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  • Headline inflation increases by 11 percent in October

    Headline inflation increases by 11 percent in October

    ISLAMABAD: The headline inflation based on Consumer Price Index (CPI) has increased by 11 percent in October 2019 while calculating on the base year 2015-2016.

    According to inflation data released by Pakistan Bureau of Statistics (PBS) on Wednesday, the inflation general increased by 11.0 percent on year-on-year basis in October 2019 as compared to an increase of 11.4 percent in the previous month and 6.5 percent in October 2018.

    On month-on-month basis, it increased by 1.8 percent in October 2019 as compared to an increase of 0.8 percent in the previous month and 2.1 percent in October 2018, the PBS said.

    CPI inflation Urban, increased by 10.9 percent on year-on-year basis in October 2019 as compared to an increase of 11.6 percent in the previous month and 7.0 percent in October 2018.

    On month-on-month basis, it increased by 1.6 percent in October 2019 as compared to an increase of 0.7 percent in the previous month and an increase of 2.2 percent in October 2018.

    CPI inflation Rural, increased by 11.3 percent on year-on-year basis in October 2019 as compared to an increase of 11.1 percent in the previous month and 5.7 percent in October 2018.

    On month-on-month basis, it increased by 2.2 percent in October 2019 as compared to an increase of 0.8 percent in the previous month and an increase of 2.0 percent in October 2018.

    Sensitive Price Indicator (SPI) inflation on YoY increased by 15.1 percent in October 2019 as compared to an increase of 14.7 percent a month earlier and an increase of 1.7 percent in October 2018.

    On MoM basis, it increased by 2.7 percent in October 2019 as compared to an increase of 1.9 percent a month earlier and an increase of 2.3 percent in October 2018.

    Wholesale Price Index (WPI) inflation on YoY basis increased by 13.2 percent in October 2019 as compared to an increase of 15.9 percent a month earlier and an increase of 18.6 percent in October 2018.

    WPI inflation on MoM basis increased by 2.0 percent in October 2019 as compared to an increase of 0.1 percent a month earlier and an increase of 4.4 percent in corresponding month of last year i.e. October 2018.

  • Investment in premium prize bonds surges by 157 percent

    Investment in premium prize bonds surges by 157 percent

    KARACHI: The investment in premium prize bonds of Rs40,000 denomination has witnessed unprecedented growth of 157 percent after the government announcement to discontinue bearer prize bonds of same denomination.

    According to official documents, the investment in premium prize bonds of Rs40,000 denomination surged by 157 percent to Rs15.86 billion by September 2019 as compared with Rs6.17 billion as of May 2019.

    The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination bearer prize bond.

    After the decision of the government people have surrendered Rs222 billion bearer bonds of Rs40,000 denomination by September 2019, which is around 86 percent of the total invested amount till May 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.

    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 Rs2.317 trillion by September 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.

  • Profit rates on saving schemes reduced

    Profit rates on saving schemes reduced

    KARACHI: The government has reduced the profit rates on saving certificates effect from November 01, 2019.

    According to notifications issued by Central Directorate of National Savings (CDNS) on Tuesday, the profit rate on Defence Saving Certificate reduced by 2.33 percent to 10.68 percent.

    The profit rate on Pension Behbood has been slashed by 2.28 percent to 12.48 percent.

    The profit rate on Regular Income Certificate has been cut by 2.04 percent to 10.92 percent.

    Similarly, the profit rate on Special Saving Certificate has been cut by 1.70 percent to 11 percent.

    The profit rate on saving accounts has been slashed by 2.05 percent to 8.20 percent.

    Khurram Schehzad, CEO, Alpha Beta Core said that the reduction in profit rate had been done in line with declining secondary market yields on bonds.

    “Decline in fixed income profit rates is going to be positive for equities/stock market,” he added.

  • Proposals for establishment of Pakistan Revenue Authority to be finalized by June 2020

    Proposals for establishment of Pakistan Revenue Authority to be finalized by June 2020

    ISLAMABAD: The ministry of finance has been directed to finalize proposals for establishment of Pakistan Revenue Authority (PRA) by June 30, 2020.

    The directives have been issued at a meeting chaired by the prime minister on restructuring of FBR held last month.

    It is decided that the ministry of finance (Revenue Division) to formulate comprehensive proposals for establishment of PRA and centralized collection of General Sales Tax (Goods and Services) by PRA under the ambit of World Bank’s “Pakistan Raises Revenue Project” by June 30, 2020.

    The meeting discussed the current structure of the FBR that it is archaic and highly bureaucratic, which does not commensurate with technology driven tax administration in vogue around the world.

    There is need to establish legislative empowered, tailored to task (lean organization) and technology driven PRA.

    In the interim period, the FBR headquarters needs to be reorganized /articulated on functional lines segregating Inland Revenue and Customs Operations into North and South Zones.

    Deputy Chairman (2) of FBR need to be appointed to effectively coordinate and supervise segregated functions of Inland Revenue and Customs.

    The meeting approved to appoint deputy chairmen for Inland Revenue and Customs by November 30, 2019.

    Following is the proposed mandate to PRA:

    • Constitutionally empowered and autonomous authority with ‘lean organization’, structured along functional lines.
    • Tax policy entrusted to Ministry of Finance (Revenue Division); guided by political leadership and informed by Tax Policy Board and PRA Board.
    • Disparate provincial revenue authorities should be consolidated into a single authority for each province under the overall coordinated, facilitation, guidance and oversight by PRA (through integrated process).
    • Establishment of Directorate General of Revenue Coordination & Oversight (headed by Director General –Grade 21) at PRA for ensuring fiscal discipline, enhance flexibility and responsiveness of fiscal framework.
    • To address collection, jurisdiction and double taxation issues, GST (including services) be adopted as PRA’s responsibility.
    • Conditional vertical resource distribution formula linked to revenue collection performance under PRA’s coordination / oversight.

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  • Imran Khan appreciates World Bank’s financial, technical support to Pakistan

    Imran Khan appreciates World Bank’s financial, technical support to Pakistan

    ISLAMABAD: Prime Minister Imran Khan has appreciated the World Bank’s financial and technical support to Pakistan.

    He said this while welcoming World Bank Group President David R. Malpass here on Thursday.
    The prime minister reiterated the government’s resolve towards strengthening of economy, ensuring transparency and good governance, institutional reforms, tax reforms and socio-economic development of the marginalized sections of society.

    He said that ease-of-doing business, enhancing tax base, domestic resource mobilization, attracting foreign investment and financial reforms agenda s the foremost priority of the government.

    Prime Minister Khan apprised that the government has launched various initiatives aimed at welfare of the youth, poverty alleviation and housing sectors that will ultimately result in economic development.

    President World Bank was accompanied by Regional VP South Asia Hartwig Schafer, Ms. Ceyla Pazarbasioglu-Dutz, Regional Vice President IFC Ms. Snezana Stolijkovic and Country Director World Bank Pakistan Patchamuthu Illangovan.

    The Pakistani side comprised of Minister for Economic Affairs Muhammad Hammad Azhar, Minister Planning Makhdoom Khusro Bakhtiar, Minister Water Resources Faisal Vawda, Advisor on Finance Dr. Abdul Hafeez Sheikh, Advisor on Institutional Reforms Dr. Ishrat Hussain, SAPM Dr. Firdous Ashiq Awan, SAPM Dr. Sania Nishtar, Governor State Bank Raza Baqir, Chairman FBR Syed Shabbar Zaidi and senior officers.

    President World Bank Group, David Malpass appreciated Prime Minister Imran Khan for personally spearheading various flagship programs of the government. He also recognized the efforts of the government towards economic turn-around, reducing expenditures, practicing austerity and initiating reforms in critical sectors of the economy.

    He said that there was substantial progress in economic indicators despite Global and internal fiscal challenges.

    Later, a round-table conference was also held wherein detailed discussions were held on issues related to energy sector and reforming tax regime of the country. Minister for Economic Affairs Hammad Azhar, in his opening remarks, highlighted overall reform agenda of the government and the efforts being made for economic turn-around.

    Advisor Finance Dr. Abdul Hafeez Sheikh gave an overview of the achievements made by the Government during last one year. He also underlined the efforts made by the government to stabilize the economy and to put it onto the path of growth.

    He said that there was a considerable progress this year on exports, containing fiscal and current account deficits, revenue collection, restricting expenditures and exchange rate stabilization.

    Minister for Power Omar Ayub Khan and SAPM on Energy Nadeem Babar shared the strategy of the Government to overcome the issues related to energy sector including circular debt and efforts being made to diversify energy-mix with greater reliance on alternate and renewable energy resources.

    The World Bank President David R. Malpass also visited Tarbela Dam Project on Thursday and had a round of the Main Dam and the Power House of Tarbela 4th Extension Hydropower Project.

    Water Resources Federal Minister Muhammad Faisal Vawda, Water Resources Federal Secretary Muhammad Ashraf, WAPDA Chairman Lt Gen Muzammil Hussain (Retd) and World Bank senior officials accompanied him during the visit.

    Speaking on the occasion, World Bank President David R. Malpass expressed his pleasure over completion of Tarbela 4th Extension Hydropower Project within time and less than estimated cost, adding that the work on the project is impressive.

    The efforts of Government of Pakistan particularly Ministry of Water Resources and the Minister Faisal Vawda for improvement of water resources in Pakistan are applauded.

    President World Bank appreciated the efforts of Ministry of Water Resources especially the Minister for resolving the issues in relation to completion of Dassu Hydral Power Project, construction of Dams and other related projects.

    The team of World Bank especially recognized the untiring efforts of Faisal Wadda, Minister for water Resources for effectively coping with the challenges related to water issues in Pakistan.

    Earlier, Water Resources Federal Minister Muhammad Faisal Vawda thanked the World Bank for the cooperation it has been providing to Pakistan for harnessing water and hydropower resources since 1960.He expressed the hope that this cooperation will further enhance for implementation of various projects in the days to come.

    Vawda said we are taking comprehensive and effective measures for improvement of water resources and construction of dams in Pakistan.

    Pakistan will witness more progress in hydropower and water sectors with cooperation of Water Bank in future. Faisal Vawda, Federal Minister for Water Resources further added.

    He said 523 billion units of electricity have been contributed by Tarbela Hydel Power Station to the National Grid. Welcoming the World Bank President at Tarbela, WAPDA Chairman Lt Gen Muzammil Hussain (Retd) commended that the World Bank not only helped broker Indus Water Treaty between Pakistan and India but also administered the entire financial arrangements with assistance of the friendly countries to complete Indus Basin Replacement Works, which included two mega dams namely Mangla and Tarbela, five barrages and nine inter-river link canals to divert water from the Western Rivers to the Eastern Rivers.

    He also appreciated the World Bank for financial support for Tarbela 4th Extension Hydropower Project, Dasu Hydropower Project and upcoming Tarbela 5th Extension Hydropower Project. WAPDA is looking forward to World Bank’s support for other projects, located on Indus Cascade.

    The projects on Indus Cascade have the great potential to store water and generate phenomenal hydel electricity, he further said. Briefing the World Bank President about the benefits of Tarbela Dam Project, the Chairman said that as many as 378 MAF water has been released from Tarbela Reservoir to meet irrigation needs of the country.

    In addition, Tarbela 4th Extension Hydropower Project, commissioned last year, has also generated 5.6 billion units – more than the generation envisaged in PC-I of the project.

  • Petrol, high speed diesel prices increased for November

    Petrol, high speed diesel prices increased for November

    ISLAMABAD: The government on Thursday increased the prices of petrol and high speed diesel on sales to end consumers.

    The price of motor spirit (petrol) has been increased by Re 1 to Rs114.24 with effective from November 01, 2019 as compared with Rs113.24 applicable during October 2019.

    Similarly prices of high speed diesel increased by 27 paisas to Rs127.41 from Rs127.14.

    However, prices of light diesel oil and kerosene oil have been reduced for the month of November 2019.

    The price of light diesel oil has been reduced by Rs6.56 to Rs85.33 from Rs91.89. Similarly price of kerosene oil has been reduced by Rs2.39 to Rs97.18 from Rs99.57.

    The government has decreased the prices of Kerosene and light diesel oil and slightly readjusted the prices of other petroleum products for the month of November 2019 as per recommendation of the Oil & Gas Regulatory Authority (OGRA), says a statement by the Ministry of Finance.

  • Pakistan’s forex weekly reserves decrease

    Pakistan’s forex weekly reserves decrease

    KARACHI: Pakistan’s total liquid foreign exchange reserves decrease by $96 million to $15.089 billion by week ended October 25, 2019 as compared with $15.186 billion a week ago, State Bank of Pakistan (SBP) said on Thursday.

    The reserves held by the SBP increased by $22 million to $7.914 billion by week ended October 25, 2019 as compared with $7.892 billion a week ago.

    The reserves held by commercial banks, however, fell by 118 million to $7.175 billion by week ended October 25, 2019 as compared with $7.293 billion a week ago.

  • World Bank Group President arrives for three-day visit

    World Bank Group President arrives for three-day visit

    ISLAMABAD: David Malpass, President of World Bank Group will arrive in Islamabad today Wednesday, October 30, 2019 for a three-day visit, his first trip to Pakistan since assuming World Bank Group leadership on April 9, 2019.

    While in Pakistan, Malpass will meet with Prime Minister Imran Khan.

    He will also meet the Chief Minister of Sindh, Federal and Provincial Ministers, Advisors, the State Bank Governor, members of Parliament, beneficiaries of the Benazir Income Support Program, and representatives of the private sector.

    “My visit to Pakistan provides a good opportunity to discuss the need for important reforms to stabilize the Pakistani economy and accelerate broad-based growth,” said Malpass.

    “I look forward to hearing from Prime Minister Imran Khan and the Chief Ministers on their priorities and how the World Bank Group can best work with Pakistan to improve its business and jobs environment, and create conditions for people to gain education, skills, and good health.”

    During his visit, President Malpass will engage on reforms, including harmonizing the sales tax across Pakistan to further improve the business environment and enhance revenue collection; lowering circular debt in the power sector and increasing the share of renewable energy for environmental sustainability; harnessing a greater role for women in the economy; and unleashing digital payments to boost financial inclusion.

    President Malpass will visit a World Bank-supported hydropower project in Tarbela, where the Bank is currently financing additional capacity of 4GW of cheaper and environment-friendly energy.

    President Malpass will participate in an event to celebrate Pakistan’s progress in Ease of Doing Business 2020, and to discuss useful next steps.

    He will also participate in the launch of the National Payments Systems Strategy with the government and representatives from the private sector.

    Pakistan has been a member of the World Bank since 1950. Since then, the World Bank has provided $40 billion in assistance.

    The World Bank’s program in Pakistan is governed by the Country Partnership Strategy for FY2015-2020 with four priority areas of engagement: energy, private sector development, inclusion, and service delivery.

  • SBP forecasts subdued growth with high inflation

    SBP forecasts subdued growth with high inflation

    KARACHI: State Bank of Pakistan (SBP) on Monday forecast subdued GDP growth with high inflation for the current fiscal year.

    The central bank in its Annual Report 2018/2019 (State of the Economy), said that macroeconomic stabilization will continue to be the cornerstone of economic policies during 2019/2020.

    Real GDP growth is likely to remain subdued, though the early signs of recovery are already visible. Development spending may play a pivotal role, since there has been an observed tendency that Pakistan’s GDP growth and PSDP spending move in the same direction, and similar has been the case in 2018/2019.

    On this note, it is worth highlighting that the government has budgeted a greater outlay for PSDP during the year compared to the actual spending in FY19.

    Other triggers may include an improvement in market sentiments vis-à-vis the IMF program. A better showing by the agriculture sector compared to last year, and further improvement in the current account balance, may also improve the final outcome, the SBP said.

    Inflation, meanwhile, is expected to exceed its annual projection by the Planning Commission of Pakistan for FY20.

    While demand pressures have generally subsided, cost-related impact may be more pronounced in the first half of the fiscal year, taking the cue from oneoff adjustment in prices of utilities and other FY20 budget-related measures.

    By the second half, further supported by the end of deficit monetization by the government, price pressures may begin to recede, setting the tone for considerably lower inflation in FY21. However, crossborder tensions (which have flared up intermittently since Q3-FY19 and worsened during Q1-FY20) represent an upside risk to this outlook, given their tendency to drive up food inflation.

    At the same time, the global slowdown may pose a downside risk to the outlook, especially if international oil prices fall more sharply than anticipated.

    The external sector’s outlook is positive on the whole, albeit being subject to both upside and downside risks. The current account deficit, after shrinking on YoY basis during FY19, is anticipated to subside further in FY20.

    Exports are projected to pick up during the year, conditional on demand conditions among the country’s major trading partners and buoyancy in commodity markets.

    In particular, onset of fiscal stimulus and successful resolution of trade negotiations involving major economies would be instrumental in supporting global consumer demand, which would in turn bode well for exporting partners, including Pakistan, along with improved prospects of foreign investments.

    The FTA-II with China and preferential trade agreement with Indonesia may also give a boost to exports. Decline in imports would be instrumental in improving the current account as the policy induced import compression would continue on top of subdued prices, barring any adverse shock from international oil prices.

    Moreover, workers’ remittances are expected to remain robust in FY20 on the back of measures taken and incentives given to overseas Pakistanis remitting under the Pakistan Remittance Initiative (PRI).

    The outlook for the fiscal sector, by contrast, is not straightforward. The FY20 budget looks to fix the deficiencies of the tax system and represents an earnest effort to increase documentation.

    It envisages a sizeable reduction in the deficit, by enhancing revenues and squeezing expenditures. However, achieving the ambitious tax collection target in the middle of a broader economic slowdown may present a challenge.

    Moreover, even if things pan out more or less according to plan, the fiscal deficit may be in the neighborhood of 7 percent nevertheless, implying that there would still be some way to go before fiscal consolidation is achieved. That said, the government is expected to make a concerted effort to meet the IMF’s quarterly targets, implying a measure of fiscal discipline.

    On an optimistic note, the private sector would be mindful that even as the economy rebalances and there is reduced demand in some sectors, new opportunities are simultaneously opening up in other areas.

    For example, imports of many consumer items and finished goods are shrinking due to a combination of regulatory duties and exchange rate depreciation. This generates an opportunity for domestic companies to step in and fill in this demand in the short to medium term.

    Moreover, alignment of the exchange rate represents improved prospects for export-oriented enterprises. The government’s stated commitment to foster the ease of doing business and pursue investor-friendly policies is also welcome.

    Meanwhile, domestic investors should also be looking to tap underserved markets and segments. Beyond provision of traditional goods and services, innovation must be the new watchword.

    It is especially encouraging to see that proactive, technology-driven domestic startups have already ushered in a positive disruption in industries ranging from banking (fintechs) to transportation (ride hailing apps) and consumer goods and food (delivery apps), to name just a few. Such examples may inspire those investors who have been sitting on the fence for some time now to abandon the wait and-see mode, and take positions sooner rather than later.

    In the grand scheme of things, a collective shift in sentiment and more optimism could prove to be a much needed catalyst for the revival of economic activities.

  • Pakistan’s forex reserves increased by $149.7 million

    Pakistan’s forex reserves increased by $149.7 million

    KARACHI: The total liquid foreign exchange reserves have increased by $149.70 million to $15.142 billion by week ended October 11, 2016 as compared with $14.992 billion a week ago, State Bank of Pakistan (SBP) said on Thursday.

    The reserves held by the central bank increased $56.10 million to $7.813 billion by week ended October 11, 2019 as compared with $7.757 billion.

    The reserves held by other commercial banks increased by $93.6 million to $7.329 billion as compared with $7.235 billion a week ago.