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Pakistan’s current account deficit widened 102% in the first quarter (Jul-Sep) of current fiscal year 2017-18 (FY18) to stand at $3.56 billion compared to $1.64 billion in the same period of previous year, according to data released by the State Bank of Pakistan (SBP) on Friday.

In September 2017 alone, the current account gap swelled $956 million compared to $550 million in August 2017.

It is commented that the numbers were broadly in line with its estimates and investor concerns were allayed after seeing August and September numbers as the deficit had widened $2.1 billion in July 2017.

“We may not see a sharp drawdown in foreign exchange reserves and Pakistan may not enter another IMF programme in FY18,” the report said.

Investors are concerned about the growing deficit after the country recorded a much higher-than-expected deficit of $12.1 billion (4% of gross domestic product – GDP) in the previous fiscal year.

With the difference between exports and imports being the biggest determinant of the current account balance, a deficit or surplus reflects whether a country is a net borrower or net lender with respect to the rest of the world.

To control the gap, analysts were anticipating that the government could allow the rupee to weaken against the dollar or impose duties on imports.

This week, the government enhanced regulatory duties by up to 350% on 356 essential and luxury goods. However, the rupee has largely stood firm.


The rupee remained stable against the dollar at 105.35/105.55 in the inter-bank market on Thursday compared with Wednesday’s close of 105.35/105.55. The currency market has fluctuated regularly in recent months with hefty rises and falls on some occasions. In the long run, however, the rupee has stood firm after experiencing extensive volatility, when it weakened from around Rs98 to a dollar to above Rs103 in the wake of political impasse over alleged election rigging. The central bank imposed 100% cash margin in February 2017 on the import of certain consumer goods to restrict the demand for US dollars. Moreover, last week it slapped import duties on 356 items to contain widening trade deficit. The rupee has been one of the best performing currencies in Asia for over three years despite the dollar’s sharp appreciation against other currencies. However, the International Monetary Fund has repeatedly said that Pakistan’s rupee is overvalued by 5-20%. According to analysts, the artificial support for the rupee has adversely affected Pakistan’s exports.


The Lahore Chamber of Commerce and Industry (LCCI) has urged the Federal Board of Revenue (FBR) to extend the date for filing income tax returns till December 31. In a statement, LCCI President Malik Tahir Javed said that extension till at least December 31 will be a “good favour” towards the business community and will also help the FBR in meeting its revenue targets. They said that businessmen remained busy in the elections of trade bodies besides tackling a number of issues including lack of awareness about FBR’s online systems. “Therefore, majority of businessmen cannot file their returns within the given timeframe,” they added.


Pakistan has finalised two consortiums of financial advisors to float dollar-denominated Euro and Sukuk bonds as the country seeks around $2 billion aimed at taking pressure off the balance of payments’ position.

The Eurobond consortium would comprise of four international commercial banks. The Sukuk bond consortium consists of six banks, said officials in the Ministry of Finance. The financial bids were opened on Tuesday.

Citibank, Deutsche Bank, Standard Chartered Bank and Industrial & Commercial Bank of China (ICBC) will be mandated to arrange the Eurobond transaction. The government will pitch a minimum $500-million bond but will try to raise at least $1 billion through the Eurobond, said the officials.

In September 2015, the government had issued Eurobonds valuing $500 million with a 10-year maturity in the international market at an interest rate of 8.25%. It offered 6.12% above the US Treasury rate for the bond, making it one of the most controversial deals.

The Sukuk bond consortium of financial advisors consists of Citibank, Deutsche Bank, Standard Chartered Bank, ICBC, Dubai Islamic Bank and Noor Bank JSPC, said the officials. Again the government will pitch $500 million Sukuk bond but will try to raise over $1 billion, said the officials. The M3 Motorway (Pindi Bhattian-Faisalabad) would be pledged in collateral to raise loans through the Sukuk bond.

In September last year, the government raised $1 billion by floating Sukuk bond at 5.5% interest rate.

The combined size of the two deals could go up to $2 billion or $3 billion, one banking official said on Wednesday.

The finance ministry did not respond to a request to comment.

The officials said that the DIB and ICBC had given the lowest financial bids, quoting 1.5% less fee than offered by three Europe-based banks. The finance secretary asked the three commercial banks to match the fee, if they wanted to become part of the consortium, said the officials.

They said that the Ministry of Finance was not officially announcing the financial advisors consortiums, as it was waiting written concurrence of three European-based banks to match the lowest bids. But their local representatives have already given the verbal concurrence, said the officials.

This time the government was expecting better price due to availability of liquidity in the international markets. In recent months, Abu Dhabi, Saudi Arabia, Jordan, and Yemen have raised debts from the international markets and their bids were significantly over subscribed.

But the fluid political situation in Pakistan and the desperation to raise loans to protect the official foreign currency reserves could affect the overall price, said the officials.


The committee met at the Federal Flood Commission under the chairmanship of MNA Khalid Hussain Magsi.

Officials of the Indus River System Authority (Irsa) have said that Pakistan was facing the effects of global warming and river flows slowed down in March this year.

The Wapda chairman pointed out that after 11 years international donors refused to fund the Diamer-Bhasha Dam in 2016, calling the dam site a disputed area. “Wapda is facing problems in funding the project through its own resources as its total cost is estimated at $14 billion.”

Hussain recalled that during premier Shaukat Aziz’s tenure, the National Transmission and Despatch Company (NTDC) was separated from Wapda. He termed it a wrong decision as Wapda was now generating electricity at one location while the NTDC was laying transmission lines at another.

He pointed out that the Private Power and Infrastructure Board (PPIB), which was working on hydroelectric power generation projects, was required to be with Wapda, but it was working under the control of Power Division. The committee voiced concern that some departments like NTDC had been given under the control of the Ministry of Energy, which could harm their overall performance as they were mainly linked with the Ministry of Water Resources.

Hussain told the NA panel that financial close for the Dasu hydroelectric power project had been achieved and work was in progress. The project will cost $4-5 billion and the World Bank has agreed to fund 20% of the cost.

He revealed that first unit of the Golen Gol project would come online by December 2017 while the Tarbela 4th Extension project would start power generation by February next year.

Officials of the Ministry of Water Resources said the ministry had made no improvement and it was still in the initial stages as it was 70 years ago. No recruitments were made on important posts, which were still lying vacant, they said.


Number of air passengers travelling through Faisalabad International Airport will swell from 0.5 million to 0.8 million during the year and four new airlines are planning to start their flights in addition to the existing seven already operating in the city, an official stated on Thursday.

Addressing members of the Faisalabad Chamber Of Commerce & Industry (FCCI), Airport Manager Anwar Zia disclosed that only three domestic flights were being operated from the airport just few years ago causing an annual deficit of Rs220 million.

He said that now 128 flights operate from the airport for which FCCI played a commendable role. He said that the sustainability of new flights was the main challenge.

“However, with the active support of FCCI and Travel Agents Association, we chalked out a comprehensive strategy to turn things around.


Pakistan’s capacity to repay external debt and liabilities has weakened significantly in the past four years and its foreign debt obligations are now equal to 162% of annual foreign exchange earnings – the highest ratio in the past one decade, said Dr Ishrat Husain, a former central bank governor.

The capacity to service external debt was weakening and that should have given sleepless nights by now to the State Bank of Pakistan (SBP), remarked Husain while speaking at the fourth National Debt Conference, organised by the Policy Research Institute of Market Economy (PRIME).

External debt and liabilities, which are now equal to 162% of Pakistan’s foreign exchange earnings, stood at 121.3% four years ago. In 2008, the external debt and liabilities were equal to 124% of foreign exchange earnings.

Responding to a question, Husain suggested that the external debt and liabilities as a percentage of foreign exchange earnings should have been on a downward trajectory, which might have demonstrated some policy measures.

The external debt servicing in relation to the annual foreign exchange earnings has also gone up to 16% in four years. In 2013, the ratio was 13%. The external debt servicing is now eating up roughly 30% of Pakistan’s export receipts against slightly over one-fifth four years ago.

The biggest setback was the decline in export earnings, which set off alarm bells, said the former central banker. In 2013, the external debt and liabilities were equal to 193.2% of exports – a ratio that within four years has jumped to 304.6%.

He said the rapid depletion of foreign currency reserves had created some serious concerns and the country’s import cover now stood below the three-month level.

In 2013, when the PML-N government came to power, the gross public debt stood at Rs14.3 trillion or 63.8% of gross domestic product (GDP). In just four years, it has grown to Rs21.4 trillion or 67.2% of GDP. However, the major concern was the external debt.

Husain suggested the need for proactive management of the external account at least till June 2018 and that the external debt of $83 billion should not be seen in isolation.

Initial conditions on the external and fiscal fronts indicated the gathering of another storm, said Dr Waqar Masood Khan, who earlier this year retired as finance secretary.


Pakistani jewellers are planning to take advantage of China-Pakistan Economic Corridor (CPEC) to give the dwindling industry a boost.

The All Pakistani Gems Merchants and Jewellers Association (APJMJA) has set up a committee to study and devise a detailed plan as to how the country’s gem and jewellery exports can be increased by taking advantage of CPEC.

Pakistan’s gemstone and jewellery sector is currently suffering due to low exports, undergoing a massive fall in the last five years. In 2016-17, the exports of the industry stood at $5.8 million, down 99% compared with $921.8 million in 2011-12.

Like other industries in Pakistan, this industry can also take advantage of CPEC, say officials.

“With the help of Chinese investment and machinery, we can increase our gemstone and jewellery exports to $5 billion in just 3 years,” said APJMJA Chairman Matiullah Sheikh. “Pakistan has the finest craftsmanship and China has technology. Together, we can promote exports of the industry,” he said.

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