Islamabad: China will provide USD 2.5 billion in loans to Pakistan to boost the foreign exchange reserves of its “all-weather ally”, a media report said Saturday.
The country’s USD 8.12 billion reserves, which are below the minimum level that the International Monetary Fund (IMF) and the World Bank (WB) prescribe, are sufficient to cover only seven weeks of imports.
Due to this, the WB and the Asian Development Bank are not providing loans for budget financing.
“Beijing will place the USD 2.5 billion in deposits with the central bank,” a top Finance Ministry official here told The Express Tribune.
With the anticipated USD 2.5 billion deposits, China’s contribution in this fiscal year alone would surge to USD 4.5 billion, the paper said.
Pakistan has struggled to maintain reserves that are not currently sufficient to provide cover to even two months of imports despite receiving USD 4 billion in loans from two Middle-Eastern countries.
In July, China deposited USD 2 billion with the State Bank of Pakistan. In the past five years, China has emerged as Pakistan’s single largest saviour in times of economic crisis.
The money is coming as part of the government’s strategy to secure breathing space till the time its macroeconomic stabilisation measures take effect.
After coming into power, Prime Minister Imran Khan visited China, Saudi Arabia and the UAE to arrange emergency loans to avoid a looming default.
Pakistan has secured USD 14.5 billion worth of commitments from these three countries that have helped largely bridged the external financing gap of the ongoing fiscal year.
Before coming into power, Khan was critical of taking loans to run the country but due to extremely low level of foreign currency reserves and financing requirements standing above USD 25 billion, he sought loans from other countries.
Saudi Arabia will provide a USD 6 billion financial assistance package, which included USD 3 billion in short term loans at an interest rate of 3.18 per cent. Riyadh has already disbursed USD 3 billion.
The State Bank of Pakistan (SBP) Governor Tariq Bajwa on Thursday said the modalities for USD 3 billion oil on deferred payments were finalised this week and an agreement would be signed on February 16 during the visit of Saudi Crown Prince Mohammad bin Salman.
The UAE has agreed to provide USD 3 billion in loans at an interest rate of around 3 per cent and has already disbursed USD 1 billion. A USD 3.2 billion worth of oil facility on deferred payment is being awaited.
Pakistan has arranged these deposits for a term of one to three years but these are likely to be rolled over, in case Islamabad faces difficulties to return them, said the sources in the Finance Ministry.
But despite USD 4 billion inflows from Riyadh and the UAE during the past two months, the gross official foreign currency reserves stayed at only USD 8.12 billion as of December 25, according the SBP governor.
However, the SBP governor on Thursday said despite these measures, the current account deficit remained high, standing at USD 8 billion in six months.
The overall foreign loans disbursements also remained low during first half of the fiscal year, standing at only USD 2.2 billion from July through December.
The government on Thursday also launched Diaspora bonds at interest rates of 6.25 per cent for three years and 6.75 per cent for five years to arrange funds for balance of payments support.
Finance Minister Asad Umar said he also gave a go ahead to launch two more financial instruments to meet external sector financing requirements. One instrument, likely to be Sukuk bonds (Islamic bonds), could be launched before June, according to the Finance Ministry officials.
The sources said the government is planning to launch foreign currency Sukuk to tap the Islamic markets. There is also a plan to launch USD 3 billion Euro bonds during the current fiscal year. Asad Umar had postponed it in November after the government arranged loans from the three countries.
The Pakistan Tehreek-e-Insaf (PTI) government blames expansionary fiscal policies of the last Pakistan Muslim League-Nawaz (PML-N) government for the overvalued exchange rate and the current external sector problems.
Since July, the rupee has been devalued by more than 15 per cent but exports could not pick.
The sources said the Finance Ministry and the central bank are in the process of implementing a flexible exchange rate regime while moving away from the managed exchange rate policy.
RBI asks banks to grout ATMs to wall, floor for security by September-end
Mumbai: The Reserve Bank asked banks to ensure their ATMs are grouted to a wall, pillar, or floor by September-end, except those installed in high secured premises such as airports, to enhance security of the cash vending machines.
In 2016, the RBI had st up a Committee on Currency Movement (CCM) to review the entire gamut of security of treasure in transit.
Based on the recommendations of the panel, the central bank has now issued instructions aimed at mitigating risks in ATM operations and enhancing security.
As part of the security measures, all “ATMs shall be operated for cash replenishment only with digital One Time Combination (OTC) locks”.
Also, “All ATMs shall be grouted to a structure (wall, pillar, floor, etc.) by September 30, 2019, except for ATMs installed in highly secured premises such as airports, etc. which have adequate CCTV coverage and are guarded by state/central security personnel”.
Further, banks may also consider rolling out a comprehensive e-surveillance mechanism at the ATMs to ensure timely alerts and quick response, it said.
The new measures to be adopted by banks are in addition to the existing instructions, practices and guidance issued by the RBI and law enforcement agencies.
The RBI also warned the banks that non-adherence of timelines or non-observance of the instructions would attract regulatory action including levy of penalty.
SBI refuses to disclose communication from RBI, govt on electoral bonds
New Delhi: The State Bank of India has refused to disclose any communication it received from the government or the Reserve Bank of India on electoral bonds, terming it “personal information” and held in “fiduciary capacity”.
Responding to an RTI filed by Pune-based activist Vihar Durve who had demanded copies of all letters, correspondence, directions, notifications or e-mails received from the RBI or any government department between 2017 and 2019, the SBI said it cannot be provided by it.
The bank cited two exemption clauses under the RTI Act to deny information — Section 8(1)(e) which pertains to information held in fiduciary capacity and Section 8(1)(J) which pertains to personal information of a person which has no link to any public activity.
“Information sought by the applicant cannot be disclosed as it is in fiduciary capacity, disclosure of which is exempted under Section 8(1)(e) and 8(1)(j) of the RTI Act, 2005,” the Central Public Information Officer of the bank said in his reply.
The bank also refused to give any details of action taken by it on such communications from the RBI and the government.
The electoral bonds, for giving donations to political parties, are being sold through SBI only. The sale opens in SBI branches when the Finance Ministry issues a notification of their sale for a given period.
The scheme of electoral bonds notified by the Centre in 2018 has been challenged in the Supreme Court.
Only the political parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one per cent of the votes polled in the last general election to the House of the People or the Legislative Assembly of the State, shall be eligible to receive the bonds.
The bonds may be purchased by a person who is a citizen of India “or incorporated or established in India,” the government had said in a statement last year.
The bonds remain valid for 15 days and can be encashed by an eligible political party only through an account with the authorised bank within that period only.
A voluntary group working in the field of electoral reforms, Association for Democratic Reforms (ADR), has demanded a stay on the sale while the CPI(M) has challenged it before the Supreme Court in separate petitions.
ADR recently filed an application in the Supreme Court seeking a stay on the Electoral Bond Scheme, 2018 which was notified by the Centre in January last year.
Walmart’s Flipkart, Indian startup GOQii settle dispute over sharp discounting
New Delhi: Walmart unit Flipkart has settled a legal dispute with an Indian startup that alleged it suffered losses because its products were sharply discounted on the global retailer’s website.
GOQii, a seller of smartwatch-type health devices, sued Flipkart last month in a Mumbai court, alleging its devices were discounted by around 70 per cent to the retail price, much more than the two sides had agreed. The court had, as an interim measure, ordered device sales to be halted on Flipkart.
In a joint statement , the companies said the dispute had been resolved and GOQii health devices would again be available on Flipkart. They didn’t say how the settlement was reached.
Vishal Gondal, CEO of GOQii, told Reuters the company would withdraw the case against Flipkart. The e-commerce retailer’s “team worked on a resolution benefitting the brand and the customers”, Gondal said in the statement.
The legal spat was seen as a test case of the giant retailer’s operating strategy in the country.
Small traders and a right-wing group close to Prime Minister Narendra Modi’s ruling party have raised concerns about large e-commerce companies, saying they burn billions of dollars deeply discounting some products to lure customers onto their sites, in the expectation that they will also buy other goods.
GOQii said it signed an agreement last year with a Flipkart unit to sell two of its devices at a price not below 1,999 rupees (USD 28.63) and 1,499 rupees. It later found the devices were being sold for 999 rupees and 699 rupees, calling it “unauthorized” discounting.
In response, Flipkart said it reserved “the right to institute actions for defamation, both civil and criminal”, arguing it wasn’t responsible for any discounts which are determined by third-party firms which sell via its website.
The two companies struck a friendlier tone in their joint-statement on Friday as they brought the legal battle to an end.
“We have ensured constant engagement with GOQii to resolve any differences,” Flipkart said in the statement.
With a 19 per cent market share, GOQii was the second-biggest player in India’s so-called wearables market last year, data from industry tracker IDC showed. The market is dominated by China’s Xiaomi, with Samsung a small player.