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The State Bank of Pakistan (SBP) has issued an advisory against use OctaFX, Easy Forex and other illegal offshore Foreign Exchange Trading Websites, Mobile Apps and Platforms

According to the presser, the central bank has noticed an increasing number of offshore foreign exchange trading websites, mobile applications and platforms such as OctaFX, Easy Forex, etc. are offering their products and services to residents of Pakistan.

These digital platforms lure people through social media advertisements to buy/invest in their products or services. Examples of such products include but not limited to foreign exchange trading, margin trading, contract for differences, etc.

State Bank of Pakistan (SBP) clarified for the interest of public that buying products and services being offered by aforementioned platforms by any person resident in Pakistan is prohibited and against the laws of the land.

It added that any person in Pakistan buying products or services of such offshore platforms and remitting foreign exchange directly or indirectly to them through any payment channel is making himself/herself liable to be proceeded against for violation of provisions of the Foreign Exchange Regulation Act, 1947 (FERA).

Since such platforms are regulated neither by the SBP nor by the Securities & Exchange Commission of Pakistan; hence, the public is hereby advised to be careful and refrain from buying/investing in products and services of such offshore platforms to avoid any potential loss and legal proceedings under FERA
 

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The government has prepared a revised plan to reduce imports by nearly one billion dollars a month through a combination of tariffs and non-tariff measures, as it considers increasing regulatory duties up to 100% to slow down the imports.

Finance Minister Miftah Ismail on Tuesday chaired another meeting to review the set of options crafted by the Ministry of Commerce and the Federal Board of Revenue (FBR) to reduce the import bill.

The meeting was informed that imports could be reduced by close to $1 billion, or about 15% of the total monthly imports, if the regulatory duties were substantially increased. New Govt Suggests to Double Duty Tax on Mobiles Phones
 

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The US dollar has reached the startling milestone of Rs200 in interbank trading, gaining Rs1 from the previous day's close of Rs199, data by the Forex Association of Pakistan (FAP) showed.

A day ago, the greenback had made a significant gain of more than Rs2 from Tuesday's close and settled at Rs199 at the session's end, which was the latest in a string of record highs that the US currency has been hitting since last Tuesday.

While the FAP recorded the previous day's closing rate at Rs199, data released by the State Bank of Pakistan stated the closing rate as Rs198.39 — still remarkably close to the Rs200 milestone that the international currency is being anticipated to reach with the country's rising import bill, growing current account deficit and depleting foreign exchange reserves.
 

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Govt imposes ban on import of luxury commodities to save revenue


: The federal government has imposed a ban on the import of luxury products to save much-needed revenue and to arrest the current account deficit (CAD), a news source reported on May 19. The tax ban will affect 33 product categories and will save up to USD 500 million monthly in terms of the import of these products.

Reportedly, the decision to ban imports of luxury items was announced by the government amidst a widening pay gap and the falling value of the rupee against greenbacks.

In a public announcement on Thursday, Prime Minister Shehbaz Sharif said in a Tweet that “ “My decision to ban the import of luxury items will save the country precious foreign exchange. We will practice austerity & financially stronger people must lead in this effort so that the less privileged among us do not have to bear this burden. ”

A four-page SRO598 of 2022 was released by the ministry of commerce for banned items.

List of banned items

A total of 800 items were banned, belonging to 33 categories, including food items, manufactured and CKD units, mobile phones, and confectionaries.

Automobiles
Mobile phones
Home appliances
Fruits and dry fruits (except Afghanistan)
Crockery
Private weapons and ammunition
Shoes
Chandeliers and lighting (except energy savers)
Headphones and loudspeakers
Sauces
Doors and window frames
Travelling bags and suitcases
Sanitary ware
Fish and frozen fish
Carpets (except Afghanistan)
Preserved fruits
Tissue paper
Furniture
Shampoos
Confectionary
Luxury mattresses and sleeping bags.
Jams and jellies
Cornflakes
Toiletries
heaters, blowers
Sunglasses
Kitchenware
Aerated water
Frozen meat
Juices
Pasta
Ice cream
Cigarettes
Shaving goods
Luxury leather apparel.
Musical instruments
Salon items like hairdryers
Chocolate

Reversal of the import ban on some items,

Mobile phones and completely knocked-down (CKD) items, however, are exempt from the import ban. The government has decided instead to increase tariffs on both items to discourage their import. The decision regarding the new tariffs will be announced In the second half of Friday (May 20).

 

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Pakistan surprises IMF, World Bank with nearly 6% growth rate in FY 2021-22

Defying all the odds, Pakistan has attained a Gross Domestic Product (GDP) of 5.97% during the fiscal year 2021-22 ending in June, news sources reported. The jump in GDP growth is greater than the 4% and 4.30% forecasted by the International Monetary Fund (IMF) and World Bank (WB), respectively.

Reportedly, The current fiscal year’s (FY22) robust GDP growth is being characterised as an economic recovery from the adverse consequences of COVID-19. Following the 105th meeting of the National Accounts Committee, led by Planning Secretary Dawood Muhmmad Bareach, the new and corrected GDP growth estimates were announced. The meeting also updated GDP numbers for the fiscal years 2020-21 from 5.57 % to 5.74 %. Similarly, it was announced that the economy expanded by USD 33.24 billion in the current year to USD 380 billion in 2021-22, up from a revised number of USD 346.76 billion the previous year. The economic growth rate is the greatest figure recorded in a single year. The economy increased in dollar terms as the rupee rose against the dollar – the most growth in any year. Other statistics given by the government include:

  • The construction industry grew from 2.84% in FY21 to 3.14% in FY22
  • The total amount of cash crops i.e. cotton (17.9%), rice (10.7%), sugarcane (9.4%) and maize (19%) has increased while wheat production decreased
  • Per capita income has increased from PKR 268,223 (USD 1673) to PKR 314,353 (USD 1798) during the FY 2021-22 as compared to FY 2020-21
  • The crops sub-sector has improved from 5.92pc to 5.96pc. Other crops have improved from provisional growth of 8.08pc to 8.27pc in revised estimates
  • The industrial sector’s growth in the revised from 7.79% in FY21 to 7.81% in FY22
  • The services sector has improved from 5.7% in FY21 to 6% in FY 22
  • The growth in agricultural, industrial and services sectors is 4.40%, 7.19% and 6.19%
  • The livestock sector grew from 2.38% in FY21 to 3.26% in FY22
  • The overall industrial sector grew from 7.19% in FY21 to 7.81% in FY22
  • The transportation and storage industry has increased by 5.42% with railways showing a growth of 41.85%, air transport 26.56% and road transport by 4.99%
 

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UAE to invest in Pakistan’s infrastructure development

The United Arab Emirates (UAE) will invest in Pakistan’s infrastructure development and bilateral economic cooperation, news sources reported on May 4. The decision was conveyed to the government of Pakistan through a high-level delegate that met Prime Minister Shehbaz Sharif here on Eid.

The delegate expressed interest in the growth of commerce, energy, infrastructure, petroleum, and other critical areas during a meeting with the premier. The premier assured the delegate of full government assistance in carrying out the leadership’s investment and trade initiatives.

Reportedly, the delegate met with the premiere a few days after he visited Saudi Arabia. While returning from Saudi Arabia, PM Shahbaz met with the crown prince of UAE, HH Mohammed bin Zayed. Both parties agreed during the meeting to pursue bilateral growth and economic cooperation.

On receiving the delegate on Eid, the premier stated that the meeting on such an important occasion demonstrates both countries’ commitment and resolve to promote bilateral ties. It is worth noting that PM Shehbaz visited Saudi Arabia at the request of Crown Prince Muhammad Bin Salman. The tour’s purpose was to expand commercial cooperation and strengthen bilateral relations with the kingdom. Non-resident Pakistanis in the UAE and Saudi Arabia represent the largest diaspora, sending billions of dollars in remittances.
 

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Prime Minister Shehbaz Sharif on Friday asked Karachi businessmen to devise a plan for an investment of $1 billion dollars from Saudi Arabia.

Addressing a ceremony at the Karachi Chamber of Commerce and Industry during a one-day trip to the metropolitan city, the premier touched on a number of topics, including the recent import ban and the economic crisis.

"One billion dollars is available, it is a gift of investment from Saudi Arabia. As the prime minister, I am laying this in front of you. Sit together and brainstorm and make a feasibility plan. Set up a desalination plant and I believe that clean water will be available at every home within five years," he told the businessmen.

"Now it is up to you. This investment is available. It is on the table," he said, adding that he had told Finance Minister Miftah Ismail on the flight over to Karachi that he wanted to use the funds for the city.

He said that the Saudis had stated that were waiting for viable investment opportunities in Pakistan.
 

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Import Ban: Govt exempts businesses with LCs opened before 19th


In order to facilitate importers, the government has exempted all those businesses from the import ban whose Letters of Credit (LC) had been opened by banks before May 19, news sources reported on May 19. A notification in this regard was issued by the Ministry of Commerce to accommodate importers.

All importers who have already placed orders through the proper channels will be excluded from the new notification. Similarly, the notice exempted any consignments that arrived at ports prior to the announcement of the May 19 import embargo. Following this notice, all of these consignments will be cleared by customs officers in accordance with the laws and regulations. Consignments whose LCs were opened after the ban announcement, on the other hand, will not be cleared till further notice. It is worth noting that the government has banned the import of luxury non-essential products in order to address the country’s growing current account deficit (CAD).

The government has banned the import of products falling into a total of 33 categories including food products, automobiles, and other products that will not be cleared by customs at ports.
 

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WB approves PKR 56.7 bn loans for solar power project in Tarbela

The World Bank (WB) has approved loans worth PKR 56.697 billion for the installation of 300 MV Floating Solar Photovoltaic (FPV) in Tarbela Ghazi Hydropower Generation Complex, according to a news story published in the national dailies on May 18.

As per the details, the WB will be financing the solar power project at water bodies in Tarbela Ghazi Hydropower Generation Complex through a soft loan. Under the said project, 300 MV FPV will be installed on two water bodies; 150 MW at Ghazi Barrage Head Pond and 150 MV on Ghazi Barotha Forebay.

Moreover, the solar power project will raise the supply of electricity during peak hours and strengthen capacity through large-scale demonstration of solar-hydropower hybrid operation. It was mentioned that there are several reservations about the project. It was suggested to execute a generation capacity expansion project on Independent Power Producers (IPP) model. Also, WAPDA was recommended to focus its available capacities on water resources and hydropower development. The solar power project will be implemented by Alternate Energy Development Board (AEDB).
 

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Pakistan’s total debt and liabilities jumped to Rs53.5 trillion – an addition of Rs23.7 trillion under the watch of former prime minister Imran Khan.

The increase in public debt alone, which is the direct responsibility of the government, was Rs19.5 trillion, as it swelled to Rs44.4 trillion by March 2022, according to the central bank.

The State Bank of Pakistan’s (SBP) latest debt bulletin for the end of March 2022 showed that the debt burden increased both in absolute terms and in terms of the size of national economy, underscoring that Pakistan’s economic viability requires serious long-term reforms.

The debt issue has been politicised for the past 10 years and no government brought meaningful reforms to stop the debt accumulation.

The total debt and liabilities of the country increased to Rs53.5 trillion, a surge of Rs23.7 trillion or nearly 80%, when compared with the statistics before the Pakistan Tehreek-e-Insaf (PTI) came to power.

Imran Khan won the July 2018 elections and promised to curtail the debt burden while also blaming his predecessors for throwing the country under the debt pile.

Imran Khan also formed the Debt Commission to probe the reasons for the surge in public debt from Rs6 trillion in 2008 to Rs24.5 trillion in 2018, suspecting that the debt increased due to alleged corruption by his political opponents – former president Asif Ali Zardari and former prime minister Nawaz Sharif.

But the PTI government never made the Debt Commission report public.

In terms of size of the economy, Pakistan’s total debt and liabilities were equal to 76.4% in 2018 that jumped to 80% by March this year despite the rebasing of the economy.

The SBP report showed that the last PTI government added Rs19.5 trillion to the public debt during its three-and-a-half-year stint, which was more than the liabilities accumulated by any government in 75 years.

The gross public debt stood at Rs44.4 trillion by the end of March 2022, according to the SBP data.

During their previous five-year stints in power, the PML-N added around Rs10 trillion and the PPP Rs8 trillion to the debt burden. But Imran Khan’s party left behind his opponents in just 43 months.

The lower-than-targeted tax collection, steep currency devaluation of around 50%, higher interest rates, higher expenditures along with losses incurred by state-owned companies and debt mismanagement were the main reasons for the surge in public debt during the PTI’s tenure.
 

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SBP hikes interest rate by 150 points, reaches 13.75%


The State Bank of Pakistan (SBP) on Monday (May 23) increased the policy rate by 150 basis points, reaching a 13-year high of 13.75%, news sources reported. The new interest rate was announced following the depreciating rupee and higher inflation rates.

The policy rate was announced at the conclusion of the meeting held by the Monetary Policy Committee (MPC) and was described as a step in the economy’s management amid rising domestic demand and pressure on the rupee. The SBP also issued a three-page post-meeting statement outlining the rationale for the monetary policy rate adjustment and modification. A summary of the announcement was also made available on the SBP’s official Twitter account, which reads as follows:


In addition to raising the policy rate, the SBP raised interest rates on EFS (export finance scheme) and LTFF (long-term financing facility) loans, stating that they would be linked to the policy rate and would change automatically. According to the apex bank, the economy would rise at a rate of 3.5-4.5 % in the fiscal year 2023 (FY-23). It is important to mention here that the government has banned the import of all luxury items to curtail the current account deficit (CAD), which has reached 4% of GDP. The SBP has said that the CAD will reduce in FY-23 to 3%.
 

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Pakistan has incurred foreign loans of $13.03 billion in the first ten months of the ongoing fiscal i.e., July- April FY22 from multiple financing sources against the annual budget estimates of $14.09bn for the entire fiscal year FY22, the latest monthly bulletin by the Economic Affairs Division (EAD) showed today.

In the month of April, the country got foreign assistance of $262.14 million from multiple financing sources.

Out of $13.03bn, the government obtained $10.26bn loan for non-project aid that includes $9.02bn in the form of program/budgetary support assistance to restructure Pakistan’s economy, $1.21bn for short-term credit, and $31.41mn for TDPs while $1.82bn has been obtained for project aid financing and guaranteed loans of $832.53 during July-April FY22.

Going into details made available by EAD, the disbursement from bilateral and multilateral development partners maintained a strong trend as it totaled $4.54bn of foreign economic assistance during 10MFY22. These healthy inflows also helped to improve foreign exchange reserves.

The Ministry of Economic Affairs noted the country relied on foreign commercial borrowing as it was recorded at $2.62bn that included a $1.14bn from Dubai Bank, $591.25mn loan from Emirates NBD, $61mn from Ajman Bank, $487.26mn loan from Standard Chartered Bank London while Suisse AG, UBL & ABL provided $343.50mn during July-March FY22.

Similarly, the country received $2.04bn from bonds issuance and $3bn time deposit from Saudi Arabia during the said period.

During July-April FY22, the foreign assistance obtained by Pakistan through multilateral sources totaled $4.05bn. Amongst the multilateral development partners, Asian Development Bank (ADB) provided $1.454bn, followed by Islamic Development Bank (IDB) provided $1.21bn as short-term finance and International Development Association-World Bank (IDA) with $976.93mn.

The monthly bulletin by EAD revealed that the collective disbursement from bilateral partners amounted to $485.97mn during July-April FY22 wherein the country received $201.09mn from Saudi Arabia, followed by China with $153.3mn, the United States with a grant of $64.32mn while Japan gave $19.33mn during the period under review.
 

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Gold prices in Pakistan skyrocketed on Monday as a softer rupee and concerns regarding inflation lifted demand for the safe-haven asset.

Gold prices in the local bullion market soared by Rs2,350 per tola and Rs2,015 per 10 gram today to reach Rs141,650 and Rs121,442 amid continuous depreciation of the rupee against the US dollar.

The precious commodity closed at Rs139,300 per tola and Rs119,427 per 10 grams on Saturday.

Significant fluctuations in the local currency coupled with speculations that the rupee will further depreciate added fuel to the already surging price of the yellow metal.

Cumulatively, the price of the yellow metal significantly gained Rs9,300 per tola since the start of the bullish spell (May 6).

Gold is considered a hedge against soaring inflation and is often used as a safe store of value during times of political and economic uncertainty.
 

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Pakistani Prime Minister Shehbaz Sharif proposed Friday to expand and include Turkiye in the multibillion-dollar China Pakistan Economic Corridor (CPEC).

Addressing a ceremony of the launch of PNS Badr, the third ship under the framework of Turkey’s National Ship Project (MİLGEM) in Karachi, Sharif said turning the CPEC into a trilateral project with Pakistan, Turkiye and China would be beneficial for the region.
 

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CM Murad highlights USD 6 billion investment potential of Sindh


Sindh Chief Minister Sindh Murad Ali Shah invited international investors to explore USD 6 billion investment potential of Sindh, news sources reported on May 25. He was sharing his vision of Sindh‘s development at an international investment conference in Devos.

According to CM Murad, there are latent investment prospects in water and the environment, education and technology, industrial zones, eco-tourism, urban ecosystems, and food security. CM Murad also stated that the provincial administration has implemented investment-friendly rules and regulations that has enhanced the province’s ease of doing business ranking. He also stated that his government is creating infrastructure that is critical for the province’s long-term socioeconomic growth in the fields of education and healthcare and has improved citizens’ living standards.

Furthermore, he emphasised the Thar Coal project’s investment potential, stating that once completed, the project will improve the country’s energy security and become a key export item. It is worth noting that CM Murad is in Switzerland for an official visit to attend the World Economic Forum. The Path Finder and Martin Dow Group in Davos, Switzerland, arranged a Sindh investment moot as part of the tour.
 

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KSA to extend USD 3 bn deposit to improve fiscal stability in Pakistan


The Kingdom of Saudi Arabia (KSA) is working to extend the withdrawal date of the USD 3 billion fund facility, news sources reported on May 24. The funds were deposited in Pakistan’s current account last year to stabilise forex reserves.

The news was reportedly communicated by Saudi Finance Minister Mohammed al-Jadaan. He stated that the fund facility extension will be completed soon. He also stated that Pakistan’s fiscal stability is critical because the country is an essential ally. The announcement comes amid the country’s expanding current account deficit (CAD) and a greater balance of payment concerns.

Currently, the nation has put import limitations on luxury consumer goods in order to halt the runaway CAD and cut import expenses. It is worth noting that the government and the International Monetary Fund (IMF) are now holding a staff-level meeting to restart the IMF’s USD 6 billion fund project. The first round of the talks has concluded in Doha.
 

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ADB to allocate USD 2 bn for development projects in Pak


The Asian Development Bank (ADB) on Thursday (May 26) announced a proposal of USD 2 billion in funding for development projects in Pakistan during the coming months, news sources reported. The funding will be released following consultation with public and private organisations.

According to reports, the ADB would support initiatives related to food security, water, irrigation, and education. The announcement was made by ADB Deputy Country Director Asad Aleem during a consultation meeting with the Lahore Chamber of Commerce and Industry (LCCI) in Lahore. He stated that consultative sessions had also been held with the governments of Sindh and Punjab in order to ensure the proper execution of vital programmes for Pakistan’s development.

LCCI Senior Vice President Mian Rehman Aziz Chan said on the occasion that ADB has funded approximately USD 37 billion for the country’s socio-economic development since 1996. This excellent collaboration has resulted in the development of society’s lowest segments
 

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The Assets Recovery Unit (ARU), which was set up by former prime minister Imran Khan to bring looted money from foreign countries back to Pakistan, helped recover Rs426.4 billion over the last three years, according to documents prepared by the Cabinet Division this month.

Of the total amount, over Rs334bn was recovered in the last fiscal year alone, according to the Cabinet Division's yearbook for 2020-21, which was prepared in May 2022, well over a month after Shehbaz Sharif took over as the prime minister.

The ARU was set up in September 2018 to "provide a forum" for law enforcement agencies, National Accountability Bureau (NAB), Federal Investigation Agency (FIA), Financial Monitoring Unit (FMU) and provincial anti-corruption establishments (ACEs) to "trace new cases and track all existing cases targeting eventual repatriation of unlawfully acquired offshore assets".

The institutions and agencies would "eventually recover the amount either through taxation or plea bargain or direct recovery/repatriation to the government exchequer".

According to documents, over the last three years, NAB, "under the supervision and assistance of ARU", recovered Rs389.5bn. It was a "drastic increase" from the total Rs295.6bn recovered in the 17-year period before then (from 2000 to 2017), according to the Cabinet Division yearbook.

Meanwhile, the FIA recovered Rs6.4bn in the last three years, of which 3.6bn was recovered in 2020.

The documents added that in light of various inquiry commissions set up by the federal government, the Federal Board of Revenue (FBR) established liabilities and made recoveries that were "off the charts".

The revenue body had identified taxes of Rs22.8bn on offshore assets, including properties in the United Arab Emirates and the United Kingdom, and assets identified in the Panama Papers and Paradise Papers, recovering Rs5.6bn in FY21.

Recoveries of Rs30bn were also directly attributed to the ARU, according to the documents.

They added that the Financial Monitoring Unit was also reinvigorated to ensure that it reported suspicious transactions to law enforcement agencies in a timely manner so they could combat money laundering in accordance with their respective laws.

"Assets Recovery Unit continues to liaise with the National Crime Agency of UK and other foreign governments to enter into legal instruments and MoUs to get the unlawfully acquired offshore assets repatriated to Pakistan."
 

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Prime Minister Shehbaz Sharif stressed on Monday that Pakistan needed support from China in the form of investment, trade and transfer of knowledge rather than disbursement of loans and financial aid.

In a meeting with Chinese investors, he said that Pakistan wants to learn agriculture and industrial uplift and cost cutting from China.

“Scarce resources are used to finance expensive oil and gas imports and we need to learn how to replace them with wind and solar power and how to make Pakistan prosperous and progressive in the time to come,” he said.

He praised Chinese President Xi Jinping and Premier Li Keqiang for extending endless support to Pakistan.
 
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