Tag: financing

Pakistani rupee drops to Rs287.09 versus US dollar

In Monday’s interbank market, the Pakistani rupee experienced a substantial decrease against the US dollar. The State Bank of Pakistan (SBP) reported that the local currency closed at Rs287.09, down by Rs2.44 or 0.85 per cent.

Last week, the rupee had already depreciated by 0.3 per cent, closing at Rs284.65. During the week, the currency fell in four of the five sessions, with the only gain on Thursday, the day when an official from the finance ministry announced that the International Monetary Fund (IMF) had received a financing assurance from Saudi Arabia.

The recent drop in the value of the Pakistani rupee is partially due to the delay in the confirmation of funding from a friendly country. The staff-level agreement between Pakistan and the IMF is taking time solely because of this delay. The financing confirmation is crucial to bridge

Pakistan’s external account gap and meet the last condition of the IMF. Until then, the currency is likely to remain under pressure.

Meanwhile, globally, the US dollar began the week strongly after the release of US jobs data indicating a tight labour market. This firming up of expectations has led to predictions that the Federal Reserve will again raise interest rates at its meeting next month.

In the currency market, the dollar index, which measures the US currency against six major peers, rose 0.225 per cent to 102.25, recovering from the two-month low of 101.40 that the index touched last week.

Additionally, oil prices, a key indicator of currency parity, stabilised on Monday after rising for three consecutive weeks. This was due to looming supply cuts from Saudi Arabia and other OPEC+ producers, which balanced concerns about weakening global growth that may dampen fuel demand.

April 10, 2023
Chinese bank to provide Pakistan with another $500 million loan soon

A Chinese bank has committed to provide Pakistan with another refinanced $500 million loan within the next few days. This brings the total of commercial loans to $1.7 billion out of the committed amount of $2 billion.

Pakistani authorities are currently seeking 100 per cent confirmation from friendly donor countries and multilateral creditors before moving towards an agreement with the International Monetary Fund (IMF). The IMF has set an unwritten condition that Pakistan must secure refinancing of commercial loans and a rollover on deposits from China during the program period, which is set to expire in June 2023.

A top official from the Finance Division confirmed that another $500 million commercial loan from a Chinese bank is on its way and will be completed soon. Chinese banks have already provided refinancing of $1.2 billion in commercial loans in the past few weeks, and Beijing has given assurance on another $500 million in loan refinancing in the next few days. Pakistan has also requested a rollover on the Chinese SAFE deposit of $2 billion within the ongoing month.

All these factors are prerequisites for moving towards the signing of a staff-level agreement between the IMF and Pakistan. The Pakistani authorities are waiting for confirmation from Saudi Arabia, UAE, and Qatar, as well as from the World Bank and the Asian Infrastructure Investment Bank, to fulfill the external financing needs of $6 billion until the end of June 2023. The guarantees for securing external financing are crucial for the sustainability of the IMF program.

Brent crude and WTI are both down in the international market, which is good news for Pakistan’s economy. However, the IMF has secretly launched “Inclusive growth in the MENA region” at NUST. The IMF high-ups argued that state-owned enterprises (SOEs) possessing a major footprint resulted in the crowding out of the private sector. Pakistan’s budget makers have also assured the IMF that they will prepare gender-based budgeting in the next financial year.

To meet the IMF’s demands, the CPI-based and SPI-based inflations have risen to unprecedented levels of 31.5 per cent every month and 42.3 per cent every week. The development budget of the federal government, known as the Public Sector Development Program (PSDP), has been slashed by 50 per cent for the current fiscal year in line with the Fund’s demand to curtail the budget deficit target.

March 16, 2023
PM Shehbaz expresses concern over IMF conditions burdening people

The Prime Minister, Shehbaz Sharif, has shown worry that the terms set by the International Monetary Fund (IMF) will result in an increased burden on the citizens.

During an appearance on the Geo News program Capital Talk, the Prime Minister attributed the stringent conditions to the previous government, alleging that they had breached their commitments to the IMF.

Consequently, the IMF is insisting that Pakistan fulfills all of the conditions regardless of the cost, according to the Prime Minister. He acknowledged that many people in Pakistan are having trouble putting food on the table, purchasing medication, and paying for their children’s education.

The Prime Minister claimed that former Prime Minister Imran Khan almost defaulted on Pakistan and damaged the country’s relations with numerous friendly countries. However, he stated that his government had provided relief to underprivileged individuals through the Benazir Income Support Program.

He further stated that inflation was caused by the increased cost of imported goods as commodity prices rose due to the Russia-Ukraine conflict. In Pakistan, inflation is expected to reach its highest level in nearly 50 years.

Additionally, Pakistan is struggling to obtain funding from friendly nations, resulting in a delay in the IMF bailout. The IMF Managing Director, Kristalina Georgieva, recently urged Pakistan to increase tax revenues and distribute subsidies only to those who truly require them. She emphasized that the IMF is dedicated to protecting the impoverished people of Pakistan.

March 15, 2023
SBP hikes export financing markup rates from 11% to 13%

The State Bank of Pakistan (SBP) has revised the rates of specialised lending schemes in accordance with its increased monetary policy rate of 16 per cent.

SBP said it had decided to reduce the gap between its policy rate and the Export Finance Scheme (EFS) and Long-Term Financing Facility (LTFF) rates from the existing 5 per cent to 3 per cent, according to a circular released by the central bank.

The notification stated that the revised tariffs will be effective from December 30, 2022.

“Further, as mentioned in above referred circular, in [the] future with any change in the SBP policy rate, markup rates for EFS and LTFF will be revised automatically so that the gap between [the] policy rate and EFS & LTFF rates is maintained at 3 per cent,” the central bank added.

Exporters and industrialists, who are already feeling the strain of strong inflationary pressures together with record increases in energy costs, are anticipated to see a rise in the cost of doing business as a result of higher financing rates.

December 30, 2022
Pakistan seeks rollover of SAFE deposits worth $2 billion from China in March 2023

Pakistan seeks the rollover of $2 billion in State Administration of Foreign Exchange (SAFE) China deposits in March 2023. Federal Minister for Finance and Revenue Ishaq Dar, received a visit from Nong Rong, the People’s Republic of China’s ambassador, at the Finance Division.

According to APP, Dar emphasised the long-standing friendship and kinship ties between Pakistan and China.

The finance minister also thanked the Chinese leadership for their assistance in refinancing a syndicate facility worth RMB 15 billion ($2.24 billion) for Pakistan. He also asked the ambassador to help facilitate the rollover of $2 billion in SAFE China deposits in March 2023.

Dar informed the ambassador of the costs to the overall economy as well as the harm done to Pakistan’s infrastructure, agriculture, lives, and property by the severe floods. He expressed gratitude to the Chinese government for providing the government and people of Pakistan with unwavering support during this difficult time.

In reference to the CPEC, the finance minister stated that the economic corridor will be crucial in advancing Pakistan’s economy and fortifying bilateral ties between the two nations. He further pledged his unwavering support for the aid in realising the success of CPEC.

The minister received Nong Rong’s congratulations on taking up his new duties. The envoy underlined China’s continuous support for Pakistan and emphasised how China is a rock for the Pakistani people in this time of need.

“Since the devastating floods occurred in Pakistan, among all countries, China has announced over 644 million RMB (around 90 million dollars), the biggest amount of assistance to Pakistan,” said Nong Rong, in a tweet.

Since the devastating floods occurred in Pakistan, among all countries, China has announced over 644 million RMB (around 90 million dollars), the biggest amount of assistance to Pakistan. #ChinaStandsWithPakistan pic.twitter.com/uUMPBzIj79

— Nong Rong (@AmbNong) September 30, 2022

October 1, 2022
Another friendly country to confirm assurance this week: Miftah Ismail

According to Pakistan’s Finance Minister Miftah Ismail, “one friendly country” has confirmed its commitment to assist Pakistan in filling the funding gap, while another nation would confirm its assurance in a day or two.

An announcement will be made soon on this subject after confirmation.

Earlier, the International Monetary Fund (IMF) said that Pakistan has completed the final prior action for the combined seventh and eighth reviews with the increase in the petroleum development levy (PDL).

The IMF also stated that the board meeting is tentatively scheduled for late August once adequate financing assurances are confirmed.

In order to prevent Pakistan from having a liquidity vacuum following the IMF loan, the international lender wants to make sure Pakistan will be able to get $4 billion in additional cash.

The country has a $4 billion finance imbalance, according to Miftah, and the IMF wants our reserves to grow by $6 billion.

Pakistan is in touch with friendly nations to cover the gap, and one of them has already reaffirmed its assurance. Within a day or two, the other nation will confirm as well.

The assurances would be announced in advance of the IMF board meeting, which is slated to take place in the last week of August. According to reports, the IMF would announce the disbursement for Pakistan as soon as sufficient finance assurances are verified.

The import bill has decreased to $4.92 billion, according to the minister. Due to this, there is now more cash coming in than going out. The market attitude has improved as a result of this.

He believed that the Pakistani rupee had grown significantly versus the US dollar and would continue to do so.

The Pakistani rupee made a significant recovery on Wednesday, recording its largest day-over-day gain in absolute terms against the US dollar to settle at Rs228.8, up Rs9.58 or 4.19 per cent in the inter-bank market. In the early hours of Thursday, trade, the rupee kept rising.

On Thursday, stocks extended their gains, with analysts blaming the strong recovery of the rupee and soaring global equities for the optimistic trend.

Read more: Dollar may drop near Rs180 after IMF tranche

The benchmark KSE-100 index increased 356.50 points or 0.87 per cent to settle at 41,425.37 points, according to the Pakistan Stock Exchange (PSX).

After being battered for weeks due to political and economic unrest, the local currency recovered by Rs9.59 on Wednesday, marking the highest one-day rise in decades.

August 4, 2022
Yamaha YBR125G now costs Rs292,000 after Rs26,000 hike

The prices of Yamaha’s motorcycle lineup have increased, with the hike reaching as high as Rs26,500 and the new pricing taking effect from July 1st.

According to Brecorder, the development comes a day after Atlas Honda raised the prices of its lineup.

Yamaha’s YB125Z has seen a price hike of Rs23,500, bringing the current cost to Rs255,000. The cost of the YB125Z DX also increased by Rs25,000. The updated cost is Rs273,500.

After a Rs25,500 price increase, the YBR125 will now be available for Rs280,500. The cost of the YBR125G rose from Rs26,500 to Rs292,000. The cost of the YBR125G (Matte Dark Gray) has also gone up by Rs26,500 and will now be available for Rs295,000.

Last month, the company similarly raised the price of bikes by between Rs21,000 and Rs23,000. Motorcycle producers at the time cited rising raw material costs, rising international freight charges, and the ongoing depreciation of the rupee as causes.

Sabir Sheikh, Chairman of the Association of Pakistan Motorcycle Assemblers (APMA), stated that the recently enacted super tax of 10 per cent and the weakening rupee are to blame for the increase.

June 30, 2022