Day: November 1, 2021

Millions continue to suffer as the National Bank of Pakistan (NBP) has not yet fully restored its banking system after hackers targeted the bank on Friday and caused disruption in its services, including the disbursement of payments and pensions for public sector current and former employees.

Credible sources within NBP have disclosed that the bank’s IT teams are working hard to restore its banking system ever since it went down but have failed miserably. They are reluctant to issue a deadline as to when the system will become completely operational once again.

Meanwhile, NBP has issued an official statement to calm the nerves of its concerned users who are waiting for the bank to disburse their salaries and pensions for the month of November.

According to the statement, the IT teams have repaired the affected parts of its system and NBP assures its users that banking services, including ATMs and the disbursement of salaries and pensions, will be fully restored on 1 November 2021.

NBP’s branches across the country will operate today as scheduled and will work to facilitate customers to ensure that their banking requirements are met as best as possible.

Its call center (111-627-627) will also remain functional as its call center representatives have been directed to facilitate the resolution of all client inquiries.

The statement added that NBP assures its customers that their financial data has not been compromised and has remained protected, confidential, and secured.

Its IT teams have worked tirelessly since Friday to ensure that they manage the extraordinary situation which the bank encountered.

“The bank is grateful for the support and guidance extended by all regulatory bodies as it continues to work with various stakeholders to fully normalize its services over the next few days”, the statement read.

“NBP would also like to thank its customers, partners, vendors, and correspondent banks for their support and understanding during this challenging period”, it concluded.

Source: Pro Pakistani

As the prices of petroleum products are expected to jack up to a historic high, there is a lot of dismay among people over its devastating economic impact as it leads to an overall hike in inflation and commuting costs. However, there is a lack of information on how POL prices are determined in Pakistan.

The price of gasoline at the pumps is essentially made up of various components, each of which represents a portion of the total oil value chain. The cost of gasoline must account for each area of the business, from crude oil discovery and production to refining and end-product distribution. Except for the oil-rich nations, the governments most likely introduce gasoline taxes to generate revenue — also true in the case of Pakistan.

In Pakistan, the government controls the price of gasoline, which is announced monthly or fortnightly by the Oil and Gas Regulatory Authority (OGRA).

Breakdown of Prices

Ex-Refinery

The price at which local refineries sell their product to oil marketing companies (OMCs) is known as the ex-refinery price. This price is not determined by refineries. Instead, it is computed by OGRA using the Import Parity Price calculator. The price is calculated by adding the import incidentals and surcharges to the FOB price of Arab Gulf Gasoline 92 RON. It is basically the landed cost of imported gasoline and is almost entirely reliant on the global oil markets.

As per OGRA notification dated November 1, the ex-refinery price is currently at Rs. 112.57 which remained unchanged compared to October 16 notification. However, due to rising global oil prices, 16-Oct notification bumped up prices by 9.6%.

In-land Freight Equalization Margin (IFEM)

OGRA calculates and implements IFEM for uniform oil pricing in Pakistan. Without IFEM, there would be a significant price difference in Karachi and Islamabad.

IFEM is currently at Rs. 3.9 after a minor increase of 2 paisa from the previous notification.

Oil Marketing Company (OMC) margin

OGRA sets an OMC margin that reflects the maximum margin oil distributors can earn over a liter of petrol. OMC margin remained unchanged at Rs. 2.97 per liter in the October 16 oil price notification from OGRA.

Dealer Margin

This highlights the maximum per liter margin an owner of the gas station can earn by selling petroleum products. Dealer margin remained unchanged and stood at Rs. 3.91 per liter.

Petroleum Development Levy (PDL)

The federal government sets PDL to shore up revenues. The Petroleum Division in the Ministry of Energy sets the rate of levy. The government had set the levy to zero from mid-June to mid-August. In the notification of October 16, the levy was Rs. 5.62 per liter.

Due to the surge in global oil prices, the government decreased the petroleum levy by 75.4% compared to the January 1 price of Rs. 22.85 per liter.

Sales Tax

Lastly, GST is on the sum of previous petroleum price components. Sales tax percentage remained unchanged at 6.8%; however, due to a jump in component prices, the sales tax increased to Rs. 8.82 per liter against Rs. 8.15 per liter in the October 1 notification.

In the current year-to-date change, the sales tax has declined by 42.7% to contain the inflationary effect of the rising oil prices.

The breakdown of petrol prices paints a different picture. Governments are usually reluctant to increase oil prices in view of political fallout. The same is true for the PTI-led government that is making a dent in its petroleum levy of Rs. 610 billion to contain the currently uncontainable inflation.

Note: The numbers are based on the 16 October 2021 notification from Ogra. The 01 Nov 2021 notification has kept oil prices the same; however, retailer plus freight cost is up by 1.67% to Rs. 10.96.

Source: Pro Pakistani

Advisor to the Prime Minister on Finance, Shaukat Tarin, informed that the matters with IMF have been settled and a formal agreement would be reached within a couple of days to revive the 6 billion USD Extended Fund Facility (EFF).

He was talking to the media after the launch event of the Pakistan Single Window (PSW) on Monday.

Shaukat Tarin said that an accord would be signed this week as the differences have been settled. The Adviser on Finance further said, “We have tried to explain our position to the IMF, that we do not have a two-third majority in the parliament to bring any constitutional amendment.”

He was referring to the laws pertaining to the State Bank of Pakistan (SBP). The Advisor on Finance, commenting on the latest cyberattack on the National Bank of Pakistan (NBP), said that more cyberattacks may occur on our financial system after attacks on FBR and the National Bank of Pakistan. “The enemy is sitting on our borders and such attacks may occur, but we have deployed safety measures to avert any such in future,” said Shaukat Tarin.

He said that the issues of finances have been managed and there is no chance of delay in salaries of the government employees, as the situation is under control now. Responding to a question on inflation, Shaukat Tarin said that the government is giving targeted subsidies to control inflation. He said that higher commodity prices are a global phenomenon, and he cannot control global commodity prices.

Earlier, while addressing the launching ceremony of the Pakistan Single Window facility, Shaukat Tarin said that it is an important step towards reforming our trade and it will not only boost trade but also streamline all inbound and outbound trade at a single platform. “The government has come up with the slogan of change, reform, and accountability as we have taken important steps for institutional reforms,” said the advisor.

Congratulating Pakistan Customs on the launch of Single Window, Shaukat Tarin said that in the last two years, the supply chain had been affected due to the COVID-19 pandemic, but Pakistan’s economy is now in a recovery phase. He further said that the businessmen and industries will get facilitated with the PSW project, and it will help increase Pakistan’s export. Shaukat Tarin opined that the regional trade and geo-economic ties would improve and provide a comparative advantage to our business community to enter new markets and enhance exports. He said the government is actively pursuing the agenda of making Pakistan a hub of regional trade and transit.

In this regard, he said a major milestone had been achieved by operationalizing the TIR agreement and dispatch of transit consignments to Uzbekistan and Turkey.

The Advisor on Finance said the PSW would boost our capacity to promote regional trade and help counter financial crimes, including money laundering.

David Young, Deputy Mission Director USAID, and Syed Aftab Haider, Chief Executive Office PSW, also addressed the event.

The Pakistan Single Window enables parties involved in trade and transport to register standard information and documents with a single-entry point and thereby, fulfill all import, export, and transit-related regulatory requirements. Previously, traders were required to secure approval from a variety of government offices, duplicating efforts and paperwork, which led to increased costs and delays. Today’s announcement rolled out the Subscription and Customs Registration system, along with the Commercial Bank integration module, which are the first steps in helping to reduce these costs and delays, and which will benefit consumers and businesses alike.

Source: Pro Pakistani

The currency in circulation (CIC) has increased to over Rs. 7 trillion in Pakistan, representing the growth in the size of the economy and the traditional use of cash among the citizens as money.

According to the State Bank of Pakistan (SBP), the currency in circulation has increased to Rs. 7.4 trillion by the end of the financial year 2020-21 as compared to the previous level of the last financial year in which it stood at Rs. 6.7 trillion, showing a double-digit growth of 10.4 percent year-on-year.

The currency in circulation is the overall currency consisting of various denominations of banknotes being used as money in an economy for the exchange of goods and services and informal savings, excluding the financial sector.

The size of Pakistan’s economy has increased significantly, which showed the double-digit growth in currency in circulation, said Tahir Akbar, Head of Research at Arif Habib Limited. It is pertinent to mention here that Pakistan’s GDP grew by 3.94 percent, which was well above the target set for the financial year 2020-21 of 2.1 percent, and COVID-19 induced contraction of 0.47 percent in FY20.

Accordingly, the banking regulator issued currency notes in order to meet the requirements of the local economy. The banknote printing charges of SBP increased to Rs. 15.762 billion in FY21 from Rs. 13.325 billion in FY20, thereby registering an increase of 18 percent mainly due to larger volumes of printing and an increase in printing rates.

The CIC of the country stands from 28 to 30 percent viz-a-viz the volume of broad money size, he further said. This is the average percentage of CIC when Pakistan is compared with similar economies. On the other hand, the CIC percentage is less than 20 percent of the broad money in most of the developed countries, where the digitization of the economy is much higher than in Pakistan.

Besides, the currency in circulation stands at Rs. 7.4 trillion, the value of money deposits maintained by the banking system of the country stood at Rs. 19.2 trillion, which is in addition to the value of assets and investments made by the country.

Financial Inclusion and Digitization of Banking System

The higher currency in circulation also means that the size of Pakistan’s undocumented economy is huge. Besides, the cash available in the economy also causes a factor of money-led inflation.

Since the last decades, the banking regulator along with the private sector has been working aggressively towards the financial inclusion of the economy through introducing various new avenues such as branchless banking, mobile and internet banking, payment cards, payment gateway operators, POS operators, digital wallets, QR payments, etc.

The use of digital means for the transaction of money has increased tremendously, but there is a big room for improvement, which needs customers’ confidence over these tools on the one hand, whereas the literacy of electronic banking is also needed on the other hand.

In FY20, the volume of paper-based transactions within the banking sector stood at Rs. 151 billion as compared to transaction volume through electronic or digital banking standing at Rs.86 billion. The electronic banking transactions registered year-on-year growth of 31.1 percent, which implies an increase in the adoption of digital means for payments.

This growth was spurred by major uptake in mobile banking (133.6 percent increase in transactions volume) and internet banking (65.1 percent increase in transactions volume), whereas transactions against paper-based instruments showed a decline of 6.8 percent by volume and a rise of 15.6 percent by value.

These trends point toward healthy growth in fostering a more digitally integrated economy in years to come.

Source: Pro Pakistani

Pakistani businesses are suffering heavily from the existing framework of the power sector, according to the report: “State-Owned Electricity Distribution Companies — A 5-year Performance Review” published by Prime Institute.

As per the report, even surplus generation capacity is unable to end Pakistan’s loadshedding because of the state-owned distribution companies’ (DISCOs) inability to meet the regulatory targets for transmission and distribution loss. It also criticizes the authorities’ failure to implement regulations on-bill recovery, investment, and public safety.

The report mentions that the carelessness in the power sector resulted in the overall loss to the national exchequer that is recorded at Rs. 1.355 trillion. From the total losses, Rs. 647 billion was caused by the financial loss of the DISCOs and Rs. 708.4 billion was attributed to the subsidy paid out of the federal budget to DISCOs between 2016 and 2020.

One of the reasons for these unnecessary losses is reportedly the lack of investment by some DISCOs while others had invested more than the permitted limit. Another reason is the DISCOs ‘incompetence in fulfilling the regulatory targets.

Fines were imposed on these DISCOs, but many continue to breach the set regulations, and these inefficiencies have led to the government paying Rs. 708.4 billion to bail out different distribution companies.

The report also highlights that a total of 7.5 million applications have been filed for new connections over the past five years but 16 percent of them are yet to be approved.

Source: Pro Pakistani