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  • Foreign direct investment declines by 28.9% in 2020/2021

    Foreign direct investment declines by 28.9% in 2020/2021

    KARACHI: The foreign direct investment (FDI) into Pakistan has declined by 28.9 percent during fiscal year 2020/2021, the State Bank of Pakistan (SBP) said on Friday.

    Inflow of FDI recorded at $2.059 billion during fiscal year 2020/2021. It was $2.316 billion in previous fiscal year.

    Total foreign private investment declined by 11.1 percent to $2.058 billion during 2020/2021. It was $2.315 billion in previous fiscal year.

    Inflow of portfolio investment in capital market increased to $211.5 million during fiscal year 2020/2021. It was an outflow of $281.7 million in preceding fiscal year.

    However, the total inflows of foreign investment into Pakistan have registered 122.4 per cent increase during fiscal year 2020/2021.

    The total inflows of foreign investment increased to $4.614 billion during fiscal year 2020/2021 as compared with $2.074 billion in the preceding fiscal year.

    The foreign public investment registered a phenomenal increase to inflows of $2.555 billion during fiscal year under review as compared with an outflow of $241.3 million in the preceding fiscal year.

  • Economic momentum likely to accelerate further in FY22: SBP

    Economic momentum likely to accelerate further in FY22: SBP

    KARACHI: The State Bank of Pakistan (SBP) has said that the economic momentum is expected to accelerate further during FY22.

    The optimistic outlook is premised on the expanding vaccine roll-out and relatively unhindered continuation of economic activity despite Covid-19, the SBP said in it’s the Third Quarterly Report on the State of Pakistan’s Economic for the Fiscal Year 2020/2021 released on Friday.

    Temporary Economic Refinance Facility (TERF), which provides long-term lending for industrialization), the policy-led surge in construction and housing, and increased Public Sector Development Program (PSDP) spending, are also likely to be key growth drivers.

    According to the report, there was growing evidence that the economic recovery gathered further momentum during the third quarter of FY21. The turnaround in the industrial sector, particularly large scale manufacturing (LSM), and the services sector, most notably in wholesale and retail trade, played a pivotal role.

    In the agriculture sector, record output of four out of five important crops – namely wheat, rice, maize and sugarcane – offset the decline in cotton production. Further growth in high frequency demand indicators, such as local cement dispatches, Petroleum Oil and Lubricants (POL) and car sales, consumer financing, sales of Fast Moving Consumer Goods (FMCG), and power generation, reflected the accelerating rebound in economic activity. Against this backdrop, real GDP growth is provisionally estimated to be 3.9 percent for the full year, compared to a contraction of 0.5 percent in FY20.

    These favorable outcomes were supported by the pro-active response of policymakers to the evolving pandemic. In addition to containment of the virus through smart lockdowns, targeted fiscal support while containing the deficit, a highly accommodative monetary policy stance, aggressive refinance facilities provided by the SBP to counter the health, employment and cash flow implications of the pandemic, as well as incentives and relief offered by the government and the SBP to households and businesses collectively lifted the economy out of last year’s Covid-induced recession.

    Even as the economy rebounds strongly, stability in key macroeconomic indicators on the fiscal and external side were an additional source of comfort, as the current account and primary balance both remained in surplus during July-March FY21. The external account received significant support from workers’ remittances – which rose by US$ 4.5 billion to touch a record-breaking level of US$ 21.5 billion during July-March FY21 – as well as deferred interest payments on external debt through the G20 Debt Service Suspension Initiative (DSSI), curbs on international air travel, and lower global oil prices. Meanwhile, on the financing side, inflows from commercial, bilateral and multilateral sources were supplemented by new inflows under Roshan Digital Accounts, which crossed the US$ 1 billion mark in April 2021. Furthermore, the successful completion of the 2nd-5th IMF reviews unlocked US$ 500 million in direct financing from the Fund. Also, Pakistan reentered the international capital markets after a gap of over 3 years in early April 2021. As a result, SBP’s foreign exchange reserves rose to a three-year high of US$ 13.5 billion by end-March 2021, and the current account remained in surplus through the first three quarters for the first time since FY04.

    The July-March fiscal deficit of 3.5 percent was lower than the 4.1 percent deficit in the comparable period last year. This was mainly attributed to a rationalization of spending, particularly a slowdown in non-priority current expenditure, and a robust increase in taxes. However, interest payments remained a significant burden, and continued to constrain the fiscal space for development spending. Besides the lower fiscal deficit, the revaluation gains from PKR appreciation and DSSI relief contributed to a reduced pace of debt accumulation during July-March FY21 compared to the same period last year.

    Average headline inflation was lower than last year, both for the July-March FY21 period and for Q3-FY21. The third quarter outturn was mainly attributable to a deceleration in January 2021, led by the food and poultry groups. However, rising prices of electricity, sugar, edible oil, cotton cloth and readymade garments drove up inflation during February and March 2021. 

    Credit to the private sector was nearly 50 percent higher during July-March FY21 compared to last year.  The third quarter witnessed a slowdown though, primarily due to retirements of short-term loans. By contrast, the SBP’s concessionary refinance schemes, such as the Temporary Economic Refinance

    Facility (TERF), continued to spur the off take of fixed investment loans. Through the third quarter, loans of Rs 426.0 billion have been approved, of which Rs 74.0 billion have been disbursed under TERF, which bodes well for investment and growth going forward. Consumer financing also picked up considerably during the period compared to last year. In addition to auto and personal loans, there was a notable upturn in house financing as banks responded to the SBP’s mandatory targets to increase their housing and construction finance portfolios to at least 5 percent of the banks’ private sector credit by end-December 2021.

    While the economy made an encouraging recovery during FY21, certain structural vulnerabilities continue to merit attention.

    First, in the agriculture sector, the secular decline in cotton production needs to be addressed. Timely availability of pest-resistant seed varieties and further support from agriculture extension departments, particularly to promote the adoption of climate-smart farming practices, could enable better outcomes.

    Second, in the external sector, the widening of the merchandise deficit needs to be contained to a sustainable level. Greater self-sufficiency in agriculture, through adoption of better farming and crop management practices, and maintenance of adequate stocks can reduce the need to import commodities (such as wheat, sugarcane and cotton) to bridge domestic shortfalls or counter temporary price pressures. Discouraging the import of luxury consumer items and promoting greater diversification of exports, in terms of value-added items and destinations, could also help.

    Third, efforts are required to mitigate food inflation, triggered largely by supply-side issues in the management of agriculture commodities. This may be achieved through better coordination among federal and provincial food departments, provision of reliable data, vigilant monitoring of stocks and food prices, and timely import of commodities.

    Fourth, the twin burdens of debt servicing and a narrow revenue base are leaving less fiscal room for public investment. This calls for an acceleration of efforts to broaden the tax base, increase documentation in the economy, improve public financial management, restructure loss-making public sector enterprises, and reduce circular debt of the power sector.

  • Foreign exchange reserves decline by $102 million

    Foreign exchange reserves decline by $102 million

    KARACHI: The foreign exchange reserves of the country have declined by $102 million for the week ended on July 09, 2021, State Bank of Pakistan (SBP) said on Thursday.

    The country’s foreign exchange reserves fell to $24.311 billion by the week ended July 09, 2021 as compared with $24.415 billion by week ended July 02, 2021.

    The foreign exchange reserves of the SBP came down by $26 million to $17.205 billion by week ended July 09, 2021 as compared with $17.231 billion a week ago.

    The foreign exchange reserves held by commercial banks fell by $78 million to $7.106 billion by week ended July 09, 2021 as compared with $7.184 billion a week ago.

  • Pakistan, Afghanistan sign protocol to extend transit trade agreement for six months

    Pakistan, Afghanistan sign protocol to extend transit trade agreement for six months

    ISLAMABAD: Pakistan and Afghanistan on Thursday signed a protocol to extend the existing transit trade agreement of 2010 for six months beyond May 11, 2021.

    The extension was essential to facilitate uninterrupted flow of transit trade between the two countries and to provide sufficient time to technical teams to conclude negotiations on the new APTTA 2021.

    Advisor to PM on Commerce and Investment Abdul Razak Dawood and Afghan Minister for Industry and Commerce Nisar Ahmad Faizi Ghoryani chaired a virtual signing ceremony.

    Secretary Commerce of Pakistan and Deputy Commerce Minister of Afghanistan also attended the ceremony.

    Ambassador of Pakistan along with Trade & Investment Counselor in Kabul represented the Government of Pakistan in the ceremony held at the Ministry of Industry and Commerce in Kabul, a press release issued by the Embassy of Pakistan in Kabul said.

    The Ministers appreciated the work of technical teams for the progress attained so far in the negotiations.

    They directed the technical teams to forge consensus on the outstanding issues in the new APTTA 2021, to ensure its conclusion, signing and notification at the earliest for the benefit of trade, transit, investment and connectivity between the two brotherly countries.

    The Ministers also agreed to meet in Kabul on the sidelines of 9th Afghanistan Pakistan Transit Trade Coordination Authority (APTTCA) meeting to push forward the negotiations on APTTA 2021 and also to hold business and investment conference in August, 2021.

  • Grant of 10% increase in pension notified

    Grant of 10% increase in pension notified

    ISLAMABAD: The federal government on Thursday notified the grant of 10 per cent increase in pension of all government pensioners with effect from July 01, 2021.

    The finance ministry said that the President has sanctioned an increase at 10 per cent of net pension with effect from July 01, 2021 until further orders to all Civil pensioners of the Federal Government including Civilians paid from Defence Estimates as well as retired Armed Forces personnel and Civil Armed Forces Personnel.

    The ministry said that the previous increase in pension would be admissible to the new pensioners who would retire on or after July 01, 2021.

    The latest 10 per cent increase in pension as will also be admissible to the pensioners who would retire on or after July 01, 2021.

    For the purpose of admissibility of increase in pension sanctioned in this O.M. the term “Net Pension” means “Pension being drawn” minus “Medical Allowance”.

    The increase will also be admissible on family pension granted under the Pension-cum-Gratuity Scheme, 1954, Liberalized Pension Rules, 1977, on pension sanctioned under the Central Civil Services (Extra Ordinary Pension) Rules as well as on the Compassionate Allowance under CSR-353.

    lf the gross pension sanctioned by the Federal Government is shared with any Government in Accordance with the rules laid down in part-iv of Appendix-lll to the Accounts Code, Volume-I, the amount of the increase in pension will be apportioned between the Federal Government and the other Government concerned on proportionate basis.

    The increase in pension sanctioned in this O.M. will not be admissible on Special Additional Pension allowed in lieu of pre-retirement Orderly Allowance and monetized value of a driver or an orderly.

    The benefit of increase in pension sanctioned in this O.M. will also be admissible to those Civil Pensioners of the Federal Government who are residing abroad (other than those residing in India and Bangladesh) who retired on or after 15.08.1947 and are not entitled to, or are not in receipt of pension increase under the British Government’s Pension (increase) Acts. The payment will be made at the applicable rate of exchange.

  • Pakistan receives $1 billion loan from China; forex reserves rise to $24.415 billion

    Pakistan receives $1 billion loan from China; forex reserves rise to $24.415 billion

    KARACHI: Pakistan has received $1 billion as loan from China which helped the total foreign exchange reserves of the country rose to $24.415 billion by week ended July 02, 2021.

    Pakistan also received an amount of $440 million loan from the World Bank during the week, the State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $23.297 billion by the week ended June 25, 2021.

    The foreign exchange reserves of the State Bank increased by $1.112 billion to $17.231 billion by the week ended July 02, 2021 as compared with $16.119 billion a week ago.

    The foreign exchange reserves held by the commercial banks witnessed an increase of $6 million to $7.184 billion by the week ended July 02, 2021 as compared with $7.178 billion a week ago.

  • Notification for 10% ad hoc increase in salary issued

    Notification for 10% ad hoc increase in salary issued

    ISLAMABAD: The President of Pakistan has sanctioned the grant of ad hoc 10 per cent increase in salary of government employees effective from July 01, 2021, according to a notification issued by the ministry of finance on Thursday.

    It said that the president has been pleased to sanction with effect from July 01, 2021 and till further orders, an ad hoc relief allowance 2021 at 10 percent of basic pay to all the federal government employees i.e. armed forces personnel, civil armed forces and civil employees of the federal government as well as the civilians paid from defence estimates including contingent paid staff and contract employees employed against civil posts in basic pay scales on standard terms and conditions of contract appointment.

    The amount of ad hoc relief allowance 2021:

    i. will be subject to income tax;

    ii. will be admissible during leave and entire period of LPR except during extra ordinary leave;

    iii. will not be treated as part of emoluments for the purpose of calculation of pension/gratuity and recovery of house rent;

    iv. will not be admissible to the employees during the tenure of their posting/deputation abroad; and

    v. will be admissible to the employees on their repatriation from posting/deputation abroad at the rate and amount which would have been admissible to them had they not been posted abroad.

    The finance ministry said that the term ‘basic pay’ for the purpose of ad hoc relief allowance 2021 will also include the amount of the personal pay granted on account of annual increment(s) beyond the maximum of the existing pay scales.

  • Prime Minister inaugurates first phase of Gwadar Free Zone

    Prime Minister inaugurates first phase of Gwadar Free Zone

    GWADAR: Prime Minister Imran Khan on Monday inaugurated the first phase of Gwadar Free Zone besides performing the groundbreaking of its second phase spread over 2,200 acres and also inaugurated three factories.

    Addressing the launch of development projects and the signing ceremony of Memoranda of Understanding here in the port city, the prime minister said Gwadar would open up new avenues of opportunities for regional trade.

    The prime minister said the future of Pakistan belonged to Gwadar, emerging as the ‘focal point of development’ and ensuring prosperity for the entire country.

    Imran Khan mentioned the recently announced Rs 730 billion development budget for Balochistan by the federal government and said it was “historic”, and was aimed at uplift of the province and at mitigating the longstanding deprivation of its people.

    “No country can progress unless it mainstreams all its areas and ensure development across the board,” he said, adding that connectivity was one of the major components of the Balochistan package.

    The prime minister who arrived in Gwadar on a day-long visit inaugurated the first phase of Gwadar Free Zone besides performing the groundbreaking of its second phase spread over 2,200 acres also inaugurated three factories.

    The prime minister said his vision of an emerging Pakistan was a steadfast nation that was committed to the prosperity of the country.

    He said the government was focused on ensuring the provision of basic amenities in Gwadar and Balochistan, particularly clean water and electricity to encourage industrialization.

    Imran Khan said the government was prioritizing development in far-flung areas of Balochistan, northern areas and rural Punjab.

    The prime minister mentioned that Gwadar International Airport would encourage regional trade and boost economic activity.

    He said a one-window operation was in progress to facilitate the investors and urged upon the provincial governments to ensure proper servicing of investors since the subject moved to them after the passage of the 18th Amendment.

    Imran Khan thanked the government of China for the launch of water and solar projects in Balochistan, particularly in Gwadar.

    “Pakistan can benefit from its strategic location and also from the expertise of its friend China, which is an economic power in the region,” he said.

    He also mentioned the technical education provided by China to the youth of Gwadar, which he said, would prove greatly helpful as the foreign investment grew in future.

    The prime minister mentioned several initiatives for the uplift of Gwadar including the university, employment under the Kamyab Jawan Programme, and the up-gradation of the equipment of local fishermen to ensure value addition of their catch.

    He said the Prime Minister Office would regularly monitor the progress on the development plans initiated in Gwadar on a monthly basis.

    The prime minister said regional countries had expressed interest in reaping the benefits offered by the Gwadar port.

    In this scenario, he expressed concern over the deteriorating law and situation in Afghanistan, stressing peace and stability was extremely important for the continuity of development.

    Chief Minister Balochistan Jam Kamal Khan said the provincial government had been collaborating with the CPEC Authority to resolve the issues of customs. He drew attention to the problem regarding the relocation of locals along Eastbay and mentioned that efforts were on for an amicable solution.

    He said the Public Sector Development Programme for the current fiscal year covered the entire Balochistan and mentioned that the extension of Gwadar Hospital up to 200 beds, construction of the first university in Gwadar, border markets and uplift of villages were on the cards.

    Chinese Ambassador Nong Rong said the cooperation between the governments of Pakistan and China had led several projects to see the light of the day. He said over the past eight years, the two countries accelerated their pace on several projects related to civic amenities, particularly clean water and solar plants.

    He said Gwadar was a showcase of the “Chinese solution” for Pakistan’s development.

    By taking a comprehensive way of development, he said, Gwadar Port would turn into a business hub. He said China would continue to extend support for a shared future with Pakistan.

    Chairman CPEC Authority Lt Gen (retd) Asim Saleem Bajwa said the Gwadar Free Zone spread over 60 acres had been completed and 46 enterprises had become operational.

    He said now, the groundbreaking of the second phase at the vast 2200 acres starting today would usher in a new era of prosperity in Gwadar and in Balochistan.

    He mentioned that the personal interest of Prime Minister Imran Khan resulted in materialization of trans-shipment policy, Afghan transit policy, the framework signing and execution of border trade with Iran and the start of work at Eastbay Expressway.

    He said several significant development projects were in progress including the Gwadar International Airport and a Vocational Institute to develop skills of the locals.

    Bajwa said conspiracies were on the rise against CPEC, however, the commitment of the government greatly helped thwart such challenges.

    Chairman Senate Sadiq Sanjrani, Foreign Minister Shah Mahmood Qureshi, Information Minister Chaudhry Fawad Hussain, Planning Minister Asad Umer, Minister for Defence Production Zubaida Jalal and Minister for Maritime Affairs Ali Zaidi were present.

    Earlier, the prime minister before landing at the Gwadar Airport took an aerial view of the infrastructure built at the seaport including the Expressway.

    On his arrival at the China Business Centre Hall, he was given a detailed briefing of the South Balochistan Development Package. He also held an interaction with the CPEC Workforce.

    Chairman CPEC Authority and Chinese Ambassador ink Memoranda of Understanding for cooperation on development in Gwadar.

    Moreover, seven regional countries including Saudi Arabia, United Arab Emirates, Kuwait, Oman, Egypt, Kenya and Qatar on Monday expressed their commitment for cooperation on the development of Gwadar.

    With their respective ambassadors present at the ceremony attended by Prime Minister Imran Khan, the regional countries expressed their support for the development of Pakistan’s port city.

    Prime Minister Imran Khan on the occasion also witnessed the signing of two Memoranda of Understanding with the government of China for carrying out development projects in Gwadar.

    The accords included the implementation agreement on setting up of 1.2 MGD desalination plant to resolve the shortage of drinking water for the residents of Gwadar.

    Other agreements included China’s grant for solar generators for South Balochistan, and the groundbreaking of North Gwadar Free Zone and Enterprises.

    Also on the occasion, the Chinese investors through video-link from Shanghai showed the ‘Expression of Commitment for Investment’. Those who pledged to invest in Balochistan’s different sectors included Huang Weiguo (textile), Huang Daoyuan (prefabricated technology), Fang Hongyan (agriculture), Shen Jian (wool spinning), David Dia and Chen Yi (dairy processing) and Bao Dequan (textile).

    The factories inaugurated on the occasion included the chemical fertilizer factory, Gwadar Animal Vaccination factory and lubricant factory, besides the opening of Gwadar Fertilizer Plant, Gwadar Animal Vaccine Plant, Henan Agricultural Industrial Park, Hengmei Lubricants Plant, Gwadar Free Zone Phase-2, and Gwadar Expo Centre.

    (Courtesy: Associated Press of Pakistan)

  • Pak-Iran trade to start soon through Gwadar Port: Bajwa

    Pak-Iran trade to start soon through Gwadar Port: Bajwa

    ISLAMABAD: Work for Iran’s trade through the Gwadar Port (in and out) is in progress and the trade will start soon through the port, Chairman China Pakistan Economic Corridor (CPEC) Authority Lt. Gen. (Retd) Asim Saleem Bajwa said on Monday.

    “The Ramadan-Gabd crossing point near Gwadar is active and fully functional now, fencing work with Pakistan-Iran border is going on rapidly and new border markets are being established at the crossing points,” he said adding the smuggling to and from Iran is decreasing due to increase in regulated trade.

    According to state media, the Chairman said after completion of development works of Gwadar Port and first phase of Gwadar Free Zone, Prime Minister Imran Khan was going to perform the ground breaking of second phase of the Zone.

    He said as compared to the first phase which comprised of 60 acres of land, the second phase would be a huge project comprising of 2200 acres of land.

    Chairman Bajwa said around 7 to 8 big Chinese investors from Shanghai would also participate in the ground breaking ceremony where they would make commitments in Gwadar Zone and inform about their future plans in Pakistan.

    He said some 46 enterprises were engaged in the Free Zone phase-I while 12 factories were being established out of them three were completed.

    He informed that the traffic at the port was increasing everyday and last year the trade volume increased by hundreds of times as 60,000 MT of cargo was transported during the year 2020-21 compared to only 1300 MT in the preceding year.

    Besides, he said five LPG vessels were berthed at the Gwadar Port.In future, he said the cargo volume would increase with even higher pace as interest for transshipment and industrialization was increasing with every passing day.

    He said the Prime Minister would also sign an accord for installation of desalination plant in the city with capacity of 1.2 million gallons per day. He said the project would complete within a year and this would be a gift from the Chinese government.

    Furthermore, he said another water desalination plant with capacity of five million gallons per day was also included in the Prime Minister South Balochistan package.

    Provision of basic facilities including electricity, water and health was the prime focus of Prime Minister Imran Khan, he added.

  • Consumer prices inflate by 9.7 percent in June 2021

    Consumer prices inflate by 9.7 percent in June 2021

    ISLAMABAD: The inflation based on Consumer Price Index (CPI) has increased by 9.7 percent on year-on-year basis in June 2021 as compared to an increase of 10.9 per cent in the previous month and 8.6 per cent in June 2020, Pakistan Bureau of Statistics (PBS) said on Thursday.

    On month-on-month basis, it decreased by 0.2 per cent in June 2021 as compared to an increase of 0.1 per cent in the previous month and an increase of 0.8 per cent in June 2020.

    CPI inflation Urban, increased by 9.7 per cent on year-on-year basis in June 2021 as compared to an increase of 10.8 per cent in the previous month and 7.6 per cent in June 2020. On month-on-month basis, it decreased by 0.4 per cent in June 2021 as compared to an increase of 0.2 per cent in the previous month and an increase of 0.7 per cent in June 2020.

    CPI inflation Rural, increased by 9.7 per cent on year-on-year basis in June 2021 as compared to an increase of 10.9 per cent in the previous month and 10.0 per cent in June 2020. On month-on-month basis, it decreased by 0.1 per cent in June 2021 as compared to a decrease of 0.03 per cent in the previous month and an increase of 1.0 per cent in June 2020.

    Sensitive Price Indicator (SPI) inflation on YoY increased by 17.6 per cent in June 2021 as compared to an increase of 19.7 per cent a month earlier and an increase of 11.5 per cent in June 2020. On MoM basis, it decreased by 0.4 per cent in June 2021 as compared to an increase of 0.8 per cent a month earlier and an increase of 1.4 per cent in June 2020.

    Wholesale Price Indicator (WPI) inflation on YoY basis increased by 20.9 per cent in June 2021 as compared to an increase of 19.4 per cent a month earlier and an increase of 0.9 per cent in June 2020. WPI inflation on MoM basis increased by 0.9 per cent in June 2021 as compared to an increase of 0.3 per cent a month earlier and a decrease of 0.3 per cent in corresponding month i.e. June 2020.