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  • ECC extends SBP’s refinance scheme with additional benefits

    ECC extends SBP’s refinance scheme with additional benefits

    ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Wednesday approved extension to the refinancing scheme of the State Bank of Pakistan (SBP) up to September 30, 2020 from June 30, 2020.

    A statement said that the ECC approved the “Risk Sharing Facility for SBP Refinance Scheme to support employment and prevent layoff of workers.

    The scheme supports provision of credit at concessional rate to businesses that commit not to lay off workers till September 2020 (earlier the cutoff date was June 30, 2020), the loss coverage for SME sector has been increased to 60 percent from the existing 40 percent to promote greater take up at the smaller level of business.

    Under the new changes the borrowers having turnover up to Rs800 million can avail benefit of the scheme; earlier, for the eligibility of the scheme, the turnover limit was up to Rs 2 billion).

    Adviser to the Prime Minister on Finance and Revenue Dr. Abdul Hafeez Shaikh chaired the ECC meeting at the Cabinet Division.

    ECC approved the following technical supplementary grants:

    1) Rs.3.2 billion for PIACL (Pakistan International Airline corporation Limited) to discharge the obligations on account of markup against GoP guaranteed loans.

    2) Rs25,206,953 in favor of Pakistan Academy for Rural Development (PARD) Peshawar for the current financial year.

    3) Rs. 1300 million to Pakistan Atomic Energy Commission to discharge its various liabilities

    4) Rs 235 million to Deputy Commissioner Islamabad for making payment of internal security duty allowance to troops of Pakistan Rangers (Punjab) deployed in Islamabad

    5) Rs 500 million to the Ministry of Information and Broadcasting to meet the expenditure of media campaign on Covid-19

    6) Rs 100 million for National Disaster Management Authority (NDMF) for procuring equipment for locust control in Punjab

    7) Rs 7.947 billion to NDMA on account of procurement of emergency equipment through Pakistan Foreign Mission in China (Ex-post Facto approval on account of Pakistan National Emergency Preparedness and Response for Covid-19, procurement of equipment and transfer of funds)

    8) Rs.4.5 billion for the capacity building of Civil Armed forces as requested by the Ministry of Interior

    9) Rs.80 million for Competition Commission of Pakistan for different expenses

    10) Rs 100 million for the purchase of kerosene oil by Head Quarters Frontier Corps KP (North) to be used in different locations posts (8000 feet and above)

    11) Rs.8.093 million for the Privatization Division for employee related expenditure

    12) Two TSGs amounting to Rs 1192.325 million and Rs 358.506 million for Ministry of Federal Education and Professional Training for the Award of Scholarships to Afghan students ECC also granted approval for book value adjustment of overdue amount of loans amounting to Rs 30.807 billion to Earth Quake Reconstruction and Rehabilitation Authority over and above its allocated development and non-development budget.

    It also allowed, on the recommendation of the committee earlier constituted by ECC, to convert two relent Chinese loans in to Government loans keeping in view the subsuming of ERRA into NDMA and ERRA being non-profit/ non revenue generating entity. ECC also approved the “handing over of Pakistan Machine Tool Factory to Strategic Plans Division.

    For the purpose of operationalization of PMTF, Rs 500 million shall be provided to SPD as a loan.

    The Federal Government shall pay all the liabilities accrued till the transfer of management control of PMTF to SPD, after partial settlement of liabilities of Rs 1.78 billion.

  • Remittances fall by 18.6 percent in May 2020

    Remittances fall by 18.6 percent in May 2020

    KARACHI: The inflow of workers’ remittance has registered 18.6 percent decline in May 2020 due to job losses and closure of borders due to coronavirus.

    The inflow of workers’ remittances was at $429.2 million in May 2020 as compared with $2.3 billion in the same month of the last year, showing decline of 18.6 percent, State Bank of Pakistan (SBP) said on Friday.

    During this pandemic situation, job losses of overseas workers and closure of international borders are the main factors affecting remittances’ flow. Moreover, in last year, the whole month of Ramadan fell in May 2019, the SBP said.

    During May 2020, workers’ remittances stood at $1,872.8 million, showing an increase of $82.8 million or 4.6 percent over previous month (April 2020, $1,790.0 million).

    Workers’ Remittances amounted to US $ 20,654.5 million during July – May FY20, up by 2.7 percent or US $ 551.5 million over July – May FY19 (US $ 20,103.0 million).

    Major contribution to workers’ remittances during May 2020 came from Saudi Arabia (US $ 436.2 million), USA (US $ 428.3 million), UAE (US $ 323.4 million) and UK (US $ 284.8 million) recording an increase of 25.7 percent and 6.6 percent for UK and USA respectively whereas a decrease of 3.4 percent and 8.6 percent for Saudi Arabia and UAE respectively as compared to April 2020.

  • Pakistan to face greater challenges in next fiscal due to COVID

    Pakistan to face greater challenges in next fiscal due to COVID

    ISLAMABAD: Pakistan is likely to face greater challenges in the next fiscal year starting July 2020 due to COVID-19, said Economic Survey 2019/2020 released on Thursday.

    “After recording its first contractionary year due to the COVID crisis since 1952, Pakistan is likely to face greater challenges in the 2020/2021 starting July 2020,” according to the survey.

    Under normal circumstances, after recording over 3 percent growth, Pakistan could have been reaping the benefits of macroeconomic stability achieved over the last year and would have embarked on a higher growth trajectory of over 4 percent.

    However, the pervasive and lasting effects of COVID-19 pose serious challenges to the economy which remains susceptible to its aftermath, despite efforts towards the outbreak’s curtailment.

    With an expected 2 percent growth for next year which is even lower than the population growth rate, challenges such as unemployment and poverty are expected to persist and amplify.

    A second round of the outbreak could further threaten macroeconomic stability and socioeconomic outcomes.

    Businesses will face liquidity issues, and many more may experience insolvency. They will require different kinds of support, for instance bailouts and provision of cheap funding, among others.

    Global trade will further dampen thereby constricting exports and remittances inflow, while domestic fiscal adjustment will become even more challenging. Higher debt accumulation will be problematic, financing for development projects may become scarce, revenues might be difficult to increase while expenditure demand may be immense.

    Synthesizing all this in an intricate policy mix has to ultimately be in place to smoothen this transition from crisis to stabilization.

  • LSM may fall massively on constrained economic environment

    LSM may fall massively on constrained economic environment

    ISLAMABAD: The production of large scale manufacturing (LSM) may fall massively during the current fiscal year as it already registered a decline of 5.4 percent during July – March 2019/2020.

    (more…)
  • Agriculture sector grows by 2.67pc despite lower production of cotton, sugarcane

    Agriculture sector grows by 2.67pc despite lower production of cotton, sugarcane

    ISLAMABAD: The agriculture sector provisionally grew by 2.67 percent in 2019/2020 despite fall in production of cotton and sugarcane, revealed by Economic Survey 2019/2020 released on Thursday.

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  • Outlook is not promising: Economic Survey 2019/2020

    Outlook is not promising: Economic Survey 2019/2020

    ISLAMABAD: The economic outlook is not very clear as well as doesn’t seem promising as COVID may dampen exports demand besides expectations of capital flight, according to the Pakistan Economic Survey 2019/2020 released on Thursday.

    (more…)
  • Foreign exchange reserves slip by $215 million

    Foreign exchange reserves slip by $215 million

    KARACHI: Pakistan’s foreign exchange reserves have declined by $215 million to $16.705 billion by week ended June 05, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $16.92 billion by week ended May 29, 2020.

    The foreign exchange reserves held by the SBP fell by $266 million to $10.096 billion by week ended June 05, 2020 as compared with $10.362 billion a week ago.

    The central bank attributed the decline to the government external debt repayments of $301 million during the week.

    The foreign exchange reserves held by commercial banks however increased by $51 million to $6.609 billion by week ended June 05, 2020 as compared with $6.558 billion a week ago.

  • Economic Survey: GDP growth projected at negative 0.38 percent

    Economic Survey: GDP growth projected at negative 0.38 percent

    ISLAMABAD: The GDP growth for current fiscal year has been estimated negative 0.38 percent, according to Pakistan Economic Survey for 2019/2020 released on Thursday.

    The survey stated that although, provisional GDP growth rate for FY2020 is estimated at negative 0.38 percent, however, macroeconomic stabilization measures undertaken by the government over the past year resulted in significant reduction in Saving-Investment Gap which was mainly driven by reduction in trade deficit and increase in workers’ remittances.

    It is also mentionable that fiscal deficit remained contained in first three quarters of FY2020.

    Historically, Private Consumption had significantly contributed in Pakistan’s economic growth.

    The pattern was likely to continue, however, due to COVID-19, private consumption suffered significantly.

    In percentage of GDP, it dropped to 78.5 percent in FY2020 compared to 82.9 percent in FY2019.

    Private Investment as a percentage of GDP dropped to 9.98 percent from 10.29 percent in FY2019 while Public Investment (including General Government investment) has shown improvement as it remained 3.8 percent compared to 3.7 percent last year.

    However, there was 13.2 percent growth in Public Investment (including General Government investment) during FY2020, while it declined by 21.6 percent last year.

    The economy of Pakistan like other economies has a diverse structure with three main sectors -agriculture, industry and services.

    The agriculture sector, as mentioned earlier, grew by 2.67 percent.

    The crops sector has witnessed positive growth of 2.98 percent during FY2020 mainly due to positive growth of 2.90 percent in important crops.

    According to Pakistan Bureau of Statistics, fourth quarter has been estimated by keeping in view the lockdown situation faced by the industrial sector due to COVID-19.

    Significant impact has been observed in the manufacturing sector, particularly Large-Scale manufacturing and Small-Scale Manufacturing.

    The provisional growth in industrial sector has been estimated at -2.64 percent mainly due to a negative growth of 8.82 percent in mining and quarrying sector and decline of 7.78 percent in large-scale manufacturing sector.

    Due to lock down situation in the country, the growth estimates of Small-Scale Industry for FY2020 are 1.52 percent.

    Similar to the industrial sector, services sector of the economy has also witnessed significant impact of the lock down situation in the country due to COVID-19, particularly in Wholesale and Retail Trade and Transport Sectors.

    The services sector has declined provisionally at 0.59 percent mainly due to 3.42 percent decline in Wholesale and Retail Trade sector and 7.13 percent decline in Transport, Storage and Communication sectors.

    Finance and insurance sector witnessed a slight increase of 0.79 percent.

    The Housing Services, General Government Services and Other private services have contributed positively at 4.02, 3.92 and 5.39 percent respectively.

  • Foreign exchange reserves decline by $1.68 billion

    Foreign exchange reserves decline by $1.68 billion

    KARACHI: The liquid foreign exchange reserves of the country fell by $1.68 billion to $16.92 billion by week ended May 29, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The total foreign exchange reserves of the country were $18.599 billion a week ago.

    The foreign exchange held by the central bank fell by $1.712 billion to $10.362 billion by week ended May 29, 2020 as compared with official reserves of $12.074 billion.

    This decline is primarily attributed to the government external debt repayments of $1.669 billion.

    The foreign exchange held by commercial banks however increased by $34 million to $6.558 billion by week ended May 29, 2020 as compared with $6.524 billion a week ago.

  • Interest rates on saving certificates slashed up to 100 basis points

    Interest rates on saving certificates slashed up to 100 basis points

    ISLAMABAD: The profit rate on saving certificates have been reduced up to 100 basis points due to sharp cut in key policy rate by the State Bank of Pakistan (SBP). The new rate of return on national saving certificates are applicable from June 02, 2020.

    According to Central Directorate of National Savings (CDNS), the interest rate by one percent on the savings certificates investment due to lower rates of Pakistan Investment Bonds (PIB) applicable from June 02, 2020.

    “The CDNS interest rates are linked with the policy of Pakistan Investment Bonds (PIBs), set the SBP,” an official of CDNS told state-run media.

    The rate of return on ‘Behbood Savings Certificates’ (BSC) reduced from 10.32 to 9.84 percent and as similarly Pensioner Benefit Accounts (PBA) recorded downwards from 10.32 to 9.84 percent.

    The profit rates on ‘Shuhada Family Welfare Account’ also reduced from 10.32 to new rates of 9.84 percent applicable from June 02 of this year.

    The profit rates on ‘Defense Savings Certificates’ (DSC) was also reduced from 8.54 to 8.05 percent and interest rates on ‘Regular Income Certificates’ also downwards 8.28 to 7.44 percent according to the current market situation.

    The profit rates on Special Savings Certificates (Registered)/Accounts was also reduced on all three categories of certificates from 1-5 Profit 8.00 to 7.10 percent, 6th Profit 8.60 percent 7.40 percent and Average 8.10 to 7.15 percent by June 02, 2020.

    The Short Term Savings Certificates profit rates also reduced on different categories on months on month bases by 3- Months from 7.80 to 7.72 , on 6- Months certificates 7.50 to 7.36 percent and on 12-Months slightly increased from 6.95 to 7.30 percent.

    The profit rates on Savings Account (SA) has also been reduced from 7.00 to 6.50 percent decided by last meeting held in Ministry of Finance.