KARACHI: The liquid foreign exchange reserves of the country have crossed over $20 billion by week ended November 13, 2020, State Bank of Pakistan (SBP) said on Thursday.
The foreign exchange reserves of the country increased by $178 million to $20.085 billion by week ended November 13, 2020 as compared with $19.907 billion a week ago.
The foreign exchange reserves of the central bank increased by $190 million to $12.931 billion by week ended November 20, 2020 as compared with $12.741 billion a week ago.
The foreign exchange reserves held by commercial banks fell by $12 million to $7.154 billion by week ended November 13, 2020 as against $7.166 billion a week ago.
The State Bank of Pakistan (SBP) announced on Thursday that the country has achieved a current account surplus of $1.16 billion during the first four months (July – October) of the fiscal year 2020/2021. This marks a significant turnaround from the same period last year, when Pakistan recorded a current account deficit of $1.42 billion.
KARACHI: The official estimates of Bureau of Immigration and Overseas Employment (BEOE) revealed that over 100,000 overseas job for which the recruitment process was going on in Pakistan, was disrupted due to COVID and is not going to recover unless the recruiting projects are revived.
The bureau categorizes this category as a potential loss, according to a report of State Bank of Pakistan (SBP) released on Wednesday.
According to the official estimates of BEOE, more than 8.8 million Pakistanis were living abroad as of December 2017. Of these, 54 percent resided in the Gulf region, and the rest in other destinations, including Europe, UK, US, Canada, and Australia.
Furthermore, during the last three years, around 1.7 million people left for different destinations, of which around 98 percent proceeded for employment in the Gulf region and only a small fraction went to acquire permanent residency in high-income countries.
During the Covid-19 crisis, BEOE records reveal multiple channels of potential job losses for migrant Pakistanis.
Around 50,000 Pakistani migrants faced layoffs in different countries. These jobs may not be recovered in the short term and are thus extremely vulnerable.
Around 60,000 Pakistanis were recruited for overseas work, but could not proceed abroad due to travel restrictions and suspension of flight operations. The Bureau also categorizes these jobs as extremely vulnerable.
In addition to these, 50,000 emigrants (Azaad Visa excluded) returned on paid/unpaid leaves as of June 2020. These workers have not been laid off, but their job continuation entails risk.
For most of the returning workers, the lockdowns resulted in permanent cessation of income along with the loss of legal status and end of accommodation and health benefits associated with employment. In case of forced dismissals, workers also did not receive compensation, and other dues and therefore found it difficult to arrange travel expenses on their own.
The recent figure of stranded Pakistanis in different destinations is highly skewed towards the Gulf region with more than 91 percent in only two countries, i.e., Saudi Arabia and the UAE.
KARACHI: State Bank of Pakistan (SBP) on Wednesday said that listing of local firms on the world leading online marketplace, Amazon.com likely help to increase exports of the country.
The central bank while discussing the digital connectivity at the time of coronavirus pandemic, said the Ministry of Commerce has facilitated enlisting more than 30 exporters on the world’s leading online marketplace, Amazon.com, on a trial basis.
“On a successful completion of the test-run, this will provide an opportunity to more domestic firms to sell via Amazon and expand their outreach to global markets. This could potentially open a new avenue for Pakistan to increase its exports and create new employment opportunities locally,” the SBP said.
Going forward, the cross-border B2C ecommerce regulatory framework developed by the SBP and the Web Based One Customs e-commerce module that is to be developed by the FBR, will help facilitate online sales of exporting firms by allowing hassle-free documentation and shipment of export orders.
The SBP said that Pakistani authorities have been proactively working on the digitization front during the past half-decade or so; positive developments include the approval of the country’s first ever e-commerce policy in 2019.
The policy aims to provide an enabling environment to private businesses, create new employment opportunities for youth and women, and provide an opportunity to the government to regulate the e-commerce sector in the public interest.
To track the implementation of the policy and to facilitate e-commerce businesses, a National Ecommerce Council (NEEC) has also been established.
Its main functions are to monitor and support the advancement of e-commerce in the private sector, foster innovation in the implementation of the necessary programs and initiatives, create awareness of the importance of e-commerce towards the overall growth in the economy, and provide relevant feedback and recommendations to the government.
KARACHI: State Bank of Pakistan (SBP) has projected GDP growth between 1.5-2.5 percent for the current fiscal year 2020/2021 with up to 9 percent average inflation for the year.
The SBP on Wednesday issued annual report on state of economy for the year 2019/2020.
The government has set GDP growth target at 2.1 percent for the current fiscal year as against a negative growth of 0.4 percent in the last fiscal year.
The central bank projected fiscal deficit between 6.5-7.5 percent of the GDP for the current fiscal year lower than 8.4 percent in the last fiscal year. Similarly, current account deficit has been estimated between 1.0-2.0 percent for the ongoing fiscal year.
The inflows of remittances are expected at $22-23 billion during the current fiscal year.
The SBP said that as things stand, Pakistan has managed to control the virus spread. Although fresh infections have posted a slight increase in recent weeks, the overall level of active cases remains significantly lower than the peak observed in June 2020.
While the prevalent risk of another spike calls for a continuation of social distancing norms, the reopening of the economy (including services) has helped reduce some of the uncertainty around the overall macroeconomic outlook.
However, the global containment of the virus still remains elusive. Active cases in the US, the UK, India, France, and Italy remain high. Advanced European economies are bracing for another wave, with rising number of cases witnessed in the UK, Belgium, Italy and Greece. Social distancing norms and localized mobility restrictions are being re-introduced in many countries, whereas recent mobility data also suggests plateauing recovery across many countries.
As a result, while a rebound in growth is expected in nearly all the regions in 2021, downside risks remain high. For now, with the ease in containment measures, retail sales have recovered in the US and the major EU economies, though this recovery was mainly concentrated in groceries, healthcare supplies, and consumer electronics.
Clothing retail sales have yet to recover, as they continued to decline in double digits between June and August in the US and EU. The overall global economic outlook also remains uncertain due to the still-high infection rate in some countries, expiration of temporary unemployment support measures in the US, and continuation of the US trade dispute with China.
These uncertainties continue to present downside risks to Pakistan’s exports growth. Preliminary customs’ records for the first quarter of FY21 show a decline of 0.7 percent YoY in the country’s exports, although a 7.0 percent increase was recorded in the month of September. For the full year, SBP expects export values within the range of US$ 23.4 – 23.8 billion in FY21 – higher than the US$ 22.5 billion recorded in FY20.
Similarly, the SBP expects full-year imports to remain higher than last year, given the anticipated pickup in economic activity following the lifting of lockdowns, and firms’ efforts to replenish inventories. In particular, the concessions for the construction industry and progress on housing finance would revive steel imports. In addition, lower domestic production and supply-management issues have necessitated imports of wheat and sugar.
Energy imports, however, would depend on the ongoing substitution trend between imported and local fuel sources. As for oil prices, though having more than doubled from 19-year lows (US$ 19/bbl) in April 2020, Brent still hovered around US$ 40 per barrel by end-October.
Through the end of CY-2021, the crude oil market is projected to remain range-bound – due to weaknesses in the aviation sector and the risk of re-imposition of lockdowns amid a still high number of active Covid cases.
Given this stability in oil prices, domestic fuel prices are likely to remain steady during FY21. However, as previous adjustments in the power and gas tariffs are due, there is an upside risk to overall energy inflation.
Conditions in the domestic food market are also subject to risk. The recent resurgence in wheat and sugar prices continues to highlight commodity-management problems in the country. Moreover, food prices may also come under pressure due to widespread torrential rains and increased risks of flooding, which may cause crop losses. In contrast, the non-food-non-energy segment of CPI is expected to ease further, as chances of a significant pick-up in domestic demand remain low due to weak financial position of businesses and households.
Overall, the SBP expects headline inflation to fall within the range of 7-9 percent in FY21. On the fiscal side, challenges remain, as the government continues to focus on addressing Covid-related economic and social outcomes and supporting the initial economic recovery.
For the full-year, the government has set the target for the fiscal deficit at 7 percent of GDP, with the primary balance also estimated to show a deficit of 0.5 percent.
Thus, with a tight fiscal position, a significant contraction in grants (social transfers) and subsidy outlay – the two major areas with large slippages in FY20 – is targeted for FY21.
In case of any overshooting under these heads, the debt servicing relief of US$ 2.7 billion (equivalent to 1 percent of GDP) provided to Pakistan under the G-20’s Debt Servicing Suspension Initiative will help create expenditure space for Covidrelated spending.
In terms of growth, the government has set the GDP growth target at 2.1 percent for FY21. This year-on-year improvement is expected to come from a steady performance of agriculture and a recovery in the services sector, especially finance & insurance, and transport & communications. Industrial performance is also estimated to post a modest recovery, primarily on account of a much contained contraction in large-scale manufacturing as compared to FY20.
The SBP expects GDP growth to stay within the range of 1.5 – 2.5 percent during FY21. Nonetheless, these growth projections are subject to risks, including from the evolution of Covid, extreme weather conditions, external demand, and progress on the reform front. In particular, earlier estimates for kharif crops (especially cotton) do not seem promising, given weaknesses in farmers’ financial condition and heavy rains causing losses to standing crops.
There are also some upside risks, especially in the context of a resurgence in business confidence in the country following the ease in lockdowns and falling Covid cases.
The August wave of the IBA-SBP confidence surveys suggests that the business confidence index not only posted a sharp surge compared to the previous two waves, but it has also come in positive territory after remaining in the negative zone for three consecutive waves.
The improvement in the expected business confidence index (a subcomponent of the overall business confidence index) was more pronounced, as it touched its second-highest level since the start of this survey. Importantly, this optimism has also begun to reflect in planned investment activity in the country. Funding requests under the SBP’s Temporary Economic Refinance Facility (TERF) have risen sharply in recent weeks.
The scheme, which provides subsidized financing to businesses undertaking capex or BMR, has so far attracted 338 projects. These developments, along with optimism in the housing and construction sectors, could help accelerate the economy’s recovery process in FY21.
Given the fact that the TERF is geared towards supporting investment activities in the country, the uptick in its utilization is encouraging from a structural viewpoint as well.
Pakistan has historically been a consumption-oriented economy, which resulted in unsustainable growth spurts and investment rates not only remaining lower than most EMDEs, but also declining in absolute terms over the past few decades. In this regard, a strong response to incentive schemes such as TERF bodes well for the future economic trajectory, as capital formation activities would help enhance and potentially diversify the output capacity of Pakistan going forward.
KARACHI: State Bank of Pakistan (SBP) on Tuesday allowed non-resident individuals holding Pakistan Origin Card (POC) to open foreign currency account.
The SBP said that as per FE circular No. 02 dated August 05, 2020, a non resident individuals is eligible to open foreign currency account.
The SBP clarified that an individual non-resident, holding Pakistan Origin Card (POC) is also eligible to open FCVA.
Accordingly, the existing Para 2 sub-para (i (a)) of the above Circular has been replaced with the following:
“Individual non-resident Pakistani and non-resident holding Pakistan Origin Card (POC).”
Consequently, all the provisions of FE Circular 2 of 2020 applicable to individual non-resident Pakistani shall also be applicable to non-resident holding Pakistan Origin Card (POC).
Moreover, in terms of Para 7, Chapter 22 of the Foreign Exchange Manual, Authorized Dealers are required to report inward remittance transactions, except for family maintenance and exports, exceeding USD 10,000/- on Form “R” to SBP.
In this regard, it is advised that instead of asking the customer to provide duly filled in Form ‘R’, the bank receiving remittances in FCVA exceeding USD 10,000, or equivalent thereof, may digitally obtain the information, required for filling Form “R”, from the customer/remitting bank, if not already available in the transaction detail, for the purpose of reporting of transactions to SBP.
Through another circular, the SBP clarified that non-resident holding POC also eligible for opening Rupee Value Account (NRVA).
Consequently, all the provisions of FE Circular 01 of 2020 applicable to non-resident Pakistani shall also be applicable to non-resident holding Pakistan Origin Card (POC).
Further, as per Para 7, Chapter 10 of the FE Manual, any person who wishes to purchase foreign exchange must lodge an application with an Authorized Dealer on Form ‘M’ for seeking approval to effect outward remittance.
However, in case of NRVA, since no approval is required to NRVA holder for repatriating the funds from his/her account, therefore Form ‘M’ may not be required for payment/ repatriation of funds from NRVA. Nonetheless, Authorized Dealers shall continue to report outward remittances under the specified purpose code through monthly foreign exchange returns to SBP as per the existing procedure.
The State Bank of Pakistan (SBP) reported a 9.1% increase in net inflows of foreign direct investment (FDI) during the first four months of the current fiscal year (July – October). The net FDI inflows amounted to $733 million, up from $672 million in the same period of the previous fiscal year, signaling a moderate improvement in investor confidence in Pakistan’s economy.
KARACHI: State Bank of Pakistan (SBP) has allowed to reduce the history of write-off/waived loans and advances for corporate borrowers from 15 years to 10 years.
A statement issued on Thursday, the central bank said it had decided to reduce the reflection period of written off/waived loans and advances for corporate borrowers in the Electronic Credit Information Bureau (eCIB) of SBP from 15 years to 10 years.
eCIB is a repository of information about the credit history of borrowers of the banking system and is largely used by banks/Financial Institutions to assess the creditworthiness of borrowers.
This decision follows a detailed assessment of international practices.
It has been a general impression that reflecting the negative history/ write-off for a longer period might deprive the borrowers of a fresh start and would exclude borrowers from access to finance for longer periods (following the write-offs/waivers) regardless of the borrowers’ current financial performance and other favorable information.
It may be noted that various business bodies and Chamber Members frequently also raised such concerns.
They were of the view that placing a one-time write-off/waiver in eCIB for 15 years is a long period particularly when a business has paid back or settled its transaction with the bank. It creates difficulties for businesses in availing fresh financing for a long time.
Decreasing the reflection period to 10 years will bring our system in line with the international practice and provide a conducive business environment to boost economic activities besides helping to improve the country ranking in the Ease of Doing Survey conducted by the World Bank periodically.
Credit Information Bureau/Credit registry (eCIB) is one of the supervisory tools used worldwide to assist the supervisors in off-site supervision and on-site examinations.
SBP established its Credit Registry i.e. eCIB in 1992 with the objective to complement its role of prudential supervision and assessment of the risk monitoring functions of its regulated FIs.
Since then, the eCIB of SBP has evolved from manual to modern electronic online credit reporting system fueled by improvements in system and technology.
The existing eCIB system is not only helping in the expansion of credit but also enabling FIs to move from the traditional subjective approach of granting credit to a more efficient lending process.
KARACHI: The liquid foreign exchange reserves of the country increased by $553 million to $19.907 billion by week ended November 06, 2020, State Bank of Pakistan (SBP) said on Thursday.
The foreign exchange reserves of the country were at $19.354 billion by the week ended October 29, 2020.
The official reserves of the SBP increased by $558 million for the week ended November 06, 2020 as against $12.183 billion a week ago.
The SBP attributed the increase to receipt of $500 million as government loan proceeds.
The foreign exchange reserves of the commercial banks eased to $7.166 billion by week ended November 06, 2020 as compared with $7.171 billion a week ago.
KARACHI: State Bank of Pakistan has banned online payment for subscribing Indian entertainment content. In a circular issued to all banks, the SBP directed to block the payment to Indian content.
The central bank said that the decision had been taken on the directives of federal cabinet to stop different modes of payments including credit cards for subscribing Indian content in Pakistan including Zee5 video-on-demand service.
“In this regard, it is advised to ensure meticulous compliance of aforementioned instructions of the government of Pakistan and submit compliance status to PSD, SBP by November 13, 2020,” the central bank said.
