SBP reserves fall $205mn to $12.15bn
The foreign exchange reserves held by the central bank declined 1.7 percent on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.
On October 2, the foreign currency reserves held by the SBP were recorded at $12,154.7 million, down $205 million compared with $12,359.7 million in the previous week.
According to the central bank statement, SBP made external debt repayment of $580 million. After accounting for official inflows, including $300 million received from the Asian Development Bank (ADB), SBP reserves decreased by $205 million, it added.
Overall, liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $19,351 million. Net reserves held by banks amounted to $7,196.3 million.
Pakistan received the first loan tranche of $991.4 million from the International Monetary Fund (IMF) on July 9 last year, which helped bolster the reserves. In late December, the IMF released the second loan tranche of around $454 million.
Previously, the reserves jumped on account of $2.5 billion in inflows from China. A few months ago, the SBP successfully made foreign debt repayment of over $1 billion on the maturity of Sukuk.
In December 2019, the foreign exchange reserves surpassed the $10-billion mark owing to inflows from multilateral lenders including $1.3 billion from the Asian Development Bank (ADB).
PM Imran Khan prioritises ease of doing business
Ease of doing business, elimination of unnecessary regulations, improvement of tax system and maximum facilitation of businessmen involved in the process of industrialisation are government’s foremost priorities, said Prime Minister Imran Khan.
Talking to a delegation of industrialists and representatives from Karachi’s trade organisations on Thursday, the prime minister said he would continue holding meetings with businessmen so that the process of reforms and facilitation could be taken forward by considering proposals of the business community.
Members of the delegation lauded the government for its policy and measures aimed at promotion of industrialisation in the country, particularly the small and medium enterprises (SMEs) and for announcing the Karachi package.
The delegation also apprised the prime minister regarding the difficulties faced by the business community.
The government team also briefed the meeting about the measures being taken for facilitation of the businessmen and ease of doing business in the country.
Separately, in a meeting of the National Coordination Committee for SMEs, the proposed National Policy on Small and Medium Enterprises 2020 was presented to Prime Minister Imran. The policy is aimed at promoting the sector across the country. The prime minister was given a detailed briefing on the salient features of the proposed policy.
Chairing the meeting, he directed Minister for Industries Hammad Azhar to finalise a roadmap based on timelines for implementation of the proposed SME policy in consultation with provinces at the earliest.
The PM further stressed upon the federal departments and provincial governments to pay special attention to the development of SMEs.
Nepra approves Rs0.83 per unit raise in power tariff
The National Electric Power Regulatory Authority (NEPRA) approved on Thursday an increase of Rs0.83 per unit in the power tariff.
The national power regulatory authority’s notification stated that the price hike was made in context of fuel price adjustment made in July.
“The increase will be collected in October bills, however, the increase in electricity prices will not apply to K- Electric customers,” the notification stated.
Expensive electricity would impose an additional burden of more than Rs10 billion on consumers.
Special Assistant to the Prime Minister (SAPM) on Political Communication Dr Shahbaz Gill said that electricity had become more expensive due to the agreements made by the previous governments.
On wheat prices, Gill said that the rise was due to low harvest in the country. About 1.5 million tonnes of wheat would be available in the country before the end of the year.
“To teach hoarders a lesson, the prime minister has directed to procure and subsidize more wheat, to break the backs of hoarders,” Gill added.
Meanwhile, Pakistan Muslim League-Nawaz’s (PML-N) spokesperson Marriyum Aurangzeb said “the corrupt gang has increased the price of electricity by 83 paisa per unit today. Rs10 billion has been looted from the pockets of the people.”
She added that, “food prices have risen by 70 to 80 percent in just three months, whereas lawsuits were being filed to divert attention”.
On the decision of fuel price adjustment, member Sindh NEPRA said in a dissenting note that the burden of running the power plant against the merit order was being placed on the consumers.
On October 7, the Power Division told the federal cabinet the government would have to increase electricity rates by Rs6.06 per unit in a bid to clear the backlog of circular debt in the financial year 2023.
Govt launches Islamic Certificates
The cash-strapped government has introduced the much-awaited Shariah-compliant regulations to enable resident and non-resident Pakistanis to extend financing in foreign currencies to the country mainly to stabilise and build up the foreign exchange reserves.
The non-resident Pakistanis, who have an account at a local bank under the recently launched Roshan Digital Account (RDA) initiative, and resident Pakistanis, who have declared assets abroad with the Federal Board of Revenue (FBR), are eligible to invest in the three-month to five-year long Shariah-compliant saving certificates – Islamic Naya Pakistan Certificates (INPCs) – both in foreign currencies (mainly in US dollar) and local rupee-denominations.
“We (the eight banks, which are offering Roshan Digital Accounts) are determined to formally launch the Islamic saving certificates in foreign and local currencies for resident and non-resident Pakistanis within 10 days,” Meezan Bank Head of Product Development and Shariah Compliance Ahmed Ali Siddiqui told after the government introduced INPCs regulations earlier this week.
For this purpose, the eight banks would establish two Shariah-compliant assets (Mudaraba pools) worth $20 million and Rs5 billion. Later on, resident and non-resident Pakistanis would become part of the assets by investing in the saving certificates and the banks would quit, while receipts from Pakistanis would only be provided to the federal government, according to the regulations.
Carpet, leather sectors can become main exporters
Carpet and leather sectors can become major exporters through government’s facilitation, said Lahore Chamber of Commerce and Industry (LCCI) President Mian Tariq Misbah.
Speaking to a delega- tion of Pakistan Carpet Manufacturers and Exporters Association (PCMEA) led by Latif Malik on Saturday, he urged the government to provide environment conducive especially to the export oriented industries.
“Special attention should be given to the businesses which earn the much needed foreign exchange for Pakistan,” he said.
“The cost of doing business should be reduced and ease of doing business should be improved.”
Emphasising on the need for exhibitions, Misbah was of the view that they provide a huge opportunity to enhance exports. He further urged Pakistani businessmen to start exploring international markets by organising exhibitions for export products. He stressed that the export development fund should be utilised to increase exports.
Speaking on the occasion, LCCI Senior Vice President Nasir Hameed Khan said that carpet industry has the manufacturing capacity and potential to export. “It can also enhance its capacity fur- ther to increase its share in international carpet export,” he said.
The PCMEA delegates said that biggest competitor of carpet industry is India. “We should conduct re- search and prepare a report on Indian policies and the facilities it provides to its carpet exporters,” they said.
“This way, we can ask and motivate our government to provide us with same facili- ties to counter Indian influ- ence and increase our share of exports in the interna- tional market.”
IMF seeks hike in power raise
The International Monetary Fund (IMF) on Thursday again linked revival of the stalled $6 billion programme with increase in electricity prices and additional revenue measures – the two conditions that Pakistan had not fulfilled in January this year, which derailed the programme.
The technical teams of the IMF and Pakistan on Thursday held discussions over the steps that Pakistan will have to take for restoring the programme, sources in the Ministry of Finance and Ministry of Energy told. The discussions were held through a video link, and led by Ernest Rigo, IMF’s Washington-based Mission Chief to Pakistan.
It was more of an issue of increasing the power tariffs than the additional tax measures, said another source in the Federal Board of Revenue (FBR). The IMF team asked Pakistani authorities to increase the electricity prices on account of quarterly adjustments and annual price adjustments, said the sources.
The Economic Coordination Committee (ECC) of the cabinet on September 30 had approved to increase the electricity prices by up to 17 percent on account of quarterly tariff adjustments for November-June period. But the federal cabinet on October 6 did not approve it, according to a federal cabinet minister.
The ECC last month had approved to increase the per unit power tariff by minimum 32 paisa (2percent) for up to 200 units monthly consumers and maximum Rs2.63 per unit (17.2percent) for commercial and industrial consumers.
ECC permits wheat import from Russia
The federal government on Wednesday approved the import of 330,000 tons of wheat at a cost of $278.5 per ton and also set up a committee to negotiate the price with Russia for import of over 1.1 million tons of wheat under a government deal.
The Economic Coordination Committee (ECC) of the cabinet took these decisions despite concern expressed by committee members over “flooding the country with imported wheat”, as the Ministry of National Food Security and Research lacked authentic data of wheat import and its requirement.
The ECC also allowed the recovery of Rs74 billion in arrears from imported gas consumers of Punjab and Khyber-Pakhtunkhwa (K-P).
It authorised Sui Northern Gas Pipelines Limited (SNGPL) “to manage the load of domestic and commercial sectors by diversion of RLNG (re-gasified liquefied natural gas) in the approaching winter season,” according to a statement issued by the finance ministry. SNGPL will face a shortfall of roughly 600 to 900 million cubic feet per day (mmcfd) in the coming winter.
In the meeting chaired by Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh, ECC members raised questions about the mishandling of wheat import by the food security ministry.
The ministry had requested the ECC to approve the lowest bid of Aston Industrial Agro, Russia, which quoted $278.5 per ton, for import of 330,000 tons of wheat and allow distribution of the commodity among Pakistan Agricultural Storage and Services Corporation (Passco), Punjab and K-P. Sources said ECC members believed that Pakistan could have secured a better deal with Russia, had the food ministry handled the matter efficiently.
The ministry also sought a “formal approval to appoint Trading Corporation of Pakistan (TCP) as the focal agency for the concessionary deal offered by the Russian Federation for 750,000 tons and 420,000 tons so that the remaining quantity of import could be made available by January 2021.” The food ministry again did not distribute the summary among ministries and it was not signed by the food secretary as well. In his place, the additional food secretary signed the summary.