$2BN LOANS GRANTED EX-POST FACTO APPROVAL
The federal cabinet has regularised nearly $2 billion foreign commercial loans that the government had obtained during second half of the last fiscal year without prior approval of the cabinet and also waived 10% tax on interest payments to foreign lenders.
It was the second time during the last nine months that the federal cabinet gave ex-post facto approvals of foreign commercial borrowings.
In February 2017, the federal cabinet had also regularised the $2.7 billion foreign commercial loans.
The Ministry of Finance had signed eight agreements between December 2016 and June 2017 with foreign banks to obtain $1.965 billion short-term loans to support the dwindling foreign currency reserves.
All the eight loan agreements had been signed without obtaining prior approval of the federal cabinet, which is necessary under the Rules of Business of 1973.
Rule 16(1)(d) of the Rules of Business states that ministries would bring “proposals for levy, abolition, remission, alteration or regulation of any tax and floatation of loans” for the approval of the federal cabinet.
However, the federal cabinet gave its ex-post facto approval of those loans on Tuesday, regularising the borrowings.
The ex-post facto approvals are in violation of the spirit of the Supreme Court judgment of August 2016. The apex court’s ruling binds the government to initiate all fiscal matters with the consent of the federal cabinet.
All the eight loan agreements had been signed without obtaining prior approval of the federal cabinet, which is necessary under the Rules of Business of 1973.
Rule 16(1)(d) of the Rules of Business states that ministries would bring “proposals for levy, abolition, remission, alteration or regulation of any tax and floatation of loans” for the approval of the federal cabinet.
However, the federal cabinet gave its ex-post facto approval of those loans on Tuesday, regularising the borrowings.
The ex-post facto approvals are in violation of the spirit of the Supreme Court judgment of August 2016. The apex court’s ruling binds the government to initiate all fiscal matters with the consent of the federal cabinet.
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PIA’S ACCUMULATED LOSSES JUMP TO RS319BN
Pakistan International Airlines’ (PIA) accumulated losses continued to soar as they increased Rs11.52 billion to Rs319.10 billion in the quarter ended March 2017 due to non-stop flights on several loss-making routes, according to a bourse filing.
The state-owned airline continued to fly on several loss-making routes to Europe and the US.
PIA has decided, in principle, to temporarily suspend flights to and from New York, which alone was causing a loss of Rs2.25 billion per year, said Adviser to Prime Minister on Aviation Sardar Mehtab Ahmed Khan recently.
PIA was not booking seats for the New York flights for November onwards, it was learnt.
The national carrier has also lost much business on domestic routes to international airlines under the open skies policy of the government.
The government has allowed Gulf airlines, particularly UAE carriers, to operate to and from multiple airports in Pakistan, which is driving up PIA losses.
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PAKISTAN COTTON GINNERS DEMAND BAILOUT PACKAGE
Pakistan Cotton Ginners Association (PCGA) has urged the government to announce a bailout package for the 1,200 ginning factories working across the country.
Rejecting the high electricity tariff and ‘unjust’ mark-up on loans for the ginning factories, association officials said the Federal Board of Revenue (FBR) should clear their tax refund cases, which had been pending for the past five years, so that ginners could modernise their units.
Speaking with source, PCGA Chairman Haji Muhammad Akram along with other officials protested against the FBR for freezing their bank accounts, misuse of discretionary powers under Section 38-B and raids on business premises.
They urged bankers to advance loans to the ginners on soft terms and conditions and reduce the mark-up plus spread since the government had lowered the benchmark policy rate to 5.75%.
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ENERGY PRODUCTION: MACHAI HYDEL STATION STARTS OPERATION
The Khyber-Pakhtunkhwa government inaugurated on Friday the 2.6-megawatt Machai Hydropower Station in Mardan district.
The plant has now formally started production of electricity and will contribute 14 gigawatts of electricity to the national grid.
Energy and Power Department Secretary Engineer Naeem Khan inaugurated the hydroelectric power station at Alai village in Mardan district, accompanied by experts from the energy sector and officials of the German and Pakistani companies involved in the project.
Speaking at a ceremony, Khan said the Machai project was started with the assistance of the Asian Development Bank at the Machai canal system as a pilot scheme to boost investment.
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COUNTRY NEEDS TO CONTROL WATER DEMAND-SUPPLY GAP
The State Bank of Pakistan (SBP) has warned that the widening gap between water demand and supply has now become a major social and economic concern for Pakistan that requires a comprehensive national policy.
“Any delay in reforms would only compound the concerns as the water deficit would expand on account of growing demand (stemming from population growth, urbanisation and economic development) and a decline in available supplies (owing to pollution and climate change),” the central bank said in a special section of its Annual Report on the State of Economy for 2016-17.
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PM LAUDS PAK-RUSSIA ECONOMIC COOPERATION
Prime Minister Shahid Khaqan Abbasi said on Friday that Pakistan-Russia cooperation in various sectors was a step towards strengthening of bilateral relations.
He was talking to Russia’s Deputy Minister of Energy Yury P Sentyurin, who called on him at the PM Office.
The prime minister stated that the government is focusing on meeting the country’s energy requirements with particular focus on a balanced mix of energy sources. He appreciated the delegation’s fruitful interaction with the Ministry of Energy.
The premier expressed the hope that members of the Russian delegation would have a productive visit in the backdrop of briefing by various ministries about immense potential for investment in Pakistan’s infrastructure development, energy and communication sectors.
He was of the view that the economic outlook of Pakistan had altogether changed in the last four years, which was being acknowledged globally.
“Our investment policy has been designed to provide a comprehensive framework for creating a conducive business environment to attract foreign direct investment,” he said, adding Pakistan’s policy trends had been consistent, with liberalisation, deregulation, privatisation and facilitation being the foremost cornerstones.
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ANGRY PESHAWAR MORR RESIDENTS PELT CDA STAFF: STIFF RESISTANCE
Officials of the civic body were forced to beat a hasty retreat on Thursday when locals near Peshawar Morr started pelting them with stones.
Officials from the Capital Development Authority (CDA) Enforcement Directorate had arrived at the Peshawar Morr and the Industrial & Trade (I&T) Centre to clear the area of encroachment — as directed by the court. They bulldozed several businesses established illegally in the commercial before moving to the residential units — the entire activity overseen by a magistrate.
The team had hardly cleared a few encroachment in the residential area when angry locals gathered and started protesting against the enforcement staff. They then started pelting the team with stones.
In wake of the protest and anticipating a worsening law and order situation, the accompanying magistrate directed the enforcement team to stop their operation.
The operation was the part of CDA ongoing drive against encroachments that which had started on October 10 and is expected to continue until October 31.
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TELEPHONE INDUSTRIES: CORRECTIVE INITIATIVES LEAD TO SAVINGS AT TIP
Minister of State for Information Technology and Telecom Anusha Rehman said on Friday that Telephone Industries of Pakistan’s (TIP) affairs had been streamlined with efforts and teamwork of the Ministry of IT over the last three years.
“Due to consistent efforts of the ministry and the TIP board, the incumbent management of the entity was able to save Rs107 million within one year in utility bills,” Rehman said. “Similar improvements in other areas have yielded significant savings.”
She stated this while chairing the 191th board of directors’ meeting of TIP.
TIP Managing Director Syed Khalid Gardezi told the board that they had got vacated the official accommodation from illegal occupants and the management was also proceeding against delinquents in accordance with the law.
He said corrective measures were being taken to bring TIP’s administrative affairs in order while deploring that some vested interests were creating hurdles in the way of implementing board decisions by flouting the law.
The IT minister warned that any violation and non-compliance with board decisions would be dealt with harshly, telling the mafias to halt their activities.
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CENTRAL BANK SUGGESTS SWITCH TO INVESTMENT, EXPORT-LED GROWTH
In order to keep the current account deficit at a manageable level, Pakistan needs to contain unnecessary imports and expand its export base, the State Bank of Pakistan (SBP) suggested on Thursday.
The findings are part of the Annual Report on the State of Economy for 2016-17 released by the central bank.
Other notable issues that the report highlighted include switching away from consumption-led to investment-cum-export oriented growth, alleviating credit constraints for small and medium-sized enterprises and enlarging the resource envelope to create the fiscal space required to fund infrastructure and social development projects.
The SBP assessment shows that the economy is likely to continue to expand with low and stable inflation in fiscal year 2017-18 (FY18).
Encouraging trends in private sector credit indicate underlying dynamics in the real economic activity. However, maintaining this momentum in future would largely depend on addressing emerging challenges in the external and fiscal accounts. The central bank said the latest information presents a mixed picture of macroeconomic conditions in FY18.
The expansion in real economic activity is expected to maintain the momentum and inflation is likely to remain within the target.
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SKY-HIGH DEBT: PRESSURE MOUNTS ON DAR TO QUIT
Opposition senators on Thursday demanded resignation of Finance Minister Ishaq Dar in the wake of a worrying analysis of Pakistan’s economy, particularly the country’s ‘sky-high debt’, given by the Chief of Army Staff General Qamar Javed Bajwa in a major speech the other day.
The government must change the finance minister after the statement of the army chief, regarding “a grave situation of the economy”, Senator Nasreen Jalil of the Muttahida Qaumi Movement (MQM) told a meeting of the Senate Standing Committee on Finance.
She claimed that the finance ministry was at a standstill because the minister himself was busy fighting a corruption case. “If the committee does not pass a resolution for the minister’s resignation, Dar will be responsible for further deterioration of the economic indicators,” she added.
It was the second time that a call for Dar’s resignation echoed in the committee meeting. Previously, the committee put forth the same demand after Dar was indicted by an accountability court over owning assets beyond his known sources of income.
The army chief spoke about the economic situation of the country in an address to the business community in Karachi on Wednesday. He expressed concerns over the ‘sky-high’ debt, which surprised many, because the military usually does not publically comment on economic matters.
Dar has been criticised for the country’s increasing debt. Every Pakistani now owes Rs120,381 as against roughly Rs91,000 in 2013, which reflects an increase of 32% in more than four years – the ongoing tenure of the Pakistan Muslim League-Nawaz (PML-N) government.
By June this year, according to the State Bank of Pakistan (SBP), Pakistan’s debts and liabilities swelled to an alarming Rs25.1 trillion. The external debt increased to roughly $83 billion by the end of 2016-17, with debt servicing reaching $8.2 billion.