State Bank of Pakistan: geopolitical tensions a concern
The State Bank of Pakistan (SBP) has voiced serious concern over the continuity of safe banking in the country at a time of fast rising geopolitical tensions as around 20 financial institutions including the central bank itself are using the core banking systems of a top global banking software company, Temenos, which is operating from a foreign country.
Speaking at a conference titled “Bank of the Future Forum 2024”, hosted by Systems Limited and Temenos, SBP Governor Jameel Ahmad asked the European IT firm to establish a support centre in Pakistan instead of continuing to operate from a foreign country. “This will ensure the continuity of services in times of geopolitical volatility and stress,” he emphasised, adding that as a regulator “we do not only want to ensure this safety and robustness of our financial system, but also want to see local expertise developed not that in support systems only but also in designing and developing systems.”
In 1st quarter trade deficit remains under control
Pakistan’s trade deficit marginally expanded to $5.4 billion in the first quarter of the current fiscal year due to a double-digit growth in exports and a constant check on imports, which helped keep foreign exchange reserves at $10.5 billion.
Exports continued their upward movement as they crossed the $2.8 billion mark in September for the first time in the past four months, according to the data released by the Pakistan Bureau of Statistics (PBS) on Wednesday.
Merchandise goods export jumped to $7.9 billion during the first quarter (July-September), higher by $974 million, or 14.1percent, over the same period of last fiscal year.
Sustainable development policy institute pushes for GMO Soybean import amid ban
The Sustainable Development Policy Institute (SDPI), a think tank, has initiated efforts to lift the ban on genetically modified (GMO) soybean imports, a move that involves multi-million-dollar contracts. The SDPI is urging the Special Investment Facilitation Council (SIFC) to expedite approval for these imports, despite concerns raised by various ministries.
The SDPI and soybean importers recently held a seminar advocating for the import of GMO soybeans. During the event, the Minister for Food Security questioned why the United Nations (UN) had banned GMO soybean and pointed out that Pakistan’s Ministry of Climate Change had also opposed the move. Sources told that some officials within the climate ministry, SDPI, and the Environmental Protection Agency (EPA) have been lobbying for the import, raising eyebrows since the contracts are worth millions of dollars. They also revealed that a proposal to allow soybean imports had been submitted to the former Secretary of the Ministry of Climate Change, but it was rejected.
Fiscal pact under international monetary fund’s umbrella inked
Pakistan’s central and provincial governments have signed a pact under the International Monetary Fund’s (IMF) umbrella to coordinate efforts to end corruption within the federating units and grant commercial banks access to the wealth statements of high-level provincial public officials.
Both conditions are part of the National Fiscal Pact that the federal and the four provincial governments signed under the IMF’s mandate. Sindh was the last province to sign the pact, a day after the September 30 deadline
Finance Minister Senator Muhammad Aurangzeb said on Wednesday that all four provinces had signed the National Fiscal Pact, a landmark development that will help align provincial taxation policies with the federal government and abolish agriculture support prices.
The finance minister further stated that the new National Fiscal Pact would improve taxation policies, transfer some fiscal responsibilities to the provinces, and improve governance. However, he maintained that the National Finance Commission, which has constitutional backing, would not be altered.
Government initiates debt re-profiling
The government has initiated domestic debt re-profiling by repaying expensive short-term loans to commercial banks early and plans to raise low-cost, long-term debt due to increased availability of funds with the government.
Additionally, rising liquidity in the system and the looming threat of additional taxes of up to 19percent on banks, if they fail to raise the advance-to-deposit ratio (ADR) to 50percent by the end of December 2024 from the current 38percent, have led banks to offer new loans to private-sector businesses at KIBOR (Karachi Inter Bank Offered Rate) minus 6percent in recent days.
According to data from the State Bank of Pakistan (SBP), the government has repaid Rs351 billion to commercial banks by buying back its short-term paper (market treasury bills or MTBs) from financial institutions on Monday.
Then, on Tuesday, the Ministry of Finance announced plans to raise Rs10.10 trillion in new debt over the next three months (October–December 2024), partly by selling long-term Pakistan Investment Bonds (PIBs) with maturities ranging from 2 to 30 years, while heavily retiring short-term (3 to 12-month T-bills) debt.
Government’s list of SOEs largely remains intact
The government on Tuesday declared Pakistan Revenue Automation Limited (PRAL) and Pakistan Single Window (PSW) as essential entities aimed at retaining them in the public sector – the companies that are the digital eye of the tax machinery and the interface for global trade.
The decision was taken by the Cabinet Committee on State-owned Enterprises (CCoSOEs), which was in the process of vetting all public sector firms to see whether they were essential, strategic or fit to be privatised.
PRAL handles the taxpayers’ data while PSW – a digital trade platform – deals with the country’s international trade data. The cabinet committee re-appointed the existing board of First Women Bank Limited for another term of three years. It also included Sheharyar Ahmad, director to the finance minister and deputy secretary in the finance ministry, in the board to have a check on the independent directors on behalf of the government.