Foreign exchange reserves hit 12-year low, reveals SBP data

SBP’s foreign exchange reserves reduced $83.5 million, or 2.7%, between November 29 and December 6. CREATIVE COMMONS

KARACHI: 

Foreign exchange reserves held by the State Bank of Pakistan (SBP) have declined to a 12-year low of $2.9 billion, hitting its lowest level since November 2001, according to data released yesterday.

SBP’s foreign exchange reserves reduced $83.5 million, or 2.7%, between November 29 and December 6. Total liquid foreign reserves held by Pakistan on December 6 amounted a little over $8 billion, SBP data revealed. Out of the total liquid reserves, net foreign reserves held by the banks other than the SBP amounted more than $5 billion.

Pakistan’s foreign exchange reserves have declined by $2.9 billion since the beginning of fiscal year 2013-14. Notably, the decrease in the total liquid reserves is mainly due to a sharp drop in the reserves held by the central bank.

Speaking to The Express Tribune, Topline Securities research analyst Zeeshan Afzal said the IMF loan repayment amounting to $1.9 billion has caused the sharp decline in reserves since the beginning of the fiscal year, although Pakistan has received the first tranche of the IMF loan, Coalition Support Fund (CSF) and other inflows since then.

“There were no scheduled payments from or to the IMF between November 29 and December 6. Apparently, the decline in reserves is because of the current account deficit, specifically balance of trade,” Afzal added.

Pakistan’s current account deficit increased to $1.3 billion in July-October as opposed to the surplus of $14 million in the corresponding period of the last fiscal year.

As a consequence, the rupee has undergone considerable depreciation due to declining reserves. It has depreciated by 7% since July 1 and was traded at Rs110.50 a dollar in the inter-bank market on September 26.

However, the rupee is stabilising in the inter-bank market of late despite dwindling reserves. The rupee hovered around Rs108 a dollar with a marginal change in value during the week under consideration.

Afzal attributes the recent stability in the value of the rupee to the government’s effort to reach out to commercial banks and the emerging clarity over foreign exchange inflows. In addition, Afzal said, a decline in demand from importers due to their expectation about the strengthening local currency also played a key role.

The finance minister recently met senior bankers and shared his optimism about the expected foreign exchange inflows from the 3G auction, loans, bonds, privatisation and CSF.

Meanwhile, according to economist Sayem Ali, the current level of foreign exchange reserves gives only three weeks of import cover. It reflects a highly vulnerable balance of payment position with a negative outlook for the Pakistan rupee.

“Foreign reserves data shows the SBP’s short-term borrowing from commercial banks has spiked, which increases the roll-over risks in the foreign exchange market,” Ali said.

“According to the SBP data, net borrowing from banks through the swaps/forwards market increased to $2.9 billion in October as opposed to $1.8 billion in September (a month-on-month increase of 61.1%), which reflects tighter dollar liquidity and a rising cost of borrowing for importers,” he added.

In the current fiscal year, the IMF will lend Pakistan $2.2 billion whereas Pakistan will repay it $3.2 billion.

“Private capital inflows have posted a healthy increase on the booming stock market, but they remain insignificant to have a meaningful impact on the foreign exchange reserves position,” Ali added.

GSP Plus: EU grants duty-free market access to Pakistani goods

Shandong Ruyi Technology Group has formally expressed its intention to acquire up to 31.2 million ordinary shares of Masood Textile Mills through AKD Securities. PHOTO: AFP/FILE

Pakistan on Thursday secured the long awaited duty-free access to European markets, through the EU Generalised Scheme of Preferences (GSP) Plus status, Radio Pakistanreported.

European Parliament approved the Single Delegated Act under which ten countries including Pakistan are entitled to Generalised System of Preferences Plus (GSP Plus) Scheme. The Act will come into force from January, 1, 2014.

Reacting to the news Prime Minister Nawaz Sharif said that the GSP Plus status for Pakistan shows confidence of the international markets in the quality of its products.

Nawaz added that access to European markets was the government’s top most priority as part of the economic development agenda. The status would enable Pakistan to export more than one billion US dollars worth of products to the international markets.

As a result of the GSP Plus, the textile industry alone is expected to earn profits up to one trillion rupees per year.

Nawaz said the increase in exports will resultantly facilitate in economic growth and help in generation of millions of additional employment.

The ministry of foreign affairs in a release expressed gratitude to the countries who supported Pakistan’s inclusion under the scheme.

“We are grateful to the European Commission and member countries of the European Union for their unstinting support at every step of the process and to the European Parliament for the adoption of the Single Delegated Act.”

Pakistan hoped that the EU initiative to grant GSP Plus will supplement the government’s efforts to revive economy, with the expectation that the implementation of the Single Delegated Act, Pakistan’s trade with EU will receive a substantial boost, particularly in the textile sector.

“It will also help generate a lot of economic activity, create more employment opportunities and improve security situation in Pakistan.”

The award follows a November vote in European Union Parliament’s International Trade Committee, 17-12-1 in favour of Pakistan’s inclusion.

The GSP Plus is granted to those countries that ratify and implement international conventions relating to human and labour rights, environment and good governance. The EU has been closely watching Pakistan’s human rights record and also fiercely opposes the death penalty.

Exporters from various industries in Pakistan including textile had been anxiously hoping for access to European markets, which promises huge potential for multiplying the country’s current exports.

Dar hails GSP Plus status

Finance Minister Ishaq Dar hailed the award of GSP Plus status to Pakistan by the European Parliament on Thursday and said that the move will help increase the country’s exports by at least US $2 billion, Radio Pakistan reported.

Addressing the Sustainable Development Policy Institute’s annual Sustainable Development Conference in Islamabad today [Thursday]‚ he noted that a number of measures have been taken to fix the economy and the trust of international community on Pakistan is beginning to take root.

The Finance Minister said that even while austerity measures are being taken to bring down the deficit‚ the government has increased allocations for social safety nets to protect the poor

CR7 to attend Ballon d'Or ceremony

The Ballon d'Or awards ceremony will take place on 13th January in Zurich and Cristiano Ronaldo will be there, according to reports by 'El Partido de las 12' on 'Cadena Cope'.

According to the broadcaster, Real Madrid has already informed FIFA via a telephone conversation.

Ronaldo's presence at the ceremony began to look less likely after Blatter's performance in front of a group of Oxford University students, when the FIFA president likened CR7 to a commander on the field of play.

Cristiano Ronaldo has become the favourite to win the award, which is also being contested by Messi and Ribery.

However, Real Madrid assures that the Portuguese player will not only be present in the Swiss city just because he is the best-placed candidate to win his second Ballon d'Or.

Microsoft eyes free versions of Windows Phone, RT, report says

Will Microsoft offer Windows Phone and RT for free?
(Credit: Ed Rhee/CNET)

Microsoft may try to compete with Android by offering Windows Phone and Windows RT for free.

Citing "sources familiar with Microsoft's plans," The Verge reported Wednesday that both operating systems would be free of charge to device makers as part of Microsoft's future overhaul of Windows. The decision to offer them as freebies hasn't yet been reached but is under serious consideration by Microsoft OS VP Terry Myerson.

Microsoft earns a healthy chunk of money by licensing its operating systems to PC, phone, and tablet vendors. In the case of Windows Phone, most of the revenue was coming from Nokia. But since Microsoft purchased the handset business from the Finnish phone maker, that source has dried up.

To compensate for the money lost on OS licenses, Microsoft would look to increase revenue elsewhere, the sources told The Verge. Specifically, Microsoft would test ads in Windows 8 apps -- ads are already part of the Bing search results in Windows 8. The company also would try to convince more people to subscribe to SkyDrive, Office, and Skype.

The move would be part of Microsoft's strategy to compete with Google, which offers Android for free to phone and tablet makers. Assuming the report is true, Microsoft would likely introduce the free operating systems around the same time that the recently rumored Threshold initiative would roll out in 2015. That project is designed to unify Xbox One, Windows, and Windows Phone so that they can better share apps and other content.

No mention was made of Windows 8, so presumably Microsoft would still charge PC and tablet vendors to install the full operating system.

A Microsoft spokeswoman told CNET that the company has nothing to share at this time concerning rumors about the free versions.

Google replaces buggy KitKat with another update

Android 4.4.2 KitKat comes just days after the last KitKat system update.
(Credit: CNET)

Google's official update to Android 4.4.1 didn't have a particularly long shelf life, as the company began deploying Android 4.4.2 late on Sunday.

A Sprint changelog revealed the improvements, reported the blog GottaBeMobile. The update will be arriving on the Nexus 4 and Nexus 5 phones, and the Nexus 7 tablet over the coming week. It's likely that the Nexus 10 tablet and other "Google edition"-branded devices will receive the update soon, as well, including the Moto X.

Spring's listed changes involve what amount to minor fixes to improve the voice mail indicator, as well as unspecified software fixes and security enhancements. Some users have noticed a decrease in photo quality, and a louder maximum volume.

It's likely, although unconfirmed, that if you're on one of the Nexus devices above and you didn't get 4.4.1, you'll probably be getting 4.4.2 sooner rather than later.

Anti-corruption drive: K-P govt urges centre to hold APC on drones, NATO supplies

K-P govt urges centre to hold APC on drones, NATO supplies. PHOTO: AFP

PESHAWAR: Khyber-Pakhtunkhwa (K-P) Minister for Information Shah Farman on Wednesday urged the federal government to call an all-parties conference (APC) on the issue of drone attacks and Nato supplies passing through the country.

“If the [federal] government does not call the conference, the people have a right to continue their protest,” said Farman, justifying the ongoing Pakistan Tehreek-e-Insaf (PTI) and Jamat-e-Islami (JI) led protest blocking the Nato supply lines in K-P.

Addressing a seminar on ‘Good Governance through Prevention’ organised in the provincial capital during the Anti-corruption Week, Farman also brought forth the issue of power and gas crisis in the province.

“We feel we are being discriminated against by the centre,” he said, adding despite producing the two commodities in abundance, K-P was experiencing gas and power load-shedding more than its fair share.

He shared the K-P government’s vision on dealing with the issue of corruption, claiming the PTI-led government will end the menace through social, economic and legal justice. Farman requested the people to help the government in this regard by informing them if anyone asks them for bribe.

Also speaking on the occasion, Establishment Department Secretary Sikandar Qayum said corruption was hampering sustainable development, but the government is taking a holistic approach to tackle the issue through various laws.

“Unaccountability results in increasing corruption,” said NAB Director General Shahzad Bhatti, adding bad governance and corruption are correlated.

Bhatti added there are two types of corruption – “corruption by need, and corruption by greed.”

“Corruption by need can be addressed by several steps, including increasing salaries of employees, but corruption by greed is a dangerous phenomenon with which even developed countries struggle,” he added.

“Without a strong civil society, nothing can be achieved in this world,” Bhatti said, talking about the role of the society in tackling the issue.

Future investments: K-P govt to provide incentives to foreign investors

A network of universities, colleges, schools and technical training institutions would be established in this education city. DESIGN: CREATIVE COMMON

PESHAWAR: The Khyber-Pakhtunkhwa (K-P) government has decided to provide all facilities to investors and entrepreneurs under a hassle-free one window operation, Chief Minister (CM) Pervez Khattak said on Thursday.

Khattak told a visiting group of foreign investors from Japan, Korea and Saudi Arabia regarding development works in the city, housing and mineral development. The delegation was led by Chairman Tharawat Capital Dr. Ahmed S. Al-Zubeidi.

The group offered special investments for the K-P government’s new housing plan called Nowshera Motorway Mega City near Col. Sher Khan Interchange.

Khattak, while addressing the participants, said the provincial government was ready to extend all incentives and guarantees to foreign investors. He also said they would be provided tax incentives in all sectors, including housing and mineral development and the mega city in particular.

Secretary for Housing Zahid Arif briefed the group on the project, detailing the proposed area of 10,000 acres at the border of Nowshera and Swabi districts, along the Peshawar-Islamabad Motorway.

Arif highlighted that a major chunk of land has been reserved for the education city on the directives of the CM. A network of universities, colleges, schools and technical training institutions would be established in this education city, and efforts will be made to ensure its progress in education and research sectors for students and scholars all over the world; especially those from neighbouring countries.

Similarly, a commercial estate and a health city plan will also be launched, comprising teaching hospitals, medical and research health centres.

With power being a major thorn in any endeavour, the participants were told that the proposed project will be powered by its own hydro power station built on nearby canals and the Kabul River.

Secretary for Mineral Development Mian Waheedudin highlighted the avenues for exploration and utilisation of precious mineral resources, available in various parts of the province.

The investors group showed interest in the projects and planned to visit sties in the coming fortnight, following the consent of the CM for public and private partnership in these sectors.