KARACHI: Pakistan has spent $531 million on vehicle import in the first four months (July – October) of the current fiscal year, according to official data released on Wednesday.
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SBP asks banks to enhance efforts for achieving agri credit disbursement target
KARACHI: State Bank of Pakistan (SBP) has asked banks to enhance their efforts to achieve qualitative aspects of the assigned targets for agriculture financing.
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SBP likely to keep policy rate unchanged: analysts
KARACHI: State Bank of Pakistan (SBP) likely to keep policy rate unchanged in upcoming monetary policy, analysts said on Tuesday.
The analysts at Arif Habib Limited said that the monetary policy committee of SBP will convene on Friday (22nd November 2019) to announce the monetary policy for the next two months.
We expect the SBP to keep policy rates unchanged in the upcoming monetary policy statement. Despite significant reduction in yields of 10-yr PIB, T-Bills, and revision on National Savings Scheme (NSS) rates, we see a status quo stance due to the following reasons:
i) Inflation is likely to remain elevated in upcoming months and expected to peak out in January 2020 at 12.50 percent which would reduce real interest rates to 75bps (compared to last 10 months average of ~290bps),
ii) Government is expected to continue attracting foreign investment in T-Bills to increase foreign exchange reserves, and
iii) Monetary easing might have negative repercussions on the current account and exchange rates.
To recall, SBP kept policy rate unchanged in last monetary policy statement (held on 16th September 2019) on account of
i) Inflation forecast which was broadly similar between new and old base (11-12 percent for FY20),
ii) Higher core inflation, and iii) Regular adjustment in utility prices and increase in food prices could pose upside risk to inflation forecast.
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SBP facilitates exports against advance payment
KARACHI: State Bank of Pakistan (SBP) has amended framework related to trade based money laundering in order to facilitate receiving export payment.
The SBP on Monday issued amendment to Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing.
The central bank invited attention of the banks and exchange companies to FE Circular No. 04 dated October 14, 2019 regarding the above subject.
The SBP said that in order to facilitate export against advance payment, the Para 6(b)(i)(e) of the Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing has been amended as under:
“e) Guideline at (a)(c) & (d) above shall be followed while making declaration on Advance Payment Voucher (Appendix V-14). Moreover, it shall be ensured by ADs that in case of exports against advance payment, declaration made on EFE/MFE is strictly in accordance with the particulars declared on Advance Payment Voucher including the name of the consignee. In case advance payment is received from an entity other than the consignee, the ADs shall ensure the same is verified through a swift message or underlying contract and the related risks, including the risk of under/over invoicing are adequately addressed.”
Prior to amendment the paragraph was read as:
“e) Guideline at (a)(c) & (d) above shall be followed while making declaration on Advance Payment Voucher (Appendix V-14). Moreover, it shall be ensured by ADs that in case of advance payment export, declaration made on EFE/MFE is strictly in accordance with the particulars declared on Advance Payment Voucher and name of consignee declared on EFE/MFE is of the same entity from which the advance payment is received.”
The SBP said that all other terms and conditions on the subject shall remain unchanged.
Further, the instructions related to advance remittance for export of fresh fruits/vegetables as contained in Para 27, Chapter 12 of Foreign Exchange Manual shall also remain unchanged.
Authorized Dealers are advised to bring the same to the notice of all their constituents.
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Current account deficit sharply narrows by 73.5pc in July – October
KARACHI: Pakistan’s current account deficit sharply narrowed by 73.5 percent during first four months (July – October) of current fiscal year due to massive decline in import bill.
The current account deficit reduced to $1.474 billion during July – October of current fiscal year as compared with the deficit of $5.567 billion in the same period of the last fiscal year.
The deficit in trade of goods fell to $6.43 billion during first four months of current fiscal year as compared with deficit of $11.06 billion in the same period of the last fiscal year.
Workers’ remittances slightly fell to $7.48 billion during July – October 2019 as compared with $7.61 billion in the corresponding period of the last fiscal year.
The current account deficit as per the GDP is 1.6 percent during first four months of current fiscal year as compared with 5.5 percent in the same period of the last fiscal year.
The current account deficit for the period fiscal year 2018/2019 was 4.9 percent of the GDP and the deficit was 6.3 percent of the GDP in fiscal year 2017/2018.
After more than 4 years, Pakistan posted a Current Account Surplus of $99 million in October 2019 compared to a $1.2 billion deficit last year.
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Foreign investment increases to $1.1 billion owing to debt securities attraction
KARACHI: Pakistan’s total inflow of foreign investment has increased to $1.1 billion during first four months (July – October) 2019/2020 as compared with outflow of $77.5 million in the corresponding months of the last fiscal year, State Bank of Pakistan (SBP) said on Monday.
The inflows can be attributed to attractive avenue in the debt securities for foreign participants.
The total portfolio investment has been recorded at $436.7 million during first four months of the current fiscal year as compared to a negligible amount in the same period of the last fiscal year.
The total inflow of foreign private investment was at $665.7 million during first four months of the current fiscal year as compared with $77.6 million outflow in the corresponding months of the last fiscal year.
The foreign direct investment also grew by 238.7 percent to $650 million during period under review as compared with $192 million in the same period of the last fiscal year.
The inflow of portfolio investment in capital market was recorded at $15.6 million as compared with outflow of $269.5 million.
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SBP to announce monetary policy on Nov 22
KARACHI: State Bank of Pakistan (SBP) will announce monetary policy on Friday, November 22, 2019 for next two months, said a statement on Monday.
The SBP kept the policy rate unchanged at 13.25 percent in its monetary policy announcement on September 16, 2019.
In the previous monetary policy, the SBP noted two key developments since the last MPC meeting.
First, the interbank foreign exchange market had adjusted relatively well to the introduction of the market-based exchange rate system.
The initial volatility and associated uncertainty in the exchange market had subsided.
Reflecting these improved sentiments and continued adjustment in the current account, the rupee had strengthened modestly against the US dollar since the last MPC, unlike its previous trend.
Second, on the external front, the US Fed, as anticipated, reduced its policy rate by 25 basis points (bps), followed by policy rate cuts by other major central banks around the world.
This would help in lowering pressures on emerging markets’ currencies and potentially increase financial inflows.
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SBP issues instructions to banks on FX/SWAP trade confirmation
KARACHI: State Bank of Pakistan (SBP) on Friday issued instructions to banks regarding foreign exchange (FX)/SWAP trade confirmation.
The SBP said that it had earlier issued instructions through a circular on October 09, 2012 under which the banks provide FX/SWAP trade confirmations duly signed by their authorized signatories, as per standardized hard copy format (hard copy) on the transaction date.
They are also required to provide SWIFT MT-300 confirmation message (SWIFT message) in addition to said hard copies.
It has, however, been observed that some of the banks occasionally fail to send said hard copies/ SWIFT messages on the transaction date.
Such lapses pose serious difficulties in timely verification of trade terms and other trade related details thereby unnecessarily exposing the banks to critical settlement risk.
The banks are also required to keep this department updated on any changes in their list of authorized signatories along with contact details, however, intermittent non-compliance to these instructions has also been noted.
In order to ensure smooth settlement process, the banks are advised to:
Ensure that all SWIFT messages, of a given transaction date, are invariably transmitted to this department with zero tolerance for any leftover SWIFT message.
This means that transmission date of a SWIFT message should not be later than the trade commitment date (transaction date) of related FX/SWAP trade.
Further, in order to bring efficiency in the process, transmission of hard copy may be discontinued from now onwards.
However, submission of hard copy would be mandatory in situations where a bank is unable to transmit SWIFT message due to any reason of whatsoever in nature.
Submit an updated list of authorized signatories with specimen signatures and contact details, on quarterly basis (format attached).Such updated list for quarter ending Jul-Sep19 may be submitted by November 28, 2019. The future reports may be submitted within 10 working days from end of a calendar quarter.
In case of any future changes of authorized person(s) during a quarter, this department will be immediately notified of such changes but not later than 3 working days.
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SLR limits not to apply on floating rate PIBs: SBP
KARACHI: The State Bank of Pakistan (SBP) has notified regulations to Statutory Liquidity Requirement (SLR) eligibility limit on floating rate Pakistan Investment Bonds (PIBs).
In a circular issued on Friday, the SBP said it is decided that SLR eligibility limit of 15 percent for banks and 5 percent for Development Finance Institutions (DFIs) on Pakistan Investment Bonds (PIBs) shall not be applicable on floating rate PIBs.
The SBP said that it had issued circulars on March 08, 2018 and May 22, 2004 for banks and Development Finance Institutions (DFIs) respectively.
All other instructions on the subject will remain same. The above instructions will be effective immediately, the SBP said.
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Pakistan’s foreign exchange reserves fall to $15.5 billion
KARACHI: Pakistan’s liquid foreign exchange reserves fell by $16 million to $15.502 billion by week ended November 08, 2019 as compared with $15.518 billion a week ago, State Bank of Pakistan (SBP) said on Thursday.
The foreign exchange reserves held by State Bank increased by $40 million to $8.397 billion by week ended on November 08, 2019 as compared with $8.357 billion a week ago.
However, the reserves held by commercial banks fell by $56 million to $7.104 billion as compared with $7.16 billion a week ago.