Aug 24 - 30, 2009

In the beginning of January 2008, rupee depreciated more than 35% against the US Dollar and also lost value against other leading currencies. Rupee depreciation can be attributed to various factors that include pressure on country's foreign exchange reserves, inability to boost exports and above all no attempt to contain import of unnecessary goods.

Some of the experts have been demanding devaluation of rupee as they believed that the currency was overvalued and a hurdle in boosting exports. They insisted that devaluation of rupee would help in boosting country's export. Some of the experts warned that devaluation would have more adverse repercussion than benefits. They feared that devaluation would not only enhance Pakistan's external debt servicing but also make every imported commodity dearer and inflation could break all the previous records.

In the recent past Pakistan had to face double-edged sword because commodity prices broke most of the previous records and higher import of wheat, fertilizer and oil also became necessary due to shortfall in local production. This pushed Pakistan's import to the record high level. The level of discomfort could be gauged from the fact that international prices per ton of wheat exceeded $500, urea around $550 and crude oil $147/barrel, almost more than double the average in the recent past. Luckily, these prices have come down substantially but an upward move has the potential to erode Pakistan's foreign exchange reserves.

Hike in global prices of the commodities skyrocketed inflation rate in the country because price of almost every item registered steep upward trend. In an attempt to contain inflation the central bank decided to keep interest rates high, which escalated cost of doing business in the country. This also eroded competitiveness of the Pakistani exporters. While most of the other countries injected funds and slashed interest rate Pakistani economic managers failed in coming up with any strategy to boost exports to bridge the widening trade deficit.

In developing countries like Pakistan major sources of foreign exchange are exports, foreign direct and portfolio investment, remittances and borrowing from international financial institutions, including the IMF. With most of the leading economies plunged deeper into financial crisis and subsequently recession Pakistan's problems were further aggravated. The deteriorating law & order conditions and military action against militants in the northern areas also impaired the economy. Added to this has been load shedding of electricity and gas. The cumulative impact of all the odds was negative growth of the manufacturing sector.


Countries suffering from adverse balance of payment often approach the IMF. However, this assistance is mainly for debt serving and other sources have to be tapped for financing imports. In past, Pakistan has successfully negotiated oil financing facilities but this time acquiring this facility was not possible. Now all eyes are set at funding under Friends of Democratic Pakistan (FoDP). Though, supporters of FoDP have promised substantial amounts, actual disbursements have not been made as yet. Pakistan has been successful in convincing the IMF to further enhance its assistance. However, experts are wary of mounting external and internal debt servicing.

Pakistan has been fortunate that this time the IMF is not proving too hostile. However, the point of concern is that the country has not been able to put its economy back on the track. The sings of economic revival are still not evident rather percentage of people living below subsistence level is on the rise. On the one hand, unemployment is on the rise and on the other hand entrepreneurs are reluctant in making fresh investment.


In nineties Pakistan suffered from 'dollarization' and phenomenon has re-emerged lately. Some of the reasons exports have not registered significant growth include under invoicing and delay in receiving export proceeds.

Lately, Special Convertible Rupee Accounts (SCRAs) have also been a major source of foreign exchange. However, plunging of the index to half of its peak level, imposition on floor at the local bourses has mostly reasons in net outflows from these accounts. It is true that most of the quality scrip are trading at substantial discount but depreciating rupee is keeping portfolio investors to stay away from investing in Pakistani equities market.


During Musharraf-Shaukat regime Pakistan's privatization also attracted substantial foreign investment. However, the present government has not made any significant achievement yet. While the entire blame does not go to the current economic managers one could not refrain himself from uttering that hardly any effort has been made to reinvigorate the program.


It may be true that trade deficit is huge but flight of capital has also eroded the foreign exchange reserves. Stabilization of commodities prices has eased the pressure but unless concerted efforts are made to attract fresh investment, accelerate GDP growth rate, contain cost of doing business, and produce exportable surplus, foreign exchange reserves cannot be built. The IMF assistance, even of huge quantum could only provide temporary relief. There is also a warning that unless corrective steps are taken to revive the ailing economy the country will be forced to borrow for discharging its debt servicing liabilities.


Commodity prices are once again on the rise and should be of greater concern for the economic managers because heavy reliance on thermal power generation is likely to inflate oil import bill. It may be true that the country may not import urea during the current financial year but import of cotton and sugar would erode the foreign exchange reserves.

Exports of textiles and clothing could register decline if cotton becomes expensive in the global markets. Curl leaf virus in certain areas has attacked the standing cotton crop. It is feared that achieving cotton production target may not be possible. Therefore, timely arrangements have to be made for the import of cotton.

Reportedly, a further reduction in the production sugarcane during 2009-10 would necessitate around 750,000 tons sugar. Sugar prices are likely to remain high during this period because of a forecast of lower sugarcane crop in India and also in some other sugarcane producing countries.



Islamic International Rating Agency (IIRA) is pleased to assign Shari'ah Quality Rating of AA (SQR) to Dawood Islamic Bank Ltd (DIBL). The rating reflects IIRA's opinion that the DIBL conforms to very high standards of Shari'ah compliance in all aspects of Shari'ah Quality Analysis.

DIBL commenced its operations in April 2007 with the vision to provide Shari'ah compliant financial solutions to all segments of an increasing shari'ah conscious business and consumer society.

DIBL has a highly efficient and effective Shari'ah Supervisory Structure consisting of a Shari'ah Supervisory Committee (SSC), a Shari'ah Coordinator and Shari'ah Control mechanism. The Head of SSC is Professor Mufti Munib-ur-Rehman, who is a well known and highly respected Shari'ah scholar specially in the fields of Tafsir, Hadith, Ifta'a, Usool-e-Hadith, Fiqh, Arabic and other Islamic Jurisprudence and has over 30 years rich experience of teaching Islamic education and issuing Fatawa'as (Shari'ah pronouncements). Other members of SSC and the Shari'ah Coordinator are also knowledgeable, experienced and highly qualified in Islamic Studies, Fiqh, Economics, Islamic Banking and Takaful.

DIBL has implemented approved procedures and a manual for Shari'ah compliance, audit and control. The SSC enjoys close working relationship with the Shareholders, board of Directors and the Executives of the Bank.

DIBL has also been committed in providing training in Islamic Banking to all its employees through intensive internal and external courses to ensure that the employees have fair knowledge of Shari'ah aspects of all the products offered by the Bank.

A significant portion of Bank's assets consists of Mudarabah, Ijarah and Musharakah based transactions. The Bank may adopt a policy for further enhancing the participatory modes of financing.


The State Bank of Pakistan will observe the following office hours during the ensuing Holy Month of Ramazan-ul-Mubarak:-

Days Office Hours

Monday to Thursday & Saturday 9.00 A.M. to 2.15 P.M. (without break)

Friday 9.00 A.M. to 1. 00 P.M.(without break)

However, the banks/field offices of the SBP Banking Services Corporation will observe the following business (banking) hours during the Holy Month of Ramazan-ul-Mubarak:-

Days Business (banking) Hours

Monday to Thursday & Saturday 9.00 A.M. to 1.30 P.M. (without break)

Friday 9.00 A.M. to 12.30 P.M. (without break)

All the field offices of SBPBSC will observe the following clearing timings during the Holy Month of Ramazan-ul-Mubarak:-

Days 1st Clearing 2nd (Special) Clearing

Monday to Saturday 0900 am 1200 noon

After the holy month of Ramazan-ul-Mubarak, the above timings will automatically be reverted to pre-Ramazan-ul-Mubarak timings.