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Israel-Hamas conflict damaging regional economies, warns IMF chief

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The ongoing conflict between Israel and Hamas is not only causing human suffering but also taking a toll on regional economies, Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva said Wednesday. 

Speaking at the Future Investment Initiative (FII) in Riyadh, Saudi Arabia, Georgieva highlighted the economic repercussions that neighbouring countries of Israel are experiencing, particularly those reliant on tourism, such as Egypt, Lebanon, and Jordan.

The conflict erupted when Hamas, a Palestinian group, launched a surprise attack on Israel on October 7, resulting in casualties and the taking of hostages.

 Israel responded with a sustained campaign of air strikes and a comprehensive land, sea, and air blockade on Gaza. The Hamas-run health ministry in Gaza reported that the war has claimed the lives of 6,546 Palestinians.

The economic implications of this conflict extend beyond the immediate war zone. Wall Street experts have warned that the ongoing hostilities could negatively impact the global economy, particularly if other countries become embroiled in the crisis. Georgieva expressed her concerns about the economic challenges faced by countries in the region.

Uncertainty and insecurity are detrimental to countries dependent on tourism, and investors may become cautious about the region. This caution extends to the cost of insurance for goods transportation, which could rise due to heightened risks. Furthermore, the influx of refugees into countries already accommodating displaced populations poses additional economic challenges.

The Future Investment Initiative (FII), often called “Davos in the Desert,” has historically been a platform for Saudi Arabia to showcase its domestic economic reforms and regional stability. Saudi Arabia had recently taken steps to improve relations with Iran and Syria, sought a lasting ceasefire in Yemen, and was in discussions regarding recognising Israel before the conflict erupted on October 7.

While Saudi officials have indicated that the normalisation of ties with Israel may be paused for now, regional stability remains a top priority. Saudi Finance Minister Mohammed al-Jadaan emphasised the importance of preserving the de-escalation efforts that were underway before the outbreak of hostilities.

Bahrain’s Finance Minister, Shaikh Salman bin Khalifa Al Khalifa, who recognised Israel as part of the US-brokered Abraham Accords in 2020, advocated for regional integration. He stressed that past ethnic and religious divisions should not hinder future cooperation.

Jared Kushner, a former White House advisor and key figure behind the Abraham Accords, suggested that the attack by Hamas was intended to disrupt the normalisation of relations. 

The Abraham Accords, which aimed to establish diplomatic ties between Israel and several Arab nations, have been viewed as a potential threat by those opposed to such diplomatic progress.

Despite the ongoing regional turmoil, many at the FII remain optimistic about Saudi Arabia’s resilience. As the world’s largest oil exporter, Saudi Arabia is well-positioned to withstand shocks and finance its Vision 2030 agenda. 

This ambitious plan, spearheaded by Crown Prince Mohammed bin Salman, seeks to diversify the Saudi economy by promoting tourism, business, and mega-projects such as NEOM, a futuristic city with a $500 billion price tag.

While the region grapples with the ramifications of the Israel-Hamas conflict, Saudi Arabia aims to press ahead with its economic transformation, offering opportunities for companies and investors from around the world in the Middle East’s largest economy and construction market.

In conclusion, the Israel-Hamas conflict is not only a humanitarian crisis but also has far-reaching economic consequences for neighbouring countries and the broader region, impacting tourism, investment, and political stability. The situation remains complex, and efforts to restore peace and stability are crucial for the well-being of both people and economies in the Middle East.

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Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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