Current Final

Category: Business

  • SBP reserves recorded at $12.9bn after $82m decrease

    SBP reserves recorded at $12.9bn after $82m decrease

    The foreign exchange reserves held by the State Bank of Pakistan (SBP) has witnessed a 0.63 per cent decrease on a weekly basis, said a statement issued by the central bank.

    After the decrease due to external debt repayments, the reserves held by the SBP stood at $12,949.1 million, down $82 million, during the week ended on February 4. The SBP reserves were recorded at $13,031.2 million in the previous week.

    Similarly, the foreign exchange reserves of commercial banks also slightly dropped to $7.124 billion from $7.131 billion.

    Earlier this week, Pakistan had approached China to seek relief in debt repayment, a report had claimed. Pakistan had made an informal request to ease terms on the repayment of debt on about a dozen power plants set up under the China-Pakistan Economic Corridor over the past eight years, Bloomberg had reported.

    “The parties have canvassed Beijing’s willingness to stagger debt payments, as opposed to lowering equity returns,” the report said, adding that Pakistan has yet to make a formal offer. The report had claimed that “Pakistan will formally make the request…after it concludes deals with those local power producers to reduce electricity tariffs”.

  • Pakistan wants China to ease terms on debt repayment, says report

    Pakistan has approached China with an informal request to ease terms on the repayment of debt on about a dozen power plants set up under the China-Pakistan Economic Corridor over the past eight years, Bloomberg reported.

    “The parties have canvassed Beijing’s willingness to stagger debt payments, as opposed to lowering equity returns,” the report said, adding that Pakistan has yet to make a formal offer. The report claimed that “Pakistan will formally make the request…after it concludes deals with those local power producers to reduce electricity tariffs”.

    A spokesperson at China’s Ministry of Foreign Affairs said they aren’t aware of Pakistan’s plan to seek debt relief.

    “Energy projects have provided Pakistan with a large amount of stable and low-priced electricity, effectively reducing the overall price of electricity in Pakistan,” the spokesperson told Bloomberg. “China-Pakistan energy cooperation has progressed smoothly and brought about real economic and social benefits,” it quoted the official as saying.

    Pakistan’s power division didn’t respond to the US-based business media outlet for comments.

    According to Bloomberg, an enormous build-out of Chinese-financed power plants in Pakistan, which was originally intended to solve its electricity shortages, has resulted in a surplus that Islamabad isn’t able to afford.

    While Chinese financing has helped Pakistan diversify fuel supplies, it has also resulted in a surplus of electricity, which is problematic for the government in Islamabad because it is the sole buyer and pays producers even when they don’t generate. To help tackle the issue, the government has negotiated with power plants, which produce roughly half of its electricity, to lower rates.

    After these negotiations, the government will approach the Chinese government for debt relief, it added.

  • National Bank to close branches in Bangladesh, Afghanistan

    National Bank to close branches in Bangladesh, Afghanistan

    The National Bank of Pakistan has decided to shut down its branches in Bangladesh and Afghanistan due to financial losses.

    According to reports, the NBP officials said that the government will shut down three branches in Bangladesh situated in Sylhet, Chittagong, and Dhaka along with some branches in Afghanistan.

    According to details, the NBP branch in Sylhet has been facing financial losses for the past eight years and that it would be shut down by the end of this year. The State Bank of Pakistan has approved the decision to close the branch down in Sylhet, while the remaining two in Bangladesh will also be closed soon.

    On Monday, the Senate’s Standing Committee of Finance and Revenue directed the National Bank of Pakistan to submit details of non-performing loans.

    Citing non-performing loans as reason, the NBP officials had informed the committee that the bank has closed two branches in Bangladesh and Afghanistan due to continuous losses, while more will be shut down soon.

    The meeting was further informed that 23 branches of the bank were established in various countries.

  • Porsche Pakistan CEO ‘runs off’ with Rs80 crores in booked orders

    Porsche Pakistan CEO ‘runs off’ with Rs80 crores in booked orders

    The chief executive officer (CEO) of Porsche Pakistan in Lahore has been accused of running off with nearly a billion rupees after conning people in the name of advance booking for high-end cars, whereas the company has termed these claims “false”.

    According to the police, while victims of the scam have registered complaints against Abuzar Bokhari in different police stations across the city, the department has informed the Federal Investigation Agency (FIA), seeking their help in informing Interpol.

    Help from the international criminal police organisation is being sought for Bokhari’s extradition from England where he allegedly flew off to a few days ago.

    Police further say that Bokhari collected Rs800 million (Rs 80 crores) from people in the name of car registrations and fled to the United Arab Emirates (UAE) after which he went to England and has not returned since.

    While Bokhari is the founder and CEO of Lahore-based, and Pakistan’s only, Porsche dealership based in Lahore, media reports say he started off with two partners but continued alone with the venture when Porsche formally entered the Pakistani market.

    Porsche’s presence in Pakistan was provisionally launched in 2006 and then formally launched in 2008. Since then, it has been running its operations rather successfully and has grown significantly.

    However, the luxury carmaker has now reportedly removed its official website page on Pakistan.

    “Porsche official website removes page on Pakistan which has details of its Pakistan representative Abuzar Bokhari — accused of leaving the country with Rs800 million in booked orders — here is a screenshot of the cached version of the page,” journalist Omar Quraishi tweeted.

    ‘ALLEGATIONS ARE FALSE’:

    In a statement, Porsche Pakistan said the said claims are false. It said that its CEO doesn’t owe car booking money to anyone and all the registration money was received in the account of Performance Automotive Pvt Ltd (Porsche Pakistan) on behalf of Porsche AG as their appointed representative.

    It said Porsche AG was refusing delivery of the vehicles to Pakistani customers for two years.

    A lull in supply is due to attempts to discredit Porche Pakistan by a ‘controversia;’ business group.

    The statement said Porsche Pakistan was in a legal battle with Porsche AG for this “illegal” refusal on all legal forums.

    The statement alleged that the delay was due to Porsche Middle East and Africa FZE’s alleged understanding with a rival local party it called “an influential and controversial business group” that seeks to get hold of Porsche distribution rights in Pakistan.

    The company concluded, “Porsche Pakistan and its legal team are fully available for any concerned parties or investigative authorities for any information or clarification they may require.

  • First two years of PTI: Lowest development spending in decade, 46% increase in per capita debt

    First two years of PTI: Lowest development spending in decade, 46% increase in per capita debt

    The per capita debt of Pakistan has jumped to Rs175,000 at the end of last fiscal year — a 46 per cent increase within two years, the Ministry of Finance told the National Assembly.

    In the Fiscal Policy Statement of 2020-21, the finance ministry admitted that the government violated the Fiscal Responsibility and Debt Limitation (FRDL) Act of 2005 by failing to reduce the federal fiscal deficit to 4% of the size of national economy, reported Express Tribune.

    The federal deficit stood at 8.6% of GDP, the report said.

    According to the fiscal statement, the current expenditures were at 28-year high level in FY19-20, whereas the development spending was the lowest in a decade in terms of total size of the economy. “Total expenditures in terms of the size of economy were at the highest level in 21 years — at 23.1% of GDP,” it reported.

    The report mentioned that the public debt was recorded at Rs36.4 trillion at the end of June 2020 which means per person debt increased by Rs21,311 or 14% in the last one year. The debt ratio was formulated on the assumption of the total population of 208 million.

    In June 2018, the total public debt was Rs24.9 trillion and the finance ministry at that time worked out the per capita debt at Rs120,099. In the first year of the PTI government, there was a 28 per cent increase in the per capita debt, while in the second the debt rose by 14 per cent.

  • Auto loans in Pakistan increased by Rs41 billion in Dec 2020

    Following a decrease in the interest rates and the revival of business after the pandemic-induced lockdown, auto loans increased by 19 per cent, reaching Rs41 billion in December 2020.

    The figures issued by the State Bank of Pakistan show that the car loans in December 2019 were recorded at Rs219 billion, which increased to Rs256 billion during the corresponding period in 2020.

    It is also reported that the growing demand for 1300cc passenger vehicles is the key factor behind the surge in these loans.

    According to media reports, the newly launched Toyota Yaris is responsible for the surge in car loans. Toyota Yaris has outsold Honda City and Civic combined.

    Another key driver of the increase in loans is the lowered interest rates. The State Bank of Pakistan had reduced the interest rates by 625 basis points to 7 per cent in 2020. Additionally, a decrease in the rates of soft interests meant lesser instalments for car financing programmes.

    It seems like a car price hikes by the automakers in 2020 had the least impact on the rising demand for cars. With new players entering the market before the expiration of the Auto Development Policy (ADP) 2016-2021, the demand for cars is likely to surge even more.

  • Fauji Foundation to buy majority stake in Silkbank

    Fauji Foundation to buy majority stake in Silkbank

    Silkbank has agreed to sell majority of its stake to Fauji Foundation, an army-owned conglomerate that owns Askari Bank.

    “Silkbank hereby notifies the Pakistan Stock Exchange that the Board of Directors of Silkbank Limited in its meeting held on January 28, 2021, has subject to the approval of the State Bank of Pakistan, given its in-principle approval to allow Fauji Foundation to conduct the required due diligence,” a statement issued by the Silkbank read.

    The financial terms of the deal were not made public, but the bank management has asked Fauji Foundation to conduct due diligence and the State Bank of Pakistan has been approached for permission in this regard.

    Silkbank, formerly Saudi-Pak Commercial Bank, is mainly owned by Arif Habib Corp. with 28 percent shareholding, former finance adviser Shaukat Tarin (12 percent), International Finance Corporation (8 percent), Nomura (4 percent) and Bank of Muscat (3 percent), the report said.

    The bank is profitable with net profit recorded at Rs151 million for the nine-month period of the calendar year 2020.

    Fauji Foundation, also known as Fauji Group, runs more than 18 industries, including Askari Bank.

    According to the website of Fauji Foundation, it is a trust that provides welfare services to its beneficiaries [ex-servicemen] that include healthcare, subsidized education, stipends and vocational and technical training. “It operates on a complete self-sustaining basis and receives no grants or assistance from any government or non-governmental Organisations,” it read.

    It is also one of the largest business conglomerates operating in fertilizer, cement, power generation, renewable energy, oil & gas exploration, marine terminal, food and banking sectors of the country, as per the website.

  • GDP growth in 2021: Pakistan likely at par with Nigeria at 1.5%; India at 11.5%, China at 8.1%

    GDP growth in 2021: Pakistan likely at par with Nigeria at 1.5%; India at 11.5%, China at 8.1%

    The International Monetary Fund (IMF) has raised its forecast for global economic growth in 2021 but warned that there was still “extraordinary uncertainty” about the outlook.

    According to the latest World Economic Outlook forecast, the IMF projects global growth at 5.5%, which is higher than their previous forecast in October. Global growth will moderate to 4.2% growth in 2022, the IMF said.

    As per the forecast, Pakistan’s gross domestic product (GDP) growth in the ongoing year will stand at 1.5% that it shares with Nigeria, while neighbouring India and China are likely to stand at staggering 11.5% and 8.1%, respectively.

    GDP is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health.

    Malaysia’s growth is likely to stand at 7%, Turkey: 6%, Spain: 5.9%, France: 5.5%, the United States (US) 5.1%, Indonesia: 4.8%, the United Kingdom (UK): 4.5%, Mexico: 4.3%, Brazil: 3.6%, Canada: 3.6%, Germany: 3.5%, Japan: 3.1%, Russia: 3%, Italy: 3%, while the GDP growth of Saudi Arabia has been predicted to stand at 2.6%.

    The upgrade for this year reflects the positive effects from the start to vaccinations in some countries, additional fiscal support in the US and Japan, and at least a partial return to business and consumer normality as the health crisis wanes.

    “Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens,” said IMF chief economist Gita Gopinath in a blog post accompanying the updated forecast.

    The global economy contracted by 3.5% in 2020, the worst peacetime contraction since the Great Depression of the 1930s, the agency said.

    Close to 90 million people are expected to enter extreme poverty in 2020 and 2021, reversing the trends of the past two decades, the IMF said.

    Altogether, the COVID-19 pandemic will cost the global economy $22 trillion over 2020-2025 relative to pre-pandemic projected levels.

  • Govt plans to mortgage Islamabad’s biggest park to get loan

    In order to meet its financial requirements, the federal government has decided to mortgage the F-9 park in Islamabad to a get loan of about Rs500 billion through issuing bonds.

    The F-9 park, also known as Fatima Jinnah Park is spread on 759 acres of land, making it one of the largest covered green areas in Pakistan.

    According to a report in Dawn, the Capital Development Authority (CDA) has already issued a no-objection certificate in this regard. The proposal to mortgage the park has been included in the agenda of the meeting of the federal cabinet to be held on Tuesday.

    This is not the first time that a government is planning to mortgage a national asset to get loans through national and international bonds.

  • ‘Fake pilot licences’: UN staffers asked to avoid Pakistani airlines

    ‘Fake pilot licences’: UN staffers asked to avoid Pakistani airlines

    The Pakistani aviation industry is still suffering from the fallout of a controversial statement made by the aviation minister last year wherein he had accused the Pakistani pilots of having fake credentials.

    In the latest blow to the aviation sector, the United Nations has asked its staffers to avoid travelling on the Pakistan International Airlines (PIA) and other airlines registered in Pakistan.

    Ghulam Sarwar, the aviation minister, had made the controversial statement in parliament in the aftermath of a deadly aircraft crash in Karachi that had resulted in the death of at least 98 people. Following the crash, the minister had blamed the pilot for the crash and said most pilots in the PIA didn’t even a required qualification to fly the planes.

    His statement created an uproar, resulting in a ban on Pakistani pilots. The ban in Europe still persists.

    A report in Geo News quoted an advisory issued by the UN Security Management System asking its employees to stop using the Pakistani airlines for travelling.

    “Due to an ongoing investigation of the CAA [Civil Aviation Authority] Pakistan…due to dubious licenses caution is advised on the use of Pakistan-registered air operators,” said the statement.

    The advisory has been issued for all Pakistan-registered carriers and has been recommended to all the UN agencies, including the UN Development Programme, World Health Organization, UN High Commission for Refugees, Food and Agriculture Organization, UN Education, Scientific and Cultural Organization and others.

    The advisory by the UN also drew flak by a journalist who covers the aviation beat. Tahir Imran said that the advisory was “created by some dumb official at the UN” because it includes “cargo airlines” as well.

    “Unless there are heavyweights working with the UN Pakistan who needs cargo aircraft to travel around,” he said while taking a jibe at the UN.