Raising funds: Government opens doors to private lenders - Express Tribune

[AsifAmeer]

DOUBLED RETURNS: 6% is the minimum deposit rate, while around 12%
is the rate of return on Treasury Bills. DESIGN: ALI DARAB

http://tribune.com.pk/story/375497/raising-funds-government-opens-doors-to-private-lenders/

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ISLAMABAD: The government has decided, in-principle, to allow individual depositors to invest in government securities through commercial banks; a move aimed at boosting declining savings and ensuring almost double returns to investors against what they currently receive from banks.



Individual depositors will now have the option to ask banks to invest their deposits in government security papers, sources in the Finance Ministry have said. In return, banks will charge a nominal service fees on these investments.
The government had earlier allowed pensioners and trust funds to invest in national saving schemes in a bid to give them better returns on their savings.

Authorities have completed consultations with commercial banks, and the latter have endorsed the proposal. The decision will take effect from July 1, the first day of fiscal year 2012-13.

Central bank data shows that, till April, scheduled banks held Rs5.93 trillion in deposits; higher by Rs800 billion or 15.6% over the corresponding month last year. Currently, the minimum deposit rate is 6% raised only recently from 5%.

On May 2, the federal government issued treasury bills worth Rs150 billion with three- or six- months maturity period. The three-month papers were sold at 11.87%, while the mark-up on six-month papers was 11.94%, according to the State Bank of Pakistan.

By obtaining deposits at the minimum rate of 6%, banks invest this money in treasury papers at almost double rates, securing hefty profits. Almost half of banks deposits have been invested in government papers. The ratio is 65% in case of the two largest banks in the country, according to the central bank.

The government remains the largest borrower due to its burgeoning expenses; which have outstripped revenues at an unprecedented pace. According to finance ministry documents, from July through March the federal governments budget deficit swelled to Rs1.39 trillion 6.6% of the total economy and the highest ever in nine months. The deficit includes Rs391 billion in payments to reduce circular debt from last year.

According to a recent report by the International Monetary Fund, Pakistan will require Rs7.3 trillion, or 30.3% of its Gross Domestic Product, to meet debt and deficit liabilities for the coming financial year.

Low savings have become increasingly problematic for the country and have resulted in low investment and higher unemployment. Against every hundred rupees earned, Pakistan saves a little over Rs13. The same ratio is 45.5% in China and 29% in India. Average South Asian saving rates are 26%, double Pakistans saving rates.

Pension fund
Sources said the government has also decided to establish a pension fund for civil servants. The fund was announced last year but could not be implemented, they added. The fund will serve only the newly-inducted employees.

If employees want to avail pension after retirement, they will have to surrender a part of their salaries; while in return, the government will also contribute a share to double what the civil servant will contribute, the sources said.

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PERSONAL NOTE: The folks who have been following me and interacting with me, I want those folks to guess what this move is..
DONT SCROLL DOWN TILL YOU HAVE MADE UP YOUR MIND....
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Thats right! This is a desperate move by the Govt to cut off the middle-man (Commercial Banks) and get the most out of the savings of ordinary citizens. No matter how much rate you get on these Deposit accounts, they will NEVER be higher than the inflation rate! Do not save anything in RUPEE or RUPEE denominated assets. Folks we are seeing the final attempts by the Govt to suck on the last few drops of blood of the ordinary citizens. I am starting to wonder if a Pakistani default would lay the ground for Greece to default.

 

[AsifAmeer]

[h=1]UPDATE NEWS: IPPs give 72-hour ultimatum[/h]

LAHORE - The advisory council of independent power producers (IPPs) has issued an ultimatum of 72 hours to the government for the non-payment of Rs 34 billion, failing which the IPPs legal counsel will proceed with legal options. The ultimatum was issued after the failure of government to honor its sovereign commitment. Moreover, eight IPPs served another fresh notice for payment of Rs 9 billion to the government. Sources said the government must act positively to avoid any embarrassment in court of law, as the industry was facing a hard time with severe cash crunch, especially when banks had stopped further loans. However, in the larger national interest, the IPPs are continuing to run their plants on the basis of fuel payment they got from NTDC for a few hours. The sources revealed that despite this huge default, the IPPs were generating power per their commitment based on funds they were given for fuel, but the situation was getting worse day by day.

The IPPs would soon start to default on their loans, both short-term and project loans from the banks, which would cause another of Pakistani industry (banks) to collapse. The sources said since the deadline of the final 10-day notice of Rs 34 billion payment ended on May 4, 2012, which was served by the same eight IPPs on April 19, it had become evident that soon the IPPs would have all their investment jeopardized by the government’s indifference towards financial woes of these power producers. They said a case outside Pakistan against this sovereign default would immediately result in severe reactions by the global financial sectors. The banks, they added, would stop honouring trade documents from Pakistani banks and would insist on cash payments.

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PERSONAL NOTE: I have mentioned in the past that I expect the Commercial Banks in Pakistan to collapse. I was thinking that it would be triggered by Govt bonds loosing values, hence erasing bank capital. I missed this situation. I am honestly starting to feel that the Greek default will come after Pakistan's default.

 

[Vitamin_C]

Its painful reading these figures, and accessing the damage done by these American stooges... Shocking

 

[itsnotme90]

Asif bhai i dedicate this song to you coz we only got 4 months to save the world. My prediction is that august will show the real face of not only european union but pakistani commercial banks as well. I have already converted all my euros into productive assets not keeping cash at all.

 

[AsifAmeer]

It truly is. I am away from Pakistan but the figures scare me too.

Its painful reading these figures, and accessing the damage done by these American stooges... Shocking

 

[itsnotme90]

Friend of mine from state bank told me that commercial banks are running out of money thats why Govt introduced this law of stock market of 8% capital gain tax to bring money into banks. This is what u said as well i remember. During the financial crisis only canadian dollar will be flight to safety apart from any other currency.

 

[AsifAmeer]

bay-gairat insaan mera wuzu kharaab kiya... Aur mein bhi tum se bara begairat ko wuzu kharab honay diya. I dont recall seen this grandma the last time.. Holy.. she's still the way when i was 16! For some reason I dont like these hip hop songs. Here's what get me goin

and never does this beat ever grow old on me

Asif bhai i dedicate this song to you coz we only got 4 months to save the world. My prediction is that august will show the real face of not only european union but pakistani commercial banks as well. I have already converted all my euros into productive assets not keeping cash at all.

 

[AsifAmeer]

currently the ONLY currency that is undervalued is the RMB. Common sense dictates that the only currency that will maintain value or maybe appreciate will be RMB. I feel Russia,Norway & Brazil is in decent spot too. lekin thats not a market i follow that closely. Canadian is decent too.

Friend of mine from state bank told me that commercial banks are running out of money thats why Govt introduced this law of stock market of 8% capital gain tax to bring money into banks. This is what u said as well i remember. During the financial crisis only canadian dollar will be flight to safety apart from any other currency.

 

[itsnotme90]

Mujhay pata nahi tha k siasat.pk per log ba wazzu ho kar bethtay hain. Main to samjha tha k sirf namaz say pehlay wazzu kartay hain ap mashallah siasat.pk per bhi ba wazzu atay hain[hilar][hilar][hilar]

 

[AsifAmeer]

lol.. Magrib parh k farig huwa.. checked email, checked siasat and there goes the chamak challo! yeah...

Mujhay pata nahi tha k siasat.pk per log ba wazzu ho kar bethtay hain. Main to samjha tha k sirf namaz say pehlay wazzu kartay hain ap mashallah siasat.pk per bhi ba wazzu atay hain[hilar][hilar][hilar]

 

[itsnotme90]

commodity based currencies will perform better apart from aussie as they are about to reduce interest rates & canada is back in production coz of summer.

 

[AsifAmeer]

You are mistaken on this one. Look at this
http://www.ausstats.abs.gov.au/auss...7B02CA2579F700120172/$File/53680_mar 2012.pdf

You see Australia is riding on the commodity demand from China. China is slowing down and you see the effects of that on the above provided link. There is an immense bubble in the Australian Property market. If the incomes fall, Australia will have its version of Financial crisis.

There's an excellent book out there by John Mauldin called ENDGAME covering US, China, Australia, Canada and other countries

commodity based currencies will perform better apart from aussie as they are about to reduce interest rates & canada is back in production coz of summer.

 

[itsnotme90]

I m saying the same that aussie will not perform or appreciate coz they are reducing interest rates for all these reasons but canadian dollar will perform as america is trying to import as much as they can from canada & that will boost canadian dollar during the time of european crisis. Australian bank already reduced its interest rates last week thats why aussie is under pressure.

 

[Vitamin_C]

You are mistaken on this one. Look at this
http://www.ausstats.abs.gov.au/ausstats/meisubs.nsf/0/CEE9A8A3F30A7B02CA2579F700120172/$File/53680_mar%202012.pdf

You see Australia is riding on the commodity demand from China. China is slowing down and you see the effects of that on the above provided link. There is an immense bubble in the Australian Property market. If the incomes fall, Australia will have its version of Financial crisis.

There's an excellent book out there by John Mauldin called ENDGAME covering US, China, Australia, Canada and other countries

“must learn from the philanthropists like the Rockefellers – first you rob everybody, then you give to the poor. ” Don Michael Corleone

 

[Temojin]

Well, disgusted by PTI followers' attitude during past two days, I was not in a mood to comment yet understanding that if I stir a bowl of filth and try to find something good, all that will come out is foul smell, I have given a suggestion to the moderators that either this forum should be labelled siasat.pk-a face or a front for PTI or I should report it to PEMRA and other concerning authorities through some people that I know. Even their language doesn't offend me to the extent that their lack of understanding. Seems like they just jump on to the keyboard and start typing with all their might to crush the person at the other end and completely forget what the other person has tried to point out. Imran is the new altaf bhai, bhutto and zia-all in one package. So much so for occasional frustration that comes with being a reasoning individual and then trying to reason with know-it-all teenagers and some elders who are teenagers wannabes. :)

Now coming to this point. My question again, suggest me all of you mates the date when a proper civil war ignites and then NATO forces jump in to save us and our nuclear assets? I also dread the attitude when I see at this blokes who follow PTI that making them more concrete towards such attitude might also be preparation for a civil war and they become the fodder of it in no time. And we all know that the opponents also snap at one point in time being humans.

About IPPs and electricity issue, I was talking to a very senior and fortunately and very reasonable higher official of WAPDA who told me that there is no issue at all with meeting demands of the electricity. The only issue is that almost all officials and government reps want all the money to go directly into their pockets be it from receiving electricity bills or any other revenue generated through WAPDA's installations or projects and they would want payments to come from the heavens. Moreover, during any high-profile meeting, they don't even mention the problems as they doesn't exist in the first place but the ways they can increase their earnings. With the dissolution of PEPCO, non-professionals have been appointed to manage electricity distribution and they are wreaking havoc as we all can see.

By the by, I am trying to think upon the possibility of getting the strongest of acids and make a mixture to put on ATMs and get money out of them at night :P. On a serious note, I fear that if civil war starts, even people like us might want to rob the nearest banks or markets of money and guess what (as you all know) the robbed bank notes will be worthless pieces of paper.

 

[desicad]

UPDATE NEWS: IPPs give 72-hour ultimatum



LAHORE - The advisory council of independent power producers (IPPs) has issued an ultimatum of 72 hours to the government for the non-payment of Rs 34 billion, failing which the IPPs legal counsel will proceed with legal options. The ultimatum was issued after the failure of government to honor its sovereign commitment. Moreover, eight IPPs served another fresh notice for payment of Rs 9 billion to the government. Sources said the government must act positively to avoid any embarrassment in court of law, as the industry was facing a hard time with severe cash crunch, especially when banks had stopped further loans. However, in the larger national interest, the IPPs are continuing to run their plants on the basis of fuel payment they got from NTDC for a few hours. The sources revealed that despite this huge default, the IPPs were generating power per their commitment based on funds they were given for fuel, but the situation was getting worse day by day.

The IPPs would soon start to default on their loans, both short-term and project loans from the banks, which would cause another of Pakistani industry (banks) to collapse. The sources said since the deadline of the final 10-day notice of Rs 34 billion payment ended on May 4, 2012, which was served by the same eight IPPs on April 19, it had become evident that soon the IPPs would have all their investment jeopardized by the government’s indifference towards financial woes of these power producers. They said a case outside Pakistan against this sovereign default would immediately result in severe reactions by the global financial sectors. The banks, they added, would stop honouring trade documents from Pakistani banks and would insist on cash payments.

---

PERSONAL NOTE: I have mentioned in the past that I expect the Commercial Banks in Pakistan to collapse. I was thinking that it would be triggered by Govt bonds loosing values, hence erasing bank capital. I missed this situation. I am honestly starting to feel that the Greek default will come after Pakistan's default.

pakistan is lucky again......with sarkozy gone greece will default sooner....merkel alone won't be able to do much now........

 

[kakajee]

@Asif


I am a layman when it comes to economics but it seems that you are absolutely right. The gravity of the situation is indeed appalling.

I have some money in RUPPESS in the banks. What do you suggest me in the simplest of the words to do with it in order to save it from the wrath of piggy-faced Zardari and his cronies?

 

[desicad]

@Asif


I am a layman when it comes to economics but it seems that you are absolutely right. The gravity of the situation is indeed appalling.

I have some money in RUPPESS in the banks. What do you suggest me in the simplest of the words to do with it in order to save it from the wrath of piggy-faced Zardari and his cronies?

vote for Taliban Khan........(bigsmile)

 

[AsifAmeer]

if its a big amount of cash, buy gold in lowest denomination
If its not a huge amount of cash, buy silver in highest denomination.

For daily needs, use and store foreign currency (Chinese RMB, Krona, Rubble)
Always store 2 months of drinking portable water. dried food.

@Asif


I am a layman when it comes to economics but it seems that you are absolutely right. The gravity of the situation is indeed appalling.

I have some money in RUPPESS in the banks. What do you suggest me in the simplest of the words to do with it in order to save it from the wrath of piggy-faced Zardari and his cronies?

 

[AsifAmeer]

I honestly didnt see that sledge-hammer coming from the IPP side to the commercial banks. Months ago I thought Pakistan has 18 months. Now that sounds way too optimistic.

Why even bother break the broke banks! Stay in touch with farmers. Try to build a supply chain around the ppl u live with. World wont end but there is be alot of misery. Those who advocate a simple way of life, without modernity, will have a chance to taste their wishes come true.

Well, disgusted by PTI followers' attitude during past two days, I was not in a mood to comment yet understanding that if I stir a bowl of filth and try to find something good, all that will come out is foul smell, I have given a suggestion to the moderators that either this forum should be labelled siasat.pk-a face or a front for PTI or I should report it to PEMRA and other concerning authorities through some people that I know. Even their language doesn't offend me to the extent that their lack of understanding. Seems like they just jump on to the keyboard and start typing with all their might to crush the person at the other end and completely forget what the other person has tried to point out. Imran is the new altaf bhai, bhutto and zia-all in one package. So much so for occasional frustration that comes with being a reasoning individual and then trying to reason with know-it-all teenagers and some elders who are teenagers wannabes. :)

Now coming to this point. My question again, suggest me all of you mates the date when a proper civil war ignites and then NATO forces jump in to save us and our nuclear assets? I also dread the attitude when I see at this blokes who follow PTI that making them more concrete towards such attitude might also be preparation for a civil war and they become the fodder of it in no time. And we all know that the opponents also snap at one point in time being humans.

About IPPs and electricity issue, I was talking to a very senior and fortunately and very reasonable higher official of WAPDA who told me that there is no issue at all with meeting demands of the electricity. The only issue is that almost all officials and government reps want all the money to go directly into their pockets be it from receiving electricity bills or any other revenue generated through WAPDA's installations or projects and they would want payments to come from the heavens. Moreover, during any high-profile meeting, they don't even mention the problems as they doesn't exist in the first place but the ways they can increase their earnings. With the dissolution of PEPCO, non-professionals have been appointed to manage electricity distribution and they are wreaking havoc as we all can see.

By the by, I am trying to think upon the possibility of getting the strongest of acids and make a mixture to put on ATMs and get money out of them at night :P. On a serious note, I fear that if civil war starts, even people like us might want to rob the nearest banks or markets of money and guess what (as you all know) the robbed bank notes will be worthless pieces of paper.