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  • Biometric verification of all saving scheme investors to be conducted under FATF recommendations

    Biometric verification of all saving scheme investors to be conducted under FATF recommendations

    ISLAMABAD: The government will conduct biometric verification of all investors of National Saving Schemes in order to make compliance with recommendations of Financial Action Task Force (FATF), a statement issued by Finance Division said on Saturday.

    Asia Pacific Group in its recently published Mutual Evaluation Report (MER 2019), has pointed out number of deficiencies on the part of Central Directorate of National Savings (CDNS) in terms of compliance to FATF recommendations, which has negatively affected the overall grading of different recommendations specially the recommendation 10, 11, 12 and 15.

    In this context, CDNS is committed to mitigating the deficiency to improve customer service delivery and to comply the FATF recommendation to safeguard the interest of the investors, it said.

    Banks under the supervision of SBP have already put in place all the required systems and KYC processes to comply the FATF recommendation.

    Finance Division through promulgation of National Savings Schemes (AML-CFT) Rules, 2019 has decided to engage an AML-CFT compliant bank, through competitive bidding, to put in place the requirement as well as the necessary training of employees of Central Directorate of National Savings (CDNS).

    Accordingly, Expression of Interest, in consultation with SBP, has been sought from the interested bank to conduct KYC (Know Your Customer) and other requirement of new as well as existing client of CDNS.

    This will include the biometric verification and screening of potential clients in UN Proscribed Person List.

    All these screenings are meant to stop any ill-gotten money to become part of financial system and to safeguard the valued investor from the menace of Money Laundering and Terrorist Financing.

    Central Directorate of National Savings (CDNS) as it stands today is one of the longstanding institutions in the country with a legacy of more than 140 years.

    The institution has always been a symbol of unshakable trust of the public.

    National Savings is playing its pivotal role to inculcate the Culture of Savings, facilitate Financial Inclusion and extending Social Security Net to the deserving sections of the society.

    Around 33 percent of CDNS deposits are in Welfare Schemes which attribute around 2 percent incremental rate of profit over and above other regular savings schemes.

    Currently, CDNS manages portfolio of Rs. 4,038 billion (November 2019) of more than 7 million investors.

    National Savings Schemes (“NSS”) provide risk free and competitive avenue to all segments of society specially the most vulnerable i.e. senior citizens, pensioners, widows, physically challenged persons and family members of Shuhada.

    On the other hand, it provides a non-inflationary and cost effective borrowing to the government to bridge the overall fiscal deficit which ultimately reduces dependency on external borrowing.

    About 19 percent of domestic debt consists of NSS while these deposits are equal to 28 percent of total deposit of scheduled bank.

    One of the main challenges to CDNS was its manual operations and lack IT, therefore, CDNS has started its journey of automation in 2009 and successfully completed PSDP funded Automation Project Phase I & II in 2013 and 2017.

    Through these project 223 National Savings Centre (“NSC”) i.e. (60 percent out of total 376) have been successfully automated.

    Automation of remaining 153 is in active process with support of Department for International Development (DFID), UK.

    Meanwhile, CDNS has upgraded its core business solution from decentralized to centralized architecture.

    Around 144 branches have already been shifted to upgraded solution where customer transaction time has significantly reduced.

    Also, the provision of Alternate Delivery Channels (ATM) is in final stages which will further improve the service delivery. Introduction of technology has provided CDNS the opportunity to modernize its process which include swift data reporting, reconciliation with other departments, budgeting and forecasting, customer data base etc.

    Due to IT progress CDNS is now capable to implement number of initiatives which was not possible due to manual operation.

  • Foreign exchange reserves increase to $18.123 billion

    Foreign exchange reserves increase to $18.123 billion

    KARACHI: The foreign exchange reserves of the country have increased by $39 million to $18.123 billion by week ended January 10, 2020 as compared with $18.084 billion a week ago, State Bank of Pakistan (SBP) said on Thursday.

    The reserves held by the central bank increased by $83 million to $11.586 billion by week ended January 10, 2020 as against $11.503 billion a week ago.

    The reserves held by commercial banks fell by $44 million to $6.537 billion as against $6.581 billion on weekly basis.

  • Foreign direct investment increases by 68.3% in first half

    Foreign direct investment increases by 68.3% in first half

    KARACHI: The foreign direct investment (FDI) into Pakistan has increased by 68.3 percent during first six months (July – December) of 2019/2020 owing to lower outflows during the period, according to data released by State Bank of Pakistan (SBP) on Thursday.

    The FDI increased to $1.34 billion during first six months of current fiscal year as compared with $796.8 million in the corresponding months of the last fiscal year.

    The inflows under the head were at $1.71 billion during the period under review as compared with $1.84 billion in the same period in the last fiscal year.

    The outflows were at $391.2 million during first half of the current fiscal year as compared with $1.05 billion in the corresponding half of the last fiscal year.

    The portfolio investment in the equity market witnessed increased by $18.8 million in July – December 2019/2020 as compared with outflows of $419.8 million in corresponding period of the last fiscal year.

    The total foreign private investment surged by 260.6 percent to $1.36 billion during the first half of the current fiscal year as compared with $377 million in the same half of the last fiscal year.

    During the period under review an investment of $452 million was witnessed in the debt securities as foreign public investment.

    The total foreign investment increased to $1.81 billion during first six months of current fiscal year as compared with $377 million in the corresponding months of the last fiscal year.

  • Overseas Pakistanis send $11.4 billion during first half

    Overseas Pakistanis send $11.4 billion during first half

    KARACHI: Overseas Pakistanis have sent $11.4 billion during first half (July – December) 2019/2020, which is 3.31 percent higher than remittances received in the same period of the last fiscal year, State Bank of Pakistan (SBP) said on Saturday.

    The central bank said that overseas Pakistani workers remitted $11.4 billion in the first half (July to December) of FY20, showing a growth of 3.31 percent compared with $11.03 billion received during the same period in the preceding year.

    During December 2019, the inflow of workers’ remittances amounted to $ 2097.23 million, which is 15.25 percent higher than November 2019 and 20 percent higher than December 2018.

    The country wise details for the month of December 2019 show that inflows from Saudi Arabia, UAE, USA, UK, GCC countries (including Bahrain, Kuwait, Qatar and Oman) and EU countries amounted to $ 472.94 million, $ 427.56 million, $ 357.45 million, $ 324.57 million, $ 205.73 million and $ 56.42 million respectively compared with the inflow of $ 414.59 million, $ 351.19 million, $ 276.29 million, $ 267.79 million, $ 174.42 million and $ 47.48 million respectively in December 2018.

    Remittances received from Malaysia, Norway, Switzerland, Australia, Canada, Japan and other countries during December 2019 amounted to $ 252.56 million together as against $ 216.35 million received in December 2018.

  • Economy likely to grow better than World Bank forecast

    Economy likely to grow better than World Bank forecast

    ISLAMABAD: The finance ministry on Thursday said that the economy likely to grow better than forecast of World Bank.

    The ministry said that the government’s extensive measures have helped the economy move progressively along the adjustment path and stabilization process and economic recovery is expected towards the end of FY2020.

    “The government is focused on bringing improvement in the real sector growth through inclusive growth in agriculture, industrial and services sectors,” said a statement by the Finance Division in response to certain news reports carried in a section of the regarding downward revision of growth by the World Bank.

    The government is cognizant of challenges and stringently focused on resolving them particularly, reducing inflation, creating job opportunities and achieving high growth rate.

    “Keeping in view the positive developments on major economic indicators, we expect that the economy will likely to achieve better growth prospects as against the projections of the World Bank.”

    The World Bank in its report ‘2020 Global Economic Prospects’ had forecasted Pakistan`s current year growth rate at 2.4 percent before touching 3 percent next fiscal year and 3.9 percent in FY2022.

    The bank’s report had also mentioned that the growth had decelerated an estimated 3.3 percent in FY2018-19, reflecting a broad-based weakening in domestic demand.

    In addition, the report had described that significant depreciation of the Pakistani rupee resulted in inflationary pressures, monetary policy tightening restricted access to credit, curtailing public investment to deal with large twin deficits and budget deficit rose more sharply than expected.

    It may be pointed out that during FY2019, the slowdown in economy was largely attributed to various policy measures to manage the twin deficit crisis. Consequently, these measures helped to contain demand pressures and contributed to import compression.

    However, the outcomes of these measures were realized on the industrial sector.

    Particularly LSM sector witnessed a negative growth. At the same time, high input costs along with water shortages weakened agriculture sector’s output and hence, the drag in the commodity-producing segments spilled over to the services sector as well.

    Resultantly, the real GDP growth recorded at 3.3 percent. At the start of current fiscal year, with government’s extensive measures, Pakistan’s economy is now moving progressively along the adjustment path and stabilization process; however towards the end of FY2020, economic recovery is expected. In this regard, Government is focused on bringing improvement in the real sector growth through inclusive growth in agriculture, industrial and services sectors.

    For growth in agriculture sector, the target production of wheat is 27 million tons given by FCA in last meeting held in October. In addition to uplift agriculture sector “National Agriculture Emergency Programme” in coordination with all provinces has been introduced and approved 13 mega projects at the cost of Rs 287 billion.

    Agriculture credit disbursement target for CFY20 has been set at Rs.1,350 billion. Agriculture credit disbursement increased by 20 percent to Rs 482 billion during Jul-Nov, FY2020 against Rs.402 billion last year. To boost industrial sector, the government is providing a series of subsidies and incentives to industrial sector.

    These include subsidies to industry for electricity and gas, export development package and continue to provide Long-Term Trade Financing (LTFF) and Export-Refinancing Scheme (ERS) at subsidized rate. Similarly, PSDP release process is simplified and up to 3rd January, 2020 Rs.301.4 billion (Rs.225.4 billion) released to encourage construction related industries especially cement & steel.

    In addition, Cement dispatches growth of 6.55 percent (24.8 million) during July-Dec, FY2020 against 23.2 million in the last year. This development would likely stimulate the growth in LSM in coming months. On fiscal side, to control expenditures, government is following austerity measures with complete restriction on supplementary grants.

    For export promotion several initiatives have been announced such as support duty structure on raw materials and intermediate goods, improve mechanism for tax refunds, provide electricity and gas at competitive cost, and make Pakistan part of the global value chain.

    Government’s various measures to stabilize the economy has already started to reap benefits in the form of sustained adjustment in current account deficit (CAD) and continued fiscal prudence.

    A brief review indicates that CAD reduced by 72.9 percent during July-November FY2020, Fiscal deficit contained at 1.6 percent of GDP (Rs 686 billion) during Jul-Nov FY2020 ,Primary balance posted surplus of Rs 117 billion during Jul-Nov, FY2020 (0.3 percent of GDP), significant rise in FBR tax revenues to Rs.2085.2 billion (16.4 percent) during July-December, FY2020, improved ranking in ease of doing business, ranked among the world’s top 10 best business climate improver and ‘Stable’’ credit outlook to B3 from ‘Negative’ by Moody’s is an affirmation of Government’s success in stabilizing the economy and laying a foundation for robust growth.

  • Foreign exchange reserves flat at $18.084 billion

    Foreign exchange reserves flat at $18.084 billion

    KARACHI: The liquid foreign exchange reserves of the country was flat at $18.084 billion by week ended January 03, 2020 as compared with $18.081 billion a week ago, the State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves held by the central bank increased by $14.3 million to $11.503 billion by week ended January 03, 2020 as compared with $11.489 billion by week ended December 27, 2019.

    The reserves held by commercial banks however declined by $10.9 million to$6.581 billion by week ended January 03, 2020 as compared with $6.592 billion a week ago.

  • ECC constitutes price negotiation committee for TAPI gas pipeline project

    ECC constitutes price negotiation committee for TAPI gas pipeline project

    ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Wednesday approved the constitution of Price Negotiation Committee (PNC) for TAPI(Turkmenistan-Afghanistan-Pakistan-India) Gas pipeline project.

    Adviser to the Prime Minister on Finance, Dr. Abdul Hafeez Shaikh chaired the meeting of the Cabinet here at the Cabinet Division.

    The PNC shall negotiate the price with Turkmen gas. The Committee shall consist of the following members; Secretary, Ministry of Energy (Petroleum Division) as chairman. Secretary Finance or his nominee, Joint Secretary, Ministry of Energy (Power Division), Director General (Gas)/ Director (Gas) and Managing Director, SSGCL as members.

    The ECC approved the Technical Supplementary Grant of Rs 1.00 billion under demand No.04-Cabinet Division for establishment of Pakistan Tourism Development Endowment Fund under Public account.

    The Chair directed Pakistan Tourism Development Corporation to come up with their tourism development and soft image promotion plan in the next meeting.

    The ECC also granted approval of allocation of Gas from PGNiG’s RIZQ Gas Field to M/S SSGCL. It was briefed to the ECC that currently 2 wells namely Rizq-1 and Rizq -2 are producing 16 MMFCD gas from Rizq gas field, which are allocated to M/s SSGCL, whereas Rizq -3 which is under drilling, is expected to add another 9 to 10 MMCFD gas to the existing production. Upon completion of this well, the cumulative gas production from this gas field is expected to raise upto 25 MMCFD. The price of the gas shall be according to the applicable Petroleum Policy.

    On the Demand moved by the Ministry of Industries and Production for Rs 3.02 billion for the payment of outstanding dues of SSGC Private Limited by Pakistan Steel Mills on account of gas bills, the ECC directed to constitute a three-member Committee under the Chairmanship of Secretary Finance to find out a feasible solution for the issue so that the already allocated budget may not be exceeded and the liabilities of both SSGC and PSM are duly settled.

    ECC directed Ministry of Finance to explore the possibilities for improving the liquidity position of Pakistan State Oil as exchange losses of around Rs 28 billion have incurred on FE-25 loans by PSO.

    The loans were acquired under the instructions of Ministry of Finance for financing of import operations of PSO.

    Finance Ministry assured the ECC of utilization of possible all funding options in the ongoing financial year and any deficiency in the funds shall be entertained in the upcoming budget.

    ECC granted extension of Government of Pakistan guarantee against credit facility of National Bank of Pakistan amounting to Rs5 billion in favor of Utility Stores Corporation of Pakistan.

    On the request of the Ministry of Water Resources ECC granted approval to WAPDA to raise loan for the settlement of the Financial Facility amounting to Rs17.500 billion with one-year tenure and GoP guarantee.

    Clearance under Prudential Regulations R-4(clause 1a and 2) from the State Bank of Pakistan to disburse the facility initially against a letter of comfort was also granted.

  • SECP drafts framework to facilitate startups in Pakistan

    SECP drafts framework to facilitate startups in Pakistan

    ISLAMABAD: Securities and Exchange Company of Pakistan (SEC Pakistan) has issued draft regulatory framework to facilitate startups in the country.

    The SECP said that with the objective to promote growth in the startups sector of Pakistan, it is necessary to make relevant changes in Company Law to facilitate the incorporation process for the startups and provide a conducive regulatory environment.

    A) Proposed changes in the Parent legislation (Companies Act)

    i) Definition of Startups

    In the Third Schedule to the Companies Act, the following category is proposed to be added:

    An entity shall be considered as a Startup:

    a) Upto a period of 10 years from the date of incorporation/registration

    b) Turnover of the entity for any of the financial years since incorporation/registration is not greater than 100 Million Rupees

    c) Entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.

    Provided further that an entity formed by splitting up or reconstruction of an existing entity or a separate company with similar objects and ownership shall not be considered a “Startup Company”

    i) Amendment in the Section “83 – Further issue of capital” to offer “Employee Stock Option Scheme (ESOS)” shall help address the employee retention and reward issues being faced by startups.

    The following new proviso is proposed to be added:

    “Provided that the directors of private limited company may allot the declined or unsubscribed shares to its employees under “Employees Stock Option Scheme”, on such conditions, as may be specified.”

    ii) Amendment in the clause “88 – Power of a company to purchase its own shares” shall facilitate ESOS option and shall facilitate buy back of shares by companies, since they do not have a secondary market. It would also facilitate startups in case, any founding member needs to exit from the company by allowing return of shares to a company.

    B) Changes required in Companies (Further Issue of Shares) Regulations, 2018

    i) Amendment in the clause “7. Application to the Commission for issue of shares other than right” is a consequential change whereby no application for approval shall be required to be made to the Commission under Section 83 of the Act, by a Private Company, and shall only be required to maintain and file the documents with the Commission not later than two months from the decision to issue such shares, as specified in sub-regulation (2) below.

    ii) Conditions for issuance of shares with differential rights

    The requirement for the company not to default in filing financial statements and annual returns for three financial years immediately is being changed to preceding the financial year in which it is decided to issue such shares.

    iii) Furthermore, for a private limited company, the valuation mechanism of non-cash consideration and further conditions, if any, will be amended in Companies (Further Issues of Shares) Regulations, 2018.

    Introduction of Regulatory Sandbox

    Regulatory Sandbox is a tailored regulatory environment for conducting limited scale, live tests of innovative products, services, processes, and/ or business models in a controlled environment for a limited period of time so as to assess their viability to be launched on full-scale, and to determine the compatible and enabling regulatory environment that will be conducive for the innovative solutions. The objective of these Guidelines is to purposefully meet the above.

    The Regulatory Sandbox is primarily applicable for new products, services or business models which have not been addressed under existing laws and regulations; or these new ideas bring an innovative approach to the market and there exists considerable uncertainty in terms of unexpected adverse outcomes or existing regulatory framework does not fully address the solutions proposed to be experimented through the regulatory sandbox.