newspaper L’Humanité is unable to pay its bills and has been placed under judiciary supervision. A commercial court will decide on whether to liquidate it.

· Palestinian president Abbas accepts government resignation 

Palestinian president Mahmud Abbas accepted the resignation of his government on 29th January, in a reshuffle seen as a bid by the ageing leader to strengthen his position as a decade-old political split deepens. Analysts view replacing prime minister Rami Hamdallah after five years as part of Abbas’s efforts to further isolate his political rivals Hamas, who run the Gaza Strip. Hamdallah’s government will remain in place while a new administration is formed.

· U.S. Agrees to Outlines of Peace Deal with Taliban

The U.S. has agreed to the outlines of a peace deal with the Taliban that includes the withdrawal of American troops from Afghanistan in exchange for a guarantee that terrorist groups will not be permitted to take route in the vacated region,.  “We have a draft of the framework that has to be fleshed out before it becomes an agreement,” America’s chief negotiator, Zalmay Khalilzad, told the New York Times during an interview in Kabul. “The Taliban have committed, to our satisfaction, to do what is necessary that would prevent Afghanistan from ever becoming a platform for international terrorist groups or individuals.” “We felt enough confidence that we said we need to get this fleshed out, and details need to be worked out,” he added. The U.S. has also demanded that the Taliban enter into a cease-fire with the Afghan government as a precondition for the withdrawal of U.S. troops. Taliban leadership is reportedly considering the demand but has not yet agreed to it.

·  New national unity government formed in Lebanon.

Lebanon agreed a new national unity government on 31st January , ending months of wrangling between rival political factions that has added to concerns for its struggling economy and massive public debt. Western-backed Saad al-Hariri will face a big challenge in his third term as prime minister in trying to deliver reforms to address the dire state finances and unlock billions of dollars in pledged aid and loans to boost low growth.

  • Umoja Village, Samburu County, Kenya —a village of women with no man allowed to live there.

 A group of 48 women live with their children in huts protected by thorny brush to keep away intruders. When a man trespasses, they notify the local police, who either issue a warning or arrest the culprit — depending on the number of offenses. The village was started in 1990 by 15 women who became stigmatized in their communities after they were raped by British soldiers from a base at nearby Archer’s Post, a trading center bordering Samburu and Isiolo. Some of the rape survivors say their husbands accused them of bringing dishonor to their families and kicked them out. They found a piece of land, moved there and named it Umoja — Swahili for unity. It has since grown into a refuge, welcoming women escaping abusive marriages, female genital mutilation, rape and other forms of assault. Even some women whose husbands died have found solace and a home there.

  • Week after week, temperatures have continued to rise with all of Australia’s eight states and territories affected. Across the country, roads have melted, infrastructure has failed and both animals and fish have died en masse.

The southern city of Adelaide experienced its hottest day on record on January 24, reaching 46.6 C (116 F). On ist February Australia’s Bureau of Meteorology announced it had been the country’s hottest January on record, describing the weather as “unprecedented.” In temperatures above 40 C (104 F) the human body begins to experience heat exhaustion. Once the temperature exceeds 41 C (105 F), the body starts to shut down. Health warnings have been issued throughout Australia advising people to stay indoors during the hottest part of the day, minimize physical activity and keep hydrated.

·     Australian monsoon rains cause ‘once-in-a-century’ floods.

Once-in-a-century flooding in part of the eastern Australian state of Queensland looks set to worsen as the nation’s weather bureau on 2nd February warned of more heavy rain in the area.

Some residents have already been evacuated after days of monsoon rains lashed the region around the coastal city of Townsville in north Queensland, a spokesman for the Bureau of Meteorology said.

  • Glaciers in the Canadian Arctic have melted enough to reveal land that was hidden for the last 40,000 years or more, researchers say.

The Arctic might be having its warmest century in at least 115,000 years, according to a study published this month in the journal Nature Communications. “It’s not just a fluke,” University of Colorado Boulder doctoral researcher Simon Pendleton, lead author of the study, told CNN. “These ancient landscapes are being revealed over a broad geographic region on Baffin Island.” For this study, scientists plucked 48 mosses and lichens — still rooted in the spots where they were killed by expanding ice millennia ago — from the edges of 30 retreating ice caps on Canada’s Baffin Island during summers from 2010 to 2015.Using radiocarbon dating, the researchers found that most of the plants had been under the ice for at least 40,000 years, Pendleton said.

  • Can Norway win the global race to build a ‘floating tunnel’?

If successful, Norway could win a global race against countries including China, South Korea and Italy, which are projects. The Norwegian Public Roads Administration (NPRA), the governmental body responsible for the project, aims to complete construction by 2050.

  • 10 kidnapped children found dead in Tanzania with missing body parts, ministry says.

Ten children kidnapped in Tanzania have been found dead with their body parts mutilated, authorities told CNN on 28th January. Tanzania’s deputy health minister Faustine Ndugulile said all 10 children had been missing since December in Njombe district, southwest Tanzania. Their bodies were discovered last week after police launched a search operation in the area.

  • Chinese methane emissions are rising at an alarming rate despite recent government regulations aimed at curbing the climate-changing pollutant. 

A study released in the journal Nature on 29th January shows a steady growth in China’s methane emissions, primarily from the country’s massive coal mining sector, undermining Beijing’s claims to be leading the world on climate change action.”Methane emissions in China appear to be increasing, business as usual. We were unable to detect any impact of regulations on the country’s methane emissions,” the report’s lead researcher Scot M. Miller told CNN.

·         Boko Haram kills at least 60 in attack on Nigerian town.

The militant group Boko Haram killed at least 60 people when it renewed its attack on the northeast Nigerian town of Rann on 28th January, Amnesty International said on ist February. The attack was one of the bloodiest in the group’s decade-long insurgency. It came two weeks after Boko Haram had overrun the same town, driving out Nigerian soldiers and marking its re-emergence as a force capable of taking army bases.

Economy-

  • Global indices as of IST February 2019 as compared to January 25, 2019.
Global indices as of ist February 2019
Name Current Value Prev.Close
US MARKETS
 NASDAQ (Feb 01) 7,263.87 7281.74     
EUROPEAN MARKETS
 FTSE (Feb 01) 7,020.22 6968.85     
 CAC (Feb 01) 5,019.26 4992.72     
 DAX (Feb 01) 11,180.66 11173.10     
ASIAN MARKETS
 NIKKEI 225 (Feb 01) 20,788.39 20773.49     
 STRAITS TIMES (Feb 01) 3,188.68 3190.17     
 HANG SENG (Feb 01) 27,930.74 27942.47     
 TAIWAN WEIGHTED (Jan 30) 9,932.26 9931.59     
 KOSPI (Feb 01) 2,203.46 2204.85     
 SET COMPOSITE (Feb 01) 1,651.40 1641.73     
 JAKARTA COMPOSITE (Feb 01) 6,538.64 6532.97     
 SHANGHAI COMPOSITE (Feb 01) 2,618.23 2584.57     
 SGX NIFTY (Feb 02) 10,885.00 10911.50    

 

 

Global indices as of 25th January 2019
Name Current Value Prev.Close
US MARKETS
 NASDAQ (Jan 25) 7,164.86 7073.46
EUROPEAN MARKETS
 FTSE (Jan 25) 6,809.22 6818.95
 CAC (Jan 25) 4,925.82 4871.96
 DAX (Jan 25) 11,281.79 11130.18
ASIAN MARKETS
 NIKKEI 225 (Jan 25) 20,773.56 20574.63
 STRAITS TIMES (Jan 25) 3,202.25 3190.73
 HANG SENG (Jan 25) 27,569.19 27120.98
 TAIWAN WEIGHTED (Jan 25) 9,969.61 9877.12
 KOSPI (Jan 25) 2,177.73 2145.03
 SET COMPOSITE (Jan 25) 1,623.62 1620.53
 JAKARTA COMPOSITE (Jan 25) 6,482.84 6466.66
 SHANGHAI COMPOSITE (Jan 25) 2,601.72 2591.69
 SGX NIFTY (Jan 26) 10,840.50 10794.50

 

Pakistan

Politics

  • A 5.8 magnitude earthquake jolted several cities in the northern parts of the country — including Peshawar, Islamabad, Rawalpindi, Lahore, Kohat, Swat, Mianwali and Sargodha — on February 02 evening.

The tremors were also felt in parts of North India. According to the Pakistan Meteorological Department’s National Seismic Monitoring Centre in Islamabad, the earthquake took place at a depth of 208 kilometers in the Hindu Kush Region in Afghanistan at a magnitude of 5.8 on the Richter scale.

·         Pakistani court dismisses petition against Christian’s blasphemy acquittal.

Asia Bibi, the Christian farm laborer who spent eight years on death row in Pakistan for blasphemy, is expected to leave the country after the Supreme Court upheld her acquittal. The court on 29th January rejected a challenge to October’s ruling brought by an extreme Islamist party, which led violent protests across the country in the autumn and called for Bibi to be killed.

 

  • The Supreme Court on 29th January regretted that the Lahore High Court (LHC) while deciding the case of Khadija Siddiqui — a survivor who was stabbed 23 times by a fellow student— had failed to demonstrate the requisite care in examining the case record, which resulted in a glaring misreading of the record.

 

“We expect the high court to do better in this regard in future,” Chief Justice Asif Saeed Khosa cautioned in a detailed judgment he has authored. On Jan 23, a three-judge Supreme Court bench headed by the chief justice while accepting the plea of Khadija Siddiqui had ordered police to arrest her tormentor Shah Husain and send him straight to prison from the courtroom. Ms Siddiqui was stabbed 23 times by Shah Husain on May 3, 2016, near Lahore’s Shimla Hill where she, with her driver, had gone to pick up her younger sister from school. Now Ms Siddiqui is doing Bar-at-Law at the City Law School of the City University London. Shah Husain is in final year of law.

  • Six members of a family were killed in a “mortar shell” blast inside their residence in Khyber Pakhtunkhwa’s Bannu district on 29th January evening.

According to District Police Officer Bannu Yasir Afridi, the explosion took place inside a room of the house situated within the limits of Haved police station. It occurred when a 60-millimetre mortar shell exploded inside the house, according to KP police spokesperson Waqar Khan.

  • The Supreme Court on 31st January overturning the Peshawar High Court’s earlier acquittal of a murder suspect handed him a life sentence for the killing of a teenager and ordered his immediate arrest.

A three-member bench headed by Chief Justice of Pakistan Asif Saeed Khosa heard a review petition against the PHC’s acquittal of Hazrat Ali ─ who had been sentenced for life by a trial court ─ in the murder of a 17-year-old boy. Justice Khosa, overturning the PHC’s decision, observed that “none of the witnesses had spoken the truth in this case.” As a result, a man — who was a teacher — his wife and their four children were killed.

  • Amid tight security, seven victims of 21st January terrorist attackon the office complex of the Zhob Range DIG in Loralai were buried in their native villages on 30th

The bodies of two other victims were sent to their natives places in Qila Saifullah and Kohat. A majority of the victims belonged to different villages located near Loralai. Nine people — five civilian employees, three policemen and a candidate — were killed and 21 others suffered injuries in suicide bombing and firing by militants when hundreds of candidates were busy in written test for recruitment in police force.

  • Former prime minister Nawaz Sharif was shifted to the Services Hospital from the Kot Lakhpat Jail on Saturday after Punjab Chief Minister Usman Buzdar gave the green signal for the transfer.

A special medical board constituted to monitor Sharif’s health had recommended that the former premier be shifted to a hospital from prison. The recommendation was made in the board’s report to the home department. “Superintendent of jail will ensure early shifting of the prisoner back to the Central Jail Lahore, in consultation with respective hospital authorities, after requisite medical examination/investigation/management, under fool proof security arrangements,” read a notification issued by the Punjab home department.

 

Economy –

  • Encouraged by attractive bids, the government on 29th January allowed additional wheat exports of 500,000 tones and gave a go-ahead to raise Rs200 billion funds from Islamic banks for partial cash settlement of the circular debt now well above Rs1.415 trillion.

The decisions were taken at a meeting of the Economic Coordination Com­mittee (ECC) of the cabinet presided over by Finance Minister Asad Umar. It rejected approval to the budget of National Telecommunication Corporation due to unsatisfactory explanations to various questions.

  • The SBP has issued its first Quarterly report on economy for FY 2019.

According to the report improvements in external sector has worsened along with lingering inflationary pressures. Moreover, the LSM also contracted by 1.7 per cent during the quarter, versus a growth of 9.9pc in 1QFY18. Pointing out the mismatch between revenues and expenditures, the SBP says even after the 45.5pc drop in public sector projects, the fiscal deficit remained high, clocking in at Rs541.7 billion, recording a jump of Rs100bn from same period last year. The expenditures grew by 11pc during the quarter compared to 13.5pc in corresponding quarter last year Highlighting external pressures, the report remarks that the current account deficit declined slightly for the first time in two years, however “ it stayed at an elevated level of $3.6bn” during the quarter.  The central bank acknowledged the rising challenges in debt and monetary management due to behavioral interplay between scheduled banks and the government noting that “from the monetary management’s perspective, near-flattening of the yield curve and excessive government borrowings from SBP poses major challenges. However, in order to revert to a stable macroeconomic environment over the medium term, the report underlined the importance of continuation of the right mix of policies laying particular emphasis on initiating the structural reforms in order to take the growth momentum forward.

  • State Bank of Pakistan (SBP) Governor Tariq Bajwa on 31st January announced a 25 basis point increase in the policy rate, bringing it to 10.25 per cent effective from Feb 1.

Bajwa explained that the Monetary Policy Committee had noted that the impact of the government’s stabilization measures were “gradually unfolding’, and that consumer confidence had improved amidst reduced economic uncertainty. “But the fiscal deficit is yet to show signs of consolidation despite a reduction in Public Sector Development Program spending,” the SBP chief said. “A marked shift in the pattern of government borrowing from scheduled banks entails inflationary concerns,” he explained, adding: “Even as stabilization measures gradually work through the economy, underlying inflationary pressures persist.” Bajwa said that although a marginal increase in exports and healthy growth in remittances had helped contain the current account deficit, “it still remains high”. “The financing of the current account deficit nevertheless remained challenging as foreign direct investment, private loans, and official inflows were insufficient to completely finance the deficit,” he added. “Thus, a significant part of the current account deficit was managed by using the country’s own resources, which reduced the State Bank’s net liquid foreign exchange reserves to $7.2 billion by end of Dec 2018,” the central bank chief explained. “However, the realization of bilateral official inflows in the last few days has helped increase the SBP’s net liquid foreign exchange reserves to $8.2bn, and the country’s foreign exchange reserves to $14.8bn as of the Jan 25,” he said. “Based on the above, and after detailed deliberations, the MPC decided to raise the policy rate by 25 basis points to 10.25pc effect from Feb 1, 2019,” Bajwa said.

  • The country’s fiscal deficit is likely to reach above six per cent of GDP during this fiscal year as the government has failed to introduce measures to curb expenditure and increase revenues in the supplementary finance bill announced last week, noted Moody’s on31st January.

The mini-budget announced on 23 January will foster exports and support the country’s manufacturing sector but it has ignored spending cuts or measures to increase revenues eroding government’s ability to meet the deficit target of 5.1pc, added the note. The financial services company expects the fiscal deficit to widen to 6pc as the revenue is expected to remain below earlier projections given placid economic growth and new incentives to boost revenues before narrowing to 5pc of the GDP by FY21.

  • The government on 31 January launched five-year dollar-denominated diaspora bonds at an interest rate of 6.75%, which is higher than the price at which Pakistan had issued the last two bonds of same tenor. Officially called as Pakistan Banao Certificates, the government invited the overseas Pakistanis to invest in three-year paper at 6.25% interest rate and in five-year bonds at 6.75% interest rate.

The offered rates are also higher than the previous two five-year bonds, which were issued in 2016-17 and 2017-18. If returns on their investment are procured in rupees than they would get 1% premium, the SBP governor told the ceremony. This means the rate for three-year bond will be 7.25% and for five-year 7.75%.

 

F.C Exchange Rates of PKR as of 2nd February 2019 as compared to 26th January 2019
Countries PKR rate as of 26th January 2019 PKR rate as of 2nd February 2019
U.S.A. 139.50 138.40
U.K. 182.50 181.50
Euro 158.30 158.50
Japan 1.2800 1.2800
Saudi Arabia 37.15 36.85
U.A.E. 38.10 37.85

 

Pakistan Stock Exchange Indices as of IST February 2019 As Compared To 25th January 2019

Position as of 1ST February 2019

Symbols KSE100 PSX-KMI
Advanced (Curr.) 210
41121.13
19833.86
Declined (High) 107
41207.97
19878.14
Unchanged (Low) 13
40793.36
19720.40
321.60
100.00
Position as of  25th January 2019

Symbols    KSE100                     PSX-KMI
Advanced (Curr.) 115
40264.78
19372.25
Declined (High) 168
40379.95
19510.63
Unchanged (Low) 12
40165.72
19358.27
Total (Change) 295
-24.38
-115.86

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