economicletter a weekly publication of The Institute of Bankers Pakistan

Pakistan
The President, Asian Development Bank (ADB)
expects reconstruction and rehabilitation work in the flood affected
areas of the country to be completed in about 2-3 years. Both the
ADB and the World Bank have placed the flood damage at about $
9.5 bn of which the ADB and the World Bank stand committed to
provide $ 2.0 bn and $ 1.0 bn respectively. They have urged the
international community to honour their pledges by November so
that the required work may begin.
The World Bank as also the Asian Development Bank
have estimated losses suffered by flooding in the country at $ 9.5
bn while the government estimates place it at $ 43 bn.
The U.S. has urged Pakistan to increase its tax base to meet
the financial needs arising due to flooding in the country as the
nternational community can meet them only to a limited extent.
The Economic Coordination Committee of the
Cabinet (ECC) has approved a one-time grant of Rs 2,400 per acre
for farmers holding upto 12.5 acres of land adversely affected by
floods. Concessional financing has also been approved for farmers
holding between 12.5 acres to 25 acres in the flood affected areas.
The ECC has also decided against the previously planned export of 2
mn tons of surplus wheat in view of the likely shortfall in the current
rabi crop.
According to SBP, home remittance in the first quarter of the
current fiscal (July-September 2010) rose by 13.5% over the same
period last fiscal to $ 2.646 bn.
Total sale of petroleum products by oil refineries at 1.8 mn
tonnes in the first quarter of the current fiscal was lower by 14% over
the same quarter last fiscal.
According to SBP, net foreign investment in the first
quarter of the current fiscal at $ 455.1 mn was lower by 28.5%
against $ 636.5 mn in the same quarter last fiscal. Foreign direct
investment at $ 387.4 mn was lower by 9.5% against $ 427.9 mn
while portfolio investment at $ 67.7 mn was lower by 67.5% against
$ 208.2 mn during the above periods.
Financing under the Export Finance Scheme (EFS) of
the SBP stood at Rs 186 bn at end-June 2010 against Rs 198 bn at
end-December 2009.
Import need of cotton may be in the range of
2.5-3.0 mn bales consequent to losses suffered by flooding in the
country. The crop was sown at over 3.4 mn hectares of which 0.6 mn
hectares was washed away by floods. Total production is now being
estimated at 11.5 mn bales against the target of 14 mn bales.
Faysal Bank has acquired controlling shares of Royal Bank
of Scotland (RBS Pakistan) for 41 mn euros giving it a foothold of
200 branches across the country with combined business assets of
Rs 260 bn.
Bank Islami is to acquire housing finance business of Citibank for
Rs 1.1 bn subject to approval of the regulatory authorities.
Pakistan Railways suffered a loss of Rs 26 bn in 2010
with revenue generation of Rs 24 bn and operating expenses of
Rs 50 bn.
Inflation measured by the consumer price index
(CPI) registered an increase of 15.71% in September 2010 over
September 2009 against a rise of 13.23% in August of the year
over August 2009 driven mainly by higher food prices consequent to
flooding in the country. Food inflation was recorded higher by 21.24%
in September 2010 over September 2009. Core inflation (non-food,
non-energy) was lower at 9.4% in September 2010 against 11.9% in
September last year.

Services sector export earnings during July-August Liquid foreign exchange reserves as on October 8, 2010
2010 rose by 4.87% to $ 589.089 mn against $ 561.745 mn in the stood at $ 16.97 bn of which $ 13.14 bn was held by the SBP and
same period of 2009. the rest with banks.
>>
Markets at a glance
Weekly KIBOR (6months) Foreign Exchange Rates KSE Gold Rate
Review Bid % Offer % GBP (£) Euro (€) USD ($) 100 Index (10gm)
Beginning 12.97 13.22 Rs 137.34 Rs 120.10 Rs 86.15 10260 Rs 37,285
Ending 12.95 13.20 Rs 136.67 Rs 119.51 Rs 86.07 10431 Rs 37,971
Change -0.02 -0.02 -0.67 -0.59 -0.08 +171 +686

Volume 5, Issue No. 42  |  October 18, 2010

 a weekly publication of The Institute of Bankers Pakistan

International
China now has 11 richest women in the world in a list of
The Asian Development Bank has identified eight
20 top richest women, a private research study of the U.S. has come
nations as facing the worst water shortage relative to both agricul-
to conclude.
tural needs as also of clean and safe drinking water. The countries
are; China, India, Pakistan, Bangladesh, Nepal, Uzbekistan, Vietnam Forthcoming IBP Training Programs
and Cambodia.
Karachi
October 22
China’s foreign exchange reserves at end-September
Regulatory Compliance and Bank’s Operational Issues
2010 reached a record high of $ 2.648 trillion, highest in the world,
having risen by 16.5% over the same month in 2009. October 25-26
International Financial Reporting Standards for Corporate Managers
China hopes to increase its wind power capacity
five-fold from the level of 25.8 gigawatts at end-2009 to over 150 October 26
gigawatts by 2020 as the country aims to meet its power needs Alignment of Goals, Resources and Strategy
through greater reliance on green energy.
October 26
SBP Guidelines on Internal Credit Risk Rating System
Iran’s current oil reserves have been estimated by the
government at 150.31 bn barrels, second highest after Saudi Islamabad
Arabia amongst member countries of the OPEC. Iran has the second October 28
largest gas reserves in the world after Russia. Internal Control systems with particular reference to SBP Guidelines

Inflation in Bangladesh measured by the consumer price Rawalpindi

index (CPI) was recorded at 7.25% in August against 7.26% in July,
driven higher by food inflation. Food prices rose by 9.64% in August
against 8.72% in the previous month. CPI inflation in 2009-10 was
higher by 7.31% over 2008-09.
U.S. trade deficit in August rose by 9% over July to $
46.3 bn deficit on the back of $ 28 bn deficit with China. Total
imports in August stood at $ 250.2 bn, higher by 2.1% over July
while exports in August fetched $ 153.9 bn, higher by 0.2% over
July.
October 27
Preparation of Cash Flow and Its Application
Peshawar
October 21-22
SBP Prudential Regulations for Corporate & Commercial
Banking, SME & Consumer Financing & General Banking
Operations in Effective Manner [Venue: D.I.Khan ]
October 26
Risk Mitigation through Credit Administrations

Multan
The U.S. budgetary deficit in the fiscal ending September
October 25
2010 stood at $ 1.3 trillion lower by $ 122 bn over the previous fiscal. Lending to Small & Medium Enterprises
CPI inflation in the 16-nation eurozone area rose by
October 28
1.8% in September against 1.6% in August on an annualized basis, Non Performing Loans, Recovery and Out of Court Settlement
both year-on-year.

CPI inflation in the U.S. in September was 0.1% and core

inflation at 0.8%, lowest monthly since 1961, both year-on-year.

Editor: Syed Mahdi Mustafa

Published by: The Institute of Bankers Pakistan, M.T. Khan Road, Karachi 74200, Pakistan
Phone: (021) 35689718, 35680783  |  Fax: (021) 35683805  |  Email: ibp@ibp.org.pk  |  Website: www.ibp.org.pk

General Disclaimer: IBP Weekly Economic Letter is based on information obtained from local and international print and electronic
media. IBP has not verified this information and no warranty, expressed or implied, is made that such information is accurate, complete
or should be relied upon as such. In no circumstance IBP and its team members would be liable for any incidental or consequential
damage that may incur from the use of information contained in IBP publication(s).

Volume 5, Issue No. 42  |  October 18, 2010