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PAC directs audit of $3bn SBP loans given during PTI’s tenure

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1 year ago

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  • $3 billion soft loans extended during COVID-19 pandemic.
  • Khan directs SPB to share list of borrowers within three days.
  • SBP suggests in-camera briefing; list not to be made public.

ISLAMABAD: The Public Accounts Committee (PAC) has directed a forensic audit of soft loans amounting to $3 billion extended to various companies and individuals during the tenure of the Pakistan Tehreek-e-Insaf (PTI), The News reported Thursday. 

Governor State Bank of Pakistan Jameel Ahmed agreed to share the list of borrowers in an in-camera meeting during the committee meeting.

The soft loans of $3 billion were extended during the COVID-19 pandemic.

Chairman Noor Alam Khan presided over the meeting, which the finance secretary and State Bank governor also attended.

Moreover, the committee comprised representatives of the Ministry of Defence, the Ministry of Commerce and the Auditor General’s office to investigate the matter.

It was disclosed that during the PTI government’s tenure, textile, cement, tire and auto industries took $3 billion in loans under the refinancing scheme at a 5% interest rate.

Khan directed the SBP to share the list of borrowers with the committee in an in-camera meeting within three days. 

He said on April 19, the State Bank of Pakistan had been asked under Article 66 of the Constitution to furnish the record of loans given to 620 people, but it was not given. 

The PAC chairman inquired if the loan extended at 5% had benefited the economy.

PAC Member Barjis Tahir said the names of 620 beneficiaries should be given to the committee. 

The finance secretary said it was a refinance scheme that was the State Bank’s mandate, adding the scheme had been implemented through the commercial banks and this requisite information was between the bank and client.

He told the committee that the scheme was launched in March 2020 after the Corona pandemic and was for one year first, having no foreign currency exchange component. 

The scheme was for the industrial sector and import of machinery and it was revised to 5%. 

“More than 85% of lending is from private banks. Of this, 42% of borrowers are from the textile sector,” he told the committee.

“We are worried because most of the companies do not return loans and open companies with new names,” said Khan. 

Furthermore, Ahmed said the State Bank had the list of borrowers; however, loan details were confidential between the banks and customers. 

He told the committee that Rs394 billion had been disbursed so far under the scheme, making it clear that the loans had been disbursed in rupees.

He further told the committee that in this scheme, the government and State Bank did not do any risk sharing, and commercial banks lent to clients at their own risk. 

He told the committee that when the scheme was launched, the interest rate was 9% and was later reduced to 7%. 

“This scheme was used only for the purchase of machinery,” said the SBP governor.

Khan inquired whether the SBP or the government made the policy, and why the names of these companies could not be disclosed. 

The State Bank governor replied that a refinance scheme could be given under the State Bank Act and if a scheme involved government risk sharing, then its approval was sought. 

“We can give a briefing on the benefits of this scheme,” he said.

Khan said the representatives of commerce, planning and defence ministries should be included in the investigation team. 

The committee ordered a forensic audit of a $3 billion dollar loan and directed that a representative of the defence ministry be included in the inquiry. 

The SBP governor suggested that instead of making the list of borrowers public, it would be appropriate to hold an in-camera briefing. 

The PAC chairman agreed to the proposal and agreed to hold an in-camera meeting. 

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Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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20 hours ago

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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