Pakistan Hopes to Solve Tariff Issue With New Proposals to IMF and WB

The Power Division will submit a new Circular Debt Management Plan (CDMP) to the International Monetary Fund (IMF) and the World Bank, reported Business Recorder.

The proposal will be submitted at the end of the current month with an innovative approach, the news report added.

The Power Division will likely review the terms and conditions of public debt used to establish power plants by the government, like RLNG-fired plants, Neelum Jhelum Hydropower Project, as well as other WAPDA hydropower projects.

“The proposal suggests extending the debt payment tenures, reducing the interest rate, and/or extending the payment period of loans that are financed by the public sector, such as those of the K-2 nuclear power plant,” added the report.

These steps will lead to a reduction in costs that can then be adjusted to avoid an increase in tariffs. The tariff subsidy might also be revised upwards from its current budgeted level of Rs. 330 billion. One proposal to achieve this is to take the extra amount from the Public Sector Development Program (PSDP) as PSDP allocations are rarely fully utilized.

The news report quoted sources saying that there is also a third option under concern. However, it will not be applicable in the current calendar year. That option is for Pakistan Railways to lay a line from coal mines of Thar and connect it to the Railway network.

The estimated cost of this project is Rs. 26 billion with additional Rs. 20 billion as the cost of wagons for this track, making the total estimated cost to be Rs. 46 billion.

In addition to this, the already operational Sahiwal coal-fired plant – which is currently operated on imported coal – can be run on 50 percent of the local coal without needing any modifications, which will further reduce cost.

The improvement in the Rupee-Dollar exchange rate will also be adjusted, as the previous tariff was determined based on Rs. 167 per dollar, which has now come down.

The World Bank officials are very unhappy with the tariffs not being increased by Rs. 1.39 per unit from 1 June 2021, as the agreement had stated. The finance minister said earlier that Pakistan is seeking fiscal space from the IMF and the WB on the tariff increase issue. In the meantime, the cabinet has already approved other required reforms, such as privatization of DISCOs.

Source: Pro Pakistani

Banks Have Given Out Loans Worth Rs. 30 Billion for Housing Finance

The banking sector of Pakistan has approved loans worth Rs. 30 billion against applications of approximately Rs. 90 billion under the government markup subsidy facility for low-cost housing finance, data released by the State Bank of Pakistan (SBP) showed on Thursday.

The scheme allows the banking sector to use estimation models to assess the informal income of applicants.

A statement by the SBP said, “In order to facilitate low-cost housing finance applicants with informal income, the SBP has asked banks to develop and deploy income estimation model for the extension of low-cost housing finance to such applicants. This measure is expected to ease difficulties being faced by public in availing housing finance under the government’s markup subsidy scheme (G-MSS), commonly known as Mera Pakistan Mera Ghar.”

The markup subsidy facility for the construction and purchase of new homes was announced by the government in October 2020. As a result, the Pakistan Banks’ Association (PBA) developed and circulated among banks a baseline income estimation model through a consultative process.

This model assesses the income and repayment capacity of the applicants – who earn from informal sources – based on their routine expenditures like house rents, utility bills, and educational expenses.

The SBP allowed the banks to use PBA’s baseline model, modify it, or develop their income estimation models. The SBP also made it mandatory for the banks to confirm within four weeks that they have made their informal income proxy models operational.

The SBP said that these models are likely to enhance prospects of informal income applicants to secure housing finance, and it will also allow the financially excluded segment to avail financing under G-MSS.

Several other measures have also been taken by the SBP to make this facility available to the general public, including the relaxation of debt burden ratio, an extension of housing finance against the personal guarantee, development of online complaint resolution portal, and establishment of banks’ joint call center to address queries.

Other measures for the same purpose include standardization and simplification of loan application form, facility offer letter, and documentary requirements for approval and disbursement are also proving beneficial for the applicants under G-MSS, the statement added.

Source: Pro Pakistani

SECP Issues Guidelines for Issuance of Green Bonds in Pakistan

The Securities and Exchange Commission of Pakistan (SECP) has issued guidelines for the issuance of green bonds in Pakistan. The guidelines provide an easy and efficient procedure for the issuance with the concise offering of documents/prospectus.

All the issuers who are eligible to issue debt securities, including sukuk, either by way of public offer or private placement are also eligible to issue green bonds in compliance with the applicable regulatory framework.

The issuance of green bonds will help to initiate sustainable projects for the combating of climate change besides facilitating the issuers of debt securities to diversify their sources of financing.

It will also provide an additional financing instrument to investors who are conscious of financing/re-financing projects that contribute to the environment.

To qualify as a green bond, the proceeds must finance or refinance green projects or activities that involve energy efficiency, protect the environment, utilize renewable energy, prevent and control pollution, use natural resources, land management, pollution-free transportation, wastewater and water treatment, etc.

As per the green bond database, green bonds worth $1.2 trillion have been issued by different countries to date, including $297 billion in 2020 and $130.9 billion in 2021 (to April), showing an increasing trend.

As per the database International Capital Market Association (ICMA), a total of 640 issues of green bonds have been made by 60 countries.

Green bonds can be issued based on globally accepted standards/goals such as the International Capital Market Association (ICMA)’s Green Bond Principles, and the UN’s Sustainable Development Goals (UN SDGs), etc.

Source: Pro Pakistani

Chairman FBR Constitutes Committees to Remove Anomalies in the Finance Bill 2021

Federal Board of Revenue (FBR) Chairman has constituted Anomaly Committee-Technical and Anomaly Committee-Business to identify and remove the technical and legal anomalies in the Finance Bill 2021.

The Anomaly Committee-Technical will be chaired by Naeem Akhtar Sheikh, UHY Hassan Naeem & Co., whereas the Co-Chairmen of the Anomaly Committee-Technical will be Ch. Muhammad Tarique, Member (IR-Policy), and Syed Hamid Ali, Member (Customs-Policy), FBR.

The other members of the Committee are Ashfaq Tola, Abdul Qadir Memon, Patron Pakistan Tax Bar Karachi, Syed Yawar Ali, Chairman Pakistan Business Council Karachi, Shahzad Hussain, Ex-Partner AF Ferguson & Co., Khurram Mukhtar, Patron-in-Chief PTEA, Sadia Nazeer, Partner KPMG, Hafiz Muhammad Idrees, Advocate Supreme Court Ex-President Tax Bar, Habib Fakhruddin and Abdul Wahab Kodvavi.

Similarly, Anomaly Committee-Business will be chaired by Sultan Ali Allana, Chairman HBL, whereas the Co-Chairmen of the Anomaly Committee-Business will be Ch. Muhammad Tarique, Member (IR-Policy) and Syed Hamid Ali, Member (Customs-Policy), FBR.

The other members of the Committee are Ehsan A. Malik, CEO Pakistan Business Council, M. Shariq Vohra, President KCCI, Irfan Siddiqui, President OICCI, Sherbaz Ilyas Ghazanfar Bilour, President Sarhad Chamber, Abdul Samad, President Quetta Chamber, Mian Nasir Hyatt Maggo, President FPCCI, Mian Tariq Misbah, President LCCI, Adil Bashir, Chairman APTMA, Asif Peer, President American Business Council, Asad Shah, Director External Affairs PTC, and Amir Waheed, Ex-President Islamabad Chamber.

The TORs of the Committees will be to review the identified and submitted anomalies and advise FBR on the removal of anomalies. Technical and legal Anomalies can be submitted on or before the close of office hours on Tuesday, June 22, 2021, to the Co-Chairmen, Anomaly Committees in their offices at Room No. 348 (Customs) and Room No. 355 (IR), 3rd Floor, FBR House, Islamabad. The Committee can also be reached at the e-mail ‘memberir@fbr.gov.pk’ (IR related) and ‘membercustomspolicy@fbr.gov.pk’ (Customs related).

Source: Pro Pakistani

Profit Rates on National Savings Schemes Revised Upwards

The rate of return on National Savings Schemes has been increased.

According to the notification issued by the Ministry of Finance, the rate of interest on 10-year Defense Savings Certificates has been increased from 9.29 percent to 9.35 percent.

The rate of return on regular income savings certificates has been increased from 8.64 percent to 8.76 percent.

The rate of return on six-month short-term savings certificates has been increased from 7.14 percent to 7.20 percent.

Meanwhile, the rate of return on Special Savings Certificates, and Savings Accounts will remain the same.

Behbood, pensioners, and martyr family certificate rates have also been kept unchanged.

Source: Pro Pakistani

Finance Division Agrees to Grant Disparity Reduction Allowance to 14 Federal Universities

The Finance division has agreed to grant a 25 percent disparity reduction allowance to the employees of forteen Federal public sector universities.

Documents available with ProPakistani said that the Finance division on Friday communicated to Higher Education Commission with regard to grant of disparity reduction allowance.

Finance division conveys its approval that the Finance division’s office memorandum dated march 3, 2021 is applicable to the civil employees of BS 1 to 19 of the public sector universities chartered by the federal government under the administrative control of HEC with effect from March 1, 2021.

The universities included Allama Iqbal Open University, International Islamic University, National University of Modem Languages, Quaid-e-Azam University, Air University, National Defence University, Pakistan Institute of Development of Economics (PIDE), Shaheed Zulfiqar Ali Bhutto Medical University (SZABMU), National University of Medical Sciences, Federal Urdu University of Arts, Science & Technology Karachi, National Textile University, Faisalabad, Pakistan Institute of Fashion and Design, Lahore, Karakoram International University Gilgit Gilgit-Baltistan and University of FATA.

However, the public universities chartered by the provincial governments may be advised by the HEC to refer their matter for grant of Disparity Reduction Allowance to the Provincial Finance Departments.

It is pertinent to note that the government had assured the employees back in February this year to grant the 25% disparity reduction allowance from grade 1 to 19 employees and it has now extended to grade 20 to 22 offices to reduce the disparity within the federal government.

Source: Pro Pakistani