Tag: financial news

  • Pakistan expected to secure second IMF tranche despite missed deadlines

    Pakistan expected to secure second IMF tranche despite missed deadlines

    Pakistan is poised to secure the next installment of its $3 billion stand-by arrangement (SBA) with the International Monetary Fund (IMF), despite potential delays in meeting certain deadlines, as indicated in a recent brokerage report. 

    Topline Securities, in its analysis, acknowledged that Pakistan had achieved the prescribed targets for net international reserves, net domestic assets, and foreign currency swap/forward positions as of the close of June 2023.  

    However, it also pointed out that Islamabad had fallen short in meeting the targets for the primary deficit, which assesses the fiscal balance excluding interest payments as well as external public debt disbursements. 

    Furthermore, the report highlighted that Pakistan had yet to implement a gas price adjustment agreed upon with the IMF, which was a prerequisite for completing the second review of the program. 

    Pakistan initially received a $1.2 billion installment from the IMF’s stand-by arrangement in July after the IMF’s Executive Board approved the bailout package to stabilise the country’s economy.  

    Under the agreement, the remaining $1.8 billion is set to be disbursed in two tranches following reviews in November and February. 

    The current IMF programme outlines nine performance criteria, four indicative targets, and ten structural benchmarks for the upcoming review. 

    In a briefing for analysts on September 14, the Governor of the State Bank of Pakistan confirmed that all quantitative performance targets related to the central bank, including net domestic assets, swaps, and net international reserves, had been met.  

    Similarly, the Finance Ministry expressed its commitment to maintaining fiscal discipline and achieving primary balance targets. 

    Despite challenges and some unmet targets related to external funding, the primary deficit, gas price adjustments, etc., Topline Securities remains optimistic about Pakistan’s chances of receiving the next IMF tranche.  

    They believe that if the government can effectively manage the current account deficit to around $4 billion for FY2024, as opposed to the projected $6.5 billion, it can meet its financing requirements, particularly given the difficulty of commercial borrowing. 

    The Ministry has projected gross external financing requirements of $28.4 billion for the current fiscal year, including the current account deficit of $6.5 billion, aligning with IMF projections outlined in the latest country report. 

    Regarding funding sources, the government plans to secure a total of $11 billion, with $5 billion coming from China and $6 billion from Saudi Arabia, primarily in the form of rollovers and an oil facility with deferred payments, according to Topline’s report.  

    The government also anticipates around $6.3 billion from multilateral creditors, including the World Bank, Asian Development Bank, Islamic Development Bank, and Asian Infrastructure Investment Bank. 

  • US dollar hits six-month low against Pakistani currency 

    US dollar hits six-month low against Pakistani currency 

    The Pakistani rupee (PKR) has been on an upward trajectory, with the US dollar (USD) experiencing its lowest value in six months.

    This development follows a concerted effort to combat dollar smuggling, resulting in a decrease of Rs5.50 in interbank trading this week. The greenback concluded the week at Rs282.69.  

    In the open market, the US dollar saw a significant drop of 6.50 rupees, closing at Rs281.50, down from Rs288.

    This decline has been a consistent trend in recent weeks, starting from the beginning of September, when the US currency has been steadily losing ground against the Pakistani rupee.  

    Notably, other foreign currencies have also seen a decrease in their value within the currency market. Over the past week, the Euro fell by 8 rupees, going from Rs306 to Rs298. Similarly, the British Pound Sterling lost Rs5, reaching a rate of Rs248 from its previous Rs253.

    The Saudi Riyal experienced a modest decrease of one rupee, moving from Rs76.20 to Rs75.20, while the Emirates dirham shed Rs2.60 to settle at Rs77.20, down from its previous rate of Rs79.80 over the weekend.  

    This strengthening of the Pakistani rupee against the US dollar in the open market has occurred while maintaining a narrow gap with the interbank market, aligning with the limits stipulated by the International Monetary Fund (IMF).  

    This positive trend in the rupee’s value against the dollar can be attributed to a nationwide crackdown on illegal currency operations carried out by law enforcement agencies. 

  • State Bank of Pakistan reports $21 million decline in forex reserves

    State Bank of Pakistan reports $21 million decline in forex reserves

    Pakistan’s total liquid foreign reserves reached a sum of $13,030.8 million, with the central bank holding reserves amounting to $7,615.4 million, as reported by the State Bank of Pakistan (SBP). 

    According to a statement released by the State Bank of Pakistan on Thursday, during the week ending on September 28, 2023, SBP’s reserves experienced a decrease of $21 million, resulting in a total of US$ 7,615.4 million. Concurrently, commercial banks held net foreign reserves totaling $5,415.4 million. 

    In the preceding week, ending on September 22, 2023, the country’s total liquid foreign reserves were reported at US$ 13.162 billion. Among these, the central bank held foreign reserves amounting to $7.636 billion, while commercial banks held net foreign reserves of $5.525 billion. 

    As of September 29, the total liquid foreign reserves of Pakistan stood at US$ 13.18 billion, with the central bank’s reserves totaling $7,636.7 million. The State Bank of Pakistan (SBP) spokesperson attributed the decrease in SBP’s reserves by $59 million to debt repayments during the week ending on September 22, 2023. Net foreign reserves held by commercial banks amounted to $5,525.1 million. 

    In the week ending on September 15, 2023, the country’s total liquid foreign reserves were recorded at $13.186 billion. Among these, the central bank held foreign reserves amounting to $7.695 billion, while commercial banks held net foreign reserves totaling $5.491 billion. 

  • Pakistan Stock Exchange crosses 47,000-mark after five weeks

    Pakistan Stock Exchange crosses 47,000-mark after five weeks

    The Pakistan Stock Exchange (PSX) enjoyed a favourable trading session on Wednesday, with its key KSE-100 Index surging above the 47,000 level for the first time in five weeks. This uptrend was primarily driven by the robust performance of the banking sector.

    Throughout the trading session, the KSE-100 Index remained firmly in positive territory, ultimately settling at 47,079.83. This represented a notable gain of 323.03 points, or 0.69 per cent. The last instance the benchmark index closed above the 47,000 mark was on August 28.

    In a post-market report, Ismail Securities, a prominent brokerage house, attributed the positive momentum in the equity market to increased liquidity, particularly within the banking sector.

    On the preceding day, Tuesday, the KSE-100 Index managed to eke out a 0.28 per cent gain in a session characterised by a relatively narrow trading range.

    Shares of 342 companies were traded, with 172 witnessing an increase, 134 recording a decline, and 36 remaining unchanged.

    Topline Securities, another respected brokerage house, envisions the KSE-100 Index approaching the 50,000 level in a potential “pre-election rally.” They expressed their belief that the Pakistani market could experience an 8–10 per cent surge in the lead-up to the elections, assuming a smooth election process and the approval of the IMF tranche in November, stating this in an earlier note.

    Simultaneously, the Pakistani rupee continued its strengthening trend against the US dollar, registering a 0.37 per cent gain in the interbank market on Wednesday. According to the State Bank of Pakistan, the rupee settled at 284.68 after an increase of Rs1.04, marking the 20th consecutive appreciation against the greenback.

    Trading activity also saw an uptick, with the all-share index volume rising to 330.2 million shares from Tuesday’s 213.2 million. The value of traded shares also increased, reaching Rs7.3 billion compared to Rs6.1 billion in the previous session.

  • Pakistan’s economy to recover, but challenges remain: World Bank

    Pakistan’s economy to recover, but challenges remain: World Bank

    Pakistan’s economic outlook, as per the World Bank’s ‘Pakistan Development Update,’ is challenging. The report projects a gradual recovery in real GDP growth, expecting it to reach 1.7 per cent in FY24 and 2.4 per cent in FY25. However, it warns that this recovery is contingent on implementing IMF measures, securing external financing, and maintaining fiscal discipline.

    The report highlights the dire poverty situation in Pakistan, with an estimated 39.4 per cent of the population living below the Lower-Middle Income Country poverty threshold in FY23, compared to 34.2 per cent in FY22. Factors contributing to this include economic slowdown, floods in 2022, import restrictions, political uncertainty, rising global commodity prices, and reduced investor confidence.

    The fiscal deficit remains a concern. While some easing of import restrictions may widen the current account deficit, a weaker currency and higher domestic energy prices could sustain inflation. The report emphasizes the importance of comprehensive fiscal reforms, including reducing tax exemptions, broadening the tax base, improving public expenditure quality, reforming the energy sector, and managing public debt more effectively.

    The World Bank stresses that addressing these challenges is crucial for long-term recovery and recommends strengthening institutions and systems to achieve fiscal and debt sustainability. The report echoes concerns about external shocks, political instability, and debt servicing challenges, underlining the need for prudent economic management and reforms.

    The Asian Development Bank (ADB) predicts a modest GDP growth recovery to 1.9 per cent in FY24, following a contraction of 0.3 per cent in FY23, with persistent price pressures. Overall, Pakistan faces a complex economic landscape that demands immediate attention to fiscal reform, poverty alleviation, and resilience to external shocks.

  • No extension for tax return deadline, only commissioner-requested extensions accepted

    The Federal Board of Revenue (FBR) has officially announced that the deadline for income tax return submissions remains unchanged, concluding on September 30.

    However, individuals may request an extension of up to 15 days by submitting an application to their respective commissioner.

    FBR officials report that over 1.7 million tax returns have already been filed, with expectations of the total reaching over Rs2 million by the September 30 deadline.

    More to follow..

  • Pakistan’s forex reserves decline by $59 million to $7.64 billion due to debt payments

    Pakistan’s forex reserves decline by $59 million to $7.64 billion due to debt payments

    The State Bank of Pakistan (SBP) reported a weekly decrease in foreign exchange reserves, with a decline of $59 million, bringing the total to $7.64 billion as of September 22, according to data released on Thursday.

    The overall liquid foreign reserves of the country amounted to $13.16 billion, with commercial banks holding net foreign reserves of $5.52 billion.

    The central bank attributed this reduction in reserves to debt repayments, stating, “During the week ending on September 22, 2023, SBP’s reserves decreased by $59 million to $7,636.7 million due to debt repayments.”

    Notably, Pakistan’s central bank reserves had increased by $56 million the previous week, following four consecutive weeks of decline, during which SBP reserves had dwindled by a cumulative total of $416 million.

    In July, SBP’s reserves received a boost when Pakistan received approximately $1.2 billion as the first tranche from the International Monetary Fund (IMF), following approval of a new $3-billion stand-by arrangement. Additionally, inflows from Saudi Arabia and the UAE contributed to the increase.

    Despite these positive developments, the central bank’s reserves have come under pressure due to ongoing debt repayments, increased import payments following the easing of restrictions, and a lack of fresh inflows.

  • Pakistani rupee gains value, now at Rs292.78 per US dollar

    Pakistani rupee gains value, now at Rs292.78 per US dollar

    The Pakistani rupee’s ascent against the US dollar persisted for the 12th consecutive session in the inter-bank market on Thursday, registering a 0.38 per cent gain.

    According to the State Bank of Pakistan (SBP), the rupee settled at 292.78, marking a notable increase of Rs1.1 within the inter-bank market. Just the day before, on Wednesday, the rupee had exhibited a similar upward trend, appreciating by 0.35 per cent and settling at 293.88.

    This remarkable turnaround in the rupee’s value follows a recent period of decline, during which it hit a record low of 307.1 in the inter-bank market on September 5.

    The transformation in its fortune can be attributed to a series of structural reforms introduced by the State Bank of Pakistan (SBP) within the Exchange Companies’ (ECs) sector, along with various administrative measures implemented by authorities to combat currency smuggling and hoarding.

    On the global stage, the US dollar reached new heights on Thursday, notably against the yen, marking its strongest position since November.

    This surge in the dollar’s strength followed a hawkish stance taken by the US Federal Reserve at its recent monetary policy meeting, where it opted to maintain interest rates within the 5.25 per cent–5.50 per cent range.

    The Fed’s decision reflected a growing confidence among officials that their assertive monetary policy approach can effectively combat inflation without causing significant economic disruption or substantial job losses.

    Conversely, oil prices experienced a decline on Thursday, following the previous session’s significant drop, as expectations of US interest rate hikes overshadowed the impact of reduced US crude stockpiles.

  • MoIB warns against spreading false news of Rs5,000 banknote ban

    MoIB warns against spreading false news of Rs5,000 banknote ban

    The official Ministry of Information and Broadcasting (MoIB) handle recently confirmed that the news circulating on various social media platforms regarding the ban of Rs5,000 banknotes is fake.

    In a recent post, MoIB stated, “Disseminating #FakeNews is not only unethical and illegal but it is also disservice to the nation. It is the responsibility of everyone to reject irresponsible behavior.”

    The fake letter circulating on social media falsely claims, “Effective Date: The ban on Rs5,000 currency notes will take effect on September 30, 2023. From this date onwards, these notes will no longer be legal tender.

    Exchange and Deposit: Citizens and financial institutions are encouraged to exchange or deposit their Rs 5000 notes at authorized banks and financial institutions until the specified deadline. After September 30, 2023, the notes will only be accepted at designated government offices and central banks.”

    This is not the first time such news has gone viral on social media regarding the discontinuation of Rs5,000 notes. Similar false reports have surfaced in the past, and reputable news channels have later clarified that no such action is being taken.

  • Pakistani rupee sets new record, falls to Rs307.10 per US dollar 

    Pakistani rupee sets new record, falls to Rs307.10 per US dollar 

    In the interbank market on Tuesday, the Pakistani rupee (PKR) continued to weaken against the US dollar, losing PKR 1.4569 (0.48 per cent) on a day-over-day basis and ending the session at PKR 307.0996 per US dollar.

    On Monday, the Pakistani rupee experienced a slight decline against the US dollar, settling at Rs305.64 in the interbank market.

    The government has not yet finalised relief measures for the surging electricity bills of consumers, primarily due to disagreement between the federal government and the International Monetary Fund (IMF) regarding the provided data.

    On the international front, the US dollar remained strong on Tuesday, while the Australian dollar faced some pressure. Traders were closely monitoring the Reserve Bank of Australia’s upcoming interest rate decision, speculating that interest rates may have reached their peak.