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IMF sees mounting risks, sharp drop in growth for Pakistan next year

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WASHINGTON: The International Monetary Fund projected that Pakistan’s growth will moderate to 4.7 per cent in fiscal year 2019 from 5.6pc in 2018.

In its regional economic outlook update for the Middle East, North Africa, Afghanistan and Pakistan (MENAP) region, the IMF notes that “an increase in macroeconomic vulnerabilities and domestic policy slippages have weakened Pakistan’s economic outlook, with growth now projected to moderate to 4.7pc in FY19”.

In January, the IMF said it expected growth in Pakistan to pick up in 2018-19. The government has targeted 6.2pc growth for next year in its latest budget.

 

Contrary to the govt target of 6.2pc growth for next year, the Fund says it is likely to be 4.7pc
The report credits improved energy supply, investment related to the China-Pakistan Economic Corridor, and strong credit growth for the raise in Pakistan’s growth to an estimated 5.6pc in the outgoing FY18, from 5.3pc last year.

The report, however, places Pakistan among the countries where “delays in implementation or completion of structural reforms and political and policy uncertainty” continue to weigh on growth. Besides Pakistan, Jordan, Morocco, Tunisia and Lebanon are also placed in this category.

Pakistan is also placed among the countries where upcoming elections and a more challenging political environment could slow the reform process.

“A high perception of corruption and lack of transparency in some of these countries could not only affect macroeconomic outcomes directly, reducing investment and productivity, but could also heighten social tensions and hinder reform,” the IMF warns.

The report notes that some countries in the MENAP region are slowly taking steps to improve governance and transparency while additional efforts are also being made to bolster the business environment, with Pakistan recently strengthening its bankruptcy framework.

After three years of decline, exports of MENAP oil-importing countries grew by 6.4pc in 2017 and are projected to accelerate by 8.4pc in 2018 and 8.6pc in 2019.

In Pakistan, Egypt and Tunisia, this was largely due to improved external demand and greater exchange rate flexibility while Pakistan also benefited from a pickup in cotton prices.

Import growth in MENAP nations is projected to slow to 4.8pc in 2018 from 6.8pc in 2017 and remains broadly steady around 5.5pc over the medium term.

In Pakistan, Djibouti and Mauritania, this import compression “partly reflects an anticipated slowdown in capital imports for infrastructure projects”.

The IMF notes that public debt levels in non-oil producing MENAP countries remain elevated, exceeding 80pc of GDP in several nations.

“Such large debt stocks represent a significant burden on the economy. Debt service crowds out growth-enhancing expenditures,” the report adds with a warning that large debt stocks also add to external vulnerabilities given the large share of external debt.

“This burden will increase since financing costs are likely to rise in line with the expected tightening of monetary policy in advanced economies,” says the IMF, while urging borrowing nations to focus on efforts to reduce debt.

The IMF, however, points out that inflation pressure in the region has abated, with inflation broadly stable at about 12pc. In Pakistan and Morocco, decline in food prices helped bring the inflation down while in some countries monetary tightening also helped.


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MPC to meet six times during 2019-20: RBI

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Mumbai: The Monetary Policy Committee (MPC), which decides on key interest rates, will meet six times during the next financial year, the Reserve Bank of India (RBI) said.

The first meeting of the six-member MPC to decide on the first bi-monthly monetary policy statement for 2019-20 will be held from April 2 to 4.

The policy will be announced on April 4. Headed by RBI Governor Shaktikanta Das, the committee also includes two representatives from the central bank and three external members.

 

The external members are Indian Statistical Institute professor Chetan Ghate, Delhi School of Economics Director Pami Dua and Indian Institute of Management-Ahmedabad professor Ravindra H Dholakia.

According to the schedule provided by the RBI, the second meeting of the MPC in the next fiscal will be held on June 3, 4 and 6; third meeting (August 5-7); fourth meeting (October 1, 3 and 4); fifth meeting (December 3-5) and sixth meeting (February 4-6, 2020).

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SBI raises Rs 1,251 crore by issuing Basel III-compliant bonds

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New Delhi: The country’s largest lender State Bank of India (SBI) said it has raised Rs 1,251.30 crore by issuing Basel III-compliant bonds.

“The Committee of Directors for Capital Raising at its meeting held today on 22 March 2019 deliberated and accorded approval to allot 12,513 non-convertible, taxable, perpetual, subordinated, unsecured Basel lll-compliant additional tier-I bonds, for inclusion in additional tier-I capital of the bank…aggregating to Rs 1,251.30 crore,” SBI said in a regulatory filing.

The bonds with a face value of Rs 10 lakh each bears a coupon rate of 9.45 per cent per anum payable annually with call option after 5 years or any anniversary date thereafter, it said. The bonds were subscribed on Friday, it added.

 

State Bank of India (SBI) also said the central board of the bank at its meeting held has accorded its approval for extension of validity period for raising equity capital of up to Rs 20,000 crore from market by way of follow-on public offer, qualified institutional placement, preferential allotment, rights issue or any other mode or a combination of these till March 31, 2020.

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Sebi fines 4 entities Rs 27 lakh for fraudulent trading in BSE stock options

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New Delhi: Markets regulator Sebi imposed a total penalty of Rs 27 lakh on four entities for indulging in fraudulent trade in illiquid stock options segment of BSE.

Umapati Oil Mill and Ginning Factory, Yudhbir Chhibbar, Kasturbhai Mayabhai Pvt Ltd and Vimladevi Shyamsunder Khetan are the four entities, according to Sebi’s separate orders.

fter observing a large-scale reversal of trades in the BSE’s illiquid stock options segment, Sebi conducted a probe from April 2014 to September 2015.

 

Following the probe, the regulator found that the trades executed by the entities were not genuine as they were reversed within few seconds with same counter parties with significant difference in price, resulting in profit to the entities.

Securities and Exchange Board of India (Sebi) said it was a deliberate attempt to deal in such a fashion and not a mere coincidence.

The trades executed by the entities were not genuine and created an appearance of artificial trading volumes, thereby violating PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, Sebi noted.

Accordingly, a fine of Rs 8.7 lakh and Rs 8.4 lakh were imposed on Yudhbir Chhibbar and Vimladevi, respectively while a penalty of Rs 5 lakh each was levied on Umapati Oil Mill and Kasturbhai Mayabhai Pvt Ltd, totalling Rs 27.1 lakh.

In a separate order, Sebi imposed a total fine of Rs 6 lakh on four promoters of Artech Power Products for delayed disclosures to exchanges regarding their change in the shareholding in the company.

Ranjith Vijayan, I V Vijayan, Repsy Vijayan and Resmi Vijayan are the four promoters, according to Sebi’s order.

The promoters have deprived the vital information to the public by non-disclosure /delayed disclosure as mandated by the Takeover Regulations, Sebi noted.

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