Day: June 11, 2019

National Savings to issue registered prize bonds in all denominations

ISLAMABAD: The Central Directorate of National Savings (CDNS) to issue scripless registered prize bonds amongst all denominations with objective to document the economy.

Economic Survey 2018/2019 released by the finance ministry of Monday, said that in collaboration with SBP, National Savings is in the process of introduction of registered scripless prize bonds amongst all denominations.

The registered prize bonds will be a step towards documentation of the economy while providing facility to the general public.

The CDNS remained in the process of restructuring and transformation in the Fiscal Year 2019. In this regard, the achievements made in the first nine months and initiatives in the pipeline are as under:

IT Transformation:

Starting from 2002-03, National Savings has gone a long way towards computerization and automation of its processes.

Out of 375 National Savings Centers (NSCs), 222 have been computerized. In the last one year, some more milestones have been achieved for transformation of the organization into an Information Technology enabled entity.

i. A data center has been established at National Telecommunication Corporation (NTC) and now 205 NSCs are connected to centralized location through Wide Area Network (WAN) whereas NTC is working for provisioning of connectivity at remaining NSCs.

ii. CDNS Main Application System has been upgraded into state-of-the-art Business Application Solution and deployed at 35 National Savings Centers while remaining NSCs are in the process of migration to the centralized architecture by using the newly upgraded Business Application Solution. The aforesaid achievement has enabled CDNS for provisioning of advance, efficient and value-added services to its customers using Alternative Deliver Channels (ADCs) i.e. Debit/ATM Cards, etc.

iii. Protocols have been laid down with National Database Registration Authority (NADRA) for obtaining Verisys and Biosys, which are necessary in the new digitized set up of the organization.

iv. Vendor has been selected for providing the card (ATM/Debit Card) solution for CDNS.

v. Agreement with 1Linkhas been signed for providing connectivity with banking sector/ATM operations.

Achievement of Annual Targets:

CDNS, being the foremost institution providing the avenue to general public to park their savings has been able to not only achieve the targets assigned but also surpassed by a big margin. As of 30.04.2019, the CDNS has achieved 213 % of the Gross and 191% of proportionate targets.

Initiatives in the Pipeline:

Sharia Product of National Savings

There was a persistent demand of Sharia compliant product and CDNS has responded to it and has developed its first-ever Sharia Compliant product called Sarwa Islamic Savings Account (SISA) for those who desire to invest only in the Sharia-compliant scheme of CDNS. The Draft rules for it have been printed in the Gazette of Pakistan and after approval of the Cabinet Committee for Disposal of Legislative Cases (CCLC) and the Federal Cabinet, the proposed SISA Scheme will be introduced across the country.

Overseas Pakistanis Savings Certificates (OPSCs)

The Pakistani diaspora abroad wanted to have a secure investment channel for their savings while Government of Pakistan, in order to increase more also looked for bringing remittances into formal money channels which were mostly coming via informal channels. In this regard, to fill the void, OPSCs has been designed as a product by CDNS to be launched for Overseas Pakistanis only. It will be launched initially in the Gulf Cooperation Council (GCC) market and then other countries. The Agreement with Manger To the Issue (MTI) has been almost finalized. Being a scripless security, OPSCs will be offered in both the US$ and rupee currencies. It is expected that they will be launched in the Fiscal Year 2019-20.

Launch of Rs. 100,000 Premium Prize Bond (Registered)

After successful launch of Rs.40000, Premium Prize Bond (Registered) National Savings is in the process of launching another registered prize bond for Rs. 100,000

Debit Card Launch & Membership of 1Link System

In near future National Savings is launching ATM Debit Cards with the support of the Karandaaz Pakistan.

June 11, 2019
Economic Survey 2018/2019: SBP increases policy rate by 650bps in past 18 months

ISLAMABAD: State Bank of Pakistan (SBP) enhanced policy rate by 650 basis points during last 18 months (January 2018 to date) for macroeconomic stabilization.

According to Economic Survey 2018/2019 issued by the ministry of finance on Monday said the SBP had adopted policy rate reversal and gradually increased it by a cumulative 650 bps since January, 2018.

“Despite increase in policy rate, Weighted Average Lending Rate (WALR) remained stable which translated into healthy private sector credit demand.”

Credit to private sector (CPS) increased to Rs 775.5 billion during FY2018 against Rs 747.9 billion last year. Significant increase in credit demand primarily came from working capital and fixed investment in the preceding year.

During the period July-March, FY2019 CPS increased to Rs 554.7 billion compared with Rs 401.1 billion during same period of last year.

Of which working capital loans received the major share and stood at Rs 369.0 billion compared to Rs 215.3 billion last year. While fixed investment decelerated to Rs 83.1 billion against Rs 148.1 billion in the comparable period last year.

The survey said that the monetary policy is an important tool to achieve price stability and manage economic fluctuations.

Inflation targeting has emerged as the leading framework for monetary policy over recent decades in many advanced and in low income economies.

Monetary policy role after global financial crises has extended as macro prudential policy which required strong institutional framework for financial stability and to achieve twin objectives of price and output stabilization.

Pakistan’s economy witnessed a consumption led growth of 5.53 percent during preceding year FY2018.

The incumbent government has inherited the economy facing multiple challenges including unsustainable twin deficits that pose serious risks to the economy.

Hence, to correct the imbalances in the economy, authorities have taken steps to curtail the fiscal deficits and tighten monetary policy to contain demand.

SBP has significantly tightened monetary policy, and allowed greater flexibility in the exchange rate adjustments to curb excessive aggregate demand and move towards macroeconomic stabilization.

This trend is in line with the global trends. The global economic expansion has weakened and projected to slow down from 3.6 percent in 2018 to 3.3 in 2019, before returning to 3.6 percent in 2020.

Following a notable tightening of global financial conditions during second half of 2018, conditions have eased in early 2019 as the US Federal Reserve signaled a more accommodative monetary policy stance and markets became more optimistic about a US–China trade deal.

The US federal funds rate is expected to increase to about 2.75 percent by the end of 2019. Policy rates are assumed to remain at close to zero in Japan through 2020 and negative in the Euro area until mid-2020.

June 11, 2019
LSM growth exhibits massive decline on lower PSDP spending

ISLAMABAD: The Large-Scale Manufacturing (LSM) declined by 2.93 percent during July-March 2018/2019 in contrast to growth of 6.33 percent during the same period last year. The target for this year was 8.1 percent, said Economic Survey 2018/2019 released on Monday.

“The present trend suggests that full year LSM growth will remain below the target by a wide margin,” according to the economic survey.

Year on Year (YoY), LSM growth witnessed sharp decline of 10.63 percent in March 2019 as compared to increase of 4.70 percent in March 2018.

There are a number of factors which have contributed to the negative growth in LSM.

These include lower Public Sector Development Program (PSDP) expenditures compared to last year, muted private sector construction activities and lower consumer spending on durable goods amongst others.

This was more noticeable in construction-allied industries. Demand for housing moderated as the price of building materials and cost of financing increased. Moreover, additional tax measures further restricted the real estate market.

Certain sector-specific issues also contributed to the decline in LSM. Automobile prices witnessed multiple upward revisions due to PKR depreciation which made the potential buyers refrain from making booking and purchases.

Certain restrictions on non-filers with respect to purchase of cars further dampened the automobile demand.

Pharmaceuticals also suffered due to a considerable lag in regulatory adjustments in prices.

This pricing issue was in addition to weakening of the local currency, which added to the distress of an import dependent sector.

The industry specific data shows that electronics recorded highest growth of 23.70 percent, wood products 15.21 percent, rubber products 3.47 percent, engineering products 9.54 percent, leather products 0.97 percent and fertilizers 4.50 percent.

The industries which recorded negative growth during the period are; Iron & Steel 11.00 percent, Pharmaceuticals 8.40 percent, Automobile 7.58 percent, Coke & Petroleum products 6.00 percent, Food Beverages & Tobacco 4.69 percent, Chemicals 3.94 percent, Paper & Board 3.86 percent, Non-metallic mineral product 4.96 percent and Textile 0.30 percent.

The Mining and Quarrying sector declined by 1.96 percent during Jul-Feb FY 2019 in contrast to the growth of 7.7 percent during the same period last year. Chromite, Magnesite, Rock salt, Barytes, Ocher and Crude oil posted a positive growth of 228.69 percent, 159.63 percent, 12.65 percent, 22.15 percent, 19.12 percent and 0.47 percent respectively.

However, some minerals witnessed negative growth during the period under review such as Coal 25.42 percent, Natural gas 1.98 percent, Sulphur 40.72 percent, Calcite 91.49 percent, Soap stone 13.12 percent, Marble 4.66 percent and Bauxite 30.82 percent.

June 11, 2019