KARACHI: The total liquid foreign exchange reserves of the country have increased to $17.58 billion by March 25, 2019, State Bank of Pakistan (SBP) said on Thursday.
The central bank received RMB 15 billion equivalent to US$2.2 billion on March 25 as proceeds of the loan obtained by the government of Pakistan from China.
Accordingly, foreign exchange reserves held by the SBP stood at US$10.67 billion and total foreign exchange reserves of the country stood at US$17.58 billion.
KARACHI: State Bank of Pakistan (SBP) on Thursday directed banks to facilitate payment of duty and taxes on Saturday, March 30, 2019.
The central bank in a statement said in order to facilitate the collection of Government receipts/duties/taxes, NIFT will provide special clearing facility on the advice of SBP on Saturday, March 30, 2019 at 8:00 pm.
All banks are, therefore, advised to keep their concerned branches open on March 30, 2019 (Saturday) till such time that is necessary to facilitate the special clearing for the government transactions.
KARACHI: State Bank of Pakistan (SBP) has established a facilitation desk for foreign exchange related remittances to help multinational companies and domestic businesses.
In a statement on Thursday, the SBP said it had established the facilitation desk to cater to the queries pertaining to foreign exchange related remittances to help all stakeholders including multinational companies and domestic businesses.
The facilitation desk will provide assistance on foreign exchange related matters pertaining to areas including registration of equity, borrowing contracts, profit repatriation; acknowledgement and approval of royalty, franchise, technical and management services; training and development fees; operational and maintenance charges; lease rentals/maintenance reserves of airlines; legal and advisory services, visa and consulate fee; approval to issue guarantees and standby letter of credits; and any other foreign exchange related matters.
Banks have been directed to devise benchmarks for processing and due diligence of each type of transaction and ensure compliance thereof.
The facilitation desk has been established at Foreign Exchange Operations Department, Banking Services Corporation, I.I. Chundrigar Road, Karachi.
KARACHI: The present drug policy is silent on adjustment of prices under foreign currency movement, State Bank of Pakistan (SBP) said in its latest report.
“The latest drug pricing policy does not say anything about the adjustment of prices under foreign currency movements. The policy becomes ineffective in mitigating the external risk, given the origin of imported raw material is mostly different from India and Bangladesh,” the SBP said.
Drug Regulatory Authority of Pakistan (DRAP) is the implementing body of the Drugs Act of 1976, which was promulgated to ensure availability of medicines at affordable prices.
DRAP exerts control over all the aspects of drugs market. While the current policy regime has kept prices mostly at par with inflation in the medium term, the pricing policy is the cause of disagreement between the private sector and the regulator.
The central bank said that pharmaceutical industry has extensive exposure to exchange rate risk. “Depreciation of the PKR has a direct impact on this industry. Its profitability gets squeezed, as producers are not allowed a timely and commensurable increase in the prices of their products,” the SBP added.
The dependence on imported materials is a critical factor in limiting the growth potential of the industry under lagged adjustment of prices, it added.
The SBP said that extensive delay in adjustment of prices has made investors, both foreign and domestic, wary of investing in pharmaceutical sector.
The government fixes the maximum price of medicines based on the respective cost of production of each drug. A generic case involves a lengthy regulatory procedure (typically taking 1-2 years) to determine the prices of medicines.
The process requires the eventual approval from the federal cabinet.
Retrospective analysis of prices reveals interesting insights to the patterns of price adjustments, i.e. prolonged periods of low medicinal inflation, followed by periods of significant adjustments. These price corrections have been more frequent in recent times.
In this regard, DRAP issued a new drug pricing policy in 2018. To overcome the lag issues, domestic price of medicines were linked with average price of the same dosage form and strength of the same brand in India and Bangladesh.
Moreover, the policy also allowed annual price increments equal to 70 percent of the annual inflation rate with a cap of 7 percent.
Whilst the latest policy has a more relaxed tone compared to the previous one, it still has some issues. First, it should be noted that compared to Pakistan, India has very different cost dynamics, as it is one of the largest producers and exporters of generic drugs and its raw material.
On the other hand, Pakistan’s pharma industry is heavily reliant on raw material imports and its industry is inward looking.
In addition to slow regulatory framework, another critical factor is the lack of government support for the industry, especially in R&D required for obtaining international certification from the US Food and Drug Administration (FDA).
This certification is a prerequisite for exporting medicines to developed countries where profit margins are higher. On the contrary, India has state of the art research labs.
It gains significant advantages by fast-tracking its FDA approvals as soon as patents expire. As a result, India’s pharmaceutical industry has not only attained economies of scale but helps in earning foreign exchange as well.
KARACHI: State Bank of Pakistan (SBP) will announce Monetary Policy for the next two months on Friday, March 29, 2019, a statement said on Wednesday.
In the last monetary policy announcement, the central bank increased the policy rate by 25 basis points to 10.25 percent effective from February 01, 2019.
The monetary policy committee (MPC) decided to increase the rate on the basis of: (i) the fiscal deficit is yet to show signs of consolidation despite a reduction in PSDP spending; (ii) although a gradual improvement in current account deficit is visible, it remains high; (iii) a marked shift in the pattern of government borrowing from scheduled banks to SBP entails inflationary concerns; and (iv) even as stabilization measures gradually work through the economy, underlying inflationary pressures persist.
Analysts at Arif Habib Limited said that the SBP to increase policy rate by 75 basis points to 11.00 percent (Discount rate 11.50 percent) in the upcoming monetary policy statement.
This might be the last rate hike before Pakistan enters the International Monetary Fund (IMF) program whereas inflation will remain moderate after making its peak in the ongoing month.
The monetary tightening is expected on the back of i) rising inflationary pressure due to recovery in prices of petroleum products and essential food items, ii) mounting Fiscal deficit despite sharp cut in PSDP and rationalization of tariffs and duties, and iii) narrowing real interest rate as it declined to 1.6 percent compared to last four year average of 2.85 percent.
KARACHI: The restriction on non-filers to purchase cars during first half of current fiscal year has reduced the delivery time and also reduce the own money for immediate delivery in the grey market.
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KARACHI: State Bank of Pakistan (SBP) has projected the real GDP growth for fiscal year 2018/2019 would be around 3.5-4 percent much lower than the actual target of 6.2 percent.
The central bank in State of Pakistan Economy, Second Quarterly Report for Fiscal Year 2018/2019, issued on Monday the SBP further projected that the inflation would further increased to 6.5-7.5 percent during the current fiscal year as compared with actual target of 6 percent.
The GDP growth for fiscal year 2017/2018 was 5.2 percent and inflation for the same year was recorded at 3.9 percent.
The central bank estimated that remittances would be above the target during the current fiscal year to $21.5 billion. However, estimates for exports are at $25.5-27 billion lower than the target of $27.9 billion. Meanwhile, the estimates for imports have also been lowered to $54-56 billion from actual estimate of $58.5 billion.
The SBP estimated that the fiscal deficit would be around 6-7 percent against target of 4.9 percent. The fiscal deficit was at 6.6 percent last year. The current account deficit would stay around 4.5-5.5 percent of the GDP as against the target of 4 percent.
The SBP said that real GDP growth during FY19 is likely to moderate significantly, mainly due to slowdown in the growth of the agriculture sector and stabilization measures taken to preserve macroeconomic stability.
This is in line with a further contraction in LSM during Q2-FY19. Moreover, given that public development spending, a key driver for private sector industrial activities, is unlikely to pick up anytime soon, the full year outlook for manufacturing activities remains subdued.
Furthermore, private consumption is going to remain lower due to tighter monetary policy and pass through of exchange rate depreciation that has resulted in both higher energy prices and core inflation.
In addition, the prospects for the upcoming wheat crop remain subdued in terms of growth. All these aspects are going to constrain the services sector in the coming months as well.
Regarding price pressures, inflation is expected to remain high in H2-FY19. This is due to the second round impact of recent exchange rate depreciations, an upward adjustment in gas and electricity prices and higher budgetary borrowing from SBP.
However, the lagged impact of policy rate increases would be instrumental in keeping demand pressures in check. Acknowledging these risks, SBP continues to project average CPI inflation at 6.5-7.5 percent for the full year.
As noted earlier, the primary deficit has increased further while there has been a sharp reduction in development expenditures in order to improve the fiscal position.
This situation has become more challenging as the growth in current expenditure inched up to 17.3 percent during the first half as compared to 13.5 percent last year.
On the contrary, revenue collection has contracted by 2.4 percent during the same period as compared to the growth of 19.8 percent last year.
Since there is limited room to curtail government expenditures in the coming months, it is the growth in revenues that would be instrumental in determining the overall fiscal position for FY19.
Incorporating the performance of revenue collection during the second half in the last four years, SBP projects fiscal deficit to further deteriorate by 0.5 percent of GDP, which brings it close to the same level as in FY18.
As for the external sector, while the CAD has improved by USD 1.7 billion during the first seven months of FY19, it is still high at USD 8.4 billion.
Some improvement is expected to continue in the remaining months as imports are likely to contract further on account of moderating domestic demand and relatively low international oil price as compared to that at the beginning of FY19.4 However, merchandize exports are expected to miss the target due to waning demand in certain export destinations.
Additionally, this is compounded by the competitive pressures in the international arena and the lack of diversified and higher value
added products that can effectively utilise the export quotas allowed under specific trade agreements.
Meanwhile on the external financing front, the efforts of the government have started to materialize in the shape of bilateral inflows from Saudi Arabia, UAE and China. Some of these inflows have already been realized, while rest are due in H2-FY19.
Along with the Saudi deferred oil payment facilities, these inflows have an important role in meeting the external financing gap for FY19; thereby, relieving pressure on the foreign exchange reserves and mitigating volatility in the FX market.
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KARACHI: The investment in prize bonds has soared to Rs929.64 billion by January 2019 as compared with Rs794.09 billion by the same month of the last year, showing an increase of 17.07 percent.
According to statistics issued by State Bank of Pakistan (SBP), the savings mobilized through prize bonds had increased to Rs929.64 billion January 2019 through different categories of prize bonds.
The statistics have shown the investment in higher denomination prize bonds increased more rapidly then the lower denomination.
Following is the position of investments in different prize bonds:
(Rs in million)
| S. No. | Prize Bonds | Jan 2019 | Jan 2018 | % Increase |
| 01 | Rs100 | 9,771 | 8,795 | 11.09 |
| 02 | Rs200 | 29,325 | 27,076 | 8.30 |
| 03 | Rs750 | 98,590 | 86,520 | 13.95 |
| 04 | Rs1,500 | 105,019 | 90,078 | 16.58 |
| 05 | Rs7,500 | 96,221 | 75,317 | 27.75 |
| 06 | Rs15,000 | 173,803 | 144,780 | 20.04 |
| 07 | Rs25,000 | 156,923 | 135,080 | 16.17 |
| 08 | Rs40,000 | 259,130 | 225,586 | 14.86 |
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KARACHI: State Bank of Pakistan (SBP) on Friday directed all commercial banks to ensure receiving payment of duty and taxes through over the counter (OTC) channel.
The SBP said that the finance department through circular on July 17, 2018 made it mandatory for banks to enable their Over-the-Counter (OTC) Channel for collection of taxes and duties.
Complaints are pouring in from different quarters, regarding non-entertaining of tax payment requests through banks’ OTC Channel.
So much so that Federal Board of Revenue (FBR) has formally launched a complaint that PSIDs generated by WeBOC system for payment of customs duty and other taxes especially the levy on Mobile devices are not being entertained, by the bank branches.
In view of the above, all banks were advised vide email dated 15th March 2019 to improve their customer services in facilitating taxpayers with due courtesy.
Despite the above-referred instructions, there is no visible improvement, as complaints from different quarters are still landing with us.
It is therefore advised to share these instructions with all your branches across the country with the advice to ensure meticulous compliance and facilitate the taxpayers in payment of taxes and duties under the I Link’s OTC facility.
The branches shall also prominently display on their respective Notice Boards that “Taxes and Duties are accepted here under the 1Link’s OTC facility”. Further, banks shall also ensure that the branch staff has adequate understanding of the mechanism for collection of taxes and duties under the said facility.
The banks shall inform this department within 3 working days of the date of circular i.e. 27th March 2019 that these instructions have been communicated to all their branches for meticulous compliance and that the Notice Boards of branches are prominently displaying the message that “Taxes and Duties are accepted here under the 1Link’s OTC facility”.
KARACHI: State Bank of Pakistan (SBP) has announced bank holiday on March 23, 2019 on occasion of Pakistan Day.
In a circular issued by the SBP said that the State Bank of Pakistan would remain closed on March 23, 2019 (Saturday) being public holiday on the occasion of “Pakistan Day” as declared by the Government of Pakistan.