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Government plans to sell 10 additional entities

The Pakistan Tehreek-e-Insaf (PTI) government is considering privatising 10 more entities including Zarai Taraqiati Bank Limited (ZTBL) and two gas utility companies amid slow progress on one and a half dozen enterprises that have already been picked for privatisation.

The Utility Stores Corporation (USC) is also among the 10 entities that the Ministry of Privatisation has recently shortlisted for privatisation in the next phase, according to officials.

Initially, the list comprised of 11 government-owned entities but the Cabinet Committee on SOEs struck off the name of Pakistan Television and directed to pursue the other cases, said the sources. The entities that can be privatised in the next phase included ZTBL – the only specialised bank lending money to the agriculture sector.

ZTBL is the third specialised bank that the PTI government has picked for privatisation after the Small and Medium Enterprise (SME) Bank and First Women Bank Limited (FWBL).

Prime Minister Imran Khan is keen to give a major push to the privatisation agenda in his third year in power, as the line ministries neither controlled their losses nor restructured these enterprises.

Officials said that the PM wanted the power sector losses to be stemmed at any cost, even if the government has to outsource their management to the private sector.

The government’s intentions to privatise the ZTBL was clear for the last one year, as it had appointed a supra body of people who had restructured and privatised the loss making commercial banks in the past.

Cabinet committee on energy opposes LNG supply guarantee

The Cabinet Committee on Energy (CCOE) has emphasised that in future the government should not guarantee any liquefied natural gas (LNG) supplies, which should be based on a competitive market mechanism.

So far, the government has guaranteed LNG supplies which has exposed state-run gas companies to financial risk.

Already, a foreign commodity trading company has filed a case against state-run Pakistan State Oil (PSO).

During discussion in a recent meeting of the CCOE, the committee chairman noted that the main challenge in relation to new LNG terminals was the allocation of pipeline capacity, which was a commercial issue.

He stressed that future LNG supplies should not be underwritten/ guaranteed by the government, rather they should be based on a competitive market mechanism.

Meanwhile, the expansion plan for the two existing LNG terminals has hit a stumbling block due to cases in the National Accountability Bureau (NAB) and international court. LNG terminals – Engro Elengy Terminal Private Limited (EETPL) and Pakistan GasPort – were contemplating enhancing their capacities under the third-party access arrangement without any financial obligation or risk to the government.

However, EETPL is facing a NAB case whereas Pakistan GasPort has filed a case in the international court against the termination of an LNG service agreement by the government.

Government to disburse PKR 1.7bn under DLTL scheme

Finance Minister Abdul Hafeez Shaikh has assured businessmen that the government will clear claims worth Rs1.7 billion under the Drawback of Local Taxes and Levies (DLTL) scheme in 10 days for the leather sector.

Talking to a delegation of the Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) in Islamabad on Friday, the finance minister said an additional Rs2.5 billion in duty drawback would be disbursed to the industrialists in three stages.

According to a statement issued by the association, Shaikh promised the leather sector exporters that all possible facilities would be provided to them so that they could play their true role in lifting the country’s exports.

He stressed that the government was pursuing a strategy of promoting industrial activities aimed at economic stabilisation in the country.

Speaking on the occasion, PLGMEA Chairman Danish Khan said that the Covid-19 pandemic had adversely affected economic condition of the world including that of Pakistan and requested an extension in the DLTL scheme till 2025-26 along with relief in freight charges. According to him, the extension in the DLTL scheme will aid development of the export sector.

He cheered that the amount of sales tax and customs duty drawback had improved under the automatic system and termed it a welcome sign for economic activities.

“Stringent efforts by Prime Minister Imran Khan and his economic team have led to improvement in the country’s economy as well as rise in exports, which is encouraging for businessmen,” he said.

WB presents partnership framework

Under the World Bank (WB) partnership framework, the bank will focus on four main areas along with improved governance, education, healthcare, inclusive growth, green and clean Pakistan, said World Bank Country Head for Pakistan Najy Benhassine.

He presented the proposed Country Partnership Framework at a consultative session held at the Planning and Development Complex on Friday.

Representatives of the World Bank, federal government and all administrative departments of Punjab participated in the event. Speaking on the occasion, Planning and Development Board Joint Chief Economist Dr Amanullah presented Punjab’s economic growth strategies, government interventions and economic growth landscape of the province.

Planning and Development Board Chairman Abdullah Khan Sumbal called Punjab a progressive province where development initiatives were always encouraged.

He acknowledged the support extended by the World Bank to the province. Planning and Development Secretary Imran Sikandar Baloch said that the Punjab government had always been growth-centric and inclined to work on specific sectors.

The objective of the session was to hold discussion on Punjab’s development priorities for the next five years and take input of the provincial government on areas where the World Bank could provide support.

PKR weakens against $

The Rupee weakened against the US dollar at Rs160.7 in the inter-bank market on Friday compared with Thursday’s close of Rs160.6, according to the State Bank of Pakistan (SBP). Earlier, the SBP let the rupee depreciate massively in the inter-bank market after finalisation of an agreement with the International Monetary Fund (IMF) for a loan programme on May 12, 2019. The IMF has asked Pakistan to end state control of the rupee and let the currency move freely to find its equilibrium against the US dollar and other major world currencies. Also, the World Bank, which finances some of the infrastructure and social safety net projects in Pakistan, has supported the idea of leaving the rupee free from state control in a bid to give much-needed boost to exports and fix a faltering economy.

SPI Raises 0.32PC

The Sensitive Price Indicator (SPI) for the week ended January 21, 2021 registered an increase of 0.32 percent for the combined income group, going up from 139.70 points during the week ended January 14, 2021 to 140.15 points in the week under review. The SPI for the combined income group rose 6.54 percent compared to the corresponding week of previous year. The SPI for the lowest income group increased 0.06 percent compared to the previous week. The index for the group stood at 145.15 points against 145.07 points in the previous week, according to provisional figures released by the Pakistan Bureau of Statistics (PBS). During the week, average prices of 19 items rose in a selected basket of goods, prices of eight items fell and rates of remaining 24 goods recorded no change.

SBP reserves decline $386mn to $13.01bn

The foreign exchange reserves held by the central bank fell 2.88 percent on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday. On January 15, the foreign currency reserves held by the SBP were recorded at $13,013.8 million, down $386 million compared with $13,400 million in the previous week. According to the central bank, the fall came on the back of external debt repayments. Overall, liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $20,120.3 million. Net reserves held by banks amounted to $7,106.5 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.

Pakistan can take it exports to $10bn

Pakistan has the potential to enhance its IT exports to $10 billion from the current $2 billion, said a report released by the Overseas Investors Chamber of Commerce and Industry (OICCI).

The report titled “OICCI Recommendations for Digital Economy” highlighted the much-needed shift required to capture the opportunity of digital transformation happening within and outside Pakistan through a new mindset.

“By digitising most, if not all, key segments of the economy could boost IT exports to $10 billion annually, provide a significant growth to gross domestic product (GDP), attract billions of dollars in foreign direct investment (FDI) and create new jobs within a short period,” the report added.

It highlighted the FDI potential by creating an enabling environment for investment in the platform and hi-tech ecosystem so that Pakistan could attract global IT platform players and venture capital funds to accelerate innovation.

The OICCI digital recommendations cover six key areas which include connectivity, digital financial system, export growth and digital skills, platforms and e-commerce ecosystem, innovation and regulatory environment, and digital governance and citizen services.

Government increases profit rates on saving certificates

The federal government has increased the rate of profit in a range of 12-96 basis points on various national saving certificates partly to attract higher investment in the government papers and partly to pass on benefit of rise in returns from Pakistan Investment Bonds (PIBs).

The Central Directorate of National Savings (CDNS), which operates under the ambit of the finance ministry, reinvests the funds received from retail investors into three to 10-year PIBs.

So far, the CDNS has mobilised a meagre investment of Rs28.68 billion in the first five months (Jul-Nov) of the current fiscal year compared to Rs371 billion in the previous full fiscal year 2020, according to the State Bank of Pakistan.

People have apparently invested low amount in the saving scheme due to downward trend in the rate since March 2020 and they wanted to keep cash in hand to deal with any untoward situation during the Covid-19 pandemic.

Moreover, the government has discontinued prize bond of denomination of Rs40,000 each and Rs25,000 each. People have been encashing the banned bond. This has partially offset growth in investment in the national saving certificates.

“Profit rates on national saving schemes certificates revised upwards by 12-96 basis points. Highest increase was witnessed in Behbood and Regular income certificate by 96 basis points each to 11.28 percent and 9.00 percent, respectively,” the research house Arif Habib Limited (AHL) cited CDNS reporting this.

Besides, the annualised rate of profit on Defence Saving Certificates (DSC) has been increased by 75 basis points to 9.24 percent. The rate of return on Special Savings Certificates (SSC) revised up by 20 basis points to 7.80 percent. And the profit rate on Short Term Saving Certificates (STSC) up by 12 basis points to 6.92 percent.

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