POLITICAL NOISE HITTING ECONOMIC FUNDAMENTALS
BANKING SECTOR SHOWS RESILLIANCE AGAINST GLOBAL SHOCKS
Aug 18 - 24, 2008
The heightening political noise naturally has its impact on the domestic economy which has added to the sufferings of the people already confronted with the imported economic stresses in the form of ever increasing fuel and food prices, alarming state of exchange rate depreciation as the rupee has touched the level of Rs76 against us dollar adding fuel to inflationary pressures.
The economic fundamentals giving a depressive look primarily due to political instability as even the vibrant economic players yielding to the economic and political pressures.
Looking at the performance of the automobile sector reveals that the sales of cars has registered a drop even to 70 percent in July 2008. The textile sector, the economic mainstay of the country showing bleak sign of depression as most of the units are at the verge of collapse due to rising cost of fuel, including as and electricity besides other inputs.
However, the financial sector still showing resillence to the pressures though the profit margins were reduced yet the banking sector showing resistance.
The issue of impeachment of President Mushat is yet another factor which has forced the investors to take a wait and watch attitude by sitting on the fence. For impeachment, the government needs a 2/3rd majority (295 seats) in a joint session of the Parliament (Senate and National Assembly) for the impeachment motion to be successful.
Both ruling and pro-President parties claim to hold the required number of seats; however the break-up of seats suggests the coalition has a thin majority. Independent National Assembly members could prove to be a swing factor while unexpected diversion from either group has the potential to change the equation for either side.
The State Bank of Pakistan , since its inception, has been making relentless efforts with sincerity and honesty for the development of the country's economy.
The banking industry has made significant progress in recent years and the State Bank has taken a number of measures ensuring that people at large reap the benefits of economic growth, sustainability of growth momentum and competitive environment.
Dr Shamshad Akhtar, Governor SBP speaking at the flag hoisting ceremony held at the State Bank of Pakistan , Karachi today to mark the 61st Independence Day. said that the Independence Day provides the nation with an opportunity to reiterate our commitment with our homeland.
Dr Akhtar said that despite several problems, Pakistan as a country has come a long way since achieving Independence in 1947. She highlighted various unique features and achievements of the country and said that "we all are proud to be Pakistanis."
SBP Governor said being a leader of a national institution, she must admit that still there are several impediments in our way to progress. "Partly we are also responsible for that as we have not aligned ourselves with the requirements of the 21st century," she added. "We have yet to achieve self-reliance in all sectors, which is a hallmark of a sovereign and vibrant nation," she emphasized.
Paying rich tributes to forefathers of the nation, Dr Akhtar said that this Day reminds us of our elders, who under the dynamic leadership of Quaid-e-Azam Muhammad Ali Jinnah, scarified their lives and as a result of their unparalleled efforts, Pakistan was created. She paid glowing tributes to the national heroes and tens of thousands of unsung martyrs, who played a key role in the independence of the country.
Meanwhile, the State Bank has advised all commercial banks to ensure repatriation of overdue export proceeds.
Dr. Shamshad Akhtar, governor SBP while addressing a meeting of heads of commercial banks has expressed concern over inability of banks to realize export proceeds within the stipulated period of 180 days.
The banks should concentrate on encouraging exporters to bring back over-due export proceeds, which are held-up for less than a year. "Banks have to really act fast to ensure realization of approximately $200 - $220 million overdue proceeds on which the State Bank staff will be working closely with them."
SBP Governor underscored the need to devise a mechanism to segregate between those exporters who have genuine problems and those who are not bringing back export proceeds willfully. The State Bank and banks are to conduct analysis of reasons for delays in export proceeds beyond one year and work out linkage between held up export proceeds and Export Refinance. She also said that banks and the State Bank should also develop a database of export proceeds region wise/customer wise in order to expedite repatriation of the held up proceeds.
Representatives of the commercial banks assured the central bank that they will make utmost efforts towards realization of export proceeds. They also agreed to have another meeting with the Governor SBP after 15 days to report the progress in this regard.