Deadline expires, but Riyadh yet to sign debt suspension pact with Islamabad
Saudi Arabia has not signed a formal agreement with Pakistan for debt suspension under the G-20 initiative till the expiry of the deadline set for the purpose.
The club of the world’s richest economies, G-20, had asked the applicant countries to conclude debt suspension agreements by December 31, 2020 for phase-1 (May to Dec 2020).
Pakistan and the Kingdom of Saudi Arabia (KSA) did not sign a formal debt suspension agreement till Dec 31, the Ministry of Economic Affairs confirmed to The Express Tribune on Thursday.
The ministry did not cite any reason for the delay but said Pakistan was still waiting for the formal signing.
It further said that Pakistan had not been making regular debt repayments to Saudi Arabia after the kingdom confirmed in July last year to suspend the bilateral official credit under the G-20 initiative.
“Saudi Arabia never refused to sign a formal agreement [to this effect],” said the ministry.
Trade deficit widens 32pc in Dec
Pakistan’s trade deficit widened nearly one-third in December 2020 despite a much-trumpeted increase in exports, which was not sufficient to match the surge in imports that jumped to over one-and-a-half-year high of $5 billion.
The gap between imports and exports increased to $2.7 billion in December over a year ago, a jump of $651 million or slightly above 32%, the Pakistan Bureau of Statistics (PBS) reported on Thursday.
The 32% increase in deficit was due to the spike in imports that overshadowed a gradual improvement in exports. In December 2020, imports surged to $5 billion compared to $4 billion in the same month of previous year, which reflected an increase of 25.2% or $1.01 billion. The $5 billion worth of imports were the highest in the past 19 months. Last time in May 2019, the imports had amounted to $5.04 billion.
Exports showed a significant improvement and surged to $2.35 billion in December, an increase of 18.3% or $364 million. But the increase was not sufficient to contain the trade deficit.
CCOE forms body to streamline gas connections
The Cabinet Committee on Energy (CCOE) has formed a committee to streamline the process for providing industrial gas connections in Balochistan.
The committee will formulate criteria for approving the new connections to eliminate possibility of any discretionary decision.
A meeting was held under the chairmanship of Federal Minister for Planning, Development and Special Initiatives Asad Umar in Islamabad on Thursday.
The Petroleum Division proposed the setting up of a committee for streamlining the process of industrial gas connections in Balochistan. The cabinet body on energy approved the proposed committee and directed that its recommendations be submitted to the CCOE within one month.
The committee will be chaired by the Petroleum Division secretary and will include Balochistan energy secretary, Balochistan industries secretary, Petroleum Division DG gas and Sui Southern Gas Company senior general manager distribution.
The energy minister had chaired a meeting on January 30, 2020 to discuss the policy related to provision of gas to industrial/ captive power consumers in Balochistan. After detailed discussions, it was decided that a five-member ex-officio committee would decide/ approve the industrial gas connections for Balochistan.
A moratorium was imposed by the prime minister and the petroleum minister was authorised to take decision on industrial/ commercial connections in Balochistan.
KE gets nod to construct gas pipeline
The Oil and Gas Regulatory Authority (Ogra) has allowed K-Electric to construct and operate a short distance pipeline to receive gas supplies for its forthcoming RLNG-fired 900-megawatt power plant at Bin Qasim from state-owned Pakistan LNG Limited (PLL) this year.
PLL would supply 150 million cubic feet of gas per day (mmcfd) through the dedicated pipeline to the Karachi-based power firm via Sui Southern Gas Company’s (SSGC) infrastructure.
The pipeline would be capable of transporting up to 250 mmcfd of gas. The supplies would be in addition to the ones that are being received by K-Electric from SSGC for a long time. The two companies are fighting a case in court to settle dues worth billions of rupees to be paid by K-Electric to SSGC.
“K-Electric is liable to lay the pipeline, which will handle up to 250 (mmscfd) of RLNG supply,” Ogra said in its decision while awarding the licence to K-Electric to construct and operate the pipeline.
A K-Electric spokesperson said that the company aimed to complete the construction of 2.4km-long pipeline in the vicinity of Bin Qasim by March-April 2021 so that one of the two 450MW RLNG-based power plants could be made operational by the forthcoming summer season.
SBP reserves rise $261m to $13.41b
The foreign exchange reserves held by the central bank rose 1.98% on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.
On December 31, the foreign currency reserves held by the SBP were recorded at $13,412.3 million, up $261 million compared with $13,150.9 million in the previous week.
According to the central bank, the rise came on the back of official inflows of the government. Overall, liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $20,512.1 million. Net reserves held by banks amounted to $7,099.8 million.
Pakistan received the first loan tranche of $991.4 million from the IMF on July 9, 2019, which helped bolster the reserves. In late December 2019, the IMF released the second loan tranche of around $454 million.
The reserves had also jumped on account of $2.5 billion in inflows from China. In 2020, 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 ADB.
Pakistan embraces digitalisation in 2020
While 2020 can be termed a hazardous year for most sectors of the economy, it has been phenomenal for steering digitalisation and giving a boost to e-commerce in Pakistan.
Following the Covid-19 outbreak in Pakistan in late February, many businesses began implementing work-from-home models and a majority found it a viable option.
Around mid-March, the government announced a full-fledged lockdown across the country, which prompted businesses to either operate from home or close down temporarily till the restrictions were lifted. It was this turning point when digitalisation in the country recorded a steep rise.
An industry source, heading an e-commerce-based start-up, termed 2020 the year in which the pace of digitalisation accelerated and people skewed more towards adopting digital solutions in Pakistan.
“In 2020, the mindset of a majority of Pakistanis changed,” he said. “Firstly, people started taking digitalisation seriously and secondly, work from home became widely acceptable.”
He added that work from home for any profession prior to 2020 was not considered respectable but it all changed during the year.
PM to launch first phase of instant payment system
The State Bank of Pakistan (SBP) has achieved a significant headway on a payment system, which is aimed at transferring dividend payments directly to bank accounts of investors through the Central Depository Company (CDC).
The development of Pakistan’s Instant Payment System project, powered by the SBP in collaboration with its partners, has progressed significantly and Prime Minister Imran Khan will soon launch the completion of its first phase, said SBP Governor Reza Baqir.
Chairing the third nationwide stakeholders’ meeting on digital financial services on Thursday, he commended the completion of this phase in a reasonable time despite Covid-19 disruptions and appreciated continuous support from the SBP partners and other stakeholders.
He also highlighted various other initiatives of the SBP that were accelerating the pace of digitisation in the country.
He stressed that the successful introduction of digital account opening and provision of lifestyle banking and investment by banks through the Roshan Digital Account (RDA) for non-resident Pakistanis was a giant step forward. Baqir added that the SBP had fast-tracked the licensing application process for Electronic Money Institutions (EMIs), which would help accelerate digital payments by non-bank players.
Economy revives to pre-covid levels
Economic activities were largely restored to pre-Covid levels in the first quarter (Jul-Sept) of current fiscal year 2020-21.
The uptrend indicates a promising growth ahead in all major sectors like agriculture, industries and services, but the risk of a spike in Covid-19 cases still poses a major threat to growth trends.
Pakistan’s central bank reported on Tuesday that the Business Confidence Survey turned positive after quite a long time. The economic growth stands promising with the recent increase in wheat support (minimum) price by the government for purchases from farmers in the forthcoming harvesting season (Feb-May) and availability of subsidised fertilisers and pesticides.
Besides, the State Bank of Pakistan (SBP) projects potential growth in export of rice and textile amid the November industrial package, uptick in collection of taxes, continuous strong receipt of workers’ remittances in the months ahead and the outlook for further narrowing down of current account deficit in the full fiscal year (FY21).
“Real GDP (gross domestic product) growth is projected to be in the range of 1.5-2.5% in FY21 (compared to 0.4% contraction in FY20),” the SBP said in its first quarterly report on The State of Pakistan’s Economy for Fiscal Year 2020-21. This is based on current trends of economic activity. However, the downside risk to this projection includes the second wave of Covid, which has swept across many countries and, in Pakistan’s case, gained momentum in November 2020. Supply-side shocks from uncertain weather conditions cannot be ruled out either, the report said.
At the same time, there are also potential upsides. These include the development and distribution of an effective vaccine and its possible early availability in Pakistan.
CAA exempts few countries from covid-19 test
The Civil Aviation Authority (CAA) on Tuesday issued a list specifying the countries from where the international travellers would not require Covid-19 tests before their entry into Pakistan.
According to a notification issued by the aviation authority, the list has been divided into three categories – A, B and C.
The new directives have been announced for all scheduled and chartered airline operators, ground handling agents, private operators and authorised flight permission agents.
Passengers from countries in Category A will not be asked to get tested for the coronavirus, the notification said.
Twenty-three countries have been mentioned in the category A including Australia, Cote d’ Ivoire, China, Cuba, Fiji, Finland, Ghana, Iceland, Iraq, Madagascar, Maldives, Myanmar, New Zealand, Qatar, Rwanda, Saudi Arabia, Singapore, South Korea, South Sudan, Sri Lanka, Togo, Vietnam and Zambia.
Meanwhile, any country that is not included in category A automatically falls into category B and the travellers from there will have to present a negative Covid-19 test, carried out within the last 96 hours.
Although there is no country in category C, the aviation authority maintained that in case a nation is included, passengers from there will have to get a negative test before boarding a flight as well as after landing in Pakistan.