economiclettera weekly publication of The Institute of Bankers Pakistan

Volume 8, Issue No. 50 | December 13, 2013

Markets at a glance

Weekly KIBOR (6 months) Foreign Exchange Rates KSE Gold RateReview Bid % Offer % GBP () Euro () US ($) 100 Index (10 gm)

Beginning 9.87 10.12 Rs 177.26 Rs 148.10 Rs 108.38 24,870 Rs 43,885

Ending 9.90 10.15 Rs 175.10 Rs 147.39 Rs 107.16 25,256 Rs 43,842

Change + 0.03 + 0.03 - 2.16 - 0.71 - 1.22 + 386 - 43

>>

PakistanAccording to SBP, home remittances in the first f ive months of the current f iscal (July-November 2013) rose by 7.10% to $ 6.407 bn against $ 5.982 bn in the same period last f iscal.

According to SBP, the level of non-performing loans of banks and development f inance institutions (DFIs) fell to Rs 620.978 bn at end-September 2013 against Rs 632.130 bn at end-June of the year.

According to SBP, the Central Directorate of National Savings mobilized fresh investment in its various saving schemes of Rs 64.0 bn during July-October 2013 against Rs 185 bn in the same period of 2012.

According to SBP, liquid foreign exchange reserves as on December 6, 2013 stood at $ 8.060 bn of which $ 2.963 bn was held by the SBP and the rest with banks.

The European Parliament has granted GSP-Plus status to Pakistan to be effective from January 1, 2014 to end-2017 subject to review thereafter. Under the status, 20% of Pakistans export could enter the 27-nation European Union without any tarif f while 70% of exports would be charged import duties at concessional rates and 10% tarif f rates on importable commodities would remain unchanged.

The National Assembly was informed by the Minister of Commerce & Textile that bilateral trade between Pakistan and Afghanistan amounted to $ 2.35 bn in the 2012-13 fiscal with Pakistans exports at $ 2.1 bn.

According to Pakistan Bureau of Statistics (PBS), the large-scale manufacturing (LSM) sector posted a growth of 8.37% in the first quarter of the current f iscal (July-September 2013) over the same quarter last f iscal.

The government has launched a Youth Loan Scheme under which a credit line of Rs 100 bn would be provided to one hundred thousand young through balloting to help them stand on their own feet.

The government has formed a ten-member steering committee to concretize measures to promote Islamic banking in the country.

According to IMFs website release, headline inflation measured by the consumer price index (CPI) has been forecast at 7.09% for the full 2013-14 fiscal against 7.40% in the 2012-13 fiscal.

The Securities & Exchange Commission of Pakistan (SECP) has approved the issuance of rules of Commercial Papers aimed at enabling highly rated companies to raise funds from the capital markets to meet their short-term working capital needs.

The Supreme Court of Pakistan has ruled against the imposition of the additional 9% tax on gas prices and has directed that the amount so collected be refunded to consumers who were subjected to the levy.

According to the Ministry of Finance, the Asian Development Bank (ADB) is to provide a credit line of $ 900 mn for the conversion of the 1,320 MWs power plant in Jamshoro, Sindh, from thermal/gas sources to coal source based upon coal reserve in the district of Thar in the province. The conversion is projected to be completed by December 2018. The Sindh government has signed three memorandums of understanding worth $ 6.3 bn with a Japanese company for investment in the provinces energy, infrastructure and mass transit sectors.

Volume 8, Issue No. 50 | December 13, 2013

a weekly publication of The Institute of Bankers Pakistan

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).

According to Pakistan Bureau of Statistics (PBS), f.o.b. data, the trade deficit during July-November 2013 narrowed to $ 7.743 bn against $ 8.195 bn in the same period of 2012 given a rise of 3.10% in exports and a fall of 0.77% in imports.

According to the Rice Market Report of the U.N. Food & Agriculture Organization (FAO), milled rice production in the current crop season may be short by 0.6 million tonnes of the target to 5.8 million tonnes but would be still higher by about 5% over the preceding crop season.

According to All Pakistan Cement Manufacturers Association, total despatch in the first f ive months of the current f iscal (July-November 2013) stood at 13.167 million tonnes against 13.127 million tonnes in the same period last f iscal.

According to Pakistan Automotive Manufacturers Association, the total number of locally assembled cars including jeeps and light commercial vehicles increased by 6.7% to 52,384 units during July-Nov. 2013 against 49,092 units in the same period of 2012.

According to Oil Companies Advisory Committee, total oil sales during July-November 2013 rose to 8.5 million tonnes against 7.6 million tonnes in the same period of 2012.

The Sui Northern Gas Pipelines Ltd. has introduced a load-shedding measure in the Punjab under which the supply of natural gas through its outlets would remain suspended for two to three months to the CNG stations, the industrial sector, captive power plants, fertilizer sector and independent power producers (IPPs). The suspension would not apply to domestic consumers. The policy measure has been adopted to meet the supply-demand gap.

InternationalThe U.S. gross domestic product (GDP) registered a growth of 3.6% on an annualized basis in the third quarter of 2013 against a growth of 2.5% in the April-June quarter of the year.

The World Trade Organization (WTO) has reached a deal involving all its 160 members under which the richer countries would introduce measures including import duties abolition or their reduction as also to dismantle non-tarif f barriers to facilitate greater market access to the poorer developing countries. The agreement is estimated to benefit the under-privileged countries to the extent of $ 1.0 trillion in the near foreseeable future without damaging interests of the richer countries and thus lead to a free trade regime globally.

The Kingdom of Saudi Arabia is to raise its capital base in the Islamic Development Banks subscribed capital from the current 902.19 mn Islamic dinars ($ 1.2 bn) to 5.15 bn Islamic dinars ($ 6.85 bn). The injection of the additional amount beginning from 2016 would be spread in installments over the next 20 years. Saudi Arabia is the largest single shareholder in the Bank.

According to Chinas National Bureau of Statistics, inflation in the country measured by the consumer price index (CPI) fell to 3.0% in November against 3.2% in October, both year-on-year.

The Japanese government has revised downwards GDP growth during July-September 2013 on an annualized basis to 0.3% against earlier estimates of it being 0.5% and realized 0.9% during April-June of the year.

The Bundesbank, the central bank of Germany, has raised the growth prospects of the economy from 1.5% to 1.7% in 2014 against the anticipated growth of about 0.5% this year, higher than earlier estimates of it being 0.3%. With recovery in the eurozone on the anvil, the central bank expects the economy to grow by 2.0% in 2015.

The Bank of England (BoE) has left its benchmark lending rate unchanged at 0.5%.

Unemployment in the U.S. fell to 7.0% of workforce in November, lowest for f ive years, against 7.2% in October.