Traders observe nationwide strike against high power bills, taxes: After Fitch, Moody’s lifts Pakistan’s rating

ISLAMABAD: On the call of Jamaat-e-Islami (JI) Ameer Hafiz Naeemur Rehman, traders across Pakistan observed a strike on Wednesday against the government’s economic policies, particularly high electricity bills, oppressive taxes, a controversial tax scheme and implementation of IMF policies in the country.

However, a good news was also received on the economic front when Moody’s Rating Agency upgraded Pakistan’s local and foreign currency issuer amid expectations that the government would be able to lower liquidity and external vulnerability risks further.

A statement issued by Moody’s rating agency on Wednesday stated that it upgraded the Government of Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa2 from Caa3. “Our earlier concerns over very high risks of a balance of payments crisis materialising have diminished, although risks remain elevated as Pakistan continues to rely on timely and sufficient disbursement of financing from official partners. There is now greater certainty over Pakistan’s sources of financing to meet its needs over the next two to three years, following the IMF staff-level agreement reached on 12 July 2024.

“We expect the IMF Board to give its approval for the new 37-month Extended Fund Facility (EFF) worth $7 billion in the next few weeks. The IMF programme is likely to support Pakistan in of financing from official partners. There is now greater certainty over Pakistan’s sources of financing to meet its needs over the next two to three years, following the IMF staff-level agreement reached on 12 July 2024.

“We expect the IMF Board to give its approval for the new 37-month Extended Fund Facility (EFF) worth $7 billion in the next few weeks. The IMF programme is likely to support Pakistan in unlocking additional financing from other multilateral and bilateral partners,” it added.

“Concurrently, the outlook for the Government of Pakistan is changed to positive from stable. The upgrade to Caa2 reflects Pakistan’s improving macroeconomic conditions and moderately better government liquidity and external positions, from very weak levels. Accordingly, Pakistan’s default risk has been reduced to a level consistent with a Caa2 rating. There is now greater certainty on Pakistan’s sources of external financing, following the sovereign’s staff-level agreement with the IMF on 12 July 2024 for a 37-month Extended Fund Facility (EFF) of $7 billion. We expect the IMF Board to approve the EFF in the next few weeks. Pakistan’s foreign exchange reserves have about doubled since June 2023, although they remain below what is required to meet its external financing needs. The country remains reliant on timely financing from official partners to fully meet its external debt obligations. Pakistan’s Caa2 rating continues to reflect Pakistan’s very weak debt affordability, which drives high debt sustainability risk.

“We expect interest payments to continue absorbing about half of government revenue over the two to three years. The Caa2 rating also incorporates the country’s weak governance and high political uncertainty. The positive outlook reflects a balance of risks skewed to the upside. It captures the possibility that the government is able to further lower its government liquidity and external vulnerability risks, and achieve a better fiscal position than we currently expect, supported by the IMF programme.

“Sustained reform implementation, including revenue-raising measures, can increase the government revenue base and improve Pakistan’s debt affordability. A record of completing IMF reviews on a timely manner would also allow Pakistan to continually unlock financing from official partners, sufficient to meet its external debt obligations and support further rebuilding of its foreign exchange reserves. The upgrade to Caa2 from Caa3 rating also applies to the backed foreign currency senior unsecured ratings for The Pakistan Global Sukuk Programme Co Ltd. The associated payment obligations are, in our view, direct obligations of the Government of Pakistan,” added the statement.

“The outlook for The Pakistan Global Sukuk Programme Co Ltd is positive. Concurrent to today’s action, we have also raised Pakistan’s local and foreign currency country ceilings to B3 and Caa2 from Caa1 and Caa3, respectively. The two-notch gap between the local currency ceiling and sovereign rating is driven by the government’s relatively large footprint in the economy, weak institutions and high political and external vulnerability risk. The two-notch gap between the foreign currency ceiling and the local currency ceiling reflects incomplete capital account convertibility and relatively weak policy effectiveness. It also takes into account material risks of transfer and convertibility restrictions being imposed.” Prime Minister Shehbaz Sharif expressed his satisfaction at Moody’s upgrade of Pakistan’s credit rating and attributed the achievement to the hard work of the economic team and the blessings of Allah Almighty.

On the other hand, the countrywide shutter-down strike call received broad support from various political parties, including Pakistan Tehreek-e-Insaf (PTI), Jamiat Ulema-e-Islam Fazl (JUIF), as well as associations like the Karachi Chamber of Commerce and Federation of Pakistan Chambers of Commerce & Industry (FPCCI).

A complete shutter-down strike was observed by the traders community in the twin cities of Rawalpindi and Islamabad. In an unprecedented show of unity, the traders community observed strike against the government’s ‘Tajir Dost Scheme’ and the taxes imposed in electricity bills and kept their shops and other businesses closed at big and small shopping areas and markets. Markazi Tanzeem-e-Tajran Pakistan President Muhammad Kashif Chaudhry congratulated traders community on the highly successful shutter-down strike. “We will also give a call for wheel-jam strike if a notification to end Tajir Dost Scheme is not issued,” he said.

JI Central Naib Ameer Mian Muhammad Aslam, accompanied by Islamabad Ameer Nasarullah Randhawa, visited various shopping areas of Islamabad and talked to traders sitting outside their closed shops. In Rawalpindi also, all shopping areas including Sadar Market, Murree Road, Sarafa Bazaar, Commercial Market, Lalkurti, Raja Bazaar Anarkali Bazaar, Liaquat Road, DAV College Road and all adjoining markets, Urdu Bazaar, Bohar Bazaar remained closed. JI Rawalpindi Ameer Arif Shirazi, accompanied by other leaders and traders representative Sharjeel Mir, visited different shopping areas and thanked traders leaders for supporting the strike call. Protest rallies were held at Raja Bazaar, Jamia Masjid Road, Commercial Market, Tench Bhatta, Saddar, Chur and several other areas in Rawalpindi, as well as at Karachi Company, Aabpara, Melody, Bari Imam and several other localities in Islamabad.

All Pakistan Traders Association (Islamabad) President Ajmal Baloch, in his address to a rally, strongly criticised bureaucrats’ opulent lifestyle. The government officials and elected representatives were not ready to cut down their own expenses and increasing the tax burden on the public, he regretted. All Pakistan Traders Association (Rawalpindi) Presidents Sharjeel Mir and Shahid Ghafoor Piracha said the shutter-down strike would continue till acceptance of their demands.

Over 5,000 tandoors in Rawalpindi remained closed and organised their protest at Murree Road. The Muttahid Naanbais Welfare Association President Muhammad Shafiq Qureshi said they will start ‘Jail Baro Tehrik’ soon because the local administration was continuously arresting Naanbais.

The main markets and business centres in Karachi remained closed against the Tajir Dost Scheme, taxation and inflated power bills. Trading centres and markets in other parts of Sindh also observed a shutdown on the call of traders associations, which was supported by various political parties.

Saddar, the main business hub of Karachi, was completely shut down whereas Tariq Road market also observed a complete shutter-down. The Joria Bazar, Boltan Market, Kaghazi Bazaar, Denso Hall, Jama Cloth market, Cloth Market, New Chali market, markets on MA Jinnah Road, Liaquatabad market, Ranchor Lane markets, Kharadar market, Light House market, Aram Bagh Furniture market, Akbar Road market, Hyderi and other markets in the city remained closed.

Ilyas Memon, President Tariq Road Traders Alliance, told the media that the shops and markets in the area observed a complete shutter-down. Atiq Mir, Chairman Tajir Ittehad, said markets in Karachi fully responded to the strike call and were completely shut down. Rizwan Irfan, President Karachi Electronics Market Association, said that traders fully responded to the call for strike against taxes and high tariffs of electricity. Rauf Ibrahim, Chairman Wholesale Grocers Association, said the government should listen to concerns of traders.

Meanwhile, traders across cities in Sindh, including Nawabshah, Tando Allahyar, Thatta, Sajawal, Sukkur and other parts of the province, also observed a shutter-down. The Anjuman Tajiran Sindh said that small and large businesses across Sindh remained closed on Wednesday.

Waqar Memon, President Anjuman Tajiran Sindh, said traders observed a peaceful strike by closing down their shops against the monthly tax, withholding tax, professional tax and anti-business policies. However, the Karachi Transport Ittehad (KTI) did not join the strike citing lack of consultation.

Traders of wholesale markets in Lahore observed a complete shutter-down strike against the advance income tax imposed by the Federal Board of Revenue (FBR) and high electricity bills. However, business remained usual in the remaining areas of the city markets and bazaars where traders gave a deaf ear to the strike call.

The markets which remained completely closed in Lahore were Akbari Mandi, Azam Cloth market, Shah Alam market, Circular Road, Hall Road, McLoed Road, Montgomery Auto Parts market, Brandreth Road, Badami Bagh Auto-parts Markets, Iron Market, Lunda Bazaar, Anarkali Bazaar, Urdu Bazaar, Ganpat Road Paper Market, Bedain Road, Nisbat Road, Ferozepur Road marble market, Jail Road, Samanabad and Maulna Shaukat Ali Road car markets. However, shops remained opened partially on The Mall Road.

JI Ameer Hafiz Naeemur Rehman congratulated the nation, particularly the traders organisations, on the success of the strike, stating it sent a strong message to the government to provide relief on electricity tariffs, eliminate unjust taxes on the business community and establish a transparent mechanism to address these issues. Speaking to the media at Mansoora, he noted that while this was the first call for a peaceful strike, the JI would continue to escalate its efforts if the government failed to fulfil their demands. He warned that further strikes, as well as long marches and sit-ins in Islamabad, could be organised, if necessary. He warned that the government had 25 days to implement the agreement it had signed with the JI after the 14-day sit-in. If the terms were not honoured, the JI would pursue all peaceful means of resistance to compel the government to act in the interest of the public, he said.

In Gujranwala, a complete shutter-down strike was observed on the call of traders associations. In Burewala, a complete shutdown was observed. In Vehari, a complete shutter-down strike was observed by the business community. All businesses, including medical stores, grocery shops and hotels, remained closed. Mailsi also witnessed a complete shutter-down strike and coordinated protest rallies. In Multan, traders observed a shutter-down strike against inflated electricity bills and taxes. The JI held a public meeting at Chowk Kutchehry and congratulated the party workers and traders representatives for observing a successful strike.

In Lalamusa, an unprecedented display of unity was seen as traders across Gujrat district observed a complete shutter-down strike to protest skyrocketing electricity tariff and heavy taxation imposed by the government. In Jalalpur Jattan, traders participated in the protest. In Hafizabad, traders and shopkeepers observed a complete strike and closed all bazaars and markets in the city. In Jaranwala, a complete shutdown strike was observed. In Gujranwala, the business community observed a partial shutter-down strike against the sales tax and Tajir Dost Scheme on the call of JI on Wednesday. In Toba Tek Singh, Gojra, Kamalia and Pirmahal, majority of shopkeepers observed the strike and shut their businesses. In Bahawalpur, traders observed a complete strike and important trade centres and markets remained closed. In Sahiwal, a shutter down strike was observed in all major and minor markets across the city.

The All Pakistan Oil Tankers Owners Association supported the nationwide strike call given by the JI for Wednesday. Chairman All Pakistan Oil Tankers Owners Association Mir Shams Shahwani, in a statement, said, “We fully support the nationwide strike called by the JI and traders community.”

Also, a complete shutter-down strike was observed across Balochistan on Wednesday against excessive increase in utility bills and taxes under the so-called trader-friendly scheme.

On the call of Central Traders Association, All Pakistan Traders and Traders Union, a shutter-down strike was observed across Balochistan. In Quetta, all small and large business centres, markets, plazas, including Liaquat Bazaar, Jinnah Road, Abdul Sattar Road, Prince Road, Masjid Road, Mekangi Road, Mission Road, Suraj Ganj Bazaar, Double Road, Kandhari Bazaar, Fatima Jinnah Road, Circular Road, Patel Road, Quarry Road, Sarki Road, Joint Road, Sariab Road, Jail Road, Huda, Shahbaz Town, Satellite Town, Brewery, and other areas remained closed, and business activities were halted. Trader leaders including Abdul Rahim Kakar, Mir Yaseen Mengal, Hazrat Ali Achakzai, and others, monitored the strike.

All major business centres in Harnai, Pishin, Dalbandin, Chagai, Usta Muhammad, Kuchlak, Kanuzai, Sanjavi, Zhob, Qila Saifullah and other areas remained completely shut during the successful shutter-down strike.

In Khyber-Pakhtunkhwa province, the call for a strike from traders associations received an overwhelming response from the community in provincial metropolis and elsewhere as shops remained shut on Wednesday to register protest at the taxation measures introduced by the federal government. Markazi Tanzeem-e-Tajiran Pakistan and All Pakistan Anjuman-e-Tajiran had called a nationwide strike against the “Tajir Dost Scheme”, heavy taxation and inflated power bills.

The opposition parties, including JI, JUIF and Awami National Party, backed the shutdown. In Charsadda, ANP President Aimal Wali Khan addressed the traders protest, blaming the unchecked expenditure of state machinery for the country’s economic woes.

However, reacting sharply to the countrywide strike, Coordinator to Prime Minister on Implementation and Monitoring Rana Ihsaan Afzal Khan said the government would not be pressurised by traders. Speaking on Geo News programme Geo Pakistan, he invited traders for talks if they considered the government’s decision “wrong”. He added that Prime Minister Shehbaz Sharif has reorganised the Federal Board of Revenue (FBR), insisting that the retail sector must also come under the tax net.

APP adds: Prime Minister Shehbaz Sharif Wednesday expressed his satisfaction with global rating agency’s recent upgrade of Pakistan’s credit rating and attributed the achievement to hard work of the economic team and blessings of Allah Almighty.

Chairing a review meeting on the nation’s economic development and investment strategies, he said Pakistan’s economy had been rescued from default by prioritising the country’s needs over his own political career during his previous term as prime minister. He expressed satisfaction that after stabilisation, the country’s economy was now on the path of progress and development.

He noted that the benefits of government’s focus on national interests over political gains were now evident in the economy. He also pointed out that Moody’s Caa2 rating for Pakistan was an international endorsement of the government’s economic strategies. He expressed optimism that the economy would maintain its positive trajectory and continue to progress.

The prime minister commended the finance minister and his team for their significant progress and improvements in the overall economic situation. He added that the interest shown by the friendly countries in investing billions of dollars across various sectors was a direct outcome of the government’s business- and investment-friendly policies.

He warned that delay in executing investment projects from friendly countries would not be tolerated. He instructed all ministers and relevant institutions to take immediate action to accelerate progress on these proposed projects. The PM emphasized that Pakistan offers substantial investment potential in areas such as information technology, agriculture, minerals and precious stones and energy. He added that foreign investment in these sectors would not only boost domestic exports but also generate employment opportunities for millions of young people.

In the meeting, the prime minister was briefed about the improvement in Pakistan’s rating by the international rating agency Moody’s, progress on investment agreements with friendly countries in various fields and ongoing projects.

The meeting was also informed about the progress on the projects under the second phase of China Pakistan Economic Corridor (CPEC). The prime minister ordered to give key importance to the element of transparency in all projects and to ensure their implementation on a priority basis.