Day: April 24, 2024

Experts at a high-level policy forum on Wednesday demanded of the International Monetary Fund (IMF) and other global finance lending institutions to ensure relief for growth in Pakistan keeping in view the plight of common masses and the prevailing economic conditions of the country.

The forum titled: ‘Prosperity for Pakistan: Reforms for National Economic Growth’ was organized by Sustainable Development Policy Institute (SDPI) in collaboration with the United Nations Development Programme (UNDP) and the World Bank (WB).

In his opening remarks, Dr Samuel Rizk, the Resident Representative of UNDP Pakistan, said it is an important high-level dialogue that focuses on Pakistan’s economic trajectory. ‘Pakistan needs to focus on marco-economic stability, debt recovery, and improved revenue generation for its prosperity,’ he said, adding that the country has largely faced the impact of global macro-economic fallout, COVID-19 pandemic and Ukraine-Russia war.

Dr Rizk further said that the country’s economic fault
lines are turning risk into threat whereas the sustainable economic policy initiatives require cooperation from stakeholders and international community to achieve economic revival and improvement.

Dr Shamshad Akhtar, the former caretaker finance minister, said the country needs to undergo massive transformation for economic sustainability as it demanded inclusivity and climate resilience as the key components of prosperity agenda. She added that macro-economic stability has to be ensured through adequate process and reinforced with great commitment through significant revenue enhancement along with focus on remote earnings to be aligned with increase in its earning agenda.

She underlined that the country had to abandon domestic and external debts with improved taxation footprint and productivity improvements to achieve the goal of economic growth.

Dr Abid Qaiyum Suleri, the SDPI Executive Director, said the recommendations presented by the experts are identical to the domestic agenda for economic betterme
nt of the country. He recommended that the country needs to fix the leakages in its economic system, the chronic menaces like state-owned enterprises that are damaging the national economy.

‘It is not possible for the country to avert default like situation amid more economic compromises towards non-tax paying sectors,’ he added. Moreover, Dr Suleri said, it is also necessary to advocate on IMF to review impacts of its recommendations on people of Pakistan during its quarterly review and while making an assessment of how it is impacting the life of common masses.

Kanni Wignaraja, the UN Assistant Secretary-General and UNDP Regional Director for Asia and the Pacific, said the green economy is not a luxury but a living reality in the prevailing times, whereas many Asian countries have transformed their transport sector that indicated low subsidy on fuels and increased incentive for eco-friendly means.

‘It’s not the issue of behaviour change but the issue of access to technology to improve governance. For exa
mple, she said, universal access to Wi-Fi is imperative to ensure economic justice with infrastructure development whereas dignity is critical in human development landscape.’

Wignaraja said tax subsidy equation in developing countries show direct correlation with more burdening of the already taxed and less inclusion of the untaxed sectors. ‘Pakistan’s debts go more in consumption than to increase productivity. However, we have to carry our own narrative and issues as Pakistan has to make its news choices to overcome economic crisis. It has been dragging its debt for decades and should explore new opportunities and take its affairs and decisions into its own hands,’ she added.

Pakistan should not import the things which are burdening the debt consumption she said, adding that the country needs a viable and single source of finance to address its economic woes.

Tobias Akhtar Haque, Lead Country Economist and Acting Country Director, WB-Pakistan said Pakistan needs to reduce budgetary deficit to lessen debt
s and utilize resources for human and infrastructure development.

He added that it is crucial for Pakistan to have a balanced budget to create fiscal space for growth and economic recovery. ‘However, it is necessary to review fiscal exemptions and those with political motives should be closed to start taxing the untaxed sectors like real estate and large agricultural farmland owners,’ he maintained.

Haque said the subsidies provided to the energy, fertilizer and gas-based industries needs to be abolished to ensure efficient movement of economy and stop benefitting wrong people and support social development initiatives like Benazir Income Support Programme (BISP).

In his closing remarks, Dr Abid Suleri extended the vote of thanks to UNDP and SDPI teams and the participants for making the session vibrant and interactive. He said two myths to be broken that Pakistan is among the least emitters as there are around 100 more countries in this category and its ranking is 20th in terms of low Greenhouse Gas (GHG)
emissions. In terms of climate finance, Pakistan needs to explore private climate finances through evidence-based approach and proper homework, he concluded.

Source: Pro Pakistani

The Federal Investigation Agency’s (FIA) sources have revealed that the agency has taken action against a group involving private property dealers and officials from the Capital Development Authority (CDA).

The action was taken following a detailed investigation into a complaint lodged by a private citizen.

During the investigation, FIA officials discovered the involvement of CDA officials in a multi-million rupee business conducted based on fake documents.

A case of organized fraud has surfaced, implicating top officials of the CDA, who allegedly deceived a complainant by fraudulently selling a property and pocketing a substantial amount of money.

Asmat Ullah Khan, the complainant, approached the FIA’s anti-corruption division, unearthing an intricate web of deceit allegedly orchestrated by Kaswer Abbas Shah, Dealing Assistant at CDA, Muhammad Ashraf Chandio, Sub Assistant also from CDA, and Muhammad Idrees Mughal, a private individual and other property dealing people.

The investigation revealed that
the trio, allegedly working in collusion, deceived Asmat Ullah Khan into transferring funds for the purchase of a property in F-7/3 Islamabad, covering an area of 1244 square yards.

According to sources familiar with the investigation, the fraudulent transaction was executed with the aid of a forged Non-Development Certificate (NDC). Muhammad Ashraf Chandio allegedly impersonated a Deputy Director at the CDA.

The accused, namely Kaswer Abbas Shah, Muhammad Ashraf Chandio, and Muhammad Idrees Mughal are charged with multiple offenses under the Pakistan Penal Code, including sections 109, 419, 420, 468, and 471, as well as relevant sections of the Prevention of Corruption Act.

Source: Pro Pakistani

The All Pakistan Traders Association has threatened protests if traders’ concerns aren’t addressed by the government, with the date likely to be announced during a convention in May.

President Ajmal Baloch said this in reference to the Tajir Dost tax scheme for adding 3.5 million retailers to the tax net. He criticized the scheme, labeling it a failure and claiming that similar initiatives will meet the same fate.

He said traders weren’t interested in registering for the tax scheme.

Baloch lamented the recently imposed fixed tax of Rs. 1,200/yr on traders who were already subject to fixed advance tax payments on their commercial electricity bills. He emphasized that fixed advance tax cannot be imposed on traders.

In an earlier statement, Baloch said that traders already bear the burden of over a dozen different taxes on their commercial electricity meters, making the additional Rs. 1,200 monthly tax is unreasonable.

He accused the Federal Board of Revenue (FBR) of exploiting less-educated traders by dem
anding monthly charges from them.

He invited FBR officials to discuss the various indirect taxes levied on traders with traders’ representatives.

Source: Pro Pakistani

The Board of Directors of MCB Bank Limited (MCB) in its meeting under the Chairmanship of Mian Mohammad Mansha, on April 24, 2024, reviewed the performance of the Bank and approved the condensed interim financial statements for the first quarter ended March 31, 2024.

The Board of Directors has declared the first interim cash dividend of Rs. 9.0 per share i.e. 90% for the quarter ended March 31, 2024.

Through focused efforts of the Bank’s management in maintaining a no-cost deposit base and optimizing its earning assets mix, MCB’s Profit Before Tax (PBT) for the first quarter of 2024 increased to Rs 32.5 billion with an impressive growth of 41%.

Profit After Tax (PAT) posted a growth of 27% to reach Rs. 16.6 billion; translating into Earning Per Share (EPS) of Rs. 13.97 compared to an EPS of Rs. 11.02 reported in the corresponding period last year.

On the back of strong volumetric growth in average current deposits (+13% on a YoY basis) and timely repositioning within the asset book, net interest income f
or 1Q’24 increased by 27% over the corresponding period last year.

Non-markup income increased to Rs. 9.1 billion (+54%) against Rs. 5.9 billion in the corresponding period last year with major contributions coming in from fee commission income of Rs. 6.1 billion (+46%), income from dealing in foreign currency of Rs. 1.9 billion (+97%) and dividend income of Rs. 1.0 billion (+55%).

Improving customer and interbank flows, diversification of revenue streams through continuous enrichment of service suite, investments towards digital transformation and an unrelenting focus on upholding high standards of service delivery supplemented a broad-based growth in income from fee commission; with trade and guarantee-related business income growing by 100%, cards related income by 48%, branch banking customer fees by 17% and income from home remittance by 55%.

The Bank continues to manage an efficient operating expense base and monitor costs prudently. Amidst a persistently high inflationary environment, rapidly escala
ting commodity prices and continued investments in human resources and technological upgradation, the operating expenses of the Bank were reported at Rs. 13.9 billion (+18%). The cost-to-income ratio of the Bank improved to 29.50% from 32.77% reported in the corresponding period last year.

Navigating a challenging operating and macroeconomic environment, the Bank has been addressing asset quality issues by maintaining discipline in the management of its risk return decisions.

Diversification of the loan book across customer segments and a robust credit underwriting framework that encompasses structured assessment models, effective pre-disbursement evaluation tools and an array of post-disbursement monitoring systems has enabled MCB to effectively manage its credit risk; the Non-performing loan (NPLs) base of the Bank was reported at Rs. 55.4 billion as at March 31, 2024. The coverage and infection ratios of the Bank were reported at 92.67% and 8.56% respectively.

On the financial position side, the total a
sset base of the Bank was reported at Rs. 2.41 trillion with a nominal decrease of 1% over Dec 2023. Analysis of the assets mix highlights that net investments and gross advances have increased by Rs. 39 billion (+3%) and Rs. 25 billion (+4%) over December 31, 2023 respectively whereas Lending to Financial Institutions decreased by Rs. 46 billion (-48%).

The Bank’s total deposits crossed Rs. 1.85 trillion while the domestic market share improved to 6.05% compared to 5.92% as at December 31, 2023.

The domestic cost of deposits was contained at 10.70% as compared to 7.15% in the corresponding period of last year despite the significant increase in average policy rate during the period.

Return on Assets and Return on Equity improved to 2.74% and 31.54% respectively, whereas the book value per share was reported at Rs. 180.02.

During the period under review, MCB attracted home remittance inflows of USD 892 million (+13%) to consolidate its position as an active participant in SBP’s cause for improving flow of
remittances into the country through banking channels.

While complying with the regulatory capital requirements, the Bank’s total Capital Adequacy Ratio (CAR) is 19.62% against the requirement of 11.5% (including capital conservation buffer of 1.50% as reduced under the BPRD Circular Letter No. 12 of 2020). Quality of the capital is evident from Bank’s Common Equity Tier-1 (CET1) to total risk-weighted assets ratio which comes to 16.50% against the requirement of 6%. Bank’s capitalization also resulted in a Leverage Ratio of 6.5% which is well above the regulatory limit of 3.0%.

The Bank reported a Liquidity Coverage Ratio (LCR) of 263.47% and Net Stable Funding Ratio (NSFR) of 160.47% against requirement of 100%.

Pakistan Credit Rating Agency re-affirmed credit ratings of MCB at ‘AAA / A1+’ for long term and short term respectively, through its notification dated June 23, 2023.

To retain and further consolidate its market position, the Bank has continued to invest in the upgradation of its existing locat
ions to enhance customer experiences while the digital access points are being continuously augmented to extend customer outreach.

The Bank on a consolidated basis is operating the 2nd largest network of more than 1,650 branches in Pakistan. The Bank remains one of the prime stocks traded in the Pakistani equity market with 2nd highest market capitalization in the industry.

Source: Pro Pakistani

The country borrowed just $6.899 billion from multiple financing sources during the first nine months (July-March) of the current fiscal year 2023-24 compared to $7.764 billion borrowed during the same period of 2022-23, representing 39 percent of the annual budget target

Borrowing options were evidently scarce due to unfavorable credit ratings and challenging conditions in the global financial markets despite support provided by the International Monetary Fund (IMF).

According to the Economic Affairs Division (EAD) data, the country received $218.53 million in March 2024 compared to $358.71 million in March 2023.

There is no mention of the $1 billion disbursed by the UAE. If the IMF and the UAE inflows are added, the total inflows could reach $9.799 billion during the first nine months of the current fiscal year.

The government has budgeted $2.4 billion from the International Monetary Fund (IMF) for the current fiscal year 2023-24 and received $1.9 billion of the $3 billion Stand-By Arrangement (SBA), h
owever, the EAD data does not reflect it.

The $6.899 billion included $2 billion received from Saudi Arabia under the head of time deposit during July 2023. The data further showed that the government had budgeted estimates of $4.5 billion from the foreign commercial banks for the current fiscal year 2023-24, however, no money was received under this head during the first nine months of the current fiscal year.

The government had budgeted $1.5 billion for the issuance of bonds, however, the country has yet to issue the bonds, hence no amount has been received so far.

The government had budgeted $17.619 billion from multiple financing sources for the current fiscal year including $17.384 billion in loans and $234.60 million in grants.

The country received $781.48 million under the head of the ‘Naya Pakistan Certificate’ during the first nine months of the current fiscal year 2023-24.

The country received $2.738 billion from multilaterals and $870.22 million from bilateral during July-March 2023-24. The no
n-project aid was $4.724 billion including $3.580 billion for budgetary support and project aid was $2.174 billion.

China disbursed $508.34 million under the head guarantee for the JF-17 B project funded by China National Aero-technology Import and Export Corporation (CATIC). China further disbursed 67.39 million in July-March against the government budget of $18.54 million for the current fiscal year.

The Asian Development Bank (ADB) disbursed $665.52 million during the period under review compared to the budgeted $2.086 billion for the fiscal year 2023-24.

Saudi Arabia disbursed $595.18 million against the budgeted $600 million under the head of oil facility during July-March 2023-24. Saudi Arabia disbursed another $62.03 million in the current fiscal year so far.

The USA disbursed $36.01 million in the first nine months against the budgeted $21.60 million for the fiscal year. Korea disbursed $24.81 million and France $39.89 million during the current fiscal year.

The IDA disbursed $1.292 million in Ju
ly-March against the budgeted $1.489 billion for the current fiscal year and IBRD $163.15 million against the budgeted $840.36 million. The IsDB (Short-term) disbursed $200 million in July-March against the budgeted $500 million for the current fiscal year and AIIB disbursed $300.04 million, while IFAD disbursed $26.29 million against the budgeted $42.68 million for the current fiscal year.

Source: Pro Pakistani

Standard Chartered Bank (Pakistan) Limited (PSX: SCBPL) has attributed the recent ‘unusual movement’ in its share price to the bank’s strong financial performance in the calendar year ending December 31, 2023 (CY23).

‘We understand that the positive trend in the price of the shares of SCBPL was triggered with the announcement of financial results on 23 February 2024 as investors reacted favorably to the strong financial performance of the Bank in the backdrop of an overall bullish trend in the stock market,’ the bank explained to the main bourse on Wednesday.

The bank recalled that it had announced its annual financial results for CY23 which showcased unprecedented financial performance for the period and posted the highest-ever Profit Before Tax of Rs. 89.2 billion enabled SCBPL to declare its best dividend since its incorporation.

The combined dividend announced by the bank for 2023 stood at 90 percent i.e. Rs. 9 per share.

The bank said, ‘We would also like to furnish that the Bank is not aware of any
other development/information that may be relevant to the unusual movement in the price of the shares of the Bank’.

The Bank remains fully committed to meticulous compliance with all the regulatory provisions and will continue to ensure immediate dissemination of any price-sensitive information to PSX, the filing added.

SCBPL’s response comes after PSX earlier this week demanded the bank alongside three other listed firms to explain the reason behind the unusual movement in their share prices.

At the time of filing, the bank’s scrip at the bourse was Rs. 55.1, up 2.89 percent or Rs. 1.55 with a turnover of 47,500 shares on Wednesday.

Source: Pro Pakistani

The Pakistani rupee fell third day in a row against the US Dollar after opening trade at 278 in the interbank market.

It was largely stable against the greenback but crashed against other major currencies today.

The interbank rate stayed at 278.5 most of the day before closing at the same level. Open market rates across multiple currency counters were in the 278 level today.

The PKR depreciated by 0.01 percent to close at 278.39 after losing two paisas against the dollar today.

On a fiscal year-to-date basis, the rupee has so far appreciated by 2.68 percent.

Overall, the rupee is down nearly Rs. 51.49 since January 2023. Since April 2022, it is down Rs. 95.49 against the greenback. As per the exchange rate movements seen today, the PKR lost two paisas today.

The PKR was red against all of the other major currencies in the interbank market today. It halted losses against the UAE Dirham (AED) but lost one paisa against the Saudi Riyal (SAR), 37 paisas against the Canadian Dollar (CAD), 41 paisas against
the Euro (EUR), and Rs. 2.65 against the Australian Dollar (AUD).

It lost Rs. 2.02 against the British Pound (GBP) in today’s interbank currency market.

Source: Pro Pakistani

Aamir Khan, Commissioner Insurance at SECP stated that the adoption of international reporting standards for modernizing Pakistan’s insurance industry is a critical priority for SECP as a regulator of the insurance sector.

He was delivering the keynote address at the Institute of Chartered Accountants of Pakistan (ICAP) seminar on IFRS 17 Implementation.

Khan stressed the importance of IFRS-17 adoption by January 1, 2026, as any delay could lead to Pakistan’s market lagging behind international markets. He emphasized the responsibility of stakeholders and SECP as regulators in implementing IFRS-17 and the need for familiarization with its impact on decision-making.

The seminar was attended by representatives from the Korean Accounting Standards Board industry players, experts, consultants, and SECP policy department personnel.

Insurance, he said, being an integral component of the overall financial sector, serves as an automatic stabilizer by mitigating the economy’s sensitivity to macroeconomic shocks i
n addition to being a saving and capital formation tool. Despite the potential to promote sustainable finance, and support long-term risk-taking, the Insurance landscape of Pakistan has remained underdeveloped.

The comparison to its peers representing less than 1% of GDP, is one of the lowest in the region. As of 2022, the total assets stood at PKR 2.42 trillion (circa USD 10.5 billion) with the written premium standing at Rs. 553 billion (c. USD 2.5 billion). Despite the small industry size and a fragmented structure with 42 active players, the insurance industry offers tremendous potential.

In this regard, the SECP embarked on the initiative of identifying gaps and challenges in the insurance industry, jointly with industry stakeholders, and formulated the 5-year Strategic Plan which was launched in December 2023. One of the key priority areas of the 5-year strategic plan is the achievement of financial stability through the adoption of International Financial Reporting Standards and Risk-Based capital re
gimes for the insurance industry.

Fundamentally, IFRS 17 is designed to bring about greater transparency and consistency in financial reporting in the insurance industry. Being a globally accepted accounting standard for the measurement of insurance contracts, the adoption of IFRS-17 shall allow the international markets to look positively at the Pakistani insurance market, and make the comparative assessment easier.

Through reflection of information related to underwriting and investment activities on the financial statements, in a transparent manner, it can serve as a game-changer in building trust and confidence among investors, regulators, existing and potential policyholders, as well as other stakeholders, such as rating agencies and reinsurers.

SECP expects IFRS 17 also to be a key catalyst for insurers to review, if not overhaul, business processes across the organization. This will be driven by at least three factors:

First, the need for business units to capture broader and more granular informat
ion required for financial reporting;

Second, changes in the way performance is measured under the new standard;

And third, increased opportunities for insurers to differentiate themselves from the competition, helped by a more integrated view of performance.

These considerations will have wide implications for organizations’ structures, data-capturing mechanisms, risk management, product design and development, and systems.

Recognizing the importance of standardized financial reporting, the SECP is actively engaged in the process of implementing IFRS 17 and aligning related regulatory frameworks to support transitioning to the new standard. In collaboration with ICAP, the PSOA, and the insurance industry, the SECP envisaged a four-phased approach for the implementation of IFRS 17, where work under phase 3 – System Design and Methodology, is underway.

Given that the majority of international markets adopted the standard either last year or this year, meeting the adoption timeline of January 1, 2026, is c
ritical and an absolute priority for SECP’s team looking at insurance policy.

Source: Pro Pakistani