Pak’s 4g broadband speed faster than India’s
Despite the challenges Pakistan faces in promoting information technology and bringing more and more people online, international internet speed gauging platform Ookla has said that Pakistan’s 4G mobile broadband is faster than its neighbour India’s.
Pakistan is ranked 96th in the world in download speed on mobile broadband based on the June Speed-test Global Index, with average speed of 14.03 megabits per second (Mbps). It is better than that in India which stands at 109th place with average speed of 9.12 Mbps, according to speedtest.net of Ookla – a global leader in fixed broadband and mobile network testing applications, data and analysis.
According to the website, the global average of mobile internet download speed is estimated at 23.54 Mbps.
Indian operators are focusing on spreading 4G outreach than injecting more speed into the already present 4G service, according to OpenSignal that specialises in wireless coverage mapping.
Smartphone usage is on the rise in India with 358 million mobile internet users and more users are coming online, resulting in slower mobile internet speeds, says a report in the Indian publication The Economic Times.
Because of the vast area, India has higher latency which is one of the reasons consumers are receiving slower internet.
Latency is the duration taken by a data packet to move between the user’s device and internet server. The higher the latency, the slower the user’s internet experience.
‘Branchless, mobile banking regulated activity in Pak’
The State Bank of Pakistan has said that branchless as well as mobile banking is a regulated financial activity in the country, adding that it is not the telecom companies that conduct transactions through mobile wallet accounts, but financial institutions/microfinance banks that are authorised to offer the services.
The central bank’s statement comes a couple of days after it was reported that Pakistan, amid concerns expressed by the Financial Action Task Force (FATF) over violations of counter-terrorism financing regime, faces a challenge to effectively regulate telecom companies that are conducting transactions worth billions of rupees every month through mobile wallet accounts.
Additionally, it was reported that regulatory lacunae exist in the monitoring of these accounts as the anti-money laundering (AML) and countering financing of terrorism (CFT) regulations are not applicable to Level-0 and Level-1 accounts being operated by these agents.
IMF, finance ministry way off on Pak’s economic misery
The International Monetary Fund (IMF) and Pakistan’s finance ministry have failed to make accurate forecasts about the country’s external sector for the last fiscal year, putting a question mark over the capability of both institutions.
Projections of the Washington-based lender for the current account deficit and gross official foreign currency reserves for fiscal year 2017-18 were missed by a huge margin. Its first Post Programme Monitoring (PPM) mission had made these projections hardly six months before the close of the last fiscal year and released a report in March, three months before FY18 ended.
The IMF’s forecasts of external debt, imports, trade deficit and foreign direct investment were also wide of the mark.
The actual outcome has led to depletion of gross official foreign currency reserves at a more rapid pace besides exposing the country to external account financing challenges.
In its first PPM report, the IMF had revised upward its current account deficit forecasts to $15.7 billion or 4.8% of Gross Domestic Product (GDP). “Despite continued recovery of exports and some moderation of import growth, the current account deficit is expected to widen to $15.7 billion this year,” noted the IMF.
On this basis, the IMF had expected that in the medium term the current account deficit would remain elevated at about 3.8% of GDP, owing to continued real exchange rate misalignment and slow recovery of remittances.
Currency crisis tops agenda for whoever wins Pak election
Whoever wins the upcoming election in Pakistan will have to urgently resolve a currency crisis that threatens to put the brakes on the fast-growing economy, with the most likely solution being another bailout from the International Monetary Fund (IMF).
Pakistan’s economy expanded at 5.8% in the last fiscal year, its quickest pace in 13 years, but the rupee has been devalued four times since December, cumulatively shedding 22%. Interest rate has been raised three times and now stands at 7.5%.
A sharp increase in oil prices – Pakistan imports about 80% of oil needs – has contributed to a current account deficit that widened 43% to $18 billion in the fiscal year that ended June 30. The central bank’s defence of an overvalued rupee has led to foreign reserves plunging to just over $9 billion last week from $16.4 billion in May 2017.
“Nobody thinks there is another option but to go to the IMF,” said Ehsan Malik, chief executive of the Pakistan Business Council, a body representing about 60 major Pakistani businesses.
Pakistan is forecasting economic expansion to hit 6.2% in the financial year ending June 2019, but the IMF sees it stumbling to 4.7%.
Pak’s current account deficit peaks at $17.99bn
The current account deficit, which remains the single largest challenge for economic managers, shot to a record high of $17.994 billion (5.7% of GDP) at the end of fiscal year ended June 30, 2018 mainly due to exorbitant imports and less-than-projected inflows.
This is 44.7% higher than $12.44 billion recorded in the previous fiscal year 2017.
State Bank of Pakistan (SBP) Governor Tariq Bajwa said last week that the deficit has grown to an “unsustainable level” due to soaring aggregate demand in the economy.
To tame demand, the central bank has let the rupee fall by close to 22% to Rs128 to the US dollar since December 2017, and made borrowing expensive by increasing the benchmark interest rate by 175 basis points to 7.5% in the last six months.
“The Real Effective Exchange Rate (rupee-dollar parity) and monetary policy (the benchmark interest rate) are two effective tools available with the central bank to deal with the situation,” he said. “We are using both of them.”
Rest can be done by the government to deal with the situation like imposing regulatory (additional) duties on imports and announcing an export package, he said.
The deficit is close to double the set target of $9 billion (2.9% of GDP) for FY18. Surprisingly, it is also much higher than the one estimated at around $16 billion by independent economists many months ago.
PHMA asks SBP to eliminate curbs on advance payments
The Pakistan Hosiery Manufacturers and Exporters Association (PHMA) has written to the State Bank of Pakistan (SBP) that it should not apply to this export-oriented industry a new condition restricting advance payments for imports against irrevocable Letters of Credit (LCs).
According to the SBP’s Foreign Exchange Manual 2018, authorised dealers were allowed to make advance payments for imports against irrevocable LCs up to 100% of the value of goods, given that the value did not exceed $10,000 per invoice.
This applied to the import of all eligible items without the requirement of bank guarantee from the supplier abroad.
“In this regard, it has been decided that the facility, allowing authorised dealers to make advance payments, stands withdrawn with immediate effect,” the SBP announced in its circular dated July 14.
“However, in case, authorised dealers decide that a request on the subject merits consideration, they may approach the SBP along with appropriate recommendations on a case-to-case basis,” it added.
The measure has been taken to curb the outflow of foreign exchange from the country.
The government has been trying to reduce the country’s current account deficit amid depleting foreign exchange reserves, which now stand at a meagre $9.06 billion.
However, the PHMA complained to the SBP that withdrawal of the facility would severely affect export-oriented industries, create hurdles in the way of meeting export commitments on time and increase the cost of doing business.
“Generally, exporters import trims and accessories from buyer-nominated foreign suppliers by making advance payments because foreign suppliers only start working after advance payments,” the PHMA elaborated.
Pak at lower rank than India, Sri Lanka on internet index
Despite a rapid increase in internet connectivity and gender parity in Pakistan, the country has been ranked lower than India, Iran, Sri Lanka and even Bangladesh on the Inclusive Internet Index of the Economist Intelligence Unit (EIU), primarily due to unavailability of content in local language.
On the index, Pakistan stood at the 68th place out of 86 countries surveyed, with a mean score of 54.5 relative to the South Asian average of 61.
In the country, 3G/4G services have been spreading at an appreciable pace, which has opened doors to digitalisation of various services, scalability of e-commerce, dissemination of agricultural knowledge and online access to various government-to-citizen services.
“Cross-country statistics reveal that there exists ample room for improvement in this (internet inclusiveness) regard,” stated the State Bank of Pakistan (SBP) report for the third quarter of fiscal year 2017-18.
Among four dimensions considered for the ranking – availability, affordability, relevance and readiness, Pakistan showed average-to-poor performance in all of them, the report said.
Under the availability dimension which included the usage of infrastructure and electricity and quality of internet access, Pakistan was placed at a low 77th rank. It also considered disparity between the number of male and female internet users.
In fact, Pakistan is ranked the lowest worldwide in gender access parity with 266% gap in internet access rates and 121.2% gap in mobile ownership in favour of men.
“This poses policy challenge in light of currently under way National Financial Inclusion Strategy (NFIS),” stated the quarterly report.
Customer illiteracy also has a great role in Pakistan’s low ranking. A poor literacy rate and sub-optimal web accessibility have led the country post the second lowest score in the digital literacy environment indicator.
However, on the parameters of conducive policy, regulations and trust of government, Pakistan did well and was ranked 15th, which helped enhance the overall ranking. Good services from wireless internet providers due to competitive environment in the industry aided Pakistan on the affordability front with a ranking of 43.
The index measures affordability in terms of cost of gaining access to internet with respect to per capita income in the country, followed by competitiveness in the internet marketplace that helps keep prices down.
Pakistan ranks a joint-first in the wireless operator category alongside 23 other countries.
Another power tariff rise in the offing
After a respite of several months, electricity consumers are now bracing for another tariff increase on account of fuel cost adjustment for June 2018 following consumption of expensive furnace oil in power production in violation of the merit order.
The National Electric Power Regulatory Authority (Nepra) had already increased the tariff by Rs1.25 per unit for May 2018 because of reliance on furnace oil and slowdown in import of cheaper liquefied natural gas (LNG) due to delay on the part of power producers in placing a firm order.
Now, the power tariff is likely to be raised by Rs0.70 per unit for June and in this regard, the regulator will hold public hearing on July 24 to take a decision.
The Central Power Purchasing Agency (CPPA) has sought a lower tariff increase this time around in comparison with May following reduction in furnace oil consumption, increase in hydroelectric and LNG-based power generation.
For the past few years, the power consumers had been enjoying tariff cuts in the wake of sharply lower global crude oil prices despite the imposition of surcharges of Rs2.3 per unit during tenure of the previous Pakistan Muslim League-Nawaz (PML-N) government.
A senior government official said only eight LNG cargoes had been imported for May in the absence of firm demand from power producers. However for June, 11 cargoes were brought compared to total capacity of 12 cargoes, therefore, a comparatively lower tariff increase was proposed.
The share of LNG-based electricity in total power production had been calculated at 23.85% in May, which edged up to 25.18% in June. More significantly, the contribution of hydroelectric power generation was 18.30% in May, but it jumped to 27.79% in June.Total power generation also increased from 12,117 gigawatt-hours (Gwh) in May to 12,913.86 Gwh in June. Transmission and distribution losses were estimated at 2.36% or Rs0.13 per unit.
According to the government’s priority list, LNG stands at the second place after domestic natural gas in consumption as fuel in power plants. Instead, the Power Division preferred furnace oil that would put extra burden on the consumers.
In June, the consumption of high-speed diesel for power generation also resumed and 3.99 Gwh of electricity was generated with the help of that fuel.
In the month, LNG-based electricity generation cost Rs9.31 per unit whereas furnace oil-fuelled electricity cost Rs13.12 per unit. Furnace oil power plants showed a low efficiency level of 28% whereas gas-fired plants recorded a higher level of more than 50%.