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Author: Mrs. Anjum Shahnawaz

  • Moody’s assigns stable outlook to top five Pakistani banks

    Moody’s assigns stable outlook to top five Pakistani banks

    KARACHI: Following the improved outlook of Pakistan economy, Moody’s Investors Service on Thursday affirmed the B3 long-term local currency deposit ratings of five top Pakistani banks and changed the outlook to stable from negative.

    The rating agency in a statement said that affected banks include Allied Bank Limited (ABL), Habib Bank Ltd. (HBL), MCB Bank Limited (MCB), National Bank of Pakistan (NBP) and United Bank Ltd. (UBL).

    The rating actions follow Moody’s decision on 2 December to affirm the B3 rating for the Government of Pakistan and change the outlook on the sovereign rating to stable from negative.

    The banks’ rating actions reflect improvements in the operating environment in Pakistan and in the country’s sovereign credit profile, which affect the banks’ given (1) their high government exposures that link their credit profiles to that of the government; and (2) the expectation that the government’s capacity to support banks in case of need will not deteriorate.

    The primary driver of Moody’s decision to change the five Pakistan banks’ outlooks to stable is the extensive interconnectedness between their balance sheets and sovereign credit risk, owing to the banks’ high exposures to government securities.

    According to Moody’s estimates as of the latest available information, the five banks’ direct exposure to government credit risk stood at around 10.2x of Tier-1 capital for ABL, 8.1x for HBL, 6.4x for MCB, 9.5x for NBP and 6.8x for UBL.

    The high direct exposure to government credit risk, in addition to the primarily Pakistan focus of their operations, links the banks’ credit profile to that of the government. As a result, the improvements in the operating environment and in the sovereign credit profile have eased pressures on banks as well.

    The stable outlook assigned to the banks’ local currency deposit ratings also reflects Moody’s expectation that the government’s capacity to support banks in case of need will not deteriorate.

    This is reflected by the stable outlook on Pakistan’s sovereign B3 bond rating which is driven by reduced external vulnerability risks on the back of policy adjustments and currency flexibility, as well as ongoing fiscal reforms that will mitigate risks related to debt sustainability and government liquidity.

    The local currency deposit ratings of NBP and HBL incorporate one notch of support uplift from their caa1 baseline credit assessments.

    Moody’s decision to affirm the banks’ ratings reflects their stable deposit-based funding structures, high liquidity buffers and good earnings generating capacity, as well as Pakistan’s high growth potential.

    These credit strengths balance banks’ modest capital buffers and high asset risks, as well as their high exposure to the government, which links their credit profile to that of the government.

    Moody’s does not have any particular environmental, social or governance concern for the banks included in this action, and does not apply any corporate behavior adjustments to them.

  • Import, export of gold prohibited under foreign exchange laws

    Import, export of gold prohibited under foreign exchange laws

    KARACHI: The import and export of gold are prohibited, except with the general permission, under updated foreign exchange manual issued by State Bank of Pakistan (SBP).

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  • Bearer prize bonds of Rs40,000 worth Rs233 billion documented

    Bearer prize bonds of Rs40,000 worth Rs233 billion documented

    KARACHI: People have documented an amount of Rs233 billion invested in bearer prize bonds of Rs40,000 denominations following the government announcement of discontinuation.

    According to statistics of Central Directorate of National Savings (CDNS) people have Rs323 billion bearer bonds of Rs40,000 denomination by October 2019, which is around 90 percent of the total invested amount till May 2019.

    The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination national prize bonds in initial phase.

    The investment in prize bonds of Rs40,000 denominations reached to record level of Rs258.72 billion by May 2019.

    However, since announcement the stock of bearer prize bonds was gradually falling and reduced to only Rs26.15 billion by October 2019.

    The State Bank of Pakistan (SBP) following the announcement issued procedure for the banks to facilitate general public in exchanging the unregistered prize bonds through three different modes.

    The SBP has barred the exchange of bearer prize bonds against cash.

    However, it can be redeemed against registered or premium prize bonds or can be converted into national saving schemes or face value (direct transfer to the bank account of bond bolder).

    The bearer instruments have been known as parking lot for undocumented economy. Therefore, the government launched registered prize bonds of Rs40,000 denomination in March 2017 which could be purchased against certain requirements including Computerized National Identity Card (CNIC) and valid bank account.

    Following the ban on bearer prize bonds and its conversion through option of known documented manner, the investment in premium prize bonds of Rs40,000 denomination jumped up to Rs17 billion by October 2019 as compared with Rs6.17 billion as of May 2019, showing an increase of 175 percent.

    According to the SBP the bearer instrument can also be exchanged in savings schemes such as Special Saving Certificates (SSC) or Defence Saving Certificates (DSC).

    The total investment into the saving certificates increased to Rs2.4 trillion by October 2019 as compared with Rs2.2 trillion by May 2019.

    The government is intended to transform all the bearer prize bonds into to registered securities. In this regard the Central Directorate of National Savings in collaboration with SBP is planning to issue scripless registered prize bonds amongst all denominations with objective to document the economy.

  • FBR extends date up to Dec 15 for online integration of large retail houses

    FBR extends date up to Dec 15 for online integration of large retail houses

    ISLAMABAD: Federal Board of Revenue (FBR) has extended last date up to December 15, 2019 for large retail houses to integrate their systems for online sales reporting to the tax authorities.

    In an official memorandum circulated on Wednesday to all chief commissioners of Regional Tax Offices (RTOs) and Large Taxpayers Units (LTUs), saying that the mandatory requirement for Tier-I retailers to integrated their outlets with FBR’s computerized system for real time reporting of sales, the date has been extended up to December 15, 2019.

    According to Sales Tax Act, 1990, Tier-1 retailers means,

    (a) a retailer operating as a unit of a national or international chain of stores;

    (b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;

    (c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees six hundred thousand;

    (d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers”; and

    (e) a retailer, whose shop measures one thousand square feet inarea or more.

    According to the statute, in case a Tier-1 retailer does not integrate his retail outlet in the manner as prescribed under sub-section (9A) of section 3, during a tax period or part thereof, the adjustable input tax for whole of that tax period shall be reduced by 15 percent.

    The Sales Tax Act further said that Tier-1 retailers shall pay sales tax at the rate as applicable to the goods sold under relevant provisions of this Act or a notification issued there under:

    Provided that the customers of a Tier-1 retailer shall be entitled to receive a cash back of up to five percent of the tax involved, from such date in the manner and to the extent, as may be prescribed by the Board:

    Provided further that from such date, and in such mode and manner, as prescribed by the Board, all Tier-1 retailers shall integrate their retail outlets with Board’s computerized system for real-time reporting of sales.

    The FBR notified rules separately for the integration of retailers with the system.

    150ZEA. Application.– The provisions of this Chapter shall apply to supplies of finished fabric and locally manufactured finished articles of textile and textile made-ups and leather and artificial leather, as covered in Table II in Notification No. S.R.O. 1125(I)/2011, dated the 31st December, 2011, under sub-serial (vii) of S. No. 1 and S. No. 3, as are made by the registered persons who are integrated with Board’s online system for the purpose of availing lower rate on supplies as specified in condition (xv) of the said Notification.

  • SBP directs banks to provide daily branch-level cash position

    SBP directs banks to provide daily branch-level cash position

    KARACHI: State Bank of Pakistan (SBP) on Wednesday directed the banks to provide branch-wise cash position on daily basis.

    A circular issued by the central bank said that through a circular dated October 04, 2018 wherein SBP introduced daily branch-level reporting of cash receipts and payments, with a view to monitor and manage cash operations across the industry.

    In order to further enhance the control over reported data, it has been decided to route the data reporting through Data Acquisition Portal (DAP).

    Banks are therefore advised to report daily branch wise cash receipts & payments data via DAP with effect from December 09, 2019.

    In the previous circular issued in October 2018, the SBP said that While appreciating the efforts of banks in efficient reporting through DAP, SBP intends to further improve the reporting mechanism with a view to monitor and manage the cash operations, banks would be required to upload/submit branch wise cash receipt and withdrawal position at each day end.

    Accordingly, SBP has made necessary development in SBP Data Acquisition Portal (DAP) to facilitate banks in submission of branch wise daily position.

    In order to acquaint the respective officials of banks, SBP is organizing an orientation session.

    Therefore, banks are requested to nominate, at least two, officials to participate in the session.

  • FBR issues Rs5.5bn refunds through automated system: Shabbar Zaidi

    FBR issues Rs5.5bn refunds through automated system: Shabbar Zaidi

    ISLAMABAD: Syed Shabbar Zaidi, Chairman, Federal Board of Revenue (FBR) on Wednesday said that around Rs5.5 billion sales tax refunds were issued through fully automated system.

    In a massage, he said that the FBR had released to this date around Rs 5.5 billion worth of refunds under fully automated FASTER system.

    “However the most important feature and the change in paradigm is that such refunds have been issued under fully automated, impersonal, harassment and corruption free system.”

    In August 2019 the FBR amended the Sales Tax Rules, 2006 through SRO 918(I)/2019 to make mandatory the routing of refund claims through RMS of the FBR’s computerized system.

    Based on the parameters in RMS, a refund claim shall be routed to any of the following three channels as described below, namely:−

    (a) Fully Automated Sales Tax e-Refund System (FASTER), The provisions related to this channel are prescribed in Chapter V-A.

    (b) Expeditious Refund System (ERS), The claims filed by the manufacturer cum-exporters under section 10 of the Act that do not fulfill parameters of FASTER channel and the same are considered as involving medium risk by RMS shall be routed to ERS. The RPO for verified amount shall be generated and forwarded to CSTRO for payment.

    (c) Sales Tax Automated Refund Repository (STARR), The claims that do not fulfill criteria for both FASTER and ERS channels shall be processed through STARR in the manner as provided in rule 29.

    For the refund claims processed through FASTER or ERS, the part of the refund claim that is not verified or not found admissible shall be subjected to system validation checks every week and Refund Payment Order (RPO) shall be generated for the amount found valid during each validation check. After every validation process, the information regarding RPO generated, if any, as well as the objections shall be communicated by the system to the refund claimant and also to the concerned RTO or LTU for information.

    The FBR said that RPO so generated shall be communicated to the State Bank of Pakistan for payment in the aforesaid manner. After eight validation checks, including the initial one, if any amount still remains un-cleared, the same shall then be processed under STARR channel.

  • Economic environment becomes stable, international community recognizes: Hafeez Shaikh

    Economic environment becomes stable, international community recognizes: Hafeez Shaikh

    ISLAMABAD: Dr Hafeez Shaikh Adviser to Prime Minister on Finance and Revenue Dr. Abdul Hafeez Shaikh on Wednesday said that after 15 months efforts the economic environment of Pakistan becomes more stable as being recognized by international community.

    “We inherited a very grim economic situation with the debt levels and the fiscal and current account deficits reaching at the highest level, but through serious work and collaboration with international community, we have stabilised the economy and the international community is also recognising our efforts,” he said while addressing the inaugural session of the two-day conference arranged at a local hotel on the theme of “Rethinking Microfinance: Developing a New Inclusive Finance Compass”.

    The adviser said that an over US$ 1 billion investment in Pakistan’s bond market and a 238 per cent growth in the foreign direct investment in the first four months of this fiscal year which comes to $650 million, were reflection of an increased level of confidence the international community had begun to show in the Pakistani market.

    “Similarly, IMF applauding Pakistan for meeting all agreed structural benchmarks with comfortable margins in the first quarter, Bloomberg declaring Pakistan Stock Exchange as the world’s best performing market in last three months and now Moody’s upgrading Pakistan’s ranking from the negative to stable are positive developments and signs of the progress achieved on the economic front by the government,” he added.

    He further pointed out that the government also inherited the highest ever current account deficit of $ 20 billion but this massive current account deficit was contained and turned into a surplus for the first time in many years in the month of November.

    Similarly, the fiscal deficit adjusted for interest payment which is also called primary balance had also turned into a surplus in the first quarter of this year.

    Dr. Abdul Hafeez Shaikh also told the participants about government efforts to boost the exports which had previously shown negative growth for five consecutive years, but because of incentives given to exporters in terms of no taxes on export sector as well as subsidization of gas and electricity and grant of additional Rs 300 billion subsidized loans, the exports had gone up by 3.4 per cent during the first four months of current fiscal year with 9.6 per cent growth recorded in the month of November alone.

    “The government is working on a strategy to lead a transition away from a largely import-oriented economy to the one where the focus is on exports and earning of dollars to improve the quality of life of the common Pakistanis,” he said.

    Talking about the microfinance sector, the Adviser asked the conference participants to deliberate on how the cost of doing business could be reduced in terms of reduced rate of interest and the time lost in processes, and how one could increase access or scale up and how we could enhance the impact and what exactly the impact meant in terms of jobs and tackling poverty.

    “We also need to debate how we can keep learning as these are important questions that need to be debated and answered to formulate strategies for furthering growth in this sector,” he said.

    Meanwhile, Adviser to PM on Finance and Revenue Dr. Abdul Hafeez Shaikh also held a detailed interaction with a group of television anchorpersons in his office.

    During the informal discussion that continued for about two hours, the adviser briefed the anchors on the current state of economy with a focus on what state of economy the government inherited in 2018 and what policy steps and measures were adopted by the government for stabilisation of economy and subsequent success achieved in various areas, including 16.4 per cent revenue growth, 238 per cent growth in FDI, 3.4 per cent growth in exports in the first four months of this fiscal year as well as stabilisation of exchange rate, declaration of Pakistan Stock Exchange as the world’s best performing stock by Bloomberg and the upgradation of economic outlook of Pakistan from the negative to stable by the Moody’s.

  • Kuwait ready to ease visa policy for Pakistani businessmen

    Kuwait ready to ease visa policy for Pakistani businessmen

    KARACHI: Salem Yousif Al-Hamdan, Consul General of Kuwait, has said that his government is ready to ease visa policy for Pakistani businessmen.

    In order further discuss and devise strategies for easing the issuance of business visas, the Kuwaiti Interior Ministry was ready to hold negotiations and in this regard, Pakistan’s Ministry of Interior had been approached quite some time ago but unfortunately they have not received any response from them so far, the Kuwaiti Consul General said at a meeting with office bearers of Karachi Chamber of Commerce and Industry (KCCI).

    A press release issued by the KCCI on Wednesday quoted the consul general as saying that around 120 communities were living in Kuwait which was the basic reason why Kuwait has to adopt stringent visa policy which was not just for Pakistanis but also for all the foreigners.

    “We want to ease issuance of business visa hence, negotiations must take place between the Interior Ministries of the two friendly countries as soon as possible,” he added.

    Kuwaiti Consul General pointed out that China Pakistan Economic Corridor (CPEC) was a very important project which would have a positive impact not only on Pakistan but the entire region.

    “To attract the interest of Kuwaiti business community and other investors from the Gulf, we asked the Government of Balochistan to organize a CPEC Conference in Karachi and we will make sure that this conference is attended not only by the Kuwaiti business community but also by other potential investors from the gulf region,” he said, adding that this conference would help in raising awareness about the significance of CPEC project and provide a perfect opportunity to highlight the immense CPEC-related investment opportunities in Pakistan.

    Salem Al-Hamdan further mentioned that Kuwait has signed many MoUs with different institutions from all provinces in Pakistan while work on some of these MoUs has already begun and the Kuwaiti Investment Authority was also intending to undertake numerous projects in Pakistan, particularly in Sindh province.

    Referring to an MoU signed between Kuwait Chamber and Karachi Chamber, he said that both chambers had excellent relations in the past but with the passage of time, some gap has developed as no interaction was taking place between the two institutions.

    “Hence, I decided to visit KCCI and will certainly be making efforts to restore communication between Kuwait and Karachi Chambers by playing the role of bridge between the two institutions,” he added.

    He said that Pakistan and Kuwait, being brotherly and friendly countries, have been enjoying very old and good relations as many commodities were smoothly being traded while Kuwaitis have very positive sentiments for Pakistanis.

    “The two countries have good trade ties and many Pakistanis have also been working really hard in different sectors of Kuwaiti economy which is a testimony that we both are true friends,” he added.

    Kuwaiti CG was of the opinion that Karachi city, being the financial, trading and industrial center of the Pakistan with two ports, can offer a lot of trade and investment opportunities to Kuwaiti business community but the business communities of both the brotherly countries will have to meet regularly, exchange trade delegations and explore more avenues of trade and investment cooperation.

    Earlier, president KCCI Agha Shahab Ahmed Khan, in his welcome address, stated that Karachi, which is the economic hub of Pakistan, offers profitable investment opportunities and added facilities for trade, investment and joint ventures to business and industrial community from Kuwait.

    Karachi city, which contributes more than 70 percent revenue to the national exchequer, is an attractive place for Kuwaiti businessmen, who can surely earn maximum profits by undertaking joint ventures with their Pakistani counterparts.

    Commenting on economic relations between Pakistan and Kuwait, he said that both countries share cordial and healthy bilateral relations based on cooperation in different economic spheres.

    “During 2018, Pakistan exported goods worth $172.69 million to Kuwait as against exports of $166.78 million in 2017, showing a growth of 3.54 percent while our imports from Kuwait witnessed a decline of 4.11 percent to $1.40 billion during 2018 as against imports of $1.46 billion in 2017.”

  • Stock market gains 482 points on buying activities

    Stock market gains 482 points on buying activities

    The Pakistan Stock Exchange (PSX) witnessed a robust upward trend on Wednesday as the benchmark KSE-100 index soared by 482 points, closing at 40,271 points compared to 39,789 points the previous day.

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  • Rupee continues to make gain on improved economic indicators

    Rupee continues to make gain on improved economic indicators

    KARACHI: The Pak Rupee continued gains against dollar on Wednesday and further appreciated by five paisas on improved economic indicators.

    The rupee ended Rs155.14 to the dollar from previous day’s closing of Rs155.19 in interbank foreign exchange market.

    Currency experts said that the local unit had maintained the appreciation trend owing to back to back good news on economic front. They said that Moody’s outlook on Pakistan from negative to stable helped the rupee to gain against dollar.

    Further, reduction in trade deficit during first five months of current fiscal year also helped the rupee to continue to gain. The rupee yesterday gained 10 paisas against the dollar.

    The market today opened in a range between Rs155.14 and Rs155.22. The market recorded day high of Rs155.18 and low of Rs155.13 and closed at Rs155.14.

    The exchange rate in open market also witnessed gain in rupee value. The buying and selling of dollar was recorded at Rs155.00/Rs155.20 from previous day’s closing of Rs155.20/Rs155.40 in cash ready market.