Pakistan raised $1bn by sukuk bond
Pakistan on Monday raised a $1 billion loan through the Sukuk bond at a 7.95 percent interest rate — which is the highest cost that the country has agreed to pay in its history on an Islamic bond. The government went to international capital markets after it consumed nearly $2 billion out of the $3 billion borrowed from Saudi Arabia one-and-half months ago. This pulled down the gross official foreign exchange reserves to $17 billion as of January 14. Pakistan has issued the 7-year tenor asset-backed Sukuk bond to raise $1 billion at an interest rate of 7.95 percent, the Ministry of Finance confirmed to sources. The rate is almost half percent higher than even the 10-year Eurobond that the government had floated in April last year.
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Rs20bn subsidy withdrawal probable to jack up power tariff
The power consumers faced another increase in electricity tariff up to Rs0.95 per unit following the government’s decision to withdraw an Rs20 billion subsidy. The federal government has filed a petition before National Electric Power Regulatory Authority (Nepra) to approve policy guidelines to withdraw Rs20 billion subsidy in the second phase of the subsidy reduction plan. In the first phase, the government had split different slabs by creating new ones to reduce subsidies for power consumers. In that phase, the government had withdrawn an Rs42 billion subsidy per annum. The government removed around 8 million power consumers from the subsidy net by reducing volume from 22 million to 13.9 million consumers. Now, in the second phase, the government is going to remove more consumers from the power subsidy network by withdrawing Rs20 billion per annum subsidy.
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SBP leaves rate unchanged at 9.75pc
Pakistan’s central bank on Monday left the policy rate unchanged at 9.75 percent and strongly signaled that the era of rate hikes had come to an end, as the target of creating balance between inflation reading and economic growth had almost been achieved.
“The policy rate at 9.75 percent is appropriate,” State Bank of Pakistan (SBP) Governor Reza Baqir said while unveiling the Monetary Policy Statement (MPS) for the next one and a half month at a press conference. “Now, the focus has shifted from controlling inflation to economic growth,” he said. The State Bank of Pakistan (SBP) revised down its projection for economic growth by half a percentage point to 4.5 percent for current fiscal year 2021-22 compared to the previous forecast of 5 percent. The inflation reading is likely to remain high in January as well, but it is set to descend from February-March 2022. It is likely to decelerate at a rapid pace in the next fiscal year.
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For tobacco, ECC sets minimum indicative price
The government on Monday approved a price of Rs240 per kg for tobacco being used in cigarettes – nearly 8 percent less than the recommendation – due to pressure exerted by two multinational companies. A special meeting of the Economic Coordination Committee (ECC) of the cabinet approved the minimum indicative prices of various grades of tobacco. The meeting had been convened after Commerce Adviser Abdul Razak Dawood last Friday (January 21) requested to postpone decision on the tobacco pricing summary, which was on the regular ECC meeting agenda. Finance Minister Shaukat Tarin virtually presided over the meeting. The Ministry of National Food Security and Research had submitted proposals for minimum indicative prices of tobacco. The ministry recommended a price of Rs260 per kg for Flue-Cured Virginia (FCV) – a tobacco grade used for the manufacturing of cigarettes.
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Government stops hiring process for ZTBL unit
The government has issued directives to scrap the process of appointing managing director of Kissan Support Services (Pvt) Limited due to what it believes a tailor-made advertisement. Kissan Support Services is a wholly owned subsidiary of Zarai Taraqiati Bank Limited (ZTBL) and registered with the Securities and Exchange Commission of Pakistan (SECP) as a public sector company. Sources told that the Finance Division tabled a summary before the cabinet on January 18, which contained a panel of three potential candidates for appointment as managing director/ chief executive officer of Kissan Support Services. During discussion, cabinet members noted that the eligibility criteria in the advertisement was flawed and seemed to be tailor-made, particularly the minimum age and experience.
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SPI decreases 0.06pc
The Sensitive Price Indicator (SPI) for the week ended January 20, 2021 registered a decrease of 0.06 percent for the combined income group, going down from 167.39 points during the week ended January 13, 2021 to 167.29 points in the week under review. The SPI for the combined income group rose 19.36 percent compared to the corresponding week of previous year. The SPI for the lowest income group increased 0.02 percent compared to the previous week. The index for the group stood at 175.41 points against 175.38 points in the previous week, according to provisional figures released by the Pakistan Bureau of Statistics (PBS). During the week under review, average prices of 24 items rose in a selected basket of goods, prices of seven items fell and rates of remaining 20 goods recorded no change.
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CDNS acts to enhance digital investment
The Central Directorate of National Savings (CDNS) has kick started the work to enhance investment opportunities and promote digital investment through many new projects.
“The CDNS, in collaboration with the State Bank of Pakistan (SBP), is developing digital prize bonds, which will be available through online electronic channels,” a senior CDNS official informed APP on Monday. “CDNS is also in process to launch its first mobile application to aid online purchase and encashment of national saving schemes,” he said. For better and efficient transfer of funds through electronic mode, the CDNS will adopt RAAST in the ongoing month of January aimed at speedy flow of funds through its financial tributaries.