economicletter

Pakistan
The SBP has launched a five year 2014-18 Strategic Plan for promoting Shariah-compliant Islamic banking in the country which has been growing at a fast pace since its relaunch in 2001 and now has 19 full-fledge Islamic Banks accounting for 12% of overall banking system offering Islamic banking products and services through a network of 1,300 branches across the country. The Strategic Plan is aimed at setting a consensus direction for the industry over the next five years to augment the existing growth momentum and lead to its next level of development. It plans to increase the public perception of the industry and promote Islamic banking as a viable system to meet the financial services of the public in general and the business community in particular. The key focus areas of the Plan are as under: enabling policy environment; Shariah governance and compliance; awareness and capacity building; market development.

a weekly publication of The Institute of Bankers Pakistan

According to SBP, liquid foreign exchange reserves as on Feb. 21, 2014 stood at $ 8.654 bn of which $ 3.871 bn was held by the SBP and the rest with banks The Federal Board of Revenue (FBR) has issued directions titled Banking Companies Reporting Requirements under which banks will need to submit to it a monthly account-holders deposits statement of persons who have deposited Rs 1.0 million or above in any single month. According to the Annual Report, 2012-13, of the Federal Board of Revenue, gross revenue collection in the fiscal stood at Rs 1,946 bn against Rs 1,883 bn in the preceding 2011-12 fiscal. The Board has contended that if GDP growth had been 4.3% as targeted against realized 3.6%, revenue collection by it would have been higher. According to Pakistan Bureau of Statistics (PBS), large-scale manufacturing (LSM) sector posted a growth of 6.76% in the first half of the current fiscal (July-December 2013) over the same half last fiscal. The Minister of Petroleum & Natural Resources has informed the National Assembly that the government is to import 400 mmcfd of liquefied natural gas (LNG) from the end of the year in the first phase rising to 800 mmcfd in the second phase which would save the country $ 1.2 bn annually currently being spent on import of crude oil. The Privatization Commission has approved restructuring and privatization of two power distribution companies (Discos) and one power generation company (Genco). The two Discos are Faisalabad Electric Power Company and Lahore Electric Supply Company while the Genco is the Thermal Power Station in Muzaffargarh.

According to SBP, agricultural credit disbursement by banks and specialized financial institutions during July-January 2013-14 stood at Rs 190.1 bn against Rs 169.4 bn in the same period last fiscal. The SBP has revised upwards the indicative target for the full 2013-14 fiscal from Rs 360 bn to Rs 380 bn. According to SBP, cash recovery of non-performing loans (NPLs) by banks and DFIs in calendar year 2013 amounted to Rs 73.345 bn against Rs 73.981 bn in calendar year 2012. The SBP has directed banks to provide an upfront key product fact sheet on credit cards, in order to enhance the existing level of transparency and disclosure in the credit card business.

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Markets at a glance
Weekly Review Beginning Ending Change KIBOR (6 months) Bid % Offer % 9.87 9.92 + 0.05 10.12 10.17 + 0.05 Foreign Exchange Rates GBP () Euro () US ($) Rs 174.88 Rs 175.41 + 0.53 Rs 143.86 Rs 143.86 0 Rs 104.90 Rs 104.88 - 0.02 KSE 100 Index 25,603 25,783 + 180 Gold Rate (10 gm) Rs 44,742 Rs 45,342 + 600
February 28, 2014

Volume 9, Issue No. 9 |

a weekly publication of The Institute of Bankers Pakistan

According to the Federal Minister of Finance, auctions for 3G and 4G telecom licenses will take place in April this year with base prices of $ 295 mn and $ 210 mn respectively for each license. According to Pakistan Bureau of Statistics (PBS), f.o.b. data, trade movement of some commodities in the first seven months of the current fiscal (July-January 2013-14) over the same period last fiscal has been as under: export earnings of textiles and clothing amounted to $ 8.035 bn against $ 7.468 bn; non-textile export earnings $ 6.664 bn against $ 6.579 bn; amounted to

International
The European Commission has forecast that the 9 trillion, 18-member Eurozone economies would grow by 1.2% in 2014 spearheaded by a growth of 1.8% in Germany, the largest in the bloc, by 1.0% in France and by 0.6% in Italy, the second and third largest economies in the region. The Commission expects the growth in the bloc to rise to 1.8% in 2015. GDP growth in Britain in 2013 was recorded at 1.8% against earlier estimates of it being 1.9%. It was still the fastest pace of growth since 2007. Moodys Investors Services, an international credit rating agency, has upgraded Spains sovereign credit rating by a notch from Baa2 to positive outlook citing progress in economic rebalancing, structural reforms and improved market access as the main factors behind the revision. Moodys Investors Services has upgraded Italys sovereign credit rating from negative to stable citing measures which may help the country move out of its worst recession for 60 years. Greece is being forecast to post a GDP growth of 0.6% this year to be followed by a growth of 2.9% in 2015 after facing the longest spell of recession in the Eurozone bloc. Unemployment which was recorded at 27% of workforce in 2013 is being forecast to fall to 26% in 2014 and further to 24% in 2015. Sovereign debt which peaked at 177.3% of GDP in 2013 is expected to come down progressively to 171.9% of GDP in 2015 easing by 1.1% in 2014 over the 2013 level. The country recorded its first, albeit small, current account surplus in 2013, the first since 1948. The Bank of Korea, and the Reserve Bank of Australia, the central banks of the two countries, have signed a swap deal worth $ 4.5 bn to trade in their own currencies without reference to any other reserve currency. The deal would initially cover a three-year period.

import cost of crude oil and petroleum products amounted to $ 8.727 bn against $ 8.855 bn; import cost of food items was recorded at $ 2.374 bn against $ 2.608 bn; export earnings of food products rose to $ 2.657 bn against $ 2.449 bn; export earnings of fish and fish preparations rose to $ 200.416 mn against $ 180.137 mn; import cost of generators stood at $ 644 mn against $ 605 mn; import cost of the telecom sector stood at $ 715.50 mn against $ 965.27 mn. According to Pakistan Bureau of Statistics (PBS), f.o.b. data, total import cost during July-January 2013-14 stood at $ 25.808 bn against $ 25.685 bn in the same period of 2012-13. Total export earnings stood at $ 14.699 bn against $ 14.047 bn during the above periods. The merchandise trade deficit in the first seven months of the current fiscal fell to $ 11.109 bn against $ 11.638 bn in the same period last fiscal.

Editor: Syed Mahdi Mustafa [M.Sc. (Econ.) London School of Economics]

Published by: The Institute of Bankers Pakistan, M.T. Khan Road, Karachi 74200, Pakistan Phone: (021) 35277557 | Fax: (021) 35222416 | Email: publications@ibp.org.pk | Website: www.ibp.org.pk

General Disclaimer: IBP Weekly Economic Letter is based on information obtained from local and international print and electronic media. IBP has not verified this information and no warranty, expressed or implied, is made that such information is accurate, complete or should be relied upon as such. In no circumstance IBP and its team members would be liable for any incidental or consequential damage that may incur from the use of information contained in IBP publication(s).

Volume 9, Issue No. 9 |

February 28, 2014