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  • Key policy rate may up by 100bps in hawkish stance

    Key policy rate may up by 100bps in hawkish stance

    KARACHI: The State Bank of Pakistan (SBP) is set to announce monetary policy on November 19, 2021 and analysts believe the central bank may remain hawkish.

    Analysts at Arif Habib Limited said that the monetary policy committee of SBP will convene on Friday, November 19, 2021 to announce the monetary policy for the next two months.

    The analysts expect that SBP to remain hawkish, raising its policy rate for the second time since the beginning of the current fiscal year 2021/2022 and at a much higher magnitude of 100 basis points – the highest hike in almost 2.3 years – taking the total cumulative increase in FY22TD to 125bps. With this, the revised policy rate is expected at 8.25 per cent.

    To recall, the SBP, continuing with its tightening policy, recently announced a 100bps hike in Cash Reserve Requirement too.

    A shift towards ‘a more hawkish stance’ from the earlier ‘gradual and calibrated’ might be evident in this monetary policy meeting as inflation worries are rumbling more clearly than before.

    Inflation in Pakistan has increased markedly with the resumption of economic activities – but as supply-side inflation has subsided, demand-side inflation has overshot.

    Headline inflation initially remained low averaging at 8.7 per cent during the first four months of the fiscal year 2021/2022, but now with waning base effect, it has started accelerating, raising concerns.

    Clearly, the inflationary pressures reflect the upside arising in global energy and commodity prices and moreover, do not look ready to subside anytime soon.

    We have seen some of the central banks in the regional markets reacting as consumer prices are being pressured by global supply-chain disruptions and costlier energy and food supplies.

    Domestically, there has been a positive development on the COVID front, in terms of reduced infections/deaths and faster vaccinations.

    The overall improved healthcare conditions coupled with the economic performance of high-frequency indicators (such as auto and cement sales) as well as LSM numbers (2MFY22: +7.3% YoY) evidently signal that the overall economic activity is on the cusp of a strengthening revival.

    The domestic recovery that is likely to push GDP growth higher than initially anticipated is adding to inflationary pressures and thus, the prudent policy approach for the SBP would be to tack in a more hawkish path to manage these risks.

    SBP decides early announcement of monetary policy
  • PM Imran to launch online sugar monitoring on Nov 23

    PM Imran to launch online sugar monitoring on Nov 23

    ISLAMABAD: Prime Minister Imran Khan will inaugurate the electronic monitoring of production and supply of sugar on November 23, 2023, a spokesman of the Federal Board of Revenue (FBR) said on Tuesday.

    “PM will inaugurate the Track & Trace System (TTS) of FBR for sugar industry on November 23, 2021,” the spokesman said through a Tweet.

    TTS will ensure electronic monitoring of manufacturing and sales of products of important sectors i.e tobacco, fertilizers, sugar and cement.

    The FBR on November 11, 2021 taken a major step for electronic monitoring of sugar production and supply by banning the movement of sugar bags from mills.

    The FBR banned the removal of sugar bags from mills without affixation of tax stamps / Unique Identification Marking (UIMs). The condition is applicable from November 11, 2021. The monitoring has been launched for sugar crushing season 2021/2022.

    In this regard, the FBR issued Sales Tax General Order (STGO) No. 05 of 2021-2022.

    The FBR said that sugar bags must have tax stamps, which are to be procured from FBR’s Licensee M/s. AJCL/MITAS/Authentix Consortium.

    Previously, the FBR through a notification on February 26, 2019, issued rules for the implementation of the track and trace system. Further, in March 11, 2021 the revenue board issued a Sales Tax General Order (STGO) to notify that the monitoring system

    According to the rules, all manufacturers of sugar products are warranted under the law to make necessary arrangements for importation of application and other equipment required for successful installation and implementation of track and trace systems at their production facilities.

    The electronic monitoring would help the FBR to record the actual quantity of sugar production and utilization of raw material by the sugar millers.

    By implementing the track and trace system, the FBR would get data of online monitoring from the sugar mills when they commence purchasing sugarcane from growers and start production of sugar products and subsequent selling to their dealers.

    The FBR has planned online monitoring of production lines of five sectors, including tobacco products, beverages, sugar, fertilizer and cement.

    FBR bans sugar bags movement without tax stamps
  • Wave-Singer receives Rs1.44 bn order from Coca Cola

    Wave-Singer receives Rs1.44 bn order from Coca Cola

    KARACHI: Wave Singer Pakistan Limited has received a corporate order worth around Rs1.44 billion from Coca-Cola, according to information shared with Pakistan Stock Exchange (PSX) on Tuesday.

    The company said that for the second consecutive year since its approval as a manufacturer for the supply of Coca-Cola branded Freezers, Waves Singer Pakistan has secured the largest corporate order from Coca-Cola.

    For fiscal year 2022, WSPL has received order for supply of 25,000 units of chest coolers and visi coolers worth around Rs1.44 billion.

    Last year, the company obtained orders for 22,850 units of chest coolers and visi coolers worth Rs944 million from Coca- Cola after approval of the factory consequent to detailed audits.

    Waves Singer Pakistan Limited has become a merged company with the acquisition of Cool Industries (Pvt) Limited by Singer Pakistan during 2017. After the approval of the Scheme of Merger by Sindh High Court, the combined company has acquired the name of Waves Singer Pakistan Limited.

    Singer’s history dates back to 1850, when Isaac Merritt Singer manufactured the first ever sewing machine in Boston, USA. I. M Singer & Company was duly incorporated during the same year.

    The name of the company was changed to Singer Manufacturing Company during 1853 when the factory of the Company was also relocated to New York, USA. Singer established its presence in the Indian sub-continent during 1877.

    Over the years, and after the independence of Pakistan, Singer continued its business of sewing machines in the country, but also started dealing in domestic consumer appliances, besides manufacturing and assembling light engineering products. In 1985, the Company became a public listed company.

    Singer Pakistan’s retail network has 140 shops in Pakistan alone, and covers every small town and metropolitan city of the country. Under the Singer brand, the Company produces a variety of consumer appliances-including refrigerators, air conditioners, LED TVs, washing machines, microwave ovens, in addition to its more traditional offerings of sewing machines, water heaters and gas ovens etc.

    Beverage Cans IPO oversubscribed three times; raises Rs4.6 billion
  • CNG valuation up by 84% for sales tax collection

    CNG valuation up by 84% for sales tax collection

    The Federal Board of Revenue (FBR) in Pakistan has declared a substantial 84% increase in the valuation of Compressed Natural Gas (CNG) for the purpose of sales tax collection.

    (more…)
  • Petroleum prices kept unchanged for next fortnight

    Petroleum prices kept unchanged for next fortnight

    ISLAMABAD: The government on Monday decided to keep prices of petroleum products unchanged at the level of November 05, 2021, for the next fortnight.

    The prices will remain unchanged from November 16, 2021, till the end of the month: Petrol Rs145.82 per liter; High-Speed Diesel (HSD) Rs142.62 per liter; Kerosene Oil Rs116.53 per liter; and Light Diesel Oil Rs114.07 per liter.

    A statement issued by the Finance Division said that despite rising petroleum products prices globally, the Prime Minister of Pakistan has kindly rejected the proposal for enhancement in the prices and desired that the prices of petroleum products from November 16, 2021, shall remain the same as notified on November 04, 2021, for providing maximum relief to the general public.

    The decision has been taken in the public interest. The government will bear the burden by making adjustments in the sales tax rates, etc.

    Muzzammil Aslam, spokesman to the finance minister in a Tweet said: “History has been made today. In today’s petrol prices the Sales Tax is effective zero per cent.”

    Petrol tax rate cut by 73% to lower global oil price impact
  • SBP launches digital approval system for banks

    SBP launches digital approval system for banks

    KARACHI: The State Bank of Pakistan (SBP) on Monday launched an end-to-end digital regulatory approval process known as the Regulatory Approval System (RAS).

    The central bank now achieved another milestone by launching a module pertaining to banking policy and regulations.

    With the launch of this module in RAS, banks, Development Finance Institutions (DFIs) and Microfinance Banks (MFBs) can now submit their request letters/ proposals on a dedicated online portal to SBP’s Banking Policy and Regulations Department whereby SBP, after digitally processing them, would also be in a position to disseminate the regulatory decisions to them through the same portal.

    Earlier in October 2020, Governor SBP Dr. Reza Baqir had launched the SBP FX RAS for end-to-end digitization of Foreign Exchange (FX) related case submission process.

    The system turned out to be a huge success as it enabled the customers to lodge their FX-related requests from the location of their convenience thereby sparing their valuable time previously spent in navigating the paper-based processes. It also enabled banks to submit FX-related cases electronically for regulatory approval of SBP and SBP-Banking Services Corporation (BSC).

    Implementation of RAS for Banking Policy and Regulation-related issues will be effective from November 24, 2021. It will enable banks, DFIs and MFBs to digitally submit their requests and receive regulatory decisions through a single window. Nevertheless, in addition to online submission, banks, DFIs and MFBs shall also continue with the manual submission of their cases that will cease after a brief transitory period till December 31, 2021.

    Implementation of SBP’s RAS is expected to conserve precious resources, contribute towards SBP’s Green Banking initiative and bring efficiency in the communication between the banking sector and SBP. Moreover, this arrangement will also replace paper-based submissions that are prone to logistic and storage issues, and cause inadvertent and unnecessary delays for relevant stakeholders. 

    RAS is a regulatory initiative under SBP’s Vision 2020 aiming at the digital flow of information amongst the stakeholders to improve the service standards through leveraging upon digital techniques.

    State Bank enhances CRR 6% to ease pressure on PKR
  • Miftah Ismail highlights key reasons behind rupee fall

    Miftah Ismail highlights key reasons behind rupee fall

    Miftah Ismail, Former Federal Minister for Finance, has pointed out key reasons behind the massive depreciation in Pak Rupee (PKR) against the dollar.

    Ismail, who is also General Secretary of PML-N Sindh, in his Tweet on Sundh pointed out a thread on the four main reasons for the recent precipitous decline in the value of the rupee.

    A: Uncertainty about the renewal of the IMF program

    B: Largest trade deficit and fastest-growing imports in history

    C: Fourth highest inflation rates among major countries.

    D: Rapid increase in the money supply.

    Ismail explained that uncertainty about the renewal of the IMF program behind the rupee weakness.

    The former finance minister said: “Our program was ‘revived’ earlier this year and we were supposed to get a $1 billion tranche in July 2021. We are now in November and still, there isn’t an agreement. This is giving markets jitters.”

    In his opinion largest trade deficit and fastest-growing imports are the second major reason for the rupee fall.

    “We are on track for imports of $75 billion or over 24 per cent of the GDP. Both these are the highest in history. This year exports will cover only 37 per cent of imports, down from 44 per cent in 2018. We are moving in the wrong direction.”

    Our trade deficit in on track to be $47 billion or 15 per cent of the GDP. Again both numbers are highest in the history. Current account deficit will be around 5 per cent of the GDP. But for the healthy remittances due to decreased travel etc. we would have recorded the second-highest current account deficit

    The former finance minister said that in our history, after the one of 8.1 per cent in 2007/2008, the last year of Gen. Musharraf. The increased net demand of dollars from foreign trade is thus putting pressure on the Pak rupee. “Until we slow down imports or increase exports, the rupee will continue to be under pressure.”

    Another reason highlighted by the former finance minister is the highest inflation rates among major countries.

    A recent issue of The Economist showed that Pak has the fourth-highest inflation among major counties, two of whom we don’t even have much trade with. “We also have the highest inflation in South Asia.”

    Given that our inflation is more than our trading partners, our exports goods become more expensive and import goods become cheaper. This increases our real effective exchange rate and puts pressure on the rupee.

    Miftah Ismail continued that our money supply has grown from Rs 4.7 trillion to Rs 7 trillion, an increase of 49 per cent.

    Dr Hafeez Pasha estimates that a 1 per cent increase in money forces a 0.6 per cent rise in inflation. The primary cause of money supply increase is record-high government budget deficits.

    “There are other reasons for the continuous devaluation, political uncertainty for one, but these four —-interlinked as they are— I think are the major reasons.”

    Federal Minister for Energy Hammad Azhar in his tweet replied to Miftah Ismail saying: “I thought Miftah sahib was reminiscing about PML-N’s economy. Back then they managed to create such conditions without Covid shocks. The truth is that trade deficit now has risen due to price effect (same goods but more $ outflow due to high prices) rather than volume effect.”

    Dollar hits all-time high at Rs175.73 at interbank closing
  • State Bank enhances CRR 6% to ease pressure on PKR

    State Bank enhances CRR 6% to ease pressure on PKR

    KARACHI: State Bank of Pakistan (SBP) on Saturday enhanced the cash reserves requirement (CRR) for banks to 6 per cent in order to ease pressure on Pak Rupee (PKR).

    The SBP decided to increase the average (CRR), to be maintained during a period of two weeks by scheduled banks, from 5 percent to 6 percent and minimum CRR to be maintained each day from 3 percent to 4 percent.

    CRR is the amount of money that banks are required to keep with State Bank of Pakistan and is applicable on demand liabilities and time liabilities with tenor of less than a year.

    Time liabilities with tenor of more than one year shall continue to be exempted from maintenance of cash reserves.

    With the economy recovering briskly from last year’s acute Covid shock, there is a need to gradually normalize policy settings, including the growth of monetary aggregates.

    In recent months, real money supply growth has drifted above its trend. Today’s measure will moderate this growth as well as domestic demand, thereby helping to sustain the current economic recovery, achieve the government’s medium-term inflation target, and reduce pressures on the Pak Rupee (PKR). 

    In addition, this measure is likely to have positive impact on deposit mobilization as the banks would be encouraged to generate more deposits to cope with additional liquidity requirements for their operations.

    This would incentivize banks to offer better returns on deposits to attract these funds; thus serving the SBP objective of encouraging savings.

    It may also be highlighted that waiver of CRR on Time liabilities with tenor more than a year will encourage banks to raise more long-term deposits, which will facilitate asset-liability matching and enable banks to extend long term loans for construction and housing financing.

    Baqir meets governors of Saudi, Indonesia central banks
  • President Alvi orders two banks to pay victims of fraud

    President Alvi orders two banks to pay victims of fraud

    ISLAMABAD: Pakistan President Dr. Arif Alvi has ordered two banks i.e. Al Baraka Bank Ltd (ABBL) and Habib Bank Ltd (HBL) to pay their customers in order to provide relief in fraud cases.

    President Dr Arif Alvi has upheld two different decisions of the Banking Mohtasib (BM) ordering Al Baraka Bank Ltd (ABBL) and Habib Bank Ltd (HBL) to pay Rs9.145 million to Mrs. Zahida Naseem and Rs 5 million to Mushtaq Ahmed Bajwa, respectively, who had been swindled out of their money by the management of the banks.

    The President rejected the appeals of both the banks against the decisions of the Banking Mohtasib.

    He regretted that the victims of fraud, including an Overseas Pakistani, suffered a lot at the hands of the banks’ management and no relief was provided to them.

    He urged the public to avail the services of the Banking Mohtasib to seek relief in fraud cases as well as against the maladministration of bank officials/officers.

    According to details of both the cases, Mrs Zahida Naseem (complainant) opened her PKR Account on 03-03-2017 and British Pound Sterling on 28-03-2017 with Al Baraka Bank, at DHA Branch, Lahore. She applied for Term Deposit for an amount of Rs 10.7 million for one year after signing her cheque and TDR Application Form.

    The then Branch Manager, Omer Ikram, provided her fake and fabricated Account Statement and TDR Certificates on bank’s Letter Head.

    However, in July, she came to know that the given account statement and TDR certificates were fake and fabricated.

    The Bank Manger had fraudulently used her cheque and requested for Real Time Gross Settlement instead of TDR. It was later revealed that Ikram had allegedly committed fraud of huge amount of Rs 125 million and was an expert in making and providing tampered and fake bank statements to his clients.

    This was admitted by the bank which had cancelled the policies of clients and had refunded money to respective accounts in different cases. In this case, an amount of Rs 9 million was transferred to the bank account of Mr Ikram’s personal driver.

    Mrs. Naseem requested ABBL to credit the lost funds to her account but without any result. Subsequently, she approached the Banking Mohtasib for the redressal of her grievance.

    In a similar case, Mushtaq Ahmed Bajwa (complainant), an Overseas Pakistani living in Holland, was maintaining a PLS Saving Account with Habib Bank Ltd’s branch in Faisalabad.

    He handed over cash of Rs 5 million to the then branch manager, Akhtar Hussain, on 14-04-2017.

    Hussain filled in the deposit slip, and after signing and stamping it, handed over the counterfoil to the complainant. Later on, his brother informed him in Holland that an internal fraud had been perpetrated and funds deposited by several depositors had been embezzled by the ex-Branch Manager.

    The manager had deceitfully mentioned some imaginary cheque numbers on his deposit slip instead of cash amount personally handed over to him.

    Further, the bank lodged an FIR with FIA Faisalabad against the main accused and his accomplices. The bank did not pay Bajwa his claim despite acknowledging his complaint, after which, the complainant approached the Banking Mohtasib to seek justice.

    The Banking Mohtasib investigated both the cases and, after perusal of facts, ordered that the complainants may be refunded their lost money by the respective banks.

    Wafaqi Mohtasib held that the complainants had entrusted their hard earned money to the concerned banks and it was fiduciary duty of the banks to protect their customers.

    It noted that the appointment of vigilant bank officials, honest and professional staff was the responsibility of the bank and not of the complainants.

    The Ombudsman noted that the bank officials had been duly posted by the management of the banks and they were performing the employer’s business, when the complainants had suffered financial losses due to the unethical and fraudulent activities of the authorized bank officers.

    The bank cannot escape the liability in such cases when the commission of fraud with the accountholder by its management is established and admitted, the BM held.

    The Mohtasib ordered that both the banks were responsible to make good the loss of the complainants without further delay. Subsequently, the banks filed separate appeals against the decisions of the BM.

    President Dr Arif Alvi upheld both the decisions of the Mohtasib on the grounds that banks were given ample opportunity by the Mohtasib to defend and controvert the claims of the complainants, however, banks had failed to discharge the burden and statutory liability cast upon them under the law.

    “No justification has been made to upset the order of the learned Banking Mohtasib”, the President wrote while rejecting the representations of the banks.

    President rejects Soneri Bank’s appeal in fraud case
  • Dollar hits all-time high at Rs175.73 at interbank closing

    Dollar hits all-time high at Rs175.73 at interbank closing

    The US dollar climbed to a record high against the Pakistani Rupee (PKR), touching Rs175.73 in interbank trading on Friday. This unprecedented surge marks the rupee’s weakest performance, as escalating import payments continue to exert pressure on the local currency.

    Currency experts noted a significant depreciation of the rupee by Rs1.54, ending the day at Rs175.73 against the previous day’s close of Rs174.19. This new record surpasses the previous all-time low of Rs175.27, recorded on October 26, 2021.

    The rupee had experienced a temporary rally following its last record low in October 2021, buoyed by a financial pledge from Saudi Arabia. The Saudi government committed to transferring $3 billion directly to the State Bank of Pakistan (SBP) on the same day the last lowest rate was recorded. This support had offered a brief reprieve to the weakening currency.

    However, the relief was short-lived as the demand for dollars continued to rise, primarily driven by a significant increase in import bills. Data from the Pakistan Bureau of Statistics (PBS) reveals that the import bill soared by 65.15 percent to $25.06 billion during the period from July to October 2021, compared to $15.17 billion during the same period in the previous fiscal year. This stark increase in imports reflects a growing economic challenge for Pakistan, fueling further demand for the US dollar.

    The rising dollar has been a source of concern for Pakistan’s economy, which is grappling with multiple financial pressures including higher import costs and international debt obligations. These factors combine to stress the PKR, making imports more expensive and inflation harder to control.

    Market analysts predict that if the trend of high import bills continues without corresponding increases in exports or external financial support, the PKR could face further devaluation. Economists suggest that Pakistan needs to enhance its export capabilities and seek more sustainable financial inflows to stabilize the currency.

    As the government and financial authorities ponder over solutions to mitigate this economic challenge, the business community and consumers are bracing for potential impacts on pricing and cost of living due to the depreciating local currency.

    The situation underscores the importance of comprehensive economic strategies that balance import needs with export growth, effective utilization of foreign aid, and stabilization measures by the central bank to ensure economic stability in the face of fluctuating global currency markets.