Day: January 17, 2022

Pakistan Stock Exchange (PSX) held a gong ceremony on Monday to announce the launch of the Alfalah Consumer Index Exchange Traded Fund (ACIETF). The launch of this ETF marks the listing of the sixth Exchange Traded Fund (ETF) on PSX.

The participants of the ceremony included Managing Director (MD) & Chief Executive Operations (CEO) PSX Farrukh H. Khan, CEO Bank Alfalah Ltd Atif Bajwa, CEO Alfalah GHP Investment Management Limited Nabeel Malik and senior management of the three organizations.

Speaking at the occasion, MD PSX Farrukh Khan stated, “ETFs are an innovative product in global capital markets and it is exciting to have the sixth ETF being listed on PSX. Alfalah Consumer Index ETF is the first consumer-focused ETF on PSX and it will track the 13th index on the market, the Alfalah Consumer Index. This is a valuable addition to the ETF sector of the bourse which is sure to attract retail and institutional investors. I congratulate Alfalah Investments on launching this innovative new ETF.”

He further added, “Taking this opportunity to open the trading day with the launch of the newly added ETF on the bourse, I would emphasize upon brokers and Asset Management Companies (AMCs) to educate and promote ETFs to their customers and investors. Particularly, I would emphasize upon brokers to train their sales teams so they can advise investors about the advantages of investing in an ETF. An investor can get diversified exposure to the stock market by a single trade. This is both cost-effective and simple.”

CEO Bank Alfalah Limited Atif Bajwa said, “It is a pleasure to be here at the launch of the new ETF, the Alfalah Consumer Index ETF, which comes under the Alfalah family. The consumer-focused ETF is something that we are very excited about. Bank Alfalah and Alfalah Investments which are part of the Alfalah family will continue to play a pioneering role in bringing new products and innovation in the market.”

Speaking at the launch, CEO Alfalah GHP Investment Management Limited (AGIML) Nabeel Malik, said, “In a bid to offer innovative products, Alfalah Investments has designed Alfalah Consumer Index ETF. We believe this ETF will provide investors with a unique investment avenue to play the country’s promising demographics. ACIETF focuses on sectors that are direct beneficiaries of growing consumer demand in the country which is anticipated to strengthen further in wake of economic recovery and sustained GDP growth. Pakistan’s GDP growth has always been driven by strong local demand due to very favourable demographics where a young and robust population takes the driving seat on the consumption side. This ETF therefore will provide a concentrated avenue to investors that are planning to play the consumer demand story of the country. This is a key milestone in Alfalah GHP Investments’ journey, as with this addition, we will be managing funds in the majority of product categories thus offering our investors a variety of investment options to choose from.”

An ETF is a type of fund that holds a basket of securities that generally tracks an underlying Index. Because there are multiple scrips within an ETF, they can be a popular choice for investors seeking diversification. ETFs may be a sound option of investment for investors who lack the time or the financial acumen to make lucrative stock picks in a cost-effective manner.

Source: Pro Pakistani

Pakistan’s economy is a mess because of a ‘broken economy decision-making system’ where those in charge have repeatedly failed to recognize the requirements of a coherent growth strategy for the country.

Pakistani-American economist and former member of Pakistan’s Economic Advisory Council (EAC), Atif Mian, believes that “the national economy is not in a good place – per capita income has not risen in 3 years, [and] even over the last 20 years, income per capita has grown at a paltry 1.9%”.

Pakistan's economy is not in a good place – per capita income has not risen in 3 years (in fact down slightly)

Even over the last 20 years, income per capita has grown at a paltry 1.9%

??

— Atif Mian (@AtifRMian) January 15, 2022

Explaining his perspective on Twitter, Mian stated that the core problem impeding economic progression is the “fundamental imbalance between its anemic supply (domestic productive capacity) and the exaggerated external demand by its rentier economy”.

He highlighted that the fundamental issue revolves around the country’s “broken economic decision-making system,” and those in charge of it have repeatedly failed to recognize the requirements of a coherent growth strategy for Pakistan.

Citing pertinent examples, the Princeton University-based economist blamed the state’s “30-year flawed energy policy that relied on imported fuels and guaranteed $-returns for producers, while the power output was largely [being] used for domestic consumption”.

He termed the country’s electricity payback ‘a failure by design’, and declared that the circular debt “is nothing more than a manifestation of the fact that Pakistan adopted an unsustainable energy policy”. The same is true for other dollar-funded infrastructure projects, he added.

The economist also questioned the current regime’s growth purpose behind the policy for the opening of capital accounts “to actively encourage ex-pat Pakistanis to buy real estate in Pakistan,” and reasoned that Pakistan already has an out-of-sync housing market with a very high urban land value to income ratio.

He discouraged the use of external account inflows for real estate investments because “it makes the country more expensive to live in without providing any productivity advantage. [It also] builds speculative foreign liabilities that will further destabilize future bop position”.

Mian highlighted the government’s other more questionable policies, including a “regressive taxation system”, the implementation of the International Monetary Fund’s (IMF) conditions, and rent-seeking industrial structures, and emphasized that “Pakistan lacks a coherent macro growth strategy and one that can be followed up by a competent institutional structure”.

He also stressed the need for Pakistan to have a “functioning nervous system” in order for the economy to grow and, with effect, survive.

Source: Pro Pakistani

The Government of Khyber Pakhtunkhwa (KP) has signed memorandums of understanding (MoUs) with 44 international investment companies at the Dubai International Expo 2020.

After due formalities are completed, fresh deals are expected to contribute an overall investment of more than $8 billion in various sectors. The investors included several Pakistanis located in the United Arab Emirates, who were intrigued by KP’s integrated tourism zones, water sports in the Hund region of Swabi district, energy and power, food processing, cattle, and infrastructure.

44 MoUs worth $8 Billion signed between Government of Khyber Pakhtunkhwa and International Investors across all sectors of the province, mainly Tourism. KP Minister Taimur @Jhagra highlighted the potential of Khyber Pakhtunkhwa in #DubaiExpo2020. #InvestInKP pic.twitter.com/tvirItpv8c

— Government of KP (@GovernmentKP) January 16, 2022

According to an official statement, Kuwait-based Enertech-Kuwait Investment Authority (KIA) will invest $120 million in the installation of a hydrogen power plant under the terms of the MoUs. It will generate hydrogen from water, which will be transported through containers and used to produce energy. Moreover, KIA has signed another MoU for an investment of $2700 million in Khanpur’s sustainable development.

The Korea Hydro and Nuclear Power Company agreed to invest $1,200 million in the Lower Spath Gah project. (The Korea Electric Power Corporation is a subsidiary of this firm).

Sheikh Ahmed Bin Dalmook Al Maktoum Private Office One Person Company LLC in Dubai plans to invest $165 million in the Swat transmission line, and the Saudi Arabia-based Samara Group has agreed to invest $100 million in a food manufacturing business.

A private business called the SE Alphine Group agreed to invest $150 million as part of a public-private collaboration to build a ski resort in Kalam. China’s Gezhouba Group Corporation penned a deal to invest $250 million in a transmission line between Chitral and Chakdara in Lower Dir. Another private company, Zonergy, invested $300 million in the province’s solarization of government buildings and the development of a PV manufacturing facility.

The Karachi-based Al Raee Group of Companies will invest in the tourism sector, according to the announcement, and it plans to invest $10 million in a four-star resort in Bahrain, Swat.

The company SC Alpine Resort Private and Parties inked a $200 million MoU to develop a ski resort in Kalam. Furthermore, Tulip Hotels is committed to investing $90 million in solar park development, and the Virtual Smart System has promised to invest $50 million.

Speaking at the expo’s MoU signing ceremonies, KP’s Minister for Finance Minister, Taimur Saleem Jhagra, announced that the provincial government is also emulating the UEA model to increase foreign tourism in the province. He added that the projects have already been prepared for their presentation at the expo, and there is a lot of room for investment in KP’s tourism sector.

The minister acknowledged the importance of integrated tourism zones for the promotion of tourism in KP which is the only province that, under a public-private partnership, constructed the first freeway (motorway) which connects Swat to the rest of the country.

Addressing the occasion, Additional Chief Secretary Shahab Ali Shah stated that the government is ready to assist investors in every way possible and to give investors a single point of contact besides other related services.

Source: Pro Pakistani

As Islamic banking has become an emerging market, the international financial institutions including the International Monetary Fund (IMF) and the Asian Development Bank (ADB) are taking a keen interest in doing business in the Islamic banking sector of Pakistan.

This was noted by Director General Cambridge Institute of Islamic Banking, Dr. Humayon Dar, during a literary discussion held in Islamabad on Monday.

According to the State Bank of Pakistan (SBP), the assets of the Islamic banking industry increased to Rs. 4.797 trillion while deposits reached Rs. 3.82 trillion by the end of June 2021.

Dr. Humayon Dar said different international institutions wanted to enter Islamic banking in Pakistan. He said ADB had desired to get into the Islamic banking sector of Pakistan, as ADB’s Islamabad Office had called him for a briefing on it. He added that the World Bank and IMF had expressed their interest in adopting the Islamic banking structure for dealing with Muslim countries.

He narrated that Country Director ADB had called him some years back and said that there were intelligence reports that the government was getting pro-Islamic banking and, thus, ADB had committed $10 billion in the next 10 years. He cited the ADB official saying that the bank was ready to give finances for the Islamic banking structure, however, the government did not request ADB for a loan for the Islamic banking structure.

To a query regarding the expensive loan of Islamic development danking (IDB), he said the source of liquidity of IDB was sukuks which was costly and expensive.

On the issue of defaulting, Dar said that the Islamic Shariah scholars should look into the issue and give solutions to the Islamic banks. He opined that the Islamic banks should impose penalties on defaulting.

Answering another question about the interest on loans, he said that it could not be eliminated because no government wanted to do so in Islamic countries. He added that the governments were influenced by strong banking lobbies which did not want to eliminate the interest.

He maintained that there was no justification for imposing interest on loans due to the devaluation of currency and inflation. He observed that these were the macro factors and the borrowers were not responsible for these factors. He emphasized that the loans must be interest-free in any situation.

Source: Pro Pakistani

The government is likely to present the budget for the next financial year i.e. 2022-23 in June 2022, suggests the budget circular issued by the Finance Ministry.

The budget calendar presents activities and actions that are required to be finalized by the stakeholders to complete the budget-making process for the financial year 2022-23. The budget calendar also specifies the timelines for each activity.

In compliance with the articles of the Constitution of Pakistan, Public Finance Management Act, 2019, and Budget Manual 2020, Finance Division prepares a budget for each financial year as a key policy document of the Federal Government.

Budget Call Circular containing a budget calendar, processes, instructions, forms for preparation and submission of detailed budget Actual (FY 2020-21), Revised Estimates (FY 2021-22) and Budget Estimates (FY 2022-23) relating to Receipts, Current & Development Expenditure of the Federal Government is being issued.

The Medium-Term Indicative Budget Ceilings (IBCs) issued by Budget Wing, Finance Division in April 2021, for Current and Development Budget for three years i.e. 2021-22, 2022-23, and 2023-24, may be considered as baseline for submission of Budget Estimates.

Receipts, Current and Development Expenditure Estimates (Forms I – III) may be provided to Budget Wing, Finance Division before March 15, 2022, by the respective Principal Accounting Officer (PAO). The remaining information may also be provided as per the schedule given in Budget Calendar.

Foreign Exchange Budget Actual (FY 2020-21), Revised Estimates (FY 2021-22), and Budget Estimates (FY 2022-23) may also be provided as per attached FEB Forms (I-VI) in accordance with the specific instructions and general guidelines.

The timeline for Revised Estimates (2021-22) and Budget Estimates (2022-23) of Federal Government Receipts (Form-I) and the last date for Budget Proposals relating to Tax & Non-Tax Revenues for inclusion in Finance Bill 2022-23 is March 15, 2022.

Submission of proposed Current & Development Expenditure Budget Estimates (Form-II and Form-III) is also March 15, 2022. Budget Review Committee’s meetings are scheduled for the fourth week of March. The Budget Strategy Paper Finance Division is scheduled for April 15, 2022. The issuance of IBCs for current and development budget for the third week of April 2022. APCC & NEC meetings at Planning Division & Finance Division are scheduled for April – May 2022. Submission of BO/NIS Forms for current budget for April 25 to May 10, 2022.

Submission of BO/NIS Forms by Ministries / Divisions for development budget is scheduled for May 10 to May 17, 2022. Moreover, the completion of all Budget Documents, Schedules, Summaries for the Cabinet, etc. are scheduled for the end of May 2022.

The presentation of the Budget to the Cabinet and the Parliament is proposed for the first week of June 2022.

Budget Preparation Process

Legal framework on annual budget is available in Articles 78 to 84 of the Constitution. The Public Finance Management Act, 2019 provides legal cover to budgeting and financial management. The Finance Division has also issued various instructions from time to time, which are available on Finance Division’s website.

This section sets out the process for the preparation of the Budget 2022-23. All Federal Ministries / Divisions will prepare their budget on Performance & Output Based Budgeting System. The following are details of steps involved in the budget preparation process as outlined in the ‘Budget Calendar’.

Issuance of ‘Budget Call Circular 2022-23’ to the Principal Accounting Officers (PAOs)

As a first step, the Finance Division will issue a “Budget Call Circular” to the PAOs which contains instructions, forms, and timelines required to be completed by the respective PAOs.

Submission of the Budget forecast by the Principal Accounting Officer

The Indicative Budget Ceilings issued by the Finance Division in April 2021, for the current and development budget of three years i.e. 2021-22, 2022-23, and 2023-24 will be considered as baseline for submission of Budget Estimates 2022-2025 under Form III. Moreover, PAO will submit estimates keeping in view the Public Finance Management Act, 2019 and priorities of the Federal Government.

Review and approval of budget estimates and additional demands (current + development) by the Demand Review Committee

If needed, Principal Accounting Officer (PAO) will be invited to make presentations on their budget proposals to the Demand Review Committee (comprising Finance Division, Planning, Development, and Special Initiatives Division, and Economic Affairs Division). The Demand Review Committee would consider and approve additional expenditure (if any) of the Ministries. The Demand Review Committee will discuss past performance, current year’s budgetary allocations, and ceilings for the medium-term budgetary years. Discussions/deliberations will focus on ‘outputs’ (services) to be delivered and policy priorities outlined by the Federal Government under the respective Performance Agreement.

Preparation of Budget Strategy Paper and its presentation in the Cabinet

Finance Division shall prepare Budget Strategy Paper and seek approval of the Federal Government in accordance with section 3 of the PFM Act 2019.

Issuance of Indicative Budget Ceilings for current and development budget to all PAOs

Federal Ministries/Divisions will receive the confirmed indicative budget ceilings after approval of the Budget Strategy Paper by the Cabinet. The ceilings for the current budget are prepared by Finance Division. One line ceiling for development budget is issued by Finance Division in favor of Planning Division. However, Demand/PAO-wise ceilings for the development budget are prepared and issued by the Planning, Development, and Special Initiatives Division.

Filling of the BO/NIS Forms

The Ministries / Divisions / Departments will go through the instructions to fill in the BO/NIS Forms to be submitted to Budget Wing, Finance Division as per specified timelines.

Submission of forms by Ministries / Divisions for Current Budget and Development Budget

In the presence of ceilings, the concerned CFAO will assure the quality of BO/NIS forms and give their recommendations (if any) to the concerned Principal Accounting Officer.

Source: Pro Pakistani