Category: Finance

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Rules for treasury single account system notified

ISLAMABAD: The ministry of finance has notified Cash Management and Treasury Single Account Rules, 2020 under which treasury single account system has been explained.

According to the rules the Treasury Single Account system shall be:

(1) Federal Consolidated Fund Account, Public Account, assignment accounts, their sub-accounts and linked accounts as approved by the Finance Division, shall form part of the treasury single account system.

(2) Monies that have been appropriated through the Federal Government budget and have been transferred to scheduled bank accounts by Government offices shall be reverted to the non-food account No.1 of the Government by the 30th June 2020, as non-tax receipt of the Government as provided in sub-rule (3) of rule 4.

(3) Finance Division shall identify and notify all Government offices which are required to be included in the treasury single account system, after classification and evaluation of all existing bank accounts being maintained by such offices.

(4) Government offices that are fully funded through the Federal Government budget by using either local or foreign sources, including project and programme loans and grants, shall operate their bank accounts through treasury single account system and no cash operation shall be allowed outside the treasury single account. Assignment accounts, sub-assignment accounts and revolving fund accounts shall be used in case of local currency or foreign currency funding requirements. 7

(5) Any government investment, loan, grant, subsidy, equity, project or scheme either funded locally or through foreign aid shall be provided to government enterprises and offices through sub-accounts of treasury single account system including assignment accounts, sub-assignment accounts and revolving fund accounts opened in public account.

(6) Procedure for opening, operating and closing of assignment accounts including its sub-accounts and linked accounts shall remain operative as per Notification No. F.2(2)-BR-II/2008-948/18 dated 12.10.2018 issued by Finance Division, unless amended.

(7) The SBP or its banking agent NBP shall operate or cause to operate assignment accounts, sub-assignment accounts and linked accounts as approved by Finance Division according to assignment accounts procedure. Assignment account both for local currency and foreign currency shall be part of non-food account No. 1 of Government maintained by SBP. Principal accounting officers shall be responsible for overseeing operations of such accounts including request for approval from Finance Division for opening of assignment accounts.

(8) A request for opening of assignment accounts may be sent to Finance Division under existing procedure, available at www.finance.gov.pk. An assignment account shall be opened with designated branch of NBP for incurring expenditure under assignment accounts procedure.SBP and its agents shall be responsible for issuing bank statement for reconciliation and cooperate with Government offices as well as Finance Division for conflict resolution, if any.

(9) The Government offices using the assignment accounts shall be responsible for enforcing financial order and strict economy at every step and after observance of all relevant fiduciary rules and regulations. The Government offices shall ensure that not only the total expenditure is kept within the limits of the authorized ceiling but also that the funds allocated to spending units are expended in the public interest and for objects for which the money was allocated. In order to maintain a proper control, the Government offices shall put in place a monitoring mechanism to know not only of what has actually been spent from an appropriation but also what commitments and liabilities have been and will be incurred against it.

(10) The Government offices concerned shall maintain proper books of accounts and maintain receipt and revenue ledger and disbursement ledger so that the balance of receipt side shall correspond with the money deposited in receipt account. Similarly, expenses shall be reconciled with bank statement issued by SBP or its agents. 8

(11) The withdrawing entities shall be responsible for accounting of expenditure on a daily basis. On the basis of record and the bank statement, the drawing authorities shall render classified account of expenditure to the accounting offices on a monthly basis by 10th of each month for reconciliation of expenditure. The variations, if any, shall be reconciled and appropriate entries shall be made to update the accounting records. Monthly and quarterly release of funds shall be subject to reconciliation with accounting offices. The NBP shall report the account remaining undrawn against the authorized ceiling at the close of a financial year to accounting office in respect of each assignment account within a month.

(12) The SBP shall host and maintain treasury single account on behalf of the Federal Government. It shall provide electronic gateway system for necessary payment reports and ability to check the account balances online and real-time. The SBP shall collect information from commercial banks under section 31 of the Act and ensure provision of all information to the Finance Division to ensure implementation of the treasury single account system.

(13) Principal accounting officers, overseeing the Government offices on the instructions of Finance Division, shall close all bank accounts in commercial banks and provide evidence of such closure to Finance Division. Principal accounting officers shall transfer to treasury single account balances of accounts that contain public moneys appropriated through the Government’s.

(14) Accounting office’s shall ensure that no payment is made from the Federal Consolidated Fund without available budget, assignment accounts and sub-accounts are maintained for treasury single account system and that reconciliations are carried out on quarterly basis between book balances, bank statements and GFMIS.

July 31, 2020
Country foreign exchange reserves eases to $18.912 billion

KARACHI: The liquid foreign exchange reserves of the country eased by $135 million to $18.912 billion by week ended July 23, 2020, State Bank of Pakistan (SBP) said on Thursday.

The foreign exchange reserves were at $19.047 billion by week ended July 17, 2020.

The foreign exchange reserves held by the central bank also fell by $146 million to $11.975 billion by week ended July 23, 2020 as compared with $12.122 billion a week ago.

The SBP attributed the decline in reserves to government payment for external sector.

The reserves held by commercial banks witnessed meager increase of $12 million to $6.937 billion by week ended July 23 as against $6.925 billion a week ago.

July 30, 2020
Pakistan’s GDP growth contraction not severe as expected globally: SBP

KARACHI: The scale of the COVID-19 shock is underscored by the fact that for the first time in 68 years, as per the provisional estimates, Pakistan’s real GDP growth is set to contract in FY20.

“At 0.4 percent, this contraction is not as severe as that expected in most parts of the world due to COVID-19,” State Bank of Pakistan (SBP) said in its third quarterly report on the country’s economy issued on Thursday.

According to the report, successful stabilization measures that had fostered macroeconomic improvement in Jul-Feb FY20 provided a valuable cushion against the downturn faced from late March 2020 onward in the wake of the COVID-19 outbreak.

In particular, major progress had been made during Jul-Feb FY20 period in curbing the fiscal and current account deficits on the back of strong revenue growth, policy shift to a market-determined exchange rate, and build up in foreign exchange reserves buffers. Following this period of necessary stabilization, there were also encouraging signs of recovery in the real economy, including exports.

This made the economy relatively better equipped to respond to any external shocks than it would have otherwise been. This pre COVID-19 strengthening of Pakistan’s fundamentals and the prudent policy response to the outbreak later on should leave Pakistan well-placed to resume its earlier trajectory of recovery once the pandemic subsides.

As in other parts of the world, the real, fiscal, and external sectors came under visible strain thereafter as COVID-19 struck the global economy, while the inflation outlook improved as a result of weaker domestic demand and lower oil prices.

The report emphasizes that the estimated contraction in GDP owes mainly to a decline in industrial and services sector activities.

The large-scale manufacturing (LSM) posted an improvement during Jan-Feb 2020, driven primarily by exporting sectors with some contribution from food and fertilizer segments.

However, this nascent recovery was derailed by COVID-19 related disruptions, with LSM growth falling 22 percent on a month-on-month basis in March.

The agriculture sector emerged largely unscathed by COVID-19 as important crops registered a turnaround compared to last year. That said, unfavorable climate conditions and pest and locust attacks prevented some annual targets from being met.

The services sector felt the impact of COVID-19 acutely, as evident from high frequency data and negative sectoral growth is expected in FY20.

The report documents a similar pattern in the fiscal sector, where a primary budget recorded a surplus during Jul-Mar FY20 on cumulative basis, the first ever since 2016.

However, it turned into a deficit during the third quarter due to COVID-19. On the one hand, the lockdown created a drag for revenue, with growth in all categories of FBR revenues turning negative in March 2020.

On the other hand, the induced slump in economic activity and rise in unemployment created a need for greater expenditures. The government announced aRs 1.24 trillion stimulus package towards the close of Q3-FY20, consisting of a combination of targeted handouts and sector-specific outlays for agriculture, construction, and exports. While this package is expected to give much-needed relief to individuals and businesses, it would simultaneously contribute to a larger fiscal deficit in the near term.

Regarding the external sector, the report highlights that a sharp fall in imports, healthy growth in workers’ remittances, and contraction in the services trade deficit all played a part in narrowing the current account deficit (CAD) for Jul-Mar FY20 compared to last year.

However, the pandemic prompted foreign investors to reduce their domestic debt and equity holdings in emerging markets, including Pakistan, and growth in remittances has moderated.

These factors together with government debt repayments affected foreign exchange reserves in March 2020. However, Pakistan has generally been less affected than many other emerging markets and foreign exchange reserves of the country have since recovered, on the back of multilateral and commercial inflows.

The SBP report notes that the inflation outlook improved following the global and domestic spread of COVID-19.

A marked slowdown in domestic demand, stabilizing food inflation, and historic low oil prices led to a moderation in medium-term inflation prospects.

The Monetary Policy Committee responded swiftly, slashing the policy rate by a cumulative 625 basis points in five meetings between mid-March to end-June 2020.

To manage the cash flows of businesses and households, SBP allowed the deferment of principal amount and restructuring of loans. In addition, SBP launched three new refinancing schemes to support employment, new investments and BMR, and improve health facilities in the country. Together, these measures are estimated to provide a benefit of up to Rs.1.3 trillion (3.1 percent of GDP) to businesses and households.

Together with the government’s stimulus package, these measures are helping to cushion the impact of the COVID-19 outbreak. Beyond their immediate impact, these measures are expected to support the post-COVID-19 economic recovery as well.

July 30, 2020
Foreign exchange reserves increase to $19.047 billion

KARACHI: Pakistan’s liquid foreign exchange reserves have increased by $95 million to $19.047 billion by week ended July 17, 2020, State Bank of Pakistan (SBP) said on Thursday.

The foreign exchange reserves of the country were at $18.952 billion by week ended July 10, 2020.

The official reserves held by the central bank increased by $66 million to $12.121 billion by week ended July 17, 2020 as compared with $12.055 billion a week ago.

Similarly, the foreign exchange reserves held by commercial banks improved by $29 million to $6.926 billion from $6.897 billion a week ago.

July 23, 2020
Pakistan’s current account deficit shrinks by 78 percent in 2019/2020

KARACHI: Pakistan’s Current Account Deficit (CAD) has reduced by 78 percent owing to lower imports and better inflows.

The CAD fell to $2.966 billion during fiscal year 2019/2020 as against the deficit of $13.434 billion in the preceding fiscal year.

The import bill of the country fell by 19 percent to $44.57 billion during fiscal year 2019/2020 as compared with $54.76 billion, according to Pakistan Bureau of Statistics (PBS).

However, the exports also fell by 7 percent to $21.39 billion in fiscal year 2019/2020 as against $22.958 billion in the preceding fiscal year.

Therefore, the trade deficit fell by 27.12 percent to $23.18 billion in fiscal year 2019/2020 as against deficit of $31.8 billion in the preceding fiscal year.

The inflows of workers’ remittances grew by 6.4 percent to $23.12 billion during fiscal year 2019/2020 as compared with $21.739 billion in preceding fiscal year.

The current account deficit was came at 1.1 percent of the GDP during fiscal year 2019/2020 as compared with 4.8 percent of the GDP during preceding fiscal year.

July 21, 2020
Annual foreign direct investment grows by 88 percent

KARACHI: Foreign Direct Investment (FDI) into the country registered 88 percent growth to $2.56 billion during fiscal year 2019/2020, State Bank of Pakistan (SBP) said on Friday.

The FDI posted $1.198 billion increase during the fiscal year under review as compared with $1.36 billion in the preceding fiscal year i.e. 2018/2019.

The inflows under the head of FDI grew by 18 percent to $3.285 billion during fiscal year 2019/2020 as compared with $2.78 billion in the preceding fiscal year. However, outflows recorded 49 percent decline to $724 million as against outflow of $1.42 billion in the preceding fiscal year.

The portfolio investment registered 32 percent contraction in outflows during the period under review. The outflows from the capital market recorded $281.7 million during fiscal year 2019/2020 as compared with the outflow of $415 million in the preceding fiscal year.

The total foreign private investment posted 140.7 percent growth to $2.279 billion during July-June 2019/2020 as compared with $947.2 million in the preceding fiscal year.

The foreign public investment in debt securities witnessed outflow of 241.3 million during fiscal year 2019/2020 as compared with $1 billion in the preceding fiscal year.

The total foreign investment including public and private rose to $2.038 billion during fiscal year 2019/2020 as compared with outflow of $54.8 million in the preceding fiscal year.

July 18, 2020
Foreign exchange reserves up by $163 million to $18.953 billion

KARACHI: The liquid foreign exchange reserves of the country increased by $163 million to $18.953 billion by week ended July 10, 2020, the State Bank of Pakistan (SBP) said on Thursday.

The foreign exchange reserves of the country were at $18.79 billion by week ended July 03, 2020.

The official reserves of the SBP increased by $13 million to $12.055 billion by week ended July 10, 2020 as against $12.042 billion a week ago.

The reserves held by commercial banks witnessed growth of $150 million to $6.898 billion by week ended July 10, 2020 as against $6.748 billion a week ago.

July 16, 2020
Pakistan allows Afghan transit trade through Wagah from July 15

ISLAMABAD: Pakistan has allowed Afghan exports through Wagah border crossing from July 15, 2020, said a statement on Monday.

At the special request of the Government of Afghanistan and with a view to facilitating Afghanistan’s transit trade, Pakistan has decided to resume Afghan exports through Wagah border crossing from July 15, 2020, after implementing COVID-19 related protocols.

With this step, Pakistan has fulfilled its commitments under Pakistan-Afghanistan Transit Trade Agreement (APTTA).

Pakistan has restored bilateral trade and Afghan transit trade at all border crossing terminals to pre-COVID-19 status.

Pakistan remains fully committed to further strengthening its bilateral relations with Afghanistan in all areas including trade, and to facilitate Afghanistan’s transit trade under APTTA.

July 13, 2020
Prime Minister emphasizes out-of-box solution for economic growth amid COVID

ISLAMABAD: Prime Minister Imran Khan has emphasized out-of-the-box solutions are required for economic growth in these crucial times.

“COVID-19 has adversely impacted the world economy and of Pakistan too,” he said while chairing a meeting of the Finance and Economy Think-Tank on Saturday.

He stated that from day one, the government adopted a strategy to maintain a balance between sustaining economic activity and protecting the masses from infectious disease of Covid-19.

Imran Khan emphasized that prime focus is on providing relief to the poor segment of society through targeted subsidies.

He stated that Ehsaas is the flagship program of the government to alleviate poverty and requires expansion along with a strategy to reach the needy people.

The prime minister highlighted that a substantive package has been announced for the construction and housing sector that aims at increasing much needed employment opportunities and economic stimulus as well as adding to the inventory of affordable housing for the poor.

The prime minister highly appreciated the proposals presented by the Think-Tank regarding banking and finance, further improving the Ehsaas program and facilitating SMEs.

He directed that regular feedback of the Think-Tank be provided to him on various ongoing initiatives, policies and programs of the government.

Advisor on Finance Dr. Abdul Hafeez Sheikh, Advisor on Institutional Reforms Dr. Ishrat Hussain, Governor State Bank of Pakistan Raza Baqir and Former Finance Secretary Dr. Waqar Masood Khan were present.

Advisor on Commerce Abdul Razaq Dawood, Shaukat Tareen, Sultan Alana, Dr. Ijaz Nabi and Arif Habib participated via Video-Link.

Advisor on Finance briefed about the objectives and focus areas of this Think-Tank on Finance and Economy.

July 12, 2020
Pakistan makes substantial progress in completing remaining FATF Action Plan: Hafeez Shaikh

ISLAMABAD: Pakistan has made substantial progress towards completing remaining action plan of Financial Action Task Force (FATF) through increasing the effectiveness of its AML/ CFT Regime, Dr Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance and Revenue told International Financial Accountability.
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July 11, 2020