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Author: Mrs. Anjum Shahnawaz

  • World Bank approves $300 million to support Pakistan human capital, livelihoods

    World Bank approves $300 million to support Pakistan human capital, livelihoods

    WASHINGTON: The World Bank has approved $300 million to support human capital and livelihoods in Pakistan, said a statement on Wednesday.

    Pakistan is accelerating investments in health care and education to prepare children to reach their productive potential and generate wealth. Today the World Bank committed $200 million for the Punjab Human Capital Investment Project that will strengthen health services and social protection for poor and vulnerable households in select districts in Punjab.

    “Pakistan’s strongest asset is its people. Investing at the start of life, especially for girls and women, is essential to empower citizens to thrive,” said Illango Patchamuthu, World Bank Country Director for Pakistan. “This project will help the Punjab province to invest in early years now to create a productive workforce for the future.”

    The project will increase the quality and uptake of health services, including maternal care, immunizations, and childbirths attended by qualified professionals, reaching up to 18 million people. It will provide early childhood education and skills training for young parents and will improve systems to more efficiently manage economic and social inclusion programs.

    “There are substantial financial and non-financial barriers to access quality health services, such as expenses to visit health facilities and the burden of household chores and childcare, especially among women in poor households,” said Yoonyoung Cho, Task Team Leader for the project.

    “The first 1,000 days are the most critical time in a child’s development, thus prioritizing maternal and natal care is integral to their productive capacity and strengthening human capital accumulation in Pakistan.”

    The World Bank also approved $85 million in grants and credits from IDA18 Regional Sub-Window for Refugees and Host Communities and $15 million from the Multi-Donor Trust Fund to the Federal Government and the Government of Balochistan to support the strengthening of institutions, delivery of services, and support for livelihoods and enterprise development.

  • Banking deposits hit all-time high on attractive policy rate

    Banking deposits hit all-time high on attractive policy rate

    KARACHI: The deposits of banking system hit all-time high of Rs14.672 trillion by end of January 2020 owing to higher returns on attractive interest rates.

    According to State Bank of Pakistan (SBP), the deposits of banking system grew by 12.36 percent to Rs14.672 trillion by January 2020 as compared with Rs13.057 trillion in the same month of the last year.

    The banking deposits were previously hit all-time high of Rs14.632 trillion by end of December 2019.

    Analysts said that the higher interest rate attracted the investors to keep their money in banking system for higher returns.

    The SBP kept the policy rate unchanged at 13.25 percent in the last monetary policy on January 28, 2020.

    The analysts also believed that the slowdown in economy also discouraged new investment in the industrial and other avenues. Therefore, profit through banking deposits has become prime option.

    The higher deposits also provided room for banks to invest in government papers. The higher investment in government securities resulted in significant profitability of the banks.

    Analysts said that the year 2019 was an exceptional year for the banking sector with profitability increasing by 20 percent or Rs30 billion to reach Rs177 billion, in spite of economic slowdown.

    The primary driver this year has been the net interest income which has increased by 27 percent from Rs486 billion to Rs620 billion, which is mainly due to higher interest rates.

    Weighted average policy rate in 2019 remained 12.2 percent compared to 7.2 percent in 2018.

    In absolute terms, the highest yearly profit was earned by MCB bank (Rs23.8 billion) followed by UBL (Rs19 billion) and NBP (Rs16.6 billion). However in terms of earnings growth BIPL came out on top with 247 percent growth followed by MEBL with 73 percent and AKBL with 58 percent growth, said analysts at Arif Habib Limited.

    As mentioned Net Interest Income (NII) of the banks remained major earnings driver in 2019. In Pakistan rising interest rates bodes well for banks as around 34 percent of deposits are non-remunerative (Current Deposits on which banks give no return) that leads to a higher spread. Top banks with the highest growth in NII are BIPL (78 percent), MEBL (65 percent) and SCBPL (50 percent).

  • UBL continues de-risking strategy in international operations

    UBL continues de-risking strategy in international operations

    KARACHI: The United Bank Limited (UBL) has continued its de-risking strategy in its overseas operations, with the business model focused on selective lending mainly to established corporates with a longer term business relationship with the bank.

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  • Source of money for immovable property purchase may be questioned

    Source of money for immovable property purchase may be questioned

    KARACHI: Federal Board of Revenue (FBR) has said that a commissioner of Inland Revenue has been empowered to ask source of money used for purchase of immovable properties under legal provisions related to undeclared assets.

    The FBR in explanations related to purchase of immovable properties, said that the commissioner of Inland Revenue can ask to explain the source of funds in the investment made in immovable property and apply the provision of unexplained income under Section 111 of Income Tax Ordinance, 2001 by providing opportunity of being heard.

    The tax authority explained to general queries related to FBR valuations of immovable properties. The FBR responded in a scenario when a person is not a filer of income tax returns and the person intended to purchase property at FBR’s notified rates and required to pay advance tax under Section 236K at the time of purchase.

    The general query was whether commissioner can ask the question of source of investment for such property.

    The FBR in another query related to purchase of an immovable property at FBR’s notified value on which advance tax payable whether commissioner of Inland Revenue shall still be empowered to re-determine the value of property?

    The FBR said that the commissioner was not empowered to re-determine the value of the immovable property purchased on the valuation as determined by the FBR for which advance tax under Section 236K of Income Tax Ordinance, 2001 has been paid on such valuation.

  • Prime Minister welcomes banks’ proposals for revival of sick industrial units

    Prime Minister welcomes banks’ proposals for revival of sick industrial units

    ISLAMABAD: Prime Minister Imran Khan on Tuesday welcomed proposals of banks for revival of sick industrial units.

    A delegation of prominent bankers of the country called on Prime Minister Imran Khan in Islamabad.

    Prime Minister Imran Khan welcomed the proposals of the banking community particularly those related to the revival of the sick industrial units.

    Adviser to PM on Finance Dr. Abdul Hafeez Shaikh, Adviser to PM on Institutional Reforms Dr. Ishrat Hussain, Governor State Bank of Pakistan Syed Reza Baqir and senior officials of the Government were present during the meeting.

    The bankers apprised the Prime Minister about the issues concerning banking sector in terms of financing for accelerating the economic activities aimed at wealth creation and presented various suggestions to overcome issues being encountered.

    The Prime Minister stated that the Government is working relentlessly for economic growth and sustained positive sentiments, domestically as well as externally.

    The Prime Minister highlighted human resource potential of the country with enterprising youth in majority; we need to channelize their energies through skill development thereby enabling them to contribute towards economic development.

    The Prime Minister said that the present Government is focused on reviving sick industrial units and promoting the SMEs, as they are essential for wealth creation and generation of employment opportunities.

    The Prime Minister appreciated the proposals of the delegation and assured maximum facilitation.

    The meeting was informed that Corporate Restructuring Company has been established to take over sick industrial units for the purpose of reviving the commercially or financially distressed companies thereby making them profitable with consultation of all the stakeholders.

  • Criminal proceedings against officials of RTO-II Karachi in fake sales tax refunds ordered

    Criminal proceedings against officials of RTO-II Karachi in fake sales tax refunds ordered

    KARACHI: Federal Tax Ombudsman (FTO) has directed tax authorities to initiate criminal proceedings against officials involved in processing bogus sales tax refunds.

    In an own motion in bogus refunds, the FTO observed that failure of the Regional Tax Office (RTO)-II Karachi to initiate action against the persons/officials involved in registration of fake refund payment and retrieval of refund already issued prior to issuance of red alert, was tantamount to maladministration.

    The FTO ordered the FBR to:

    — direct the Chief Commissioner Inland Revenue, RTO-II Karachi to investigate and identify the officials involved in registration of fake RP and initiate legal action against those found involved;

    — identify the officers/officials who were involved in processing bogus sales tax refund on the basis of fake and flying invoices and issuing refund pertaining to tax period August 12 and take appropriate criminal/disciplinary action against them.

    — initiate appropriate action including criminal proceedings leading to prosecution of RPO and recovery of amount of Rs3 million, swindled from public exchequer.

    The FTO directed the tax authorities to ensure compliance of the order within 45 days from the issuance of the order i.e. February 24, 2020.

    The tax ombudsman in its own motion initiated investigation in irregularities committed by the FBR field formations in processing and sanctioning of bogus sales tax refunds during the period 2011-2014 identified by Directorate General Intelligence and Investigation of FBR and ‘Red Alerts’ were issued to the field formations concerned but neither any action was initiated against the fake claimants nor their connivers in the department, who were involved in bogus registration, processing and sanctioning of fraudulent refund and issuance of refund cheques, nor against the related officers/officials of bank branches concerned and PRAL management.

    The FBR issued the instance order in the case of M/s Victory International, engaged in the manufacturing of plastic products.
    The investigation of I&I FBR revealed that the RP got registered on November 11, 2010 as a manufacturer of plastic product but claimed refund of Rs3 million for tax period August 2012 on the basis of fake invoices issued by irrelevant suppliers from paper, steel, electric sectors therefore the whole activity chain was treated as engineered with aim to obtain illegal refund.

  • Equity market ends down by 97 points amid profit taking

    Equity market ends down by 97 points amid profit taking

    KARACHI: The equity market fell by 97 points on Tuesday after investors preferred profit taking.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 39,200 points as against 39,296 points showing a decline of 97 points.

    Analysts at Arif Habib Limited said that the market continued the ascent realizing a gain of +570 points during the session, but felt the need to consolidate and book profits, which saw index sliding back by -239 points.

    Cement sector has so far shown the strength, which resisted last week and even made a strong comeback when the despair ended.

    Reports of Cement manufacturers meeting in the coming days to resolve the issues kept the interest alive among investors.

    On the other hand, news of FFC cutting back the price of Urea concerned investors to ditch fertilizer stocks and consider safe havens such as Cyclicals and otherwise Oil & gas chain.

    Cement sector again led the traded volumes with 63.2 million shares, followed by O&GMCs (26.5 million) and Technology (22.7 million).

    Among scrips, MLCF topped the chart with 20.9 million shares, followed by UNITY (20.5 million) and HASCOL (19.2 million).

    Sectors contributing to the performance include Fertilizer (-101 points), Power (-42 points), Banks (-32 points), E&P (+52 points) and Technology (+23 points).

    Volumes increased from 215.3 million shares to 225.2 million shares (+5 percent DoD). Average traded value, however, dipped by 3 percent to reach US$ 56.7 million as against US$ 58.7 million.

    Stocks that contributed significantly to the volumes include MLCF, UNITY, HASCOL, TRG and FCCL, which formed 38 percent of total volumes.

    Stocks that contributed positively include PPL (+23 points), OGDC (+18 points), TRG (+15 points), HASCOL (+15 points) and POL (+14 points). Stocks that contributed negatively include FFC (-44 points), ENGRO (-40 points), HUBC (-37 points), LUCK (-32 points), and EFERT (-17 points).

  • Domestic oil sales fall by 14% on economic slowdown

    Domestic oil sales fall by 14% on economic slowdown

    KARACHI: The domestic oil sales have declined by 14 percent during July – February 2019/2020 due to economic slowdown.

    According to statistics by Oil Companies Advisory Committee (OCAC), the domestic oil sales fell to 11.24 million tons during first eight months of current fiscal year as compared with 13.1 million tons in the corresponding period of the last fiscal year.

    Analysts at Topline Securities said that the lower consumption was largely attributed to economic slowdown.

    The sales of motor spirit (petrol) were flat at 5 million tons during the period under review. However, sales of furnace oil and high speed diesel fell by 33 percent and 14 percent respectively.

    The analysts said that oil sale for Feb 2020 was decline by 26 percent YoY largely driven by a decline in HSD and FO volumes.

    In absolute terms the decline was of 221,000 tons in HSD (-37 percent YoY). The lower consumption is largely attributed to the economic slowdown.

    Ex-FO performance did not fare well as 26 percent YoY and 15 percent MoM decline is expected.

    The slight uptick in FO volumes was witnessed in last month (Jan 2020) at the behest of a significant price decline. Since then FO prices have witnessed a gradual recovery.

    HASCOL remained the top laggard with decline in volumes by 61 percent and 33 percent YoY and MoM, respectively.

    Market share of the company in MS/HSD has declined by 430bps/810bps YoY. Similarly on MoM basis, market share is down by 160bps/250bps.

    APL has gained market share in HSD and MS both by 390bps and 120bps MoM to 13.2 percent and 10.1 percent respectively.

    PSO’s share in MS declined by 2.4 percent to settle at 35.4 percent. SHEL managed to maintain its market share at 11.7 percent mark in MS their main segment.

  • Rupee gains eight paisas on declining import bill

    Rupee gains eight paisas on declining import bill

    KARACHI: The Pak Rupee gained eight paisas against dollar on Tuesday owing to significant decline in import bill.

    The rupee ended Rs154.29 to the dollar from previous day’s closing of Rs154.37 in interbank foreign exchange market.

    Currency dealers said that the shrinking trade deficit and decline in imports helped the rupee to gain value.

    The import bill of the country fell to $31 billion during July – February 2019/2020 as compared with $36.5 billion in the corresponding period of the last fiscal year, showing decline of around 15 percent.

    The falling imports also helped the country to curtail trade deficit. The trade deficit shrank by 27 percent to $15.5 billion during first eight months of the current fiscal year as compared with $21.5 billion in the corresponding period of the last fiscal year.

    The foreign currency market was initiated in the range of Rs154.32 and Rs154.38. The market recorded day high of Rs154.35 and low of Rs154.29 and closed at Rs154.29.

    The exchange rate in open market witnessed no change in rupee value. The buying and selling of dollar was recorded at Rs154.00/Rs154.30, the same previous day’s closing, in cash ready market.

  • Audit firm suspended for misconduct

    Audit firm suspended for misconduct

    KARACHI: The Institute of Chartered Accountants of Pakistan (ICAP) has taken disciplinary action against an audit firm for professional misconduct, suspending its operations and removing its name from the official register for a period of six months.

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