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  • Foreign direct investment falls by 50 percent in 2018/2019

    Foreign direct investment falls by 50 percent in 2018/2019

    KARACHI: The inflow of foreign direct investment (FDI) to the country has declined by 50 percent to $1.73 billion during fiscal year 2018/2019 as compared with $3.47 billion in the preceding fiscal year, State Bank of Pakistan (SBP) said on Monday.

    The inflows under FDI recorded growth of 24.5 percent to $3.16 billion during last fiscal year as compared with $4.185 billion in the fiscal year 2017/2018. On the other hand the outflows recorded 99 percent increase to $1.422 billion during fiscal year 2018/2019 as compared with $714.2 million in the preceding fiscal year.

    The total foreign private investment into the country fell by 59.10 percent to $1.32 billion in the last fiscal year as compared with $3.23 billion in the preceding fiscal year.

    The inflows of portfolio investment into the capital market were declined by 72.5 percent during the fiscal year under review. The market witnessed outflows of $415.2 million during the last fiscal year as compared with the outflows of $240.7 million in the preceding fiscal year.

    The total foreign investment including foreign public investment fell by 94.2 percent to $330 million in 2018/2019 as compared with $5.68 billion in the preceding fiscal year.

  • Fresh audits of PIA, Pakistan Steel to be conducted for transparency

    Fresh audits of PIA, Pakistan Steel to be conducted for transparency

    KARACHI: The federal government will conduct fresh audit of Pakistan International Airlines (PIA) and Pakistan Steel Mills (PSM) in order to ensure transparency in state-owned enterprises (SOE).

    The audits would be initiated for improving SOE governance, transparency and efficiency.

    The federal government will make public the outcome of the audits by December 2019, which was agreed by Pakistani authorities with the International Monetary Fund (IMF).

    The have approved the privatization of seven companies based on their good privatization prospects. They will follow best practices regarding the process and conditions of privatization to ensure a successful and transparent outcome.

    The government will sort SOEs into companies for sale, liquidation, or retaining under state ownership. This has to be done by end-September 2020.

    Further the government will submit to parliament a new State-Owned Enterprise Law by end-September 2020 aimed at modernizing and clearly defining the role of the State as owner, regulator, and shareholder of SOEs.

    In this context, the recently established holding company to manage SOEs will follow the required governance and transparency principles in line with international best practices.

    The IMF will provide technical assistance to support the development of this law and to review ownership arrangements with a view to designing an effective ownership model.

    Pakistan has assured the IMF of taking measures for improvement of the economy, which included:

    — Commit to not grant further tax amnesties Continuous

    — Issue licenses for the track-and-trace system for excises on cigarettes end-September 2019

    — Adopt measures to strengthen the effectiveness of the AML/CFT framework to support the country’s efforts to exit end-October 2019 the Financial Action Task Force list of jurisdictions with serious deficiencies

    — Submit to parliament, in consultation with IMF staff, amendments to the State Bank of Pakistan Act to address all end-December 2019 recommendations of the new 2019 Safeguards Assessment Report and the 2016 Technical Assistance Report on Central Bank Law Reform.

    — Notify the FY 2020 electricity tariff schedule as determined by the regulator end-September 2019

    — Prepare a comprehensive circular debt reduction plan in collaboration with international partners (para. 19 MEFP) end-September 2019

    — Submit to parliament amendments to the NEPRA Act to (i) ensure full automaticity of the quarterly tariff end-December 2019 adjustments and (ii) eliminate the gap between the regular annual tariff determination and notification by the government

  • Trade deficit narrows by 15.33pc to $31.82 billion in 2018/2019

    Trade deficit narrows by 15.33pc to $31.82 billion in 2018/2019

    ISLAMABAD: The country’s trade deficit has narrowed by 15.33 percent during fiscal year 2018/2019 owing to decline in import bill, according to data released by Pakistan Bureau of Statistics (PBS) on Friday.

    The trade deficit declined to $31.82 billion in last fiscal year as compared with $37.58 billion in the preceding fiscal year.

    The decline in trade deficit can be attributed to 10 percent decline in total import bill. The imports declined to $54.79 billion during fiscal year 2018/2019 as compared with $60.79 billion in the preceding fiscal year.

    However, exports failed to exhibited growth despite several incentives announced by the government in the past.

    The exports fell by one percent to $22.97 billion during the last fiscal year as compared with $23.21 billion in the preceding fiscal year.

    In the month of June 2019 the exports fell sharply by 18.32 percent comparing the previous month. The exports were $1.71 billion in June 2019 as $2.1 billion in the month of May 2019.

    On the other hand imports also fell by 13.45 percent during the month under review. The imports were at $4.36 billion in June 2019 as compared with $5.04 billion in the month of May 2019.

    Analysts said that the decline in both imports and exports were due to budgetary measures announced in the month of June 2019.

    They said that the government had taken very harsh measures to generate revenue for the fiscal year 2019/2020. The elimination of zero-rate of sales tax negatively impacted the exports. On the other hand the rise in import duties and taxes also discouraged the foreign purchases.

    The analysts further said that the fall in rupee value also another major reason for decline in both exports and imports during the month of June 2019.

  • No compromise on documentation; PM refuses to withdraw CNIC condition

    No compromise on documentation; PM refuses to withdraw CNIC condition

    KARACHI: Prime Minister Imran Khan on Wednesday showed firm resolve to document the economy and flatly refused demands of business community to withdraw condition of CNIC on sales above Rs50,000.

    Representatives of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chamber of Commerce and Industry (KCCI) met the prime minister at the Governor House. The entire prime minister’s team of finance and commerce was also present at the meeting.

    The business community urged the prime minister to withdraw the condition of CNIC at the time of sales, which was introduced through Finance Act, 2019.

    Sources said that the Prime Minister had refused the demand and told the business community that the businesses had to be documented. The prime minister said requirement of CNIC / information on above Rs50,000 sales was quite justified.

    The prime minister said that he wanted to see Pakistan grow on Turkish model. He further said that the government wanted to take along the business community on journey to growth.

    Prime Minister Imran Khan told the business community that he had arrived Karachi to resolve problems of trade and industry. He said that the government wanted to ease in doing business.

    Our priority to eradicate poverty and accelerate economic growth, he added.

    After the meeting business community has expressed disappointment.

    Mirza Ikhtiar Baig, senior FPCCI leader, while talking to media said that the apex body had presented all the problems at the meeting that are hampering the economic growth.

    The prime minister has been informed about protests by small associations. He said that the FPCCI had urged the prime minister to restore zero rated for export sector.

    He said that the interest rate by State Bank was on the rise and it would make difficult for industry to continue the production activities. On the other hand the FBR had also not withdrawn several levies on the export sector.

    The prime minister has been informed that reforms should bring in phases.

    Another meeting was held with export sector in which the prime minister listened to their problems. However, the export sector was also not happy to resolve their issues at the meeting.

  • Foreign remittances grow by 9.68pc to $21.84bn in 2018/2019

    Foreign remittances grow by 9.68pc to $21.84bn in 2018/2019

    Foreign remittances to Pakistan have surged by an impressive 9.68% during the fiscal year 2018/2019, reaching an unprecedented high of $21.84 billion.

    (more…)
  • No action against companies for gold, valuables recovery: SECP

    No action against companies for gold, valuables recovery: SECP

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Tuesday strongly refutes the reports attributing the commission for taking action against companies to recovery gold and other valuable properties.

    In a statement the SECP said, being the apex regulator of the corporate sector, the SECP is taking all necessary steps to ensure beneficial regulation and growth of capital market and corporate sector in Pakistan.

    SECP strongly refutes news items appearing in a section of the press attributing any purported action against companies to recover gold and other valuable properties.

    “No crackdown of any sort is being planned or under consideration of the Commission,” it said.

    It is also clarified that SECP does not regulate or enforce Income Tax Ordinance, 2001 or Benami Transactions (Prohibition) Act, 2017.

    SECP powers are restricted to offences provided in the SECP Act, 1997, and other administered legislation as provided in its Schedule.

    The recently notified Rules, i.e. the “SECP (Search and Seizure) Rules, 2019” are a requirement of law under section 31 of the SECP Act, 1997, which merely lays down strict procedures for use of powers by the SECP’s investigation officers.

    It is reiterated that these powers are restricted to investigations ordered by the Commission under the SECP-administered legislation. As wrongly reported in a section of the media no new powers have been bequeathed to the SECP.

    It is clarified that the powers of search and seizure and forced entry have been part and parcel of the SECP Act, 1997, since the establishment of the Commission.

    It is stressed here that recently notified Rules are aimed at helping the Commission to curb any potential misuse of authority by the investigation officers.

    The Rules, inter alia, require investigation officers to first seek authorization, in writing, from the Commission, comprising of five Commissioners for the purpose of search and seizure. Further, in certain circumstances, the order from the relevant magistrate is also required.

  • Prize bonds, bearer instruments to be registered

    Prize bonds, bearer instruments to be registered

    KARACHI: Pakistani authorities have assured International Monetary Fund (IMF) of registering prize bonds and other bearer instruments to eliminate the use of these instruments in potential illegal activities and tax avoidance.

    The IMF issued Pakistan country report on Monday following successful $6 billion loan program.

    In order to make the program successful the Pakistani authorities had assured the fund of strengthening governance and the control of corruption.

    The priorities include:

    Strengthening the effectiveness of anticorruption institutions. A national committee has been established to implement the recommendations from the UNCAC 2017 report.

    A task force will review the institutional framework of the anticorruption institutions to enhance their independence and effectiveness in investigating and prosecuting corruption cases.

    A study will be conducted on establishing a dedicated AML unit in the Federal Investigation Agency (FIA). Upgrading the financial investigation capacities of law enforcement agencies will be also prioritized.

    Moreover, the authorities are pursuing agreements on information exchange with foreign countries to complement efforts to recover unlawful assets.

    An Asset Recovery Unit in the Prime Minister’s Office is cooperating with the FBR’s International Taxation Unit in identifying assets abroad owned by Pakistani residents, in line with the OECD Convention on Mutual Administrative Assistance on Tax Matters.

    Advancing anti-corruption efforts through the enhanced used of AML tools, including by (i) ensuring that banks and other reporting institutions improve their capacities to identify politically exposed persons and apply enhanced due diligence measures and (ii) providing adequate resources to the Financial Monitoring Unit to improve the dissemination of financial intelligence that can be used to support corruption investigations.

    Moreover, asset declarations of high-level public officials will be comprehensive in scope (i.e., assets beneficial owned or located abroad), filed with a central federal agency, electronically searchable, and appropriately verified.

    “Registering prize bonds and other bearer instruments to eliminate their use in potential illegal activities/tax avoidance,” the report said.

  • Pakistan’s foreign exchange reserves increase to $14.443 billion

    Pakistan’s foreign exchange reserves increase to $14.443 billion

    KARACHI: The total foreign exchange reserves of Pakistan increased by $92 million to $14.443 billion by week ended June 28, 2019 as compared with $14.351 billion in the previous week, the State Bank of Pakistan (SBP) said on Thursday.

    The SBP said that during the week ending June 28, 2019, it received inflow of $500 million from Qatar as placement of funds. After taking into account outflows relating to external debt and other official payments, SBP reserves decreased by $9 million during the week, it added.

    The reserves held by commercial banks increased by $101 million to $7.17 billion as compared with $7.069 billion.

  • IMF approves $6 billion loan for Pakistan

    IMF approves $6 billion loan for Pakistan

    ISLAMABAD: The International Monetary Fund (IMF) has approved a 39-month extended arrangement for Pakistan under which the country will get $6 billion to support the economic reform program, said a statement.

    After approval of the loan under Extended Fund Facility (EFF) by the Executive Board of IMF, Pakistan is now eligible to immediately receive first tranche of $1 billion, the IMF statement said.

    The fund will quarterly review the performance of Pakistan over 39 months.

    The EFF-supported program would help Pakistan to reduce economic vulnerabilities and generate sustainable and balanced growth.

    The statement added that the programme would focus on a decisive fiscal consolidation to reduce public debt and build resilience while expanding social spending.

    It will also try to ensure a flexible, market-determined exchange rate to restore competitiveness and rebuild official reserves besides eliminating quasi-fiscal losses in the energy sector, strengthening institutions and enhancing transparency.

    Meanwhile, Advisor to Prime Minister on Finance Dr Abdul Hafeez Shaikh said the IMF’s support bodes well for the country and is a testament to the government’s resolve for ensuring financial discipline and sound economic management.

    Welcoming the IMF approval of $6 billion loan for Pakistan, Hafeez Shaikh said in a tweet that structural reform agenda which includes improving public finances and reducing public debt through revenue reforms is key part of the program.

    “Our program supports broad based growth by reducing imbalances in the economy. Social spending has been strengthened to completely protect vulnerable segments”, the advisor added.

  • Headline inflation increases by 8.9 percent in June

    Headline inflation increases by 8.9 percent in June

    ISLAMABAD: The headline inflation based on Consumer Price Index (CPI) increased by 8.9 percent on year-on-year basis in June, 2019 as compared to an increase of 9.1 percent in the previous month and 5.2 percent in June 2018, Pakistan Bureau of Statistics (PBS) said on Tuesday.

    On month-on-month basis, it increased by 0.4 percent in June 2019 as compared to an increase of 0.8 percent in the previous month and an increase of 0.6 percent in corresponding month i.e. June 2018.

    Core inflation measured by non-food non-energy CPI (Core NFNE) increased by 7.2 percent on (YoY) basis in June 2019 as compared to an increase of 7.2 percent in the previous month and 7.1 percent in June 2018.

    On (MoM) basis, it in-creased by 0.3 percent in June 2019 as compared to an increase of 0.4 percent in previous month, and an increase of 0.3 percent in corresponding month of last year i.e. June 2018.

    Core inflation, measured by 20 percent weighted trimmed mean CPI (Core Trimmed) increased by 7.3 percent on (YoY) ba-sis in June 2019 as compared to 7.5 percent in the previous month and by 5.4 percent in June 2018.

    On (MoM) basis, it in-creased by 0.4 percent in June 2019 as compared to an increase of 0.4 percent in the previous month and an increase of 0.2 percent in corresponding month of last year i.e. June 2018.

    Sensitive Price Indicator (SPI) based inflation on YoY basis increased by 10.6 percent in June 2019 as compared to an increase of 10.8 percent a month earlier and an increase of 1.9 percent in June 2018.

    On MoM basis, it increased by 1.6 percent as compared to an increase of 1.2 percent in the previous month and an increase of 1.8 percent in corresponding month of last year i.e. June 2018.

    Wholesale Price Index (WPI) inflation on YoY basis increased by 12.7 percent in June 2019 as compared to an increase of 14.0 percent a month earlier and an increase of 7.6 percent in June 2018.

    WPI inflation on MoM basis increased by 0.3 percent in June 2019 as compared to an increase of 1.4 percent a month earlier and an increase of 1.5 percent in corresponding month of last year i.e. June 2018.