Foreign exchange: SBP’s reserves down 0.88pc, stand at $13.98bn
Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased 0.88% on a weekly basis, according to data released by the central bank on Thursday.
On January 5, foreign currency reserves held by the central bank were recorded at $13,982.5 million, down $124.2 million or 0.88% compared to $14,106.7 million in the previous week.
The decrease in reserves was attributed to external debt servicing and other official payments.
Overall, liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $20,020 million. Net reserves held by banks amounted to $6,037.5 million.
Pakistan recently raised $2.5 billion by floating dollar-denominated sovereign bonds in the international market in a bid to shore up official reserves.
Rupee stable v/s dollar
The rupee remained stable against the dollar at Rs110.2/110.4 in the inter-bank market on Thursday compared with Wednesday’s close of Rs110.2/110.4. In the last few weeks, the rupee has cumulatively shed over 4% of its value after the central bank reportedly abstained from intervening in response to the pressure being built due to a widening current account deficit. The State Bank of Pakistan has maintained that the slide in the rupee’s value is due to supply and demand dynamics of foreign exchange in the inter-bank market.
CCP starts inquiry into poultry sector
The Competition Commission of Pakistan (CCP) has initiated an inquiry into a possible collusion between various market players to set prices in the poultry sector. The CCP initiated the inquiry under its suo motu powers after strong indications of organised communication between poultry sector players relating to prices came to light. In this regard, a team of authorised officers of CCP recently inspected premises in Lahore that were in use of a poultry association and impounded material evidence.
Budget deficit could shoot due to poll-related slippages
Pakistan’s efforts to consolidate its budget deficit may be derailed due to weak tax revenues and expenditure slippages ahead of upcoming general elections, the World Bank warned on Wednesday.
In its Global Economic Prospects Report, the Washington-based lender said increasing contingent liabilities related to infrastructure projects could become another reason for a higher budget deficit.
Against the parliament-approved budget deficit target of Rs1.479 trillion or 4.1% of gross domestic product (GDP), the finance ministry has already provisionally booked Rs826 billion or 2.3% as budget deficit in just five months of the ongoing fiscal year. This suggests that the annual budget deficit target is highly likely to be missed, showing weak planning.
“Increasing contingent liabilities related to infrastructure projects in Pakistan and slippages relating to upcoming elections and weak tax revenues could derail fiscal consolidation efforts,” noted the World Bank.
Minister wants Japan to assist Pak
Minister of State for Finance Rana Muhammad Afzal Khan invited Japan to assist Pakistan to promote its textile through Preferential Trade Agreements (PTA). During a meeting with Ambassador of Japan Takashi Kurai on Thursday, Rana said Pakistan highly values its relationship with Japan. He expressed hope that the economic cooperation between the two countries would be brought to a much higher level with the passage of time.
High prices drive away interested European buyers: exporters
Pakistan’s textile producers, whether big or small, have received encouraging response from European consumers in the world’s biggest exhibition of home textiles, but still regional rivals edge out Pakistani companies in many cases due to cost advantage.Alongside big export companies of Pakistan, massive orders have also been discussed with the smaller ones, according to representatives of different companies that had put up stalls in the pavilion set up by the state-owned Trade Development Authority of Pakistan at the Heimtextil exhibition.
Govt moves to increase real estate, but stakeholders remain unimpressed
After undergoing a minor fall in 2017, Pakistan’s property market is set to get a helping hand after the Federal Board of Revenue (FBR) revised property valuation rates upwards in major cities.
However, stakeholders are unsure about the extent of the decision’s positive impact on the market.
In an apparent move to inject new life in the property market before the general elections, the federal government slashed on Thursday property valuation rates by up to 57% for certain localities of Karachi, Lahore, Islamabad, Rawalpindi, Peshawar and Faisalabad.
Former finance minister Ishaq Dar had unveiled a three-year program in August 2016 in consultation with realty sector stakeholders for an upward revision in property valuations to bring them in line with the market.
However, now, instead of increasing the rates for collection of federal withholding and capital gains tax, property valuations have been pushed down for certain localities of six major cities.
World bank puts $250mn policy loan for Pakistan on hold
mid Pakistan’s weakening macroeconomic situation, the World Bank has put on hold a $250-million policy loan, which the lender till recently was ready to give for disaster risk management.
A review mission of the World Bank has not authorised preparations for the loan to continue, according to the Program Information Document of the Development Policy Credit. The document underlined that Pakistan’s macroeconomic framework continues to face some risks as the overall external account position weakened, the current account deficit widened and international reserves came under pressure during fiscal year 2016-17.
“The Cat-DDO (Catastrophe Deferred Drawdown Option) requires an adequate macroeconomic framework to be approved,” according to the World Bank document. The policy loan is a contingent credit line that provides immediate liquidity in the aftermath of a natural disaster.
Pakistan has been facing serious problems on the external account. The country has been struggling in the face of challenges stemming from a growing trade deficit, which is eating up precious foreign currency reserves. Even after raising $2.5 billion bonds in the ongoing fiscal year, gross official foreign currency reserves have again fallen to below $14 billion.
Sources in the finance ministry said that the World Bank’s policy loans were now contingent upon a good health certificate from the International Monetary Fund (IMF). They said Pakistan and the IMF could not converge on a consensus for the macroeconomic framework during the post-program monitoring talks, although Pakistan had accepted the IMF’s major demand of devaluing the rupee against the US dollar.
“The World Bank continues its engagement with the authorities on the macroeconomic framework, which is also informed by the ongoing dialogue between the government and the IMF,” said a spokesperson for the World Bank while responding to a question on Pakistan’s macroeconomic vulnerabilities.
CPEC projects: Chinese ambassador states active participation
Ambassador of China to Pakistan Yao Jing urged the local business community on Thursday to actively participate in China-Pakistan Economic Corridor (CPEC) projects to maximise business prospects.
He was talking to a delegation of the Islamabad Chamber of Commerce and Industry (ICCI) that called on him at his office, led by its president Sheikh Amir Waheed. Yao said Pakistan’s private sector should gear up for joint ventures and investments in the special economic zones (SEZs) being established in Pakistan under CPEC as SEZs would offer them good scope for JVs and partnerships with Chinese counterparts.
Reap to strengthen bond with global buyers
The Rice Exporters Association of Pakistan (REAP) is looking to strengthen its ties with international buyers of Pakistani rice in a bid to streamline and promote the export-oriented commodity, REAP Chairman Sameeullah Naeem said on Thursday.
At a press conference, Naeem said Pakistani rice exports are expected to cross the $2-billion mark during the current fiscal year, acknowledging the contribution of global buyers in achieving the landmark.
Pakistan exported rice worth Rs168.244 billion in fiscal year 2017, down from Rs194.2 billion in the previous year.
Pakistan suffers from low exports, putting pressure on its foreign exchange reserves. However, different sectors, including rice growers, are now targeting an increase given the recent fall in the rupee.
REAP is also looking to acknowledge buyers’ and their confidence in Pakistani rice to promote exports.
“Contribution of 30 top international buyers will be acknowledged at an event to be held on February 20, 2018 in Dubai,” said Naeem. “This will witness participation from around 100 international buyers, ambassadors, representatives of different departments of Gulf states, representatives of different government departments including Trade Development Authority (TDAP), federal ministry for food security, provincial agriculture departments and members of REAP.
“We are planning to make it an annual feature which will eventually be turned into a ‘Rice Conference’ providing a platform not only to acknowledge buyers but also to discuss future trends and new technologies in the rice sector,” he added.
In policy reversal, fbr declines real estate valuations in big cities
Just months before the general elections, the federal government slashed on Thursday property valuation rates by up to 57% for six major cities, partially reversing a policy designed to plug lacunas that caused accumulation of black money.
The move came despite the fact that the second phase of increase in property valuations for two-dozen major cities has been due for the past seven months. An average increase of 25% to 30% in property valuations had to be implemented under this phase from July 1, 2017.
Former finance minister Ishaq Dar had unveiled a three-year program in August 2016 in consultation with realty-sector stakeholders for an upward revision in property valuations to bring them in line with the market.
However now, instead of increasing the rates for the collection of federal withholding and capital gains tax, property valuations have been pushed down for certain localities of Karachi, Lahore, Islamabad, Rawalpindi, Peshawar and Faisalabad.
In certain cases, the rates notified in August 2016 were slightly higher, but the Federal Board of Revenue (FBR) had planned to make corrections at the time of implementing the second phase. In August 2016, the FBR had notified fresh property valuation rates for 21 major cities.
With CPEC in mind, PIA to commence Islamabad-Gwadar flights
Amid demand emanating from the China-Pakistan Economic Corridor (CPEC), Pakistan International Airlines (PIA) is set to start direct flights from Islamabad to Gwadar as the national carrier looks to gain air traffic and reduce its losses.
The cash-strapped national carrier faces more than Rs319.1 billion in accumulated losses by the end of March 2017, but is now looking to remove loss-making routes from its agenda, while adding new and profitable destinations to its schedule.
“We would connect Islamabad and Gwadar by the end of this year (December 2018),” PIA Chief Executive Officer Musharraf Rasool Cyan told in an interview. “Being the national carrier, we feel the responsibility for improving connectivity through Pakistan.”
Drilling activities in Badin rise
The government has stepped up drilling activities for appraisal of coal reserves confirmed by the Geological Survey of Pakistan (GSP) in the Badin field and its adjoining areas of southern Sindh.
“Drilling of nine bore holes with a cumulative depth of 3,660 meters, has been completed in Pingrio, Jhudo, Tando Bagho and Nando Town, Badin Bypass and Kingri areas in district Badin and surrounding areas, where coal seams were encountered in all holes in various depths,” official sources told APP on Friday.
Sources said experts had collected core samples and completed chemical analysis and geological logging of the exploratory boreholes. They are also in the process of digitalisation of the borehole log data and compilation of the project report, sources added.