April 19, 2020 (MLN): Below are the highlights of the important economic and business events witnessed during the last week that will have a positive impact on Pakistan’s economy in this crucial time when the economy is facing multiple challenges due to COVID-19 pandemic.
On Friday, the Executive Board of the International Monetary Fund (IMF) approved a purchase of Pakistan under the Rapid Financing Instrument (RFI) equivalent to SDR 1,015.5 million (US$ 1.386 billion, 50 percent of quota) to meet the urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic.
Meanwhile, G20 Countries are expected to provide debt relief of $12 billion to several other countries including Pakistan, starting from May 1. In view of this, the Finance Ministry has commenced working on the debt deferment plan.
On the equity front, Power Holding Limited, a public sector company wholly owned by the Government of Pakistan, intends to issue GoP Guaranteed, 100% SLR eligible, Shariah Compliant, 10 Years Secured Sukuk up to PKR 200 billion with a subsequent listing on Pakistan Stock Exchange.
Furthermore, the State Bank of Pakistan (SBP) decided to reduce the Special Cash Reserve Requirement from 15% to 10% of total FE-25 deposits effective from April 20, 2020.
Additionally, the State bank of Pakistan (SBP) rejected all bids for the 5 Year Variable Rate Gop Ijara Sukuk at an auction conducted on Wednesday. As per the data it received bids worth Rs.176.897 billion against an auction target of Rs. 75 billion at a range of margin between -225 to +25 basis points over the benchmark rate.
In the wake of increasing energy prices, meetings were conducted by the Government Committee under direction from Cabinet Committee on Energy with Independent Power Producers (IPPs) in which the Government and IPPs decided to set up a technical committee for addressing higher power tariff issue.
On Thursday, the MPC decided at its emergency meeting to cut the policy rate by a further 200 basis points to 9 percent.
The same day, Executive Board approved relief on debt service for 25-member countries that are eligible for support from the Catastrophe Containment and Relief Trust (CCRT).
To provide relief to the retail sector in the wake of the prevailing situation, Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh constituted a five-member committee including senior officials from Finance Division and the FBR to sit with representatives of the retail sector and finalize relief proposals.
Moreover, amid qualms of low inflows of remittances due to the impact of global COVID-19 pandemic, the State Bank of Pakistan (SBP) announced incentives for banks and exchange companies on Wednesday to enhance the inflow of remittances in the country.
On Wednesday, Pakistan government prepared the ordinance for the construction sector, which will be approved by President of Pakistan as the National Assembly has not been in session.
Moreover, Japan decided to provide the third cache of assistance worth $1 million to Pakistan through United Nations High Commissioner for Refugees (UNHCR) to equip the Pakistani people and Afghan refugees to fight against COVID-19.
Besides, Federal Minister for Planning, Development and Special Initiatives Asad Umar chaired CCOE meeting in which he directed power division to submit a summary for reforms in the power sector.
On Tuesday, a meeting of the Federal Cabinet took place with Prime Minister Imran Khan in the chair in which it was decided that the lockdown shall be extended till April 30.
The same day, the State Bank of Pakistan released its Second Quarterly Report for FY20 on the State of Pakistan’s Economy as per which the stabilization efforts and regulatory measures yielded notable improvements during the first half of FY20. The current account deficit contracted to a six-year low, foreign exchange reserves increased, the primary budget recorded a surplus, and core inflation eased.
On Monday, the Economic Coordination Committee (ECC) of the cabinet approved supply of 200,000 metric tons of wheat for Utility Stores Corporation (USC) from Pakistan Agricultural Storage and Services Corporation (PASSCO) reserves.
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