September 18, 2020 (MLN): Fauji Cement Company Limited has announced the resignation of Mr. Rehan Laiq from his position as Director of the FCCL Board with effect from September 7, 2020, and the appointment of Mr. Imran Moid as his replacement.
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January 20, 2021: Adviser to Prime Minister for Commerce and Investment, Abdul Razak Dawood on Wednesday informed that the Temporary Economic Refinance Facility (TERF) providing long-term concessionary refinance at 5% for manufacturers and exporters has shown excellent results.
This scheme will come to an end on March 31, 2021; the adviser said this on his official twitter account.
He said that this scheme had brought substantial investment into Pakistan through the purchase of imported and locally manufactured plants and machinery for setting up new projects.
The adviser said that this clearly showed willingness of our business community to invest when government had the commitment through good policies.
Razak Dawood said that TERF had shown significant growth over the last 9 months as reflected by increase in requested amount from Rs 36.1 billion by end-April 2020 to Rs 610.2 billion by Jan 07, 2021, while over the same period approved financing has reached to Rs 293.5 billion from Rs 0.5 billion.
APP
January 20, 2021 (MLN): The current account balance turned negative in December 2020 as the country posted a deficit of USD 662 million compared to a revised surplus of USD 513 million in November 2020.
Compared to December 2019, the deficit increased by over 130 percent, as the deficit stood at 287 million.
The Current account surplus for Jul-Dec stood at USD 1,131 million compared to a deficit of USD 2,032 million from the corresponding period of the previous year.
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January 20, 2021: The State Bank of Pakistan (SBP), under its refinancing scheme for protecting businesses from the impact of COVID-19, has so far deferred Rs657.16 billion principal repayments of loans up to one year.
The bank also allowed restructuring or rescheduling of around Rs225.5 billion so far, according to the updated data of the central bank.
The number of borrowers that would benefit from this rescheduling relief has risen to 1,631,257 with outstanding amount of Rs 2.528 billion, it said.
Under its Rozgar scheme for protecting businesses and employees working with them from the impact of COVID-19, the central bank has so far approved Rs238.2 billion for 2,958 businesses.
Meanwhile, the bank under this refinancing scheme for hospitals to combat COVID-19, approved financing of Rs9.07 billion for 42 hospitals so far.
As many as 46 hospitals had requested for the financing amounting to Rs13.8 billion.
With respect to progress on refinance scheme for setting up new projects or expansion, the central bank approved 363 projects with an amount of Rs300.3 billion for which it received requests for 548 projects with amount of Rs 622.2 billion.
Furthermore, from March 20, 2020 to January 15, the Bank had issued fresh currency notes to the commercial banks worth of Rs1.3 trillion.
Similarly an amount of Rs 41.2 billion was quarantined during the period that was received from hospitals, clinics, and pharmacies.
While overall the bank received cash worth of Rs1.26 trillion which was quarantined for 14 days.
It is pertinent to mention here that in order to combat the impact of COVID-19 and to help the businesses in payment of wages and salaries to their workers and employees and thereby support continued employment in this challenging environment, State Bank of Pakistan (SBP) has introduced a temporary refinance scheme for payment of wages and salaries to the workers and employees of the business concerns.
This scheme was aimed at easing cash flow constraints of the employers and thereby avoid layoffs. In addition, the SBP had expanded the scope of existing refinancing facilities and introduced a scheme to support hospitals and medical centers to purchase equipment to detect, contain and treat COVID-19 patients besides, stimulating investment in new manufacturing plants and machinery, as well as modernization and expansion of existing projects.
APP
January 20, 2021: The Ministry of Finance has issued a clarification on the change in public debt.
According to a statement, the change in the public debt under this government is due to a correction of the flawed economic policies of the previous regime, especially its overvalued exchange rate and excessive borrowing.
Interest Expenses: The previous government resorted to short-term debt instruments without maintaining adequate cash buffers, and relied heavily on SBP borrowing. This short-term debt profile has resulted in high interest costs on past debt. The present government has had to pay Rs 5.7 trillion (47% of the increase) as interest on debts borrowed by the previous regimes.
Currency Devaluation Impact: The previous government artificially maintained the exchange rate of the Rupee much above its market value. A large increase in public debt has resulted from the abrupt exchange rate depreciation, which was inevitable because the overvalued exchange rate triggered a balance of payment crisis. The only alternative was a default on external liabilities, which was obviously not an option. Public debt increased by Rs 3 trillion (25% of the increase) due to this currency devaluation.
Financing of Primary Deficit: The unjustified tax cuts by the previous government coupled with the impact of subsequent economic slowdown due to the Covid-19 pandemic resulted in higher than estimated primary deficits. Rs 2.5 trillion (21% of the increase) was borrowed for financing of primary deficit during first 29 months of the present government.
Cash Management: Rs 0.6 trillion (5% of the increase) was on account of increased cash balances of the Government to meet emergency requirements. The present government took the economically sound policy of not borrowing from the SBP and maintaining a cash buffer, which led to a one-off increase in debt. However, this increase in debt was offset by corresponding increase in the government’s liquid cash balances. Furthermore, Rs 0.3 trillion (approx. 2% of the increase) was due to difference between the face value (which is used for recording of debt) and the realized value (which is recorded as budgetary receipt) of government bonds issued during this period.
To conclude, the increase in debt during the tenure of present government occurred mainly during FY19 as an unavoidable consequence of erroneous policies of the previous government. Had the previous government maintained a market-based exchange rate, a sustainable level of current account deficit, adequate cash buffers and a long-term domestic borrowing profile, the present government would not have had to make all these difficult adjustments and public debt burden would have been reduced on the back of fiscal consolidation efforts of the present government supported by aggressive control on expenses and growth in tax and non-tax revenues. However, as most of the major adjustments to fiscal and monetary policies have been made, Debt-to-GDP ratio is projected to decline over the next few years.
Press Release
January 20, 2020 (MLN): Gold inched higher on Wednesday as the US Dollar remained on the backfoot amid prospects of a hefty fiscal relief package. In the international markets, the gold prices went up by USD 8 and traded at USD 1,853 per ounce while silver was valued at USD 25.43 an ounce.
Gold rates inched higher in the domestic bullion market as the price of 24 karat gold rose by Rs 150 to Rs 113,000 per tola against the price of Rs 112,850 per tola reported in the previous session.
According to the data provided by the All Sindh Saraf Jewellers Association, the price of 10-gram of 24k gold also increased by Rs 130 and was sold for Rs 96,880 at the closing of trade as opposed to Rs 96,750 reported yesterday.
However, silver rates remained unchanged at Rs1,300 per tola. The price of 10 grams of silver also stood the same at Rs1,114.54.
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