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  • SBP issues procedure for repatriation of foreign shares of Pakistan companies under asset declaration scheme

    SBP issues procedure for repatriation of foreign shares of Pakistan companies under asset declaration scheme

    KARACHI: State Bank of Pakistan (SBP) on Thursday issued procedure for repatriation of foreign assets held in the form of shares of a company incorporated in Pakistan, under Asset Declaration (Procedure & Conditions) Rules, 2019.

    The central bank said that in terms of Sub-Rule 6 of Rule 4 of the Assets Declaration (Procedure and Conditions) Rules 2019, issued by Federal Board of Revenue (FBR) vide S.R.O. 578(I)/2019 dated May 25, 2019, where foreign assets are shares of a company incorporated in Pakistan held by a declarant, whether beneficially or otherwise, it may be declared, in terms of Assets Declaration Ordinance 2019, subject to their repatriation into Pakistan and conversion into non-repatriable basis.

    In order to facilitate the declaration of shares of a company incorporated in Pakistan, under clause 4(6) of the above mentioned Rules, held by the declarant, whether beneficially or otherwise, on repatriable basis, the SBP allowed these shares to be repatriated into Pakistan and also notify the following procedure for conversion of these shares from repatriable basis to non-repatriable basis and transfer in the name of the declarant:

    Shares registered with SBP on repatriable basis:

    i. The owner of shares (i.e. the person in whose name the shares are already registered with SBP) will submit its application, duly forwarded by the respective company (the company whose shares are held by the non-resident on repatriable basis) through the AD (bank), to SBP for cancellation of registration of shares.

    ii. The application shall explicitly state that the shares are beneficially owned by the declarant (Name, Father Name, Residential Address, CNIC/Passport No.) who wants to declare them under the Assets Declaration Ordinance 2019.

    iii. The application shall also state that the request has been made to the company/company registrar/Central Depository Company of Pakistan Limited (CDC), as the case may be, for transfer of these shares in the name of the declarant on non-repatriable basis after cancellation of the registration by SBP, with an advice to confirm SBP upon transfer of these shares.

    iv. The application will be submitted along with following original documents:

    A. Original shares registration letter(s), earlier issued by SBP on registration of shares of the company in favor of the applicant on repatriable basis.

    B. A clear undertaking from the applicant that no repatriation of capital and profit/dividend accruing thereon will be claimed at any stage.

    C. Letter from company secretary, confirming that:

    a. Underlying shares (the shares whose registration is to be cancelled) are still held by the applicant.

    b. Applicant has requested to the company/company registrar/CDC for transfer of the shares in the name of the declarant on non-repatriable basis after cancellation of the registration by SBP.

    v. Upon receiving such request through AD, SBP will cancel the registration letter and inform the AD and the company along with an endorsement to FBR.

    vi. Upon transfer of shares in the name of declarant, the company/company registrar or CDC, as the case may be, will confirm SBP that the shares have been transferred in the name of declarant on non-repatriable basis.

    Shares acquired through Special Convertible Rupee Accounts (SCRA) under Para 9 of Chapter 20 of Foreign Exchange Manual:

    i. The legal owner (i.e. Foreign Portfolio Investor in whose name the Unique Identification Number has been registered) of the shares shall approach the AD (SCRA maintaining bank) with the request on the format attached as Form-I, that the shares are beneficially owned by the declarant i.e. natural person(s) (Name, Father Name, Residential Address, CNIC /Passport No.) who wants to declare them under the Assets Declaration Ordinance 2019.

    ii. The request shall also state to transfer the shares from the depository (CDC) account of legal owner to depository (CDC) account in the name of the declarant as a local/domestic shareholder (local securities account details will be provided) and delink the said holdings from SCRA in banks’ books. This will be applicable only to shares of Foreign Portfolio Investors, which are currently safe kept under the participant ID of the AD. The said transfer between the two accounts should be in accordance with the procedure prescribed by CDC for this purpose.

    iii. The AD will issue a certificate to SBP on the format attached as Form-II, that shares have been transferred to the declarant CDC sub-account in line with the instruction received from the client, excluding it from SCRA regime with copy to CDC and FBR for their information and necessary action. CDC will also confirm that consequent upon the request of the legal owner, the shares have been transferred in the name of declarant on non-repatriable basis.

    All procedural aspects in respect of above declaration including, but not limited to, (i) conversion of shares from repatriable basis to non-repatriable basis whether with CDC or otherwise and (ii) transfer and registration of shares from the name of present legal owner to the declarant shall be completed on or before June 30, 2019; and the declarant shall disclose the details of such shares, including name and number of such shares and their face value in his/her asset declaration under Assets Declaration Ordinance, 2019, the SBP said.

  • Rupee recovers 15 paisas on SBP governor briefing

    Rupee recovers 15 paisas on SBP governor briefing

    KARACHI: The Pak Rupee recovered 15 paisas against dollar on Tuesday day after the press conference of the governor of State Bank of Pakistan (SBP) for clarifying many issues about the economy.

    The rupee ended Rs156.81 to the dollar from previous day’s closing of Rs156.96 in interbank foreign exchange market.

    The foreign exchange market was initiated in the range of Rs156.60 and Rs156.90. The market witnessed day high of Rs156.85 and low of Rs156.40 and closed Rs156.81.

    A day earlier SBP governor Reza Baqir conducted a press briefing and clarified many issues pertaining to the economy, which boosted the confidence in the market.

    The exchange rate in the open market was remained unchanged.

    The buying and selling of the dollar was recorded at Rs155.50/Rs156.50 same previous day’s closing in cash ready market.

  • Demand, supply to decide dollar rate: SBP governor

    Demand, supply to decide dollar rate: SBP governor

    KARACHI: The demand and supply will decide the rate of US dollar, Reza Baqir, Governor, State Bank of Pakistan (SBP) said on Monday in his maiden press conference.

    “Let the market decide the dollar rate,” he said while replying to questions regarding exchange rate.

    He said that there were impacts of high inflation while increasing exchange rate. On the other hand if exchange rates are maintained then it will result in high debts, he added.

    At present the exchange rate is being decided by the market and it help in improving the indicators, the SBP governor said.

    The governor said that by controlling the exchange rate the imports had been reduced. He said that current account deficit had been reduced significantly. The deficit was at $19.8 billion. The deficit has been narrowed to $13 billion so far in the current fiscal year.

    He said that exchange rate was improved before Eid ul Fitr due to better inflows. However, payment pressure from corporate sector has against pressurized the local currency, he added.

    The SBP governor said that the economic team is bringing improving in the country.

    He said that in the past such budgets were presented which had failed to yield results.

    However, in the current budget relief measures have been announced under social protection program.

    Talking about the IMF program and its conditionalities, he said that people should wait till July 03, 2019 and after that all the documents related to fund programs would be made public.

  • Remittances grow to $20.19 billion in 11 months

    Remittances grow to $20.19 billion in 11 months

    KARACHI: Overseas Pakistanis workers have sent $20.19 billion during July – May 2018/2019 as compared $18.28 billion in the same period of the last fiscal year, showing growth of 10.42 percent, State Bank of Pakistan (SBP) on Friday.

    The central bank said that during May 2019, the inflow of worker’s remittances amounted to $2315.74 million, which is 30.17 percent higher than April 2019 and 28.36 percent higher than May 2018.

    The country wise details for the month of May 2019 show that inflows from Saudi Arabia, UAE, USA, UK, GCC countries (including Bahrain, Kuwait, Qatar and Oman) and EU countries amounted to US $493.73 million, $476.57 million, $346.81 million, $387.09 million, $237.76 million and $70.61 million, respectively compared with the inflow of $432.05 million, $373.85 million, $290.26 million, $269.11 million, $178.96 million and $60.34 million respectively in May 2018.

    Remittances received from Malaysia, Norway, Switzerland, Australia, Canada, Japan and other countries during May 2019 amounted to $303.17 million together as against $199.51 million received in May 2018.

  • Foreign exchange reserves slip to $14.827 billion

    Foreign exchange reserves slip to $14.827 billion

    KARACHI: The total foreign exchange reserves of the country have slipped by $63 million to $14.827 billion by week ended June 03, 2019 as compared with $14.89 billion as on May 31, 2019, State Bank of Pakistan (SBP) said on Thursday.

    The official foreign exchange reserves of the SBP reduced by $55 million to $7.807 billion by week ended June 03, 2019 as compared with $7.862 billion on May 31, 2019.

    The central bank said that its reserves were declined due to payments on account of external debt servicing.

    The reserves held by commercial banks also fell by $8 million to $7.019 billion from $7.027 billion.

  • Budget 2019/2020: No SBP borrowing from July 01

    Budget 2019/2020: No SBP borrowing from July 01

    ISLAMABAD: The government has decided not to borrow from State Bank of Pakistan (SBP) from July 01, 2019 due to high inflation concerns.

    State Minister for Revenue Hammad Azhar while presenting budget 2019/2020 has said that the government would take all possible measures for minimal increase in prices.

    If, however due to movement in international markets we are forced with any price increase we will ensure that consumers are protected to the extent possible.

    Accordingly, we have made budgetary allocations to enhance social safety net for the vulnerable population.

    Fighting inflation will be paramount for us. “We will tailor our fiscal and monetary policies, coordinate with the provinces and adopt administrative measures to fight this menace.”

    The measures proposed for 2019-2020 budget shall be as follows:

    Government borrowing from the State Bank is inflationary, the government will no longer use this facility with effect from 1 July 2019

    Our medium-term inflation target will be in the range of 5 – 7 percent.

    In addition, we will continue to focus on good governance and remain committed to fighting corruption. We will assign autonomy to our institutions, strengthen their capacity and choose their leadership on merit.

    The year 2019-20 shall continue to be the period of stabilization. This is a difficult transition that we want to achieve within a minimum amount of time. We will try to minimize the adverse effects of any difficult decisions on our citizens.

  • Government borrows Rs3.2 trillion from SBP in 10 months: Economic Survey

    Government borrows Rs3.2 trillion from SBP in 10 months: Economic Survey

    ISLAMABAD: The government has borrowed Rs3.2 trillion from State Bank of Pakistan (SBP) for budget financing during first ten months of current fiscal year, Economic Survey of Pakistan revealed.

    The survey released a day earlier stated that during July 01, 2018-April 26, 2019 government borrowed Rs 1,073.0 billion for budgetary support compared to Rs 850 billion in the same period last year, of which, government has borrowed from SBP Rs 3,204.7 billion as compared to Rs 1,316.1 billion last year.

    On the other hand, government retired Rs 2,131.7 billion to scheduled banks against retirement of Rs 466.1 billion in last year. Net government sector borrowing thus remained at Rs 908.0 billion during the period under review compared with Rs 813.6 billion last year.

    During the period 01 Jul-26 Apr, FY2019 money supply (M2) increased by Rs 625.3 billion (growth of 3.9 percent) compared with Rs 601.8 billion (4.1 percent) in comparable period of last year.

    Net Domestic Assets (NDA) is the main contributor to M2 growth.

    Net Foreign Assets (NFA) point contribution is negative and stood at (-5.5 percent) during the period under review compared with (-3.3 percent) in the same period last year.

    NDA point contribution has increased to 9.4 percent compared with 7.4 percent last year. NDA point contribution growth partially offset by NFA negative growth, thus overall money supply grew by 3.9 percent during the period under review.

    On the other hand, reserve money posted an expansion of Rs 488.0 billion (growth of 8.9 percent) during 01 Jul-26 Apr, FY2019 against Rs 260.5 billion (5.4 percent) last year.

    SBP’s NDA posted a growth of 22.5 percent compared with 18.18 percent during the same period last year, whereas, SBP’s NFA decreased by Rs 743.8 billion compared with contraction of Rs 473.7 billion in the comparable period last year.

    Therefore, reserve money growth stemmed from NDA of the SBP whereas NFA outstanding stock remained negative during the period under review.

    Within Broad Money, NFA of the banking sector further contracted to Rs 882.4 billion during 01 Jul-26 Apr, FY2019. During same period last year, it was contracted by Rs 475.4 billion.

    Therefore, SBA and scheduled bank’s NFA remained negative during the period under review.

    During the period 01 Jul-26 Apr, FY2019 NDA of the banking sector registered an expansion of Rs 1,507.7 billion (growth of 9.3 percent) compared with Rs 1,077.2 billion (7.7 percent) during the comparable period last year.

    NDA of SBP increased by Rs 1,132.5 billion as compared with Rs 661.5 billion during same period last year.

    The NDA of scheduled banks witnessed an expansion of Rs 375.1 billion compared to expansion of Rs 415.7 billion in the same period of last year.

    Government sector borrowing and private sector credit mutually impacted NDA growth of the banking system, which was more than offset the contraction in NFA of the banking system.

    Consequently, broad money growth increased to 3.9 percent during 01 Jul-26 Apr, FY2019 as compared to 4.1 percent during the comparable period last year.

    Credit to Public Sector Enterprises (PSEs) increased by Rs 312.1 billion during the period 01 Jul-26 Apr, FY2019 against Rs 153.2 billion during the same period of last year.

  • Economic Survey 2018/2019: SBP increases policy rate by 650bps in past 18 months

    Economic Survey 2018/2019: SBP increases policy rate by 650bps in past 18 months

    ISLAMABAD: State Bank of Pakistan (SBP) enhanced policy rate by 650 basis points during last 18 months (January 2018 to date) for macroeconomic stabilization.

    According to Economic Survey 2018/2019 issued by the ministry of finance on Monday said the SBP had adopted policy rate reversal and gradually increased it by a cumulative 650 bps since January, 2018.

    “Despite increase in policy rate, Weighted Average Lending Rate (WALR) remained stable which translated into healthy private sector credit demand.”

    Credit to private sector (CPS) increased to Rs 775.5 billion during FY2018 against Rs 747.9 billion last year. Significant increase in credit demand primarily came from working capital and fixed investment in the preceding year.

    During the period July-March, FY2019 CPS increased to Rs 554.7 billion compared with Rs 401.1 billion during same period of last year.

    Of which working capital loans received the major share and stood at Rs 369.0 billion compared to Rs 215.3 billion last year. While fixed investment decelerated to Rs 83.1 billion against Rs 148.1 billion in the comparable period last year.

    The survey said that the monetary policy is an important tool to achieve price stability and manage economic fluctuations.

    Inflation targeting has emerged as the leading framework for monetary policy over recent decades in many advanced and in low income economies.

    Monetary policy role after global financial crises has extended as macro prudential policy which required strong institutional framework for financial stability and to achieve twin objectives of price and output stabilization.

    Pakistan’s economy witnessed a consumption led growth of 5.53 percent during preceding year FY2018.

    The incumbent government has inherited the economy facing multiple challenges including unsustainable twin deficits that pose serious risks to the economy.

    Hence, to correct the imbalances in the economy, authorities have taken steps to curtail the fiscal deficits and tighten monetary policy to contain demand.

    SBP has significantly tightened monetary policy, and allowed greater flexibility in the exchange rate adjustments to curb excessive aggregate demand and move towards macroeconomic stabilization.

    This trend is in line with the global trends. The global economic expansion has weakened and projected to slow down from 3.6 percent in 2018 to 3.3 in 2019, before returning to 3.6 percent in 2020.

    Following a notable tightening of global financial conditions during second half of 2018, conditions have eased in early 2019 as the US Federal Reserve signaled a more accommodative monetary policy stance and markets became more optimistic about a US–China trade deal.

    The US federal funds rate is expected to increase to about 2.75 percent by the end of 2019. Policy rates are assumed to remain at close to zero in Japan through 2020 and negative in the Euro area until mid-2020.