PRO 21-07-2012_Layout 1 7/20/2012 11:42 PM Page 1
Saturday, 21 July, 2012
No reasoN to ‘be Negative’
S & P affirms Pakistan long-term rating at ‘B-’; outlook stable SINGAPORE INP
Standard & Poor’s Ratings Services Friday affirmed its ‘B-’ long-term sovereign credit rating on Pakistan. The outlook on the long-term rating remains stable. Standard & Poor’s also affirmed its ‘B’ issue rating on Pakistan’s senior unsecured foreign- and local-currency debt and its ‘B-’ transfer and convertibility assessment. At the same time, it raised the shortterm sovereign credit rating to ‘B’ from ‘C’, following a change in criteria that links long-term ratings with short-term ones. The sovereign ratings on Pakistan take into account the country’s weak fiscal profile and associated high public and external leverage, low income level, as well as the underlying weak political and policy
setting. These constraints are balanced against strong remittance inflows that help sustain a still-adequate external liquidity position. Pakistan’s high public and external indebtedness is a main rating constraint. Net general government debt stands at an estimated 52% of GDP in 2012, 40% of which is external debt. “The interest burden on this debt poses a great constraint on discretionary spending, given already sparse fiscal resources,” said Standard & Poor’s credit analyst Agost Benard. “The large interest bill and other expenditure-side rigidities against a narrow revenue base of about 12.5% of GDP result in ongoing fiscal slippages.” The country’s political and security environments also constitute a rating con-
straint. A volatile, fragmented, and adversarial domestic political setting detracts from policymaking and implementation. The resulting weak macroeconomic conditions, together with regional insurgencies, sectarian strife, and weak governance standards are a significant deterrent for private sector investment. “Our ‘B’ rating category considers the potential of administrative weaknesses to result in payment delays from ministries to agencies,” Mr. Benard said. The ratings on Pakistan are supported by the country’s adequate foreign currency liquidity. Buoyant remittance inflows from a geographically well-diversified offshore labor force and large Pakistani diaspora amount to 5.6% of GDP, having risen more than threefold in nominal terms over the past seven years.
Zakat exemption limit sees 17pc cut to stand at Rs 51,086 KARACHI ISMAIL DILAWAR
The salaried class, who are the worst hit by the persistent double digit inflation, would see their Zakat exemption limit shrinking by 17 percent this year. To be deducted by the banks on first day of the holy month of Ramadan, the “Nisab of Zakat” for 2012 (Zakat year 1432-33 A.H) has been set by the federal government at Rs 51,086. Last year, the government had relieved the salaried people, who maintain savings accounts in banks, by doubling the Zakat exemption limit to Rs 61,336 from Rs 29,385 of the preceding year, 2010. The measure was expected to provide relief to the salaried class. This year, however, the limit for the holders of saving accounts has been decreased by Rs 10,250 or 16.7 percent compared to 2011. According to official sources, the amount of deductible Zakat is determined as per market price of the 52-tola silver. On Friday, in the open market per tola silver was priced at Rs 974.68 that when multiplied with 52 tolas totals at Rs 50,683.36. The State Bank has asked the banks that the Zakat shall be deducted as per instructions of the notification issued by the Ministry of Religious Affairs last Wednesday. The ministry, in the notification, asked the central bank to convey to the banks and all financial institutions that the Administrator General Zakat had set the deductible
amount at Rs 51,086. “No deduction of Zakat at source shall be made, in case the amount standing to the credit of an account in respect of the assets mentioned in column 2 of Serial No. 1 of the first schedule of Zakat and Ushr Ordinance, 1980, is less than Rs 51,086 on the first day of Ramazan,” reads notification number CE1001(36)/NISAB/1432-33/2012. Subject to sighting of the moon, the Zakat would be deducted by the banks on the first day of Ramadan, being a bank holiday, which is likely to fall on Saturday or Sunday. The Zakat would be minused from the saving bank accounts, profit and loss sharing accounts and other similar accounts having a credit balance of Rs 51,086. “All the Zakat Collection Controlling Agencies (ZCCAs) are requested to deduct the Zakat accordingly,” said the ministry. When deducted by the banks the Zakat money is deposited in the Central Zakat Fund being maintained by the federal government with the State Bank of Pakistan. Before the holy month starts, the account holders, specially the low or middle income depositors who maintain saving accounts with the banks, rush to the banks to withdraw their deposits before the first Ramadan when the Zakat is deducted. The bankers, however, suggest that instead of doing a hectic activity the account holders should submit an affidavit seeking exemption from Zakat deduction. Most depositors, however, do not tend to go for this option and withdraw their money before Ramazan to be deposited after first Ramadan.
Old Macdonald can now have a farm in Pakistan Banks surpass Rs285b farm loans target after three years KARACH
A
STAFF REPORT
FTER a three-year gap the banks have surpassed the agriculture credit disbursement target during FY12 by loaning Rs 293.8 billion to the agriculturists during July-June of last fiscal year, the central bank reported Friday. It may be pointed out here that the banks had been missing the farm loans targets since FY2008-09. “Achievement of disbursement target during FY12 was extremely difficult in the backdrop of continuous declining trend in the overall Private Sector Credit and high agriculture Non-Performing Loans of major banks due to devastating floods of 2010 and heavy rains of 2011 in Sindh province,” said the State Bank. The credited amount, it said, is Rs 8.8 billion or 103 percent more than the annual indicative target of Rs 285 billion set by the Agricultural Credit Advisory Committee (ACAC) for the FY12. “It is 11.7 percent higher than Rs 263 billion disbursed in 2010-11,” the regulator said. A bank-wise break-up shows that the five large banks collectively disbursed agriculture loans amounting to Rs 146.3 billion or 103.7 percent of their annual target (Rs 141 billion) in fiscal year 2011-12, higher by 4.3 percent compared to Rs 140.3 billion disbursed during FY2010-11. The National Bank of Pakistan, Habib Bank Limited, MCB Bank, Allied Bank Limited and United Bank Limited surpassed their annual targets by achieving 106.0 percent, 103.5 percent, 103.3 percent, 102.8 percent and 100.7 percent disbursement, respectively. The Zarai Taraqiati Bank Limited disbursed Rs 66.06 billion or 94.2 percent of its annual target of Rs 70.1 billion while Punjab Provincial Co-operative Bank Limited by disbursing Rs 8.5
billion or 112.1 percent surpassed its annual target of Rs 7.6 billion. The 14 domestic private banks as a group achieved 112.5 percent of their target that accounts for Rs 54.1 billion and disbursed Rs 60.9 billion. The Bank of Khyber, Bank Al Habib, Faysal Bank, Soneri Bank, NIB Bank and Askari Bank surpassed their annual targets by achieving 174.6 percent, 147.6 percent,136.7 percent,132.4 percent,104.1 percent and 100.4 percent disbursement, respectively, while other remaining banks could not meet their annual targets. The five microfinance banks as a group disbursed Rs 12.1 billion or 99.3 percent of their annual target of Rs 12.2 billion. It may be pointed out here that the banks had been missing the farm loans targets since 2008-09. The central bank attributes the achievement of fiscal target to “a multi-pronged strategy” and the all out efforts it had made for achieving ACAC’s target.
No bank branches on our soil,
But we sure do need NEW DELHI AFP
India’s home ministry has refused to allow three Iranian banks to open branches on Indian soil because of concerns about money-laundering and terror financing, a report said on Friday. The move complicates New Delhi’s efforts to settle its oil trade bills with the Islamic Republic, the Indian Express daily reported, quoting an unnamed home ministry official for the report. The ministry has denied security clearance to applications by Parsian Bank, Bank Kasargad and Eghtesade-Novin Bank because of its obligation to guard against money laundering and terrorist financing, the
newspaper said. There was no immediate comment from the home ministry. Fuelscarce India plans to import 15.5 million tonnes of crude oil from Iran this year. It has faced difficulty in finding banks to transfer payments to Iran due to US-led financial sanctions against the Islamic republic that have dried up dollar payment routes. To help circumvent this, India and Iran clinched a deal under which New Delhi would pay for close to half of its Iranian oil purchases in rupees. Allowing branches of Iranian banks to set up in India would made it easier for Indian firms to boost rice, tea, yarn, fertiliser and textile exports to Iran as well as facilitate cooperation on engineering and other projects. Iran will use the rupees it receives for oil to buy Indian goods. Large delegations from each country have already made visits to explore trade opportunities. Transactions are now routed in euro
payments through Turkiye Halk Bankasi and 45 percent of crude payments in rupees through India’s state-run UCO Bank. India’s Department of Economic Affairs plans to ask the home ministry to reconsider its decision, citing “strategic compulsion” for the opening of the Iranian bank branches, the newspaper said. Iran is also looking to India for transfer of technology to modernise its textile industry and investments in a railway corridor to connect Iran to Caspian Sea countries. India, which imports four-fifths of its crude, says it shares the US anti-nuclear proliferation goals. But it also views Iran as an important source of oil to feed its economy’s fast-growing needs and sees Iran as a key ally in stabilising Afghanistan following the US planned troop exit. The United States says Iran’s nuclear drive is aimed at making an atomic bomb but Iran insists it is for civilian energy.
Balochistan musters World Bank’s attention $5m MDTF grant for BDMP ISLAMABAD: The World Bank has announced the approval of US$ 5 million grant for the Khyber Pakhthunkhwa, Federally Administered Tribal Areas and Balochistan Multi Donor Trust Fund (MDTF) and for the Balochistan Disaster Management Project (BDMP), which will strengthen the capacity of Provincial Disaster Management Authority (PDMA) Balochistan to prepare for, and respond to, natural disasters. Balochistan is prone to natural disasters. Most notably, Cyclone Yemyin of 2007 and the historic floods of 2010 resulted in significant losses to life and the economy. In 2011 again, several districts of Balochistan were adversely affected by floods, said a statement issued by the World Bank here. “Balochistan has suffered enormously following the drought in 2002, the cyclone in 2007, and the flooding in 2010 and 2011. This project will allow PDMA Balochistan to better prepare for future disasters and lessen the losses through improved mitigation and response.” APP
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Saturday, 21 July, 2012
Bull-bear deadlocks left, right and centre Moody’s bears and corporate bulls fail to settle dispute in Karachi and Islamabad, while Asian shares had their own stalemates to deal with ALL OVER THE MILKY WAY
I
AGENCIES/STAFF REPORT
NvESTORS booked profits on concerns for Moody’s downgrade of foreign and local currency bond ratings and Pakistan Banks deposit ratings despite strong corporate earnings outlook. This was said by Ahsan Mehanti, Director at Arif Habib Investments Limited. The Karachi Stock Exchange (KSE) 100share index declined 3.72 points or 0.03 percent to close at 14, 564.49 points as compared to 14, 568.21 points of the previous session. The KSE 30-share index shed 4.29 points to close at 12, 623.90 points as compared with 12, 628.16 points. The market turnover remains negative and traded 96.121 million shares after opening at 164.996 million shares. The overall market capitalization declined 0.02 percent and traded Rs 3.717 trillion as against Rs 3.719 trillion. Losers outnumbered gainers 93 to 184, while 84 stocks were unchanged. Mehanti added “Pakistan Stocks closed bearish amid institutional profit taking on macro economic concerns.” The KMI 30-share was down by 37.43 points to close at 25, 019.71 points from its opening at 25, 057.14 points. The KSE all-share index closed with a loss of 6.56 points to 10, 245.25 points as against 10, 251.81 points. The Jahangir Siddiqui Company was the volume leader in the share market with 14.039 million shares as it closed at Rs 15.48 after opening at Rs 16.40. Azgard Nine traded 6.092 million shares as it closed at Rs 6.58 after
WünDerBAr! Merkel gets Spanish bank bailout through German parliament BERLIN: The lower house of Germany’s parliament resoundingly approved Berlin’s contribution to a euro zone-wide aid package for Spain’s banking sector on Thursday. The Bundestag backed the bailout by 473 votes, with 97 votes against and 13 abstentions - far more than the simple majority of the 583 members present that Chancellor Angela Merkel needed. But Merkel fell short of a symbolically-important “chancellor majority” after 22 lawmakers from her own coalition voted against and one abstained. This was slightly fewer than the 26 coalition lawmakers who opposed the permanent bailout scheme and fiscal pact compact in parliament on June 29. The outcome of the vote had been largely a foregone conclusion after the main opposition parties had signalled they would back the package. AGENCIES
opening Rs 7.18. Askari Bank traded 4.929 million shares as it closed at Rs 15.72 from its opening at Rs 14.82. K.E.S.C traded 8.821 million shares and closed at Rs 3.88 as against its opening at Rs 3.93. National Bank of Pakistan traded 3.651 million shares as it closed at Rs 45.39 as compared to its opening at Rs 46.07. He said that the Pakistan military aid cut by US, rising fiscal deficit and security unrest in the city played a catalyst role in bearish sentiment at KSE. On the future market, the turnover decreased by over three million shares 5.771 million against 8.651 million shares of Thursday. The Unilever Pakistan and Wyeth Pakistan Limited, up Rs 50.00 and Rs 20.70, led highest price gainers while, Rafhan Maize Prod and Nestle Pakistan Limited down Rs 109.66 and Rs 27.99 respectively, led the losers. ISE1 0
ISLAMABAD: The International Monetary Fund (IMF) has called for determined action towards establishing banking and fiscal unions in the euro area to bolster monetary union. The euro area crisis has reached a critical stage, as financial markets in parts of the region face acute stress, said IMF in its latest assessment of economic developments in the eurozone. GDP growth in the euro area is expected to come in at -0.3 percent in 2012 and 0.9 percent in 2013. The pace of fiscal adjustment is particularly fast in the hard-hit periphery countries, and this is weighing on the growth outlook. Projected consolidation for 2012-13 ranges from more than 4 percentage points of GDP in Cyprus, Portugal, Greece, and Spain, to 0.5 percentage points or less in Germany, Austria, Finland and Luxembourg. The rate of unemployment is expected to continue to vary widely across the region— from 5 percent in Germany to about 24 percent in Spain this year. ONLINE
France scraps tax breaks that symbolised Sarkozy era PARIS AGENCIES
France’s Socialist-dominated parliament voted on Thursday to end tax breaks on overtime work and raise wealth tax, abolishing two cornerstones of the economic policy conservative former president Nicolas Sarkozy pursued over the past five years. The measures were in a budget bill that France’s first left-wing government in a decade presented to the National Assembly after taking power following Francois Hollande’s presidential
Dollar mixed in Asia
The latest to call for eurozone unity… IMF
La LibertÉ! election victory in May. In one vote, the lower house of parliament endorsed plans to scrap the tax-free status of overtime hours from August onwards, unstitching tax breaks that symbolised the “work more, earn more” slogan which swept Sarkozy to power in 2007. The vote, first scheduled for Wednesday, was delayed until a few hours before dawn on Thursday by bickering between Socialist supporters and centreright opponents who say the measure will damage people’s spending power.
FLAT: Islamabad Stock Exchange (ISE-10) here on Friday witnessed bullish trend as the index was up by 2.53 as compared to the previous day’s trading. Stock Analyst, AAH Pvt Ltd, Zaheer Ahmed told APP that the news of rescheduling the loans by Engro Corporation led the negative sentiments in the local stock market. Engro Corporation was scheduled to pay its loans but it could not do so owing to its inability to pay at this time, he said, adding this is temporary and the market will perform better in the future. However, the buying was seemed in the selected scrips, despite the investors preferred to be sideline, he added. Total volume of shares traded was 8,101, which was down by 262,999 as compared to a day earlier’s closing. ASIAN MARKETS MIXED: Asian markets were mixed in early trade on Friday after impressive rallies in the previous session while investors took heart from another strong performance on Wall Street. Hong Kong added 0.22 percent by the break, Sydney was flat and Seoul rose 0.30 percent but Tokyo slipped 1.00 percent and Shanghai eased 0.42 percent. Shares on Japan’s Nikkei remained under pressure after the yen strengthened in New York against the greenback while it continued to stay strong against the euro. Wall Street saw a third day of gains on Thursday thanks to another round of upbeat earnings figures from some of the country’s biggest firms.
TOKYO: The dollar was mixed in Asian trade Friday after earlier dipping on speculation that an uncertain US economic recovery would spur the Federal Reserve to usher in further easing measures. The greenback bought 78.56 yen in Tokyo morning trade from 78.59 yen in New York late Thursday. Against the dollar, the euro bought $1.2256 fro $1.2282 while it was also weaker at 96.33 yen from 96.48 yen. The euro, already under pressure over fears about Europe’s fiscal woes, was also being sold against the Australian dollar which has been strong on higher commodity prices, dealers said. Junichi Ishikawa, forex analyst at IG Market Securities in Tokyo, said the common currency may fall below $1.2230, “but with a lack of cues, there isn’t much direction”. Weak US jobless claims and housing data on Thursday stoked expectations for further Fed stimulus, which weighed on the currency. AGENCIES
OGRA’s LPG hearing results in ‘death threats’ ISLAMABAD STAFF REPORT
The Oil and Gas Regulatory Authority (OGRA) convened a hearing here today to review its LPG pricing formula under the directions of the Lahore High Court. The hearing degenerated into threats of death and physical harm against representatives of LPG marketing companies. “We are deeply disappointed by today’s proceedings,” said Belal Jabbar, spokesman of the LPG Association of Pakistan (LPGAP), a collection of OGRA-licensed LPG market-
ing companies, and one of the petitioners against OGRA. “One self-proclaimed ‘chairman’ of LPG distributors—who are not independently recognized by OGRA in any case—stood up and issued threats of physical harm and death against the gathered representatives of LPG marketing companies,” said Jabbar. “All this happened as officials from OGRA and the Ministry simply sat by and did not object, intervene or interrupt this speaker.” Jabbar said this so-called distributors’ chairman also claimed to have support from the Prime Minister.
Business 02 Major Gainers COMPANY UniLever Pak Wyeth Pak Limited Siemens Pakistan AL-Abbas Sugur ICI Pakistan
OPEN 7300.00 901.13 645.00 92.13 162.57
HIGH 7500.00 924.99 664.00 96.73 167.89
LOW 7125.00 919.00 650.00 95.00 158.99
CLOSE 7350.00 921.83 655.31 96.70 166.78
CHANGE 50.00 20.70 10.31 4.57 4.21
TURNOVER 241 40 114 4,135 265,955
Major Losers Rafhan Maize Prod. 3475.00 Nestle Pakistan Ltd. 4119.14 Mithchells Fruit 300.94 Millat Tractors 510.64 Pak Suzuki Motor 111.28
3450.00 4100.00 297.00 518.00 115.75
3301.26 4000.00 285.90 503.00 107.00
3365.34 4091.15 285.90 504.55 107.43
-109.66 -27.99 -15.04 -6.09 -3.85
161 32 552 24,404 212,707
Volume Leaders Jah.Sidd. Co. Azgard Nine Askari Bank K.E.S.C. National Bank Pak
16.40 7.18 14.82 3.93 46.07
16.23 7.07 15.82 4.15 46.15
15.40 6.49 14.66 3.82 45.28
15.48 6.58 15.72 3.88 45.39
-0.92 -0.60 0.90 -0.05 -0.68
14,039,973 6,092,545 4,929,121 4,821,677 4,118,508
Interbank Rates US Dollar UK Pound Japanese Yen
94.4521 148.4031 1.2014
Dollar East US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal Australian Dollar
BUY
SELL
94.20 114.17 146.83 1.1888 92.38 11.98 25.58 25.08 96.98
95.00 115.40 148.36 1.2011 93.85 12.17 25.82 25.27 99.44
CORPORATE CORNER Kashf announces partnership with Kiva LAHORE: In continuation of their commitment to alleviate poverty, leading Microfinance Institution Kashf Foundation announce their partnership with global non-profit organisation Kiva,a platform dedicated toconnecting global audiencesthrough online lending. The Kashf – Kiva association provides funds for on-lending, which enables the Kashf Foundation to give a higher number of loans to more female entrepreneurs of low income households.Kiva has committed to a facility of USD 3.2 million over the next 2 years which it will raise through online donations.
roots holds O/A-Levels guidance, counseling seminar ISLAMABAD: Roots College International Metropolitan G-8 campus organized a highbrow and phrenic “O and A-Levels Guidance and Counseling seminar” predominantly contrived to aggrandize the educational experiences of students in order to ameliorate their personal, scholastic, and career development. Idea sponsor Mr walid Mushtaq’s initiatve is to create and support proactive programs that help students to stimulate their intellectual growth, maximize their personal potential and make their college years a productive and meaningful experience.
Warid brings exciting eid offer KARACHI: This Ramadan, Warid Telecom brings an amazing offer for its prepaid subscribers (both existing and new) . Upon using balance of Rs. 15 per day and up to Rs. 50 during the month, Warid subscribers will automatically enter in a lucky draw to get a chance to win 1 bumper prize of Rs. 1 Crore, 12 Umrah packages, four 1300cc cars and 26 motorcycles!
LAHORE: Fatima Baig, a student of Chartered Institute of Management KARACHI: Miss Umran Beba (right) Regional Accountants, has earned laurels for President PEPSICO Asia Pacific talking to Pakistan by achieving fourth position in moderate session for Pepsico under the the May 2012 examination. Some 6,611 banner of WIBCON Forum at local hotel candidates sat the exam worldwide.