PRO 22-09-2013_Layout 1 9/22/2013 6:08 AM Page 1
01
B
BUSINESS Sunday, 22 September, 2013
Ladies entrepreneurship conference held
Sell a man a fish, he eats for a day, teach a man how to fish, you ruin a wonderful business opportunity ― Karl Marx
SBP helps govt keep macro-economic indicators in check KARACHI iSMAil DilAWAR
T
KARACHI: A ladies’ entrepreneurship conference was held at a local hotel on Saturday. The day-long moot was organised under the auspices of the Dawood Global Foundation (DGF) in collaboration with the Higher Education Commission (HEC) and French, German, Turkish and Indonesian Consulates as well as British Deputy High Commission, the organisers said. They said it was a milestone event which attracted well over women entrepreneurs and others who had gathered to hear the inside scoop to success from people who have innovated and changed their industries. This year’s theme was `Game Changers’, and the event featured speakers from Turkey, France, Germany, Indonesia, UK and Switzerland, as well as the best of local entrepreneurship. Former ambassador Sherry Rehman gave the keynote address. Former UK First Lady Cherie Blair sent a video message saying she had fond memories of her visit to Pakistan and wished to come again. Pop star Zoe Viccaji sang the national anthem along with her band. There was performance by Nida Butt, Yoga Stretch Break by Jeanette Faruque and Indonesian cultural dance by Indonesian delegates. The event was a fundraiser for women empowerment in Pakistan and in particular vocational scholarships for grassroots girls for media studies at the institute of journalism as part of the Ladies Fund Educate a 1,000 girls programme. The day’s programme also included three panels, the organisers further pointed out. StAff RePORt
HE central bank is giving the best of its monetary management inputs to help the cash-strapped federal government which is finding it hard to keep the deteriorating macro-economic indicators in check. The money market happens to be the hot spot for the cat and mouse play the state and commercial banks are engaged in to benefit their respective sides. The points in question pertain masterly to the central bank’s open market operations (the banks’ cautious participation therein) and the recent record devaluation of the rupee. After injecting billions in the apparently liquidity-scarce banking system for months, the banking regulator started a couple of months back mopping up liquidity from the money market to cater the ever-burgeoning budgetary financing needs of the funds-starved government. The analysts came up with different views when asked as to what created such a huge amount of liquidity in the banking system that made the SBP start mop-up operations for several consecutive weeks. Mohammad Sohail, senior analyst and CEO of Topline Securities, said the SBP wanted to absorb the extra funds the banks possessed. The latter, however, were not giving money in the treasury bills auctions as they expected the interest rate to increase. The central bank raised the discount rate by 50bps in its last monetary policy statement to 9.50 percent. Asked what made the banks to bid in SBP’s frequent mop-up operations, Sohail said the mop-ups were for one or two weeks. During last two OMOs, the banks did not offer sizeable amounts that made the State Bank reject the bids partially in second last and wholly in last OMO. The banks, the analyst said, could re-invest their funds at higher rate now when the SBP had hiked the policy rate. Another analyst, wanting not to be named, said the SBP’s mop-ups may be backed by the International Monetary Fund that recently approved $6.64 billion EFF for Pakistan. “May be it is on the will of IMF to take artificially created liquidity out of the system,” the analyst viewed. Asfar Bin Shahid said the SBP had followed a policy of cutting its discount rate for too long, a stance
questioned by the IMF mission as well on its last visit to Pakistan. The profit-conscious banks, he said, stopped over-investing in progressively low-yielding T-bills. “Now the banks’ holding of T-bills is just about equal to their official reserve requirements.” But, the economist said, because public borrowing needs were still high, the SBP had been forced to mop up market liquidity through OMOs. AB Shahid viewed that given the high market risk, the banks were not too keen on lending to the private sector. To them, a safer,
The SBP wants to absorb the extra funds the banks possessed. The latter, however, are not giving money in the treasury bills auctions as they expect the interest rate to increase. The central bank raised the discount rate by 50bps in its last monetary policy statement to 9.50 percent MohAMMAd SohAIl CEO Of TOpliNE SECuRiTiES in spite of Pakistan’s heightened sovereign risk, venue for lending was the sovereign. “But the lowering of the discount rate reduced their earnings because the MUP spread came down substantially,” he said. He said the lower rates on savings greatly diluted the incentive for saving. The analyst said the Pakistanis, who were earlier sending money to relatives in Pakistan for depositing in banks, compared to the rates earned by deposits in US dollars
Services trade deficit narrows by 42.16pc in July ISLAMABAD APP
and Pound Sterling the return on Pak Rupee deposits was far higher even after discounting it for the depreciation of the Rupee, were not doing that any more. “Those excess foreign exchange inflows have slowed down and contributed to the slide in forex reserves,” he added. According to official numbers, the country held $ 10.37 billion on Sept 13. Ironically, the State Bank’s $5.11 billion reserves have gone down than that of the commercial banks $5.25 billion. The State Bank tends to quote alarmingly poor dollar reserves as a major reason for the falling rupee value. However, the economic observers point a finger at the SBP when analyse attributable factors for the historic rupee depreciation. The State Bank is perceived to have been conducting frequent mop-up operations to raise money for buying dollars from the volatile open market given the country’s fast depleting foreign exchange reserves. This week, Wednesday, the rupee traded against the greenback at a record low of Rs 107 both on the open and interbank market. Reasoning the historic fall, the analysts cite factors like Haj season, six-month forward booking of dollar by the banks, contracting dollar reserves of Pakistan etc. There are, however, economists who see the State Bank actively intervening, though behind the curtain, in the money market, thus causing the rupee depreciation. AB Shahid opines that the SBP, through mop up operations, has continuously been intervening in the forex market to buy dollars and pay rupees in counter-value. This, he said, was because of the continued decline in the bank’s own forex reserves. “This factor is causing a steady slide in the exchange value of the rupee,” the economist said. All said and done, one thing is for sure that this is the resource-constrained government which is responsible, though indirectly, for the record depreciation of the rupee. Whatever the SBP has been doing covertly or overtly on the currency market was aimed at raising some liquidity, in the face of dollars and rupee, to cater the cash-strapped government’s ever increasing budgetary expenditures, much of which constitute the unproductive non-development spending.
The services trade deficit narrowed by 42.16 percent during the first month of current fiscal year as exports increased by 12.26 percent with imports showing negative growth of 11.95 percent. The overall services’ exports from the country were recorded at $384.92 million during July 2013 against the exports of $342.9 million during same period of last year, showing growth of 12.26 percent, according to the data of Pakistan Bureau of Statistic (PBS). On the other hand, the imports of services into the country during the first month of the current year decreased by 11.95 percent by going down from last years imports of $617.71 million to $543.88 million, the data revealed. Based on this data, the overall trade deficit during the period under review was recorded at $158.96 million against the deficit of 274.82 million during last year. However, on month basis, services exports from the country decreased by 20.03 percent in July 2013 as against June 2013. Exports of services during July 2013 stood at $384.92 million against the exports of $481.34 million during June 2013. On the other hand, the imports of services into the country also witnessed decrease of 9.37 percent by going down from $600.12 million during July 2013 to $543.88 million in June 2013, the PBS data revealed.
World Bank seeks Pakistan’s national policy on TBP ISLAMABAD Online
NADRA Chairman Tariq Malik has said that NADRA’s active support and participation in G2P programs has enabled an aggregate 76 percent increase in citizens holding computerised national identification cards (CNIC). He was addressing a dissemination event the other day hosted by the World Bank on the scope of technology-based payments (TBPs)and their financial inclusion and literacy outcomes for the financial sector in Pakistan. Other financial experts stressed upon the need of a national policy to move technology-based payments forward. This event was facilitated by the Pakistan Microfinance Network on behalf of the World Bank while various stakeholders of Government to Person (G2P) payment programs, including the SBP, NADRA, BISP, commercial and microfinance banks, technical assistance providers, telecommunications providers, federal
and provincial government department representatives, donors, multilateral institutions and others attended the event here at a local hotel the other day. The NADRA chairman said that aggregate 76 percent increase in citizens holding computerised national identification cards is crucial especially in case of women as it provided them access to financial services, right to vote and opportunity to participate as an active and empowered citizen in the society. The NADRA envisions building the capacity of the institutions involved with G2P payments through use of biometrics. State capacity is unthinkable without the ability to count citizens and mapping them, so biometrics is a great opportunity for greater governance. The World Bank representative related that the journey to promote financial inclusion through G2P programs had been tedious yet fruitful. A recent beneficiary assessment conducted under the RSR Trust Fund activities were cited, which illustrated extraordinary growth in access to
institutions should consider developing financial services by the ultra-poor, technical assistance programs for the especially women. Over 60 percent of provincial departments that the beneficiaries in the assessment wish to take up preferred the technology-based technology-based payment models compared to modes of others. transfers; The Pakistan Aggregate 76 percent continued Microfinance Network increase in citizens holding support representative stressed from SBP on the need to form a computerised NICs is crucial, and national level especially in case of women, NADRA platform and policy to to move technologyas it provides them access to facilitate based payments financial services, right to banks in forward; donors and reaching multilateral vote and opportunity to out to the participate as an empowered unbanked; development citizen in society of a technical guide on the different payment technologies to facilitate interest provincial government departments in understanding the technologies and options available, need to invest in financial literacy at a much greater scale with a focus on the TArIq MAlIk ultra-poor as a target segment; and NADRA ChAiRmAN
exploring the deployment of biometric verification systems as a next step towards transparency and accountability. SBP Senior Director Noor Ahmed mentioned three core components that should be considered while discussing financial inclusion and literacy through technology based mechanisms employed by G2P programs – client, cost and convenience. He commended the recommendation for a national platform to set common milestones, monitor achievements, address bottlenecks and elicit experience sharing to create buy in. This dissemination conference highlighted the key issues in uptake of technology-based payments based on extensive stakeholder engagements held with commercial banks, at the federal level, and with provincial governments in Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan. These specifically included provincial government departments such as planning and development, finance, health, education, zakat and ushr, and social welfare in these provinces.