Business

Governor SBP addresses international investors about Pakistan’s economy

Published

7 months ago

October 13, 2023

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Governor SBP addresses international investors about Pakistan's economy

Governor State Bank of Pakistan (SBP), Jameel Ahmad, met key international investors during events organized by global banks, including Barclays, JP Morgan, Standard Bank, and Jefferies on the
sidelines of the IMF-World Bank meetings in Marrakech, Morocco.

Governor SBP briefed the investors about the recent macroeconomic developments, policy responses to current challenges,
and the outlook of Pakistan’s economy, and also answered their questions.

The Governor informed the investors that the current policy mix adopted by the Government and the
Central Bank is geared towards achieving stabilization through addressing macroeconomic
imbalances.

He apprised that the SBP is among the first central banks that began to tighten monetary
policy in the wake of the rising inflation globally.

However, certain domestic challenges, most notably the unprecedented floods in the beginning of the previous fiscal year, complicated SBP’s efforts to bring down inflation. On a cumulative basis, SBP has increased the policy rate by 1500 bps over the last two years.

Likewise, the government has also stepped up its fiscal consolidation efforts.

Ahmad said that the stabilization measures have started yielding results. Inflation has come down
to 31.4 percent in September 2023 after peaking at 38.0 percent in May 2023 and is expected to
continue its downward trajectory over the coming months, whereas the external account has
improved considerably and foreign exchange buffers are being built up.

Governor SBP shared that with the policy rate at 22 percent, the SBP assesses the real interest rates turning substantially
positive on a forward-looking basis, as inflation is expected to come down significantly during the second half of this fiscal year. Going forward, the Stand-By arrangement with the IMF is expected to support the ongoing policy efforts to stabilize the economy.

The Governor also highlighted the shock-absorbing role of the market-determined exchange rate and
the support from multilateral and bilateral lenders in addressing the external sector challenges.

The current account deficit (CAD) reduced to 0.7 percent of GDP in FY23 from 4.7 percent in FY22. The
earlier administrative measures that had contributed towards the lowering of CAD last year, are now
withdrawn. Nonetheless, the ongoing stabilization measures and flexible exchange rate are expected
to keep the CAD within the range of 0.5-1.5 percent of GDP in FY24.

Jameel Ahmad informed the investors that the foreign exchange buffers are improving with both
build-up in reserves and reduction in forward foreign exchange liabilities. He explained that since
January 2023, SBP’s foreign exchange reserves improved from a low of $3.1 billion to $7.6 billion as of
end-September 2023.

The reserves build-up was largely supported by non-debt creating inflows amid
favorable market conditions. At the same time, SBP’s forward foreign exchange liabilities have
declined and the forward book target of $4.2 billion for end-September 2023 agreed with the IMF has
already been met by a wide margin. Similarly, SBP is also very comfortably placed to meet the other
end-September IMF targets, including Net International Reserves (NIR) and Net Domestic Assets
(NDA).

In his remarks, the Governor SBP emphasized that emerging economies are faced with multiple
challenges, such as access to capital markets, growing anti-trade sentiments, debt sustainability, and
building climate-resilient and inclusive economies and there is a need for multilateral institutions like the

IMF and World Bank to take the lead role in shoring up global buy-in to address these challenges.

For Pakistan’s part, the country is on-track to address the longstanding structural weaknesses, and
with the support from its multilateral and bilateral partners, it would be able to achieve sustainable
and inclusive economic growth over the medium term.

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Business

Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

Published

22 hours ago

May 17, 2024

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

A notable Chinese company has expressed keen interest in expanding its investment in Pakistan, in yet another sign of investor confidence boost in the leadership of Prime Minister Shehbaz Sharif.

A delegation from Chinese firm MCC Tongsin Resources led by its Chairman Wang Jaichen called on PM Shehbaz here on Friday.

The premier invited the Chinese company to invest in Pakistan’s mining sector and manufacturing of export goods.

Shehbaz assured the delegation that his government would extend all-out facilitation to the company from minerals exploration and processing to the export of goods.

The PM instructed the relevant federal ministers and officers to continue consultation with the Chinese firm, taking the Balochistan chief minister, provincial departments and stakeholders on board.

The delegates reposed trust in PM Shehbaz’s leadership, and expressed keen interest in enhancing their investment in Pakistan’s mining and minerals sectors.

The delegation briefed Prime Minister Shehbaz about the construction of a mineral park in Pakistan and their future investment plans.

The premier welcomed the Chinese firm and highlighted the priority steps by his government to promote foreign investment in Pakistan.

He said that being a time-tested friend, China supported Pakistan in every difficult hour for which the Pakistani nation was grateful to the leadership and people of China.

Federal ministers Ahad Khan Cheema, Dr Musaddik Malik, Rana Tanveer Hussain, Jam Kamal Khan and relevant senior officers attended the meeting.

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Business

Govt jacks up power price by Rs1.47 per unit

Published

22 hours ago

May 17, 2024

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Govt jacks up power price by Rs1.47 per unit

The government on Friday increased the electricity tariff by Rs1.47 per unit.

According to Nepra sources, the collection from consumers will take place in August, September, and October.

The electricity companies had requested the funds as part of the third quarter adjustment for 2023-2024, seeking Rs 31.34 billion under capacity charges.

Sources said that Rs5.57 billion were requested for operation and maintenance costs, and Rs12.38 billion were requested for the transmission and distribution impact under monthly fuel cost adjustment.

Previously, Nepra had completed the hearing on the electricity companies’ request under the quarterly adjustment.

Nepra approved the Power Division’s request, allowing an increase of Rs 1.45 per unit in electricity prices.

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Business

Hong Kong allows China’s digital yuan to be used in local shops

Published

22 hours ago

May 17, 2024

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Hong Kong allows China's digital yuan to be used in local shops

Hong Kong will allow mainland China’s pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing’s efforts to internationalise the yuan amid rising geopolitical tensions.

The programme, backed by Beijing, will allow mainland Chinese and Hong Kong residents to open digital yuan wallets via a mobile app developed by China’s central bank and will permit them to make payments in retail shops and some online stores in Hong Kong and in mainland China.

Transactions using e-CNY, predominantly for domestic retail payments in China, hit 1.8 trillion yuan ($249.27 billion) as of end of June 2023, with 120 million digital wallets opened, according to the latest disclosure from China’s central bank.

Using the wallet, users can make payments at over 10 million merchants in 17 provinces and cities in the mainland.

Each wallet used in the city will be subject to a balance limit of 10,000 yuan, with single transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, officials from the Hong Kong Monetary Authority said.

Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.

“By expanding the e-CNY pilot in Hong Kong .. users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,” HKMA Chief Eddie Yue said.

Currently, users of other digital yuan wallets such as those operated by Ant Group and Tencent can make payments in the city.

Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.

The yuan’s use in global finance remains low, though it has shown steady increases.

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