Category: Finance

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  • Pakistan’s headline inflation up by 13.8% in May 2022

    Pakistan’s headline inflation up by 13.8% in May 2022

    ISLAMABAD: Pakistan’s headline inflation based on Consumer Price Index (CPI) increased by 13.8 per cent in May 2022 on Year on Year (YoY) basis as compared with 13.4 per cent in the previous month, Pakistan Bureau of Statistics (PBS) said on Wednesday.

    The latest inflation number is also higher when compared with 10.9 per cent in May 2021.

    READ MORE: Pakistan’s inflation sharply up by 13.4% in April 2022

    On month-on-month basis, it increased by 0.4 per cent in May 2022 as compared to increase of 1.6 per cent in the previous month and increase of 0.1 per cent in May 2021.

    CPI inflation Urban, increased by 12.4 per cent on year-on-year basis in May 2022 as compared to an increase of 12.2 per cent in the previous month and 10.8 per cent in May 2021.

    READ MORE: Pakistan’s headline inflation increases by 12.7% in March

    On month-on-month basis, it increased by 0.3 per cent in May 2022 as compared to increase of 1.6 per cent in the previous month and increase of 0.2 per cent in May 2021.

    CPI inflation Rural, increased by 15.9 per cent on year-on-year basis in May 2022 as compared to an increase of 15.1 per cent in the previous month and 10.9 per cent in May 2021. On month-on-month basis, it increased by 0.6 per cent in May 2022 as compared to increase of 1.6 per cent in the previous month and decrease of -0.03 per cent in May 2021.

    READ MORE: Food inflation rural increases by 14.6% in February 2022

    Sensitive Price Indicator (SPI) inflation on YoY increased by 14.1 per cent in May 2022 as compared to an increase of 14.2 per cent a month earlier and an increase of 19.7 per cent in May 2021.

    On MoM basis, it increased by 0.6 per cent in May 2022 as compared to increase of 1.5 per cent a month earlier and increase of 0.8 per cent in May 2021.

    READ MORE: Pakistan’s inflation climbs up 24-month high in January

    Wholesale Price Index (WPI) inflation on YoY basis increased by 29.6 per cent in May 2022 as compared to an increase of 28.1 per cent a month earlier and an increase of 19.4 per cent in May 2021.

    WPI inflation on MoM basis increased by 1.4 per cent in May 2022 as compared to increase of 3.2 per cent a month earlier and increase of 0.3 per cent in corresponding month i.e. May 2021.

  • Pakistan’s high growth threatened by fiscal imbalances

    Pakistan’s high growth threatened by fiscal imbalances

    ISLAMABAD: The ministry of finance on Tuesday said the high economic growth of Pakistan may not sustainable due to macroeconomic imbalances.

    In its monthly review, the ministry said Pakistan is currently facing several severe challenges: accelerating inflation, high external deficits, exchange rate depreciation, declining foreign exchange reserves and mounting uncertainty.

    READ MORE: Raw materials excluded from import banned items list

    On the other hand, economic growth remains relatively high, but in the presence of macroeconomic imbalances may not be sustainable.

    The primary contributors of increasing inflation are the surge in international commodity prices and the massive exchange rate depreciation.

    In fact, the depreciation of the rupee both against the US dollar and on a trade weighted basis against the currencies of Pakistan’s main trading partners is primarily reflection of inflation differential between Pakistan and its main trading partners.

    READ MORE: PM Sharif ready to sign charter of economy: Miftah

    Further relatively high domestic inflation is compensated by Rupee depreciation. However, currency depreciation itself feeds into higher domestic inflation.

    In this sense, Pakistan is caught into a vicious inflation/currency depreciation spiral. In the short run a predicament to stop this cycle is to pursue restrictive fiscal and monetary policies, coupled with policies and announcements that restore market agent’s confidence.

    In the longer run, Pakistan’s main problems can be solved by designing a credible sustainable future economic trajectory that inspires consumers and investors’ confidence. Economic decisions are based on expectations about the future economic path as well as on the degree of certainty/confidence of development prospects.

    READ MORE: Pakistan’s forex reserves ease to $16.15 billion

    An important component of such process is supply oriented policies. Pakistan’s propensity to invest is much lower compared to high growing emerging market and developing countries.

    Accelerating the share of Gross Fixed Capital Formation in GDP would create additional production capacity to meet the increasing demand of consumers and producers. Such supply-oriented framework designed to reallocate the use of national income from consumption to investment expenditures, may be accompanied by suitable demand management policies.

    The ministry said that fiscal deficit in the first nine months has increased to 3.8 percent of GDP against 3.0 percent recorded in the same period last year.

    An increase in deficit has been observed on account of the higher expenditures due to the rise in subsidies and grants. It is expected that the expenditure side would come under further pressure in the remaining months of the current fiscal year.

    READ MORE: IMF demands Pakistan to remove fuel, energy subsidies

    On the revenue side, tax collection currently showing a remarkable performance by posting a growth of 29 percent during the first ten months of the current fiscal year.

    The first ten months’ data shows that the revenue collection has surpassed the target by Rs.237 billion. This is despite tax relief measures which have impacted revenue collection by approximately Rs 73 billion just in the month of April 2022.

    FBR has taken various policy and administrative measures which paid off in terms of improved tax collection during the current fiscal year. It is expected that with the current growth momentum, FBR would be able to achieve its target during FY2022.

  • Raw materials excluded from import banned items list

    Raw materials excluded from import banned items list

    ISLAMABAD: The ministry of commerce on Monday excluded raw materials from the list of items, which were banned through SRO 598(I)/2022.

    The ministry issued an office memorandum to issue clarification with regard to the SRO 598(I)/2022 dated May 19, 2022.

    Through the SRO 598(I)/2022, the federal government imposed ban on import of certain luxury and non-essential items.

    The ministry said that the decision has been taken in view of the concerns expressed by different trade organizations and the domestic industry regarding import of raw materials, intermediate goods and industrial equipment falling under Pakistan Customs Tariff (PCT) codes listed in the SRO.

    “The SRO 598(I)/2022 dated May 19, 2022 shall not apply on the import of raw materials, intermediate goods and industrial equipment/machinery required by industrial / manufacturing concerns and foreign grant-in-aid projects,” the ministry said.

    Prior to this, the ministry of commerce issued another clarification related to the banned imported items on May 26, 2022.

    Through this clarification, the ministry said that in order to address concerns of the citizenry and certain anomalies out of implementation of the said SRO, it is clarified:

    READ MORE: Banned items: FBR deputes officers 24X7 to facilitate passengers

    The SRO 598(I)/2022 dated May 19, 2022 shall not apply on import of goods for which an airway bill has been issued prior to the issuance of the said SRO.

    Import of following PCT codes description ‘others’ shall be exempted from the prohibition contained in the SRO if they are:

    PCT Code 2309.9000: Other than cat and dog food

    PCT Code 9405.1090: Energy savers.

  • PM Sharif ready to sign charter of economy: Miftah

    PM Sharif ready to sign charter of economy: Miftah

    KARACHI: Prime Minister Shehbaz Sharif is ready to sign charter of economy despite different ideology of various political parties, Finance Minister Miftah Ismail said on Saturday.

    He was speaking as chief guest at a webinar on National Dialogue on Economy: The Way Forward for Pakistan, organized by Nutshell Conference and Corporate Pakistan Group.

    The finance minister said the growth in the economy is achievable in Pakistan with its huge size of the population but the sustainable economic growth has been a challenge over the period last years, which needs to be addressed mutually by everyone in the government and the private sector.

    READ MORE: Pakistan’s forex reserves ease to $16.15 billion

    Consistency is the key to economic policy and the present government should honor the commitment made by the previous government as part of the sovereign guarantees of the country and international laws.

    Pakistan needs nearly $37 billion for the next year for the purpose of paying loans to various agencies and countries, controlling the current account deficit, and building the required foreign exchange reserves but these could be done only with the signing of a program with the International Monetary Fund (IMF).

    Going forward, the government will focus on discouraging import-led growth in the economy, whereas the manufacturing sector should be given preference to enhance exports, Miftah said and added. The government will work on revolutionizing the agriculture sector, which will particularly meet the local demand for food items.

    READ MORE: IMF demands Pakistan to remove fuel, energy subsidies

    He said the government will not impose any ban on traveling, raw materials, and essential items but only on luxury and non-essential items. Also, the tax rate will not be increased on the income of the people, he added.

    On the occasion former Finance Minister Senator Shaukat Tarin said the Charter of Economy is very important for the country which he proposed many years back.

    Political differences should be put aside and the economic agenda should be agreed upon. A few of the next months are difficult ahead but the situation will be improved after the general elections, he added.

    Pakistan needs inclusive and sustainable growth for a long period of time. In this regard, the saving-to-GDP ratio and tax-to-GDP ratio should be increased with incentives and schemes in the next five to six years.

    The gap between exports and imports is standing at 12% which should be reduced to 6% and to zero in the next few years, Tarin added. The former minister suggested the central bank and the government to issue new licenses to banks on the basis of regional boundaries.

    READ MORE: CPEC CSR projects, development in Gwadar reviewed

    Ghias Khan, President Overseas Investors Chamber of Commerce (OICCI) said a long-term and consistent policy is indispensable to attract businessmen and foreign investors.

    Pakistan should focus on its food and energy security on a priority basis. Also, Pakistan should focus on technology services which has immense potential to enhance exports and local productivity, Ghias Khan.

    The country needs to enhance the production of wheat and essential crops for meeting its local demand and boosting exports of agri-products. Further, he added the country is rich in mineral resources which can be translated into its lucrative exports.

    The investment should be encouraged in the productive sector instead of the real estate: We have to build skillset of the young population to make their orle more productive in the economy: Ghias Khan

    Muhammad Aurangzeb, Chairman Pakistan Business Council (PBC) said the cross-party consensus is very important in Pakistan because the business needs sustainability and the consistency of policy. Hence, the Charter of Economy is the need of the hour, he added.

    There is no dearth of thinking prescriptions in the country but we need timely decisions and timely execution, he added.

    We have to focus on capacity building of our youth in every sector which will ultimately produce results in the economy. We have to make an enabling environment for freelancers, which are growing in numbers in Pakistan, Muhammad Aurangzeb.

    Farrukh Khan, Management Director Pakistan Stock Exchange (PSX) said the political challenges should be addressed in the first place before going to fix socio-economic issues in the country.

    READ MORE: Foreign investment falls by 57% in 10MFY22: SBP

    The government is focusing on the documentation of the economy but the aspect of taxes should be realized to stabilize it, he added.

    Political stability is very important when it comes to attracting foreign investment and boosting local investment in the country, Amjad Waheed, CEO NBP Fund Management Limited.

    The privatization of the State-owned Enterprises is needed as these are eating up over Rs 1 trillion of the valuable revenues every year whereas the government’s expenditures and debt of the country should be reduced gradually, he added.

     The yield of Pakistan’s agricultural land should be enhanced which could be done through various measures including farm mechanization and the supply chain management for effective gains of the agriculture sector, said Maheen Rahman, CEO InfraZamin.

    We should focus on energy sufficiency, agriculture and food security, and business efficiency on a long-term basis to achieve sustainable results, she added.

  • Pakistan’s forex reserves ease to $16.15 billion

    Pakistan’s forex reserves ease to $16.15 billion

    KARACHI: Pakistan’s foreign exchange (forex) reserves eased to $16.15 billion by week ended May 20, 2022, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves were at $16.161 billion a week ago i.e. May 13, 2022.

    READ MORE: Pakistan’s forex reserves fall to $16.37 billion

    The country’s foreign exchange reserves hit record high at $27.228 billion by week ended August 27, 2021. Since then the foreign exchange reserves have depleted by $11.078 billion.

    READ MORE: Pakistan’s forex reserves dip to $16.55 billion

    The official reserves of the State Bank witnessed a decline of $178 million to $10.089 billion by week ended May 20, 2022 as compared with $10.164 billion a week ago.

    The SBP reserves reached to record high at $20.145 billion by August 27, 2021. The official reserves also fell by $10.056 billion after reaching record high.

    READ MORE: SBP forex reserves shrink to 1.69 months import cover

    The official reserves of the SBP have been reduced to provide import payment cover for only 1 ½ months.

    The foreign exchange reserves of held by commercial banks however inched up by $64 million to $6.061 billion by week ended May 20, 2022 as compared with $5.997 billion a week ago.

    Pakistan forex reserves inch up to $17.045 billion

  • IMF demands Pakistan to remove fuel, energy subsidies

    IMF demands Pakistan to remove fuel, energy subsidies

    KARACHI: The International Monetary Fund (IMF) has demanded Pakistan to remove fuel and energy subsidies for further discussion on bailout package.

    (more…)
  • CPEC CSR projects, development in Gwadar reviewed

    CPEC CSR projects, development in Gwadar reviewed

    GWADAR: The initiatives in the domain of Corporate Social Responsibility (CSR) undertaken by China Overseas Ports Holding Company (COPHC) and other Chinese firms in Gwadar are appreciable and are aimed at the right direction, however, effective development communication and positive engagement with local communities is critical for the effectiveness and long-term success of these projects.

    All stakeholders should devise a mechanism for an integrated socio-economic development strategy and ensure inclusion of the hopes and aspiration of the inhabitants of Gwadar vis-à-vis CPEC.

    This was the crux of a two-day media conclave and roundtable conference titled ‘CSR Initiatives in Gwadar (The Gateway to CPEC)’ co-organized by Institute of Policy Studies (IPS), Islamabad and the University of Gwadar in collaboration with COPHC, Gwadar Port Authority (GPA) and Gwadar Development Authority (GDA) in the strategic port town.

    Speaking on the occasion, Naseer Khan Kashani, chairman, Gwadar Port Authority (GPA) stressed the importance of bringing the locals together through CSR.

     “We must prioritize people over infrastructure development. Drinkable water and electricity is the top priority of the authorities in Gwadar”, he stated.

    Kashani said a desalination plant of about 1.2 million gallons would become operational in six to eight months that would provide drinkable water for the locals.

    Moreover, the newly inaugurated state-of-the-art Pak-China Vocational & Technical Training Institute will provide three years’ training to local youth, which is a big contribution by our Chinese friends, he added.

    “Chinese authorities have also recently provided 3,000 solar panels to the poorest of the poor in Gwadar for the provision of electricity,” he informed.

    While delivering the keynote speech, Zhang Baozhong, Chairman COPHC spoke at length about the experiences of his seven-year stay in Gwadar.

    “We are cognizant of the fact that Gwadar deserves more rapid development to live up to the expectations of the local people. There is no denying the fact that it has developed much during the past seven years”, he remarked.

    He stated three reasons for the promising prospects of Gwadar: the cooperation of the Gwadar people, its vast resources, and its strategic location.

    “The inhabitants of Gwadar deserve respect and development according to their rightful demands”, Mr. Baozhong underscored.

    “We are sending 20 students to China on scholarships every year. We have been running a primary school here for the last five years and soon we will construct a secondary school as well. More than 6000 solar panel units have been distributed among the people of Gwadar so far, and around 500,000 trees have been planted,” Shahzad Sultan, Country Head Marketing of COPHC informed while providing details of the CSR initiatives.

    Chairman IPS Khalid Rahman highlighted the concept of CSR and elements that can improve the lives of the local inhabitants.

    “We must have solution-oriented recommendations, not problem-oriented,” he said adding that positive thinking and improvement in governance will bring a huge change in the life of the people of Gwadar.

    “CSR activities do not mean spending a share of your profit, it’s about creating an environment which is not harmful for the society in any way,” he added.

    Professor Dr Abdul Razzaq Sabir, Vice Chancellor, University of Gwadar, in his welcome address earlier appreciated the initiatives of IPS for identifying challenges in the area.

    He said giving back to the society is the biggest responsibility of corporate sector. Working on development of human resources should be the biggest priority of the government and private sector. As Gwadar is expanding after development of the port, it is important to learn from China’s experience and expertise through student exchange program. “We must train our youth to become productive elements of Gwadar.”

    He was of the view that CSR must be defined in local perspective. Local issues could be considered to resolve people’s genuine and basic issues and problems through CSR initiatives.

    He emphasized that engaging local community and civil society could result in better planning, befitting solutions and better implementation with local wisdom and participation.

    Dr. Rashid Aftab, director Riphah Institute of Public Policy (RIPP) commented that reservations of locals must be addressed with evidence-based data sharing with all relevant stakeholders.

    Jawad Akhtar Khokhar, advisor, maritime affairs, Ministry of Planning, Development & Special Initiatives, earlier gave a detailed overview of the development projects in Gwadar under various modalities and highlighted the CPEC projects in Gwadar worth $2.1 billion so far.

    He said so far three projects worth $314 million have been completed. These projects included Gwadar Smart Port City Master Plan, physical infrastructure of Gwadar Port and Free Zone Phase-1, and Pak-China Technical and Vocational Institute. Another seven projects worth $1.44 billion are under implementation process. These projects include Eastbay Expressway, which is 98 per cent complete; facilities of fresh water treatment, water supply and distribution, which are 70 per cent complete; New Gwadar International Airport; Pak-China Friendship Hospital Gwadar; infrastructure of Gwadar Free Zone Phase-II; 300 MW coal power plant and 1.2 million gallons’ desalination plant.

    Khokhar said under the short-term strategy the prioritized projects include provision of water in three months and electricity in five months for Gwadar, Trading Corporation of Pakistan has been authorized to import one-third cargoes at Gwadar; and completion of M-8 motorway.

    Highlighting long-term strategy, he said the government is aiming to build LNG and POL terminals at Gwadar port and ensure availability of electricity, water and gas to enable phase-2 expansion of the port.

    Dolat Khan, registrar, University of Gwadar and Arsalan Ali, Head of Investments, Gwadar Development Authority (GDA) also spoke on the occasion.

    It may be mentioned that the media conclave and roundtable conference was attended by a number of senior journalists and academics from Karachi, Islamabad and Gwadar. The delegates also visited China-Pakistan Vocational and Technical Training Institute and other sites under CSR to witness the pace of progress. They interacted with the local students and teachers to observe their views.

  • Foreign investment falls by 57% in 10MFY22: SBP

    Foreign investment falls by 57% in 10MFY22: SBP

    KARACHI: The inflow of foreign investment into Pakistan fell by over 57 per cent during first 10 months (July – April) 2021/2022 owing to political uncertainty and change of government during the period, according to State Bank of Pakistan (SBP).

    The total inflow of foreign investment during the period fell to $1.57 billion as compared with $3.66 billion in the corresponding period of the last fiscal year, according to data released by the SBP on May 19, 2022.

    READ MORE: Foreign investment into Pakistan surges by 131%

    Experts believed the political uncertainty in the country and lesser offering of international bonds during the period resulted in massive fall of total foreign investment.

    The inflows in debt securities under the head of foreign public investment recorded 81 per cent decline to $473 million during first ten months of the current fiscal year as compared with $2.46 billion in the corresponding period of the last fiscal year.

    READ MORE: Foreign investment surges by 176% during July – January

    The other component of inflows under foreign private investment fell by 8.6 per cent to $1.096 billion during first 10 months of the current fiscal year as compared with $1.20 billion in the corresponding months of the last fiscal year.

    READ MORE: Pakistan’s foreign investment surges by 73% in 5 months

    The foreign direct investment eased to $1.46 billion during July – April 2021/2022 as compared with $1.48 billion in the same period of the last fiscal year.

    The portfolio investment recorded a decline of 28.3 per cent during the period. The portfolio investment under equity securities witnessed an outflow of $359 million during the first ten months of the current fiscal year as compared with $280 million in the corresponding period of the last fiscal year.

    READ MORE: Carrefour enhances Pakistan investment to Rs10.5 billion

  • Import ban not to apply on L/C issued before May 19, 2022

    Import ban not to apply on L/C issued before May 19, 2022

    ISLAMABAD: The ministry of commerce on Saturday issued a clarification stating that the import ban will not be applicable on Bill of Lading (B/L) or Letter of Credit (L/C) issued prior to ban decision.

    In order to address the balance of payments (BOP) situation in the country resulting from the increase in current account deficit (CAD) during the first 10 month of the current fiscal year 2021/2022, import of certain luxury and non-essential items has been prohibited, vide SRO 598(1)/2022 dated May 19, 2022.

    READ MORE: Pakistan’s imports hit record high at $65.47 bn in 10 months

    However, to address the concerns of certain business quarters with regard to the implementation of the said SRO, it is clarified that in terms of proviso to the paragraph-4 of the Import Policy Order, 2022, the imports where Bill of Lading (B/L) or irrevocable Letter of Credit (L/C) was issued or established prior to the notification of the SRO 598(1)/2022 dated 19.05.2022 shall be exempt from the operation of the SRO.

    READ MORE: Pakistan’s March trade deficit widens by only 5.5%

    Hence, imported goods for which B/L or irrevocable L/C was established prior to May 19, 2022 shall not be subject to the prohibitions contained in the said SRO.

    Moreover, the business community and the general public are invited to share their concerns, proposals or any anomalies with respect to the said SRO at [email protected]. Ministry of Commerce would respond to them at the earliest.

    READ MORE: Pakistan’s trade deficit widens to $32 billion in 8MFY22

    Previously, the ministry of commerce amended Import Policy Order, 2022 through SRO 587(I)/2022 to ban import of luxury and non-essential items.

    The government banned the import of items, included: aerated water and juices; automotive in Completely Built Unit (CBU); sanitary and bathroom wares; carpets (excluding from Afghanistan); Chandeliers and Lightening Devices or Equipment; Chocolates; cigarettes; corn flakes etc.; cosmetics and shaving items; tissue papers; crockery; decoration / ornamental articles; dog and cat food; doors and window frames; fish; footwear; fruits and dry fruits; furniture; home appliances CBU; ice cream; jams, jellies and preserved fruits; luxury leather jackets and apparels; matters and sleeping bags; frozen or processed meat; mobile phones CBU; musical instruments; pasta etc.; arms and ammunition; shampoos, sunglasses; tomato ketchup and sauces; and travelling bags and suitcases.

    READ MORE: Pakistan’s trade deficit widens by 92% in seven months