Tag: Tarbela 4th Extension Hydropower Project
July 17, 2021 (MLN): Inflation in the emerging markets (EM) is expected to moderate in the second half of 2021 due to stabilizing commodity prices in the coming months, said the Institute of International Finance (IIF) in its macro notes titled “Are commodity prices a threat to EM inflation” released this week.
Along with the recovery of the global economy from last year’s COVID-19 shock, prices of major commodities have risen markedly as key fossil fuel benchmarks Brent crude, natural gas, and coal have jumped 40%, 17%, and 55% respectively over the last 12 months.
“Higher prices can, thus, boost domestic growth and, in many cases, lead to current account improvements. However, commodity prices are also an important driver of headline inflation dynamics as commodities account for a large share of merchandise imports. Should elevated commodity prices persist—some even call current events the beginning of a commodity supercycle—some EM and FM would be particularly exposed in terms of headline inflation pressure,” added the IIF.
Overall, world energy prices are up by 35% and food prices by close to 20% since the end of last year, driven by higher demand and lingering supply chain disruptions.
Around one-third of Pakistan’s total import bill is due to food and energy imports. The aforementioned increase in global crude prices and the country’s heavy dependence on crude imports to meet its local demand has forced policymakers to seek alternate arrangements to buy-now-pay-later from Saudi Arabia in view to contain the current account deficit.
Meanwhile, local administrative failures forced the country to import food products in the last 10 months increasing the bill by 54% compared to the same period last year.
The CPI Inflation has remained above the 10.5% mark during the last two months and is expected to remain above 11% for June bringing the overall 4QFY21 average to 11.18%.
The inflation, currently testing the upper limit of the State Bank of Pakistan’s average for the FY21, comes despite the government’s reluctance to pass on the higher international crude prices to the consumers fearing rebuke. Meanwhile, the incumbent Finance Minister Shaukat Tareen has hinted at building up strategic reserves of major food items in items to keep prices in check.
However, the IIF points out that although the passthrough from rising commodity prices to higher headline inflation appears to be pronounced, developed, emerging and frontier markets have responded in multiple ways with some developing markets increasing the emergency stimulus and some emerging and frontier markets dialing back their stimuli.
“We are also concerned that some emerging markets governments may be tempted to bring back price controls on ‘strategic’ or rather socially sensitive goods. Such policies are unlikely to have a meaningful impact on lower-income consumers but will have dangerous repercussions of contaminating the message from the CPI and complicate monetary policy decision making and the transmission mechanism,” it warned.
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July 17, 2021 (MLN): With a sudden outbreak of COVID-19 followed up by a prolonged lockdown during 2020, digital banking with regards to online banking services including payments took a major turn where individuals were left with no alternate except for moving towards digitalization to carry on their lives.
Pertaining to that, the State Bank of Pakistan (SBP) took key initiatives on digital banking for customer satisfaction and a user-friendly system.
To discuss the future vision and initiatives taken in past, the State Bank of Pakistan (SBP) organized a special meeting on 16th June 2021 with analysts. The objective of this meeting was to apprise them of the latest developments in digital banking.
A prominent angle discussed in the session revolved around the protection of lower-income groups, regarding which the Deputy Governor SBP stated,
“We want proper financial inclusion where people should have active banking account and usage, especially ones settled in rural hubs”
Further, a salient step taken by the bank was brought in the conversation which was people who will have transactions under Rs25000 will not be charged any cost, keeping them free. The cap will be over Rs25000 transactions, where the money would be charged.
Regarding Inter-Bank Funds Transfer (IBFT), SBP is working on some changes as per the session, as during COVID-19, IBFT was made free for the individuals that actually doubled the over transactions. These changes will be applicable after July 1st, 2021, Governor stated.
A major step taken by the SBP in terms of the development of digital finance services was the introduction of Raast, Governor apprised that Raast instant payment system is an internationally recognized method of payment that will enter into phase 2, where important steps are being taken to make it more useful for the people.
The other initiatives discussed in the meeting included,
- Person to Person (P2P) transfer initiative which allows individuals to send money to anyone just by using their email or cell number. This system will be brought in by the end of October.
- Merchant Payments, which revolves around one of the challenges faced in the digitization of retail transactions in Pakistan regarding a low number of digital payment acceptance points.
- Fintech and EMIs are also in progress where work is being done in Fintech and licensing for EMIs is also in progress.
Subsequently, towards the aspect of security regarding digital payment frauds, SBP worked with 1Link and FIA, kept units and limits on transactions, and for card security, SBP directed that EMB standard has been applied.
Furthermore, regarding Central Bank Digital Currency (CBDC), Governor said a study which is ongoing regarding all aspects of CBDC including retails CBDC and if there would be a need to introduce it, then steps would be taken considering the future of digitalization in Banks of Pakistan, he added.
With this, it is early to culminate whether the future of digital finance services would be as bright as it looks, but sooner this puzzle would be solved as time will pass on and actions will portray what is to happen.
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June 17, 2021: Foreign Minister Shah Mahmood Qureshi says Economic Diplomacy has assumed center stage in modern diplomatic practice.
Chairing a virtual meeting on Economic Diplomacy with participation from Pakistan's Envoys to Serbia, Spain, Sweden, Switzerland, Netherlands, Ukraine and the United Kingdom on Wednesday, he underscored the growing significance of geo-economics in international politics.
Highlighting the valuable role played by Ministry of Foreign Affairs and its Missions abroad in safeguarding Pakistan's economic interests, he stated that the Ministry and the Missions are pivotal in the successful implementation of the Government's initiatives like the Prime Minister's 'Global Initiative on Debt Relief' for developing countries, Economic Outreach Initiative and the Roshan Digital Account Initiative.
He asked Envoys to cultivate and broaden mutually beneficial trade and economic partnerships with Europe, focusing on trade promotion, financial inflows, investments, remittances, tourism and technology transfer.
He further emphasized the need to constructively engage with Parliamentarians in Europe with a view to maximizing avenues of economic outreach and collaboration.
The Minister also instructed the Envoys to work on removing bottlenecks that hinder expansion of economic collaboration with host countries and identifying new sectors for promotion of economic cooperation with Europe.
In order to expand Pakistan's economic outreach to Europe and to maximize trade gains under the GSP Plus Scheme, he emphasized the need for diversification of exports.
While expressing satisfaction with increased inflow of remittances and investment, the Foreign Minister asked Envoys to showcase the investment potential of the country.
Highlighting the government’s robust reform measures for improvement of business climate in Pakistan, he shared that Pakistan's ranking in Ease of Doing Business has significantly improved. Pakistan has secured 6th place among the world's top 10 business climate improvers.
June 17, 2021: Pakistan Mortgage Refinance Company (PMRC) announced the closing of yet another Sukuk, with HBL Islamic Banking. This sukuk will serve to make Shariah Compliant Housing Finance more accessible to the public.
During the ceremony, Mudassir CEO/MD PMRC said, “PMRC is delighted to partner with HBL Islamic Banking for this Sukuk. The funds raised under this Sukuk are important for the promotion of the Islamic housing finance market. I am confident this will be beneficial in the growth of fixed-rate, low-cost housing for the end consumers”.
On the occasion, Muhammad Afaq Head HBL Islamic Banking said that HBL Islamic Banking is pleased to be collaborating with PMRC in the placement of the PKR 1 Billion Sukuk. The funds will be used to promote financing in the housing sector of Pakistan with a special focus on low-cost housing initiatives. This will enable us to play our part in the economic development of the country.
June 17, 2021: Crude oil prices fell on Thursday as the U.S. dollar strengthened after the U.S. Federal Reserve signaled it might raise interest rates faster than expected, but losses were limited by a big drop in U.S. crude oil inventories.
Brent crude oil futures dropped by 41 cents, or 0.6%, to $73.98 a barrel by 0400 GMT after reaching its highest since April 2019 in the previous session.
U.S. crude oil futures fell by 39 cents, or 0.5%, to $71.76 a barrel, after reaching its highest since October 2018 the previous day.
"Energy markets became so fixated over a robust summer travel season and Iran nuclear deal talks that they somewhat got blindsided by the Fed's hawkish surprise," said Edward Moya, senior market analyst at OANDA.
"The Fed was expected to be on hold and punt this meeting, but they sent a clear message they are ready to start talking about tapering and that means the dollar is ripe for a rebound which should be a headwind for all commodities."
The U.S. dollar boosted its strongest single-day gain in 15 months after the Federal Reserve signaled it might raise interest rates at a much faster pace than assumed.
A firmer greenback makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.
Still, oil price losses were limited as data from the Energy Information Administration showed that U.S. crude oil stockpiles in the world's biggest consumer dropped sharply last week as refineries boosted operations to their highest since January 2020, signaling a continued improvement in demand.
Also boosting prices, refinery throughput in China, the world's second-largest oil consumer, rose 4.4% in May from the same month a year ago to a record high.
"This pullback in oil prices should be temporary as the fundamentals on both the supply and demand side should easily be able to compensate for a rebounding dollar," Moya said.