Saturday, 30 June, 2012

Page 02

Flat again!

KARACHI

ISMAIL DILAWAR

WhIlE speculations, spe-cially by the media, havebeen rampant at home theresource-constrained Pak-istan has not yet made anyofficial request to the In-ternational Monetray

Fund (IMF) for a new bailout program.Friday saw the dollar-hungry coun-

try making the third repayment, $107.6 million, to the IMF in line withthe latter’s 2008’s half-paid $ 11.3 bil-lioin Stand-By Arrangment. Of the totalonly $ 8.3 billion were paid to Islam-abad after the latter’s failure to com-paly with the Fund’s demands. “Yes, wehave made the third repaymnet. It’s $107.6 million,” SBP chief spokesmanSyed Wasimuddin told Pakistan Today.

On the other hand, in a press brief-ing held in the US capital WahsingtionD.C on June 28, the IMF officials toldan online questioner that Islamabadhad forwarded no formal request for afresh bailout package.

“There’s an impression in Pakistanthat the IMF will not approve a new

program for Pakistan until the U.S.government gives the green signal.What is your comment?,” a transcriptof the briefing placed on the IMF’swebsite quoted the questioner asasking.

To which Gerry Rice, DirectorExternal Relations Departmentof the Fund, replied that: “Inthat, I’d just like to say thatthe Pakistani authorities haveactually not requested financialassistance from the Fund”.

The IMF staff, Rice added,was however enganged in an“active policy dialogue” withthe Pakistani authorities who,the analysts believe, might findit hard to convince the interna-tional lender on a new programgiven their previous defaults ontheir commitmnets with the former.

Under the SBA agreement, one ofthe Fund’s primary condition was forPakistan to boraden its tax net that cur-rently stands at 9 percent (tax-to-GDPratio), lowest among the develpoingeconomies. While special emphasiswere put by the Fund on the ReformedGeneral Sales Tax, the political govern-

ment

in Pakistan is still far from developinga national consesnus on the levy. “Of

course, the staff remains in an activepolicy dialogue with Pakistan,” said

the IMF director.Whereas the econmiic ob-

servers are coautionsilywatching the situtaion, the

econmic managers seemless or no wary at all of the

heavy debt repaymentsPakistan was bound tomake out of its depleting

foreign exchange reserves.The government offi-

cials like Federal FinanceMinister Dr Abdul hafeezShaikh have frequentlybeen telling the mediathat the repaymnets were

already budgetted andwere, therefore, posing no

immiediate threat to macro-econbomic stability in the

country.The central bank thinks on

the same lines. “There was a timewhen our total dollar reservesamounted to $ 300 million only,”Wasimuddin shrugged off when askedif the country was going towards an-other default on the Balance of Pay-

ment side. Accoridng to SBPspokesman, Pakistan had “suceffuly”made two repayments of around $ 793million to the IMF. Some $ 399 millionwere repaid on February 24 and $ 394million on May 25 of this year, he re-called. Friday’s tranche takes Pak-istan’s total repaymnets to the theIMF to $ 900.6 million. The amountrepaid was principle in nature anddoes not include the interest compo-nent that applies as soon as the bor-rowed money is issued. “The amountrepaid is not the interest,” clarifiedWasimuddin when asked.

Amid lowest invetsmnet inflowsinto the country, the country’s foreignexchnage reserves have contarcted to $15 billion after hitting a record high of$ 18.3 billion in July lasy year.

Accoridng to cenetral bank, thecountry’s holding of the greenback ac-cumulated to $ 14.964 billion up toJune 22. Of the total the State Bankholds $ 10.535 billion while the com-mercial banks’ reserves amounted to $4.428 billion.

The total loans the country has se-cured fron the foreign lenders have ac-cumulated to $ 62 billion.

NO CALL OUT, NO BAIL OUT

You want some? Come get some!g Pakistan has made no formal request for fresh bailout package: IMF g But we do have some ‘active policy dialogue’ going on with

IMF g SBP issues third repayment of $107.6mn under SBA deal g In FY12 total $900.6m principle amount repaid to IMF

ISLAMABADSTAFF REPORT

Tobacco farmers in Khyber-Pakhtunkhwa are likelyto brace an attack on their livelihood, by the WorldHealth Organization (WHO) that is stressing reduc-tion in area under tobacco cultivation through theFramework Convention on Tobacco Control (FCTC),an official source said.

The convention calls upon all signatory statesto stop all financial and technical support for to-bacco farming. Pakistan is a signatory to FCTC anda number of measures are introduced in the lastcouple of years for tobacco control under the com-pulsion of the treaty, despite having no local impactof those on tobacco consumption.

According to unofficial estimates nearly one mil-lion people directly or indirectly are employed in thetobacco sector out of at least 80,000 families of KPKare totally dependent on tobacco cultivation for theirlivelihood. Tobacco companies are estimated to buyannually 80 million kilogram tobacco from the localgrowers of Swabi, Mardan, Buner, Charsadda andMansehra districts.

Implementing the recommendation will be devas-tating for KPK farmers as no alternative crops are iden-tified to replace tobacco the tobacco crop and there isno working on other livelihood schemes. Putting to-bacco growers livelihood in peril is not is the intention

of FCTC which envisages that the governments will helpgrowers, as they would be affected in the long-term bya reduction in demand for tobacco.

Tobacco dependent economy of KP province can-not be expected to reduce tobacco production at thesame rate as countries with smaller tobacco farmingsectors. Until finding viable alternative, farmers shouldnot be deprived of their livelihood, says Member Pak-istan Tobacco Board Fazal Elahi.

Mentioning the ambiguous articles of FCTC thatlack clarity on the issue, he says, Article 6, 17 and 18have become sword of Damocles that could befall onhapless tobacco farmers anytime.

Article 6 says price and tax measures are an ef-fective and important means of reducing tobacco con-sumption by various segments of the population, inparticular young persons. Thus it is being proposedthat a minimum level of excise duty is imposed on to-bacco products. On the other hand member-states havea sovereign right to decide on their fiscal policies.

Tobacco and its products are also source of signif-icant revenue for the tax authorities. Despite lacklustereconomy, tax-compliant cigarette industry contributesto approximately 37 percent of total federal excise duty(FED). When tax compliant cigarette industry had tolimit its production in Pakistan owing to multiple fac-tors, cigarette industry saw a decline of 14 percent inproduction and FED could not be collected only a cou-ple of years ago.

WHO recommendationsto put KP farmers’livelihood at risk

Guess WHO

conjured up

farmers’ worst

nightmare?

ISLAMABAD

ONLINE

The government is yet again all set to take up the issue of $100 million refunds claims of Pakistani exporters with theRussian authorities in meeting of Inter-governmental Com-mission (IGC), say an official.

According to official of Commerce Ministry, the meetingof Inter-governmental Commission between Pakistan andRussia is scheduled to be held in Pakistan in August thisyear. The meeting was earlier scheduled in May 2012 butdue to budget engagements Pakistani authorities had re-quested for its re-scheduling and now it will be held in Au-gust. Official told Russia has not still paid the money interm of refund claims of Pakistani exporters even after en-tering into an agreement entitling ‘Agreement on exportersrefund claims’ between two sides.

According to official, Russia has to pay over $100 mil-lion to Pakistani exporters in term of refund claims that itdenied to give after the disintegration of Russia. These re-

fund claims are pending since the war between Afghanistanand Russia. When the Russia was disintegrated after thewar in Afghanistan, it denied paying exporters refundclaims saying now it will not pay after the disintegration.

Sources said that Pakistan had taken up the issue withRussian delegation several times but Russian governmenthad not still given approval for paying refunds claims.

”Russia is in Asia and near to Pakistan as compared toother countries but despite this fact share of Pakistan exportin Russian import is negligible only 0.8 percent while shareof Russian export in Pakistan import is 0.6 percent,” saidthe official, adding that

Pakistan and Russia have enormous trade opportunitiesbut yet a meager trade volume of $400 million (import andexports) is quite disappointing as this number of trade vol-ume does not reflect the real economic trade opportunitiesbetween the two countries.

It is pertinent to mention here that Russia had alsoagreed to finance the multi- billion dollar Iran-Pakistan (IP)gas pipeline as well as other gas and power import projects.

KARACHI

STAFF REPORT

The central bank Friday issued minimum standards for thesale of third party products by the banks and development fi-nance institutions (DFIs) to safeguard the interest of the de-positors and general public and prevent banks from incurringoperational and reputational risks.

“Banks offering third party products must establish acentralized control function entrusted with the responsibilityto verify the information given in a sales proposal/applica-tion forwarded by the sales staff. It is up to the banks how tostructure the requisite control function, however the under-lying principle is that the person verifying the informationshould not have any incentive linked with the sales volume,”said an SBP circular issued on Friday.

In addition to the existing set of documents, banks shallintroduce a basic fact sheet elaborating at least the followingfacts:i. Two liner definition of the product.ii. Disclaimer of the bank stating that it is only working in

the capacity of a distributor.iii. Return mechanism in terms of investment and premium

schedule in terms of bancassurance.iv. Free look period in case of bancassurance.

v. Premature encashment procedure and its repercussions. vi. Redressal Mechanism in case of any grievance.vii. Checklist of all the other documents signed or attached.

The basic fact sheet should be a distinct looking docu-ment including an undertaking by the customer that he/sheunderstands all the stated terms and conditions of the prod-uct. This document, along with all the other documents, shallbe printed in both Urdu & English with a font size not smallerthan 10.

Banks must institute a call back confirmation mechanismequipped with the Integrated Voice Response systemwhereby every customer is contacted, briefed about thesalient features of the product and his/her confirmation isobtained before approving a sales proposal, the Circular said.

To ensure that the bank has proper evidence of the factthat the investor was duly briefed about the product and re-lated terms/conditions, the record of every call made shouldbe retained for at least three years or until maturity of theproduct whichever is earlier.

There should be a well designed script for each productwhich should be followed for every verification call.

In Bancassurance the incentive structure, if any, mustbe focused on the persistency of the policy. For instancecommission earned by sales staff may be paid with a timelag of one year.

Pakistan to take up $100mrefund claims with Russia

SBP issues standards for 3rd party product sales

Layout 3 pages_Layout 1 6/30/2012 5:33 AM Page 1

02Saturday, 30 June, 2012

Bahria Town OPD Complex

receives prestige

RAWALPINDI: Right from its inception, Bahria Town

OPD Complex at Begum Akhtar Rukhsana Memorial

Trust Hospital Bahria Town Phase 8, Rawalpindi has

started gaining great reputation among the residents

of twin cities. BARMTH which is already famous for

providing expensive treatments at a bare minimum

for the public has met up the increasing need for an

OPD quite rapidly, which is commendable.

PACRA upgrades ratings

of JS Bank Limited

ISLAMABAD: The Pakistan Credit Rating Agency

(PACRA) has upgraded the long-term entity rating of

JS Bank Limited (JSBL) to ‘A+’ (Single A Plus). These

ratings denote a low expectation of credit risk, while

the capacity for timely payment of financial

commitments is considered strong. It also reflects the

bank’s sound financial profile emanating from

improving profitability, strong liquidity and supporting

capital adequacy. .

Pantene partners with five

renowned Pakistani women

KARACHI: Pantene, one of the leading beauty

shampoo brands in the world, announced today its

partnership with five renowned Pakistani women from

the entertainment industry. DJ and model Hira

Tareen, actress Momal Sheikh, stylist & entrepreneur

Saba Ansari, actress, painter & sculptor Sarwat Gillani

and VJ Urwa tul Wusqua will work with Pantene to

inspire girls studying in colleges and universities

across Pakistan to pursue their ambitions.

Stop & Shop at Bahria Town

Civic Centre

RAWALPINDI: Much awaited self-service

Supermarket; ‘Stop & Shop’ is inaugurated by Chief

Guest, Cmdr ® M. Ilyas, Vice Chief Executive Bahria

Town alongwith Mr. Shahid Qureshi, Advisor Real

Estate to CEO, at Phase IV Bahria Town. Speaking on

the occasion, VCE Bahria Town said that Bahria Town

always aspire to provide the best living standards for

the residents of Bahria Town and is always particular

in providing all the amenities and facilities within its

residential and commercial projects.

Major Gainers

COMPANY OPEN HIGH LOW CLOSE CHANGE TURNOVER

UniLever Pak 7018.19 7240.00 7050.00 7078.84 60.65 114Attock PetroleumXD 465.05 478.00 465.05 474.37 9.32 140,962Millat Tractors 479.14 487.00 473.00 482.85 3.71 136,641Indus Motor Company 241.69 247.85 242.66 245.08 3.39 13,845Pak.Int.Cont SD 143.00 147.74 143.98 146.00 3.00 1,613

Major Losers

Unilever Food 2750.00 2750.00 2612.50 2619.39 -130.61 160Nestle Pakistan Ltd. 4084.24 4100.00 3891.00 4014.85 -69.39 66Siemens Pakistan 763.86 790.00 725.67 747.10 -16.76 740Island Textile 217.62 225.99 206.74 207.07 -10.55 252Philip Morris Pak. 175.76 175.00 169.05 169.45 -6.31 2,986

Volume Leaders

Fauji Fertilizer 111.94 115.00 110.10 111.05 -0.89 6,330,777Fatima Fertilizer Co 24.56 25.10 24.56 24.67 0.11 5,499,453Soneri Bank Ltd 7.49 7.62 7.30 7.39 -0.10 5,169,398Jah.Sidd. Co. 12.64 12.89 12.25 12.41 -0.23 3,741,088National Bank Pak 44.03 44.49 42.95 43.54 -0.49 3,260,700

Interbank RatesUS Dollar 94.5233UK Pound 147.3523Japanese Yen 1.1899Euro 118.9953

Dollar EastBUY SELL

US Dollar 95.30 96.50Euro 117.63 119.15Great Britain Pound 146.67 148.53Japanese Yen 1.1865 1.2014Canadian Dollar 91.23 92.89Hong Kong Dollar 12.11 12.30UAE Dirham 25.80 26.10Saudi Riyal 25.30 25.56Australian Dollar 94.57 97.22

Business

Eurozone loans to privatesector down in May: ECBFRANKFURT: Eurozone bank loans to the private sectorcontracted last month, new data showed on Friday, even asgrowth in eurozone money supply, a key indicator of demand inthe economy, picked up unexpectedly. The European CentralBank, in its regular monthly money supply data, calculated thatgrowth in eurozone bank loans to the private sector came to acomplete standstill and actually showed a contraction of 0.1percent in May after growing by 0.2 percent in April. Thatfigure suggests eurozone lending to the private sector has driedup, despite the vast amounts of cheap cash banks in the regionborrowed from the ECB earlier this year. AGENCIES

Arif Siddik appointed chairman

FPCCI committee KARACHI: President FPCCI haji Fazal Kadir Khan Sherani hasappointed M. Arif Siddiq as Chairman of FPCCI StandingCommittee on land utilization and infrastructure for the year2012. Arif Siddiq is also Vice Chairman of ABAD. he has vastexperience in the field of construction. he is associated withPremier Group, said a release from Federation of PakistanChambers of Commerce and Industry (FPCCI). he was ChairmanSouthern Region in 2005-06 and Vice Chairman in 2009-10 ofAssociation of Builders and Developers. he has also beenConvener of hBFC, Karachi Water and Sewerage Board (KWSB)sub-committees of ABAD. APP

SBP appoints 11 primary dealersKARACHI: The State Bank of Pakistan (SBP) has appointed11 primary dealers for the next financial year (FY13), said thebank on Friday. Te new dealers include JS Bank, habib Bank,Faysal Bank, NIB Bank, National Bank of Pakistan, BankAlfalah, Pak Oman Investment Co., United Bank, CitibankNA (Pakistan Branches), MCB Bank and Standard CharteredBank (Pakistan). Applications were invited for selection ofprimary dealers for the FY13 from all banks, investmentbanks, development financial institutions and listedbrokerage houses and upon evaluation of each applicant’sperformance, the above-mentioned institutions have beenselected as primary dealers of the Government Securities(PIBs and MTBs) for the new fiscal year, said an SBO circularissued on Friday. STAFF REPORT

Italy, Spain lift growth pact objections BRUSSELS: Italy and Spain lifted early Friday their objectionsto an EU growth pact, luxembourg Prime Minister Jean-ClaudeJuncker said after the two nations won measures aimed at easingmarket pressures. “Spain and Italy lifted their reservations,”Juncker, the Eurogroup chief, said after more than 13 hours ofintense talks during which the two countries tied their support forthe pact to mechanisms to lower their borrowing costs. AGENCIES

CORPORATE CORNER

ISLAMABAD: Allai River being diverted, as dam for the 121-

MW Allai Khwar Hydropower Project stands completed

KARACHI

STAFF REPORT

ThE day saw the benchmark 100-share index decreasing by 4.01points to 13,801.41 points against13,805.42 points of Thursday.Ahsan Mehanti, Director at Arif

habib Investments limited., said that the Pak-istan Stocks closed lower amid concerns forglobal markets uncertainty. Thin trade wit-nessed pending judicial decisions on NRO im-plementation.

Total numbers of Shares of 447 companieswere traded on last working day of the week andat the end of the day total 109 stocks closedhigher, total 147 are declined while 191 re-mained flat. The overall value of shares tradedduring the day was Rs 3.038 billion.

The trading volumes at the ready-counterwere recorded higher at 74.047 million sharesagainst 63.362 million shares of the previoussession. The trading value increasing to Rs3.038 billion compared to Rs 2.304 billion ofthe previous session. The intraday high andlow, respectively, stood at 13,885.60 and 13,764.34 points. Market capitalization declined to3.518 trillion from 3.520 trillion.

Rising political uncertainty, fall in FX re-serves played a catalyst role in bearish senti-ments despite hopes for improvement inPak-US ties on resumption of Nato supply,viewed Mehanti.

KSE All share-index ended the day at9,708.31 points, down 5.24 points or 0.05 per-cent, KSE 30-index stopped the day at 11,922.13points, down 10.08 points or 0.08 percent whilethe KMI 30-index slumped by 13.33 points or0.06 percent to end the day at 23,776.48.

Fauji Fertilizer was volume leader of theday, 6.330 million shares, followed by FatimaFertilizer Company, Soneri Bank limited, Ja-hangir Siddiqiui Company, Natioanal Bank andlotte Pakistan PTA with turnover of Rs 5.499million, Rs 5.169 million, Rs 3.741 million, Rs3.260 million and Rs 3.125 million shares re-spectively.

The Unilever Pakistan and Attock Petro-leum XD, up Rs 60.65 and Rs 9.32, led highestprice gainers while, Unilever Food and NestlePakistan limited, down Rs 130.61 and Rs 69.39respectively, led the losers.

KARACHI

ISMAIL DILAWAR

As the new budget for financial year 2012-2013would take effect from tomorrow, July 1, thecash-strapped federal governnment on Fridayhas also budgetted its budgetrya borrowingsfrom the banking system.

The central bank Friday reported that thefunds-straved federal government had set arounded off target of Rs 1.590 trillion to be bor-rowed from the scheduled banks during firstquarter of the FY13, July-September.

This amount is higher by Rs 415 million or38 percent than Rs 1.085 trillion the govern-ment had taregetted to borrow from the banksduring the fourth quarter of the outgoing FY12,April-June.

The preceding third quarter, January-March FY12, had seen the State Bank auction-ing the heavily-weighted government papers tothe tune of Rs 777 billion to cater the govern-ment’s ever–increasing budgetary needs.

According to the central bank’s pre-an-nounced auction calendar, issued Friday, dur-ing said perioud the government would beraising from banks the above money throughthe sale of Government of Pakistan MarketTreasury Bills (MTBs) and Pakistan Investm-net Bonds (PIBs).

The govrenment would be brasiing Rs 90billion through selling PIBs of 3, 5, 10 and 20yesr maturity. This includes an additionl re-quirmnet of Rs 14.707 billion.

The economic observers call it a sort ofcyclical debt as the central bank, on one hand,is raising billions of rupees from the banks forthe government and injecting heavy liquidityinto the system on the other. The SBP believesmany of the small banks would fail if it stoppedpumping cash in the system.

Of the total Rs 1.5 trillion targeted amount,

Rs 12.897 billion would be raised as an addi-tional requirement of the government.

During the period under review, the centralbank would be conducting six auctions to beconducted on 11th and 25th of July, 8th and22nd of August and 5th and 19th of September,respectively.

On the auction dates the government hastargeted to raise Rs 225 billion, Rs 275 billion,Rs 300 billion, Rs 250 billion, Rs 225 billionand Rs 225 billion, respectively.

The targetted money would be borrowedthourgh auctioning T-bills of -3, 6- and and 6-months maturities.

The economic observers are concerned asthe cash-strapped governments, both in thecenter and provinces, are relying almost totallyon the banks for catering their ever-burgeoningbudgetary requirements. While the banks; ad-vances to the private borrower is depletingtheir investment in the risk-free governmentsecurities keep skyrocketing. The analysts con-cern is that much of the banking liquidity beingsucked up by the cash-strapped government isbeing used for non-productive purpose: run-ning of the government.

This trend, they warn, would leave the pri-vate sector sans cash thus dealing fresh blow tothe government’s growth targets.

RAG IN THE JAR

Flat again!g After Thursday’s 6-point gain, KSE loses 4 points on Friday,

as neither the bulls nor the bears figure out what to expect

from the pending NRO implementation decisions

1.59trillion!Govt budgets bank loansat Rs1.590tr for 1QFY13

Wall St recovers

late, ends with

modest lossesNEW YORK

AGENCIES

US stocks fell on Thursday but paredback sharp losses late in the session ontalk of progress by European leaders ineasing the region’s debt crisis, whilethe Supreme Court’s ruling upholdinga landmark healthcare law hit largehealth insurers. Markets are especiallyskittish about any shift in expectationsfor the euro zone as European Unionleaders began a two-day summit inBrussels. “This is a process that is justgoing to wind on and is going to bringus periodic bouts of volatility in ourmarkets depending on the news flow,”said Matt Kaufler, portfolio manager atFederated Investors in Rochester, NewYork. Stocks began lower and lossesaccelerated after a divided U.S.Supreme Court backed the centerpieceof President Barack Obama’shealthcare overhaul law. The decisionsurprised many investors who see thelaw, which requires that mostAmericans obtain insurance by 2014 orface a penalty, as a hallmark of abusiness unfriendly administration.Shares later pared losses, thoughmajor insurers such as Aetna Inc,which face more regulation, endedlower. Other companies reliant onMedicaid, such as Wellcare healthPlans Inc rose as their patient rolls areexpected to increase.

Mustafa Hamadani,

Group Head

Payment Services

(BoP) receiving the

‘Rainmaker of the

Year’ award from

Xpress Money UAE

officials.

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