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Express Tribune
12 hours ago
- Business
- Express Tribune
Govt urged to end bank subsidies
Listen to article An independent think tank has urged the government to choose between subsidising already-profitable banks or diverting limited fiscal resources toward productive sectors by ending the policy of banks guaranteed returns on government borrowing. The Economic Policy and Business Development (EPBD), a new policy research institute, released the statement the same day a federal cabinet body criticised excessive subsidies to banks in the name of attracting remittances. The Economic Coordination Committee (ECC) of the Cabinet was informed Friday that banks had claimed Rs200 billion under the Pakistan Remittances Initiative during the current fiscal year — Rs115 billion more than the budgeted subsidy. The EPBD stated that the current fiscal structure forces a choice between supporting economic growth and subsidising banking profits through guaranteed government payments. It argued that Pakistani businesses face structural disadvantages compared to regional peers who enjoy policies that enhance rather than restrict productive economic activity. The think tank stressed that economic growth requires policy alignment with development objectives — not bank profit maximisation. The current approach of keeping policy rates at 11% while allocating Rs7.2 trillion for domestic debt servicing ensures stagnation, while regional competitors grow their industrial and export capacity. The government has allocated Rs8.2 trillion for total debt servicing — equal to 46% of the 2024-25 budget. Of this, Rs7.2 trillion will go to domestic banks holding government securities. With 59% of public debt held in floating-rate instruments, the think tank argued that reducing policy rates from 11% to 6% would yield immediate savings. The government worsened this burden by issuing Rs2 trillion in fixed-rate Pakistan Investment Bonds (PIBs) at peak interest rates of 22% over the past two years, locking in excessive costs to the benefit of banks, it added. By cutting interest rates to 6%, in line with falling inflation, the government could save Rs3 trillion on debt servicing. Even a portion of this amount, the think tank said, could lower business costs and stimulate employment. A 6% rate would still offer banks real returns while easing debt burdens. The savings could support manufacturing revival, industrial expansion, SME financing, technology upgrades, and export growth. The statement added that Pakistan's future depends on diverting resources from guaranteed banking profits to investments that create jobs, enhance productivity, and ensure long-term growth. Pakistani businesses cannot expand or generate employment while banks earn risk-free profits from public funds. In contrast, regional economies maintain 5.5% policy rates, allocate only 25% of budgets to debt servicing, and still achieve 6% GDP growth by prioritising business development. The EPBD challenged the claim that lower interest rates fuel current account deficits. It cited the $19 billion deficit in 2021-22, which it attributed to exceptional, non-interest-sensitive imports such as $3.2 billion in COVID-19 vaccines, $15.6 billion in fuel, and $1.7 billion in smartphones. It said high interest rates did nothing to limit those imports and instead suppressed domestic activity. The think tank added that guaranteed profits have led banks to retreat from commercial lending, opting instead for risk-free government bonds. With 97.3% of bank investments tied up in government debt, virtually no capital remains for working capital, expansion, or technology adoption. Manufacturers struggle to finance inventory, exporters lose global competitiveness, and small businesses are excluded from credit. Pakistan's banks have effectively become bond traders, contributing no value to the real economy while earning from taxpayer-backed securities. The think tank also criticised the remittance structure, noting that Rs87 billion went to banks for basic transfersfunds that could instead support small businesses and entrepreneurship. Its statement came as the ECC met to deliberate the future of remittance-linked subsidies. The finance ministry has decided to end the subsidies in 2024-25 due to pressure from banks and International Monetary Fund (IMF) constraints. The State Bank of Pakistan told the ECC it could no longer offer implicit support under IMF rules. Although the ECC requested a transition plan, the finance ministry said no study has determined any positive impact of these subsidies. Officials noted that funds largely benefit banks and exchange companies, not overseas Pakistanis sending remittances. The central bank informed the ECC that remittance promotion schemes have existed since 1985, but their effectiveness remains unverified. Without reform, the remittance subsidy bill could swell to Rs500 billion in coming years, warned a finance ministry official. The think tank reiterated that businesses do not need subsidies or special treatment — just a level playing field. Reducing interest rates to 6% would bring Pakistan in line with regional rivals, restore manufacturing competitiveness, and improve global market access for exporters. Such a move would also accelerate technology adoption and job creation across sectors, the EPBD argued. Although manufacturing capacity exists, it remains underutilised due to lack of financing. With 97% of banks' balance sheets locked in public debt, there is little scope to support private sector growth. Regional countries have demonstrated that supporting businesses through growth-oriented credit policies can deliver 6% growth while maintaining fiscal stability, it added.
Time of India
19 hours ago
- Business
- Time of India
Nashik civic body plans to raise Rs100cr through green municipal bonds
Nashik: The Nashik Municipal Corporation (NMC) is set to raise Rs100 crore through the issuance of municipal green bonds. This move mirrors a similar initiative undertaken by the Pimpri Chinchwad Municipal Corporation (PCMC). The funds secured from these green bonds will be dedicated to various environment-friendly projects in preparation for the upcoming Simhastha Kumbh Mela. These initiatives will encompass crucial areas such as water supply management, waste management, and other related environmental efforts. Municipal commissioner Manisha Khatri , while talking to TOI, said, "We are working in that direction to raise the funds as we will need funds for various green projects in view of the upcoming Simhastha Kumbh Mela. We will raise around Rs100 crore through the green municipal bonds." She also highlighted that central govt offers incentives to municipal corporations that raise funds for green projects through such bonds. The PCMC recently raised Rs200 crore through green municipal bonds and became the first municipal corporation in Maharashtra to do so. The bond issue witnessed substantial investor interest, being oversubscribed by 5.1 times. The bonds were floated via private placement on the BSE's Electronic Bidding Platform and attracted bids worth Rs513 crore, oversubscribing the offer by 5.13 times. The base issue of Rs100 crore was fully subscribed within just one minute of opening, indicating strong investor confidence.
Express Tribune
2 days ago
- Express Tribune
SHO, three cops booked for 'extortion'
Despite a court-approved interim bail, police allegedly detained a murder suspect and extorted Rs200,000 in bribes for his release. Following an inquiry that confirmed the allegations, a case has been registered against the Station House Officer (SHO) of Saddar Police Station, the station Muharrar and three other personnel. According to a complaint submitted to the Senior Superintendent of Police (SSP) Operations by Mujahid Iqbal, his son Hamza Mujahid had been falsely implicated in a murder case under Section 302 of the Pakistan Penal Code at Saddar Police Station Iqbal stated that his son obtained interim bail from the court of the Additional District and Sessions Judge on May 28. However, when Hamza presented himself at the police station the following day to join the investigation, SHO Abid Hussain Jutt reportedly arrested him . Robkar, which the SHO allegedly tore apart while hurling verbal abuse. The complaint further alleged that Investigating Officer Sub-Inspector Naeem Alamuddin, along with officers from both cases as well as the station Muharrar Hashim, subjected Hamza to torture. SHO Jutt then allegedly demanded Rs500,000 for his release.
Express Tribune
3 days ago
- Business
- Express Tribune
Rs192b supplementary budget passed
The Khyber Pakhtunkhwa Assembly on Wednesday approved a supplementary budget of Rs192.74 billion for the current fiscal year (2024-25), clearing 62 funding demands covering additional departmental expenditures. The move sparked a backlash from opposition parties, who staged a fiery protest and a walkout, decrying the move as evidence of the provincial government's flawed planning and faulty economy. Speaker Babar Saleem Swati presided over the session, which quickly turned contentious after he invoked special powers to bulldoze opposition cut motions and fast-track the budget. Opposition members, branding the exercise a matter of "disastrous policy failure", alleged this marked the 14th supplementary budget under PTI's 13-year rule. They lambasted the frequent recourse to such budgets, arguing that when unchecked expenditures balloon year after year and questioning the government's proclaiming of a surplus. Dr Ibadullah, Leader of the Opposition, waded into the debate with figures. "Surplus doesn't fit the bill," he said, pointing to the staggering provincial debt rising from Rs150 billion to Rs800 billion under successive PTI administrations. He questioned the logic of approving patchwork budgets when nearly a third of development funds had gone unspent and alleged Rs200 billion in financial irregularities per the auditor general's findings.
Business Recorder
3 days ago
- Business
- Business Recorder
FY25: Sindh PA approves Rs156bn supplementary budget
KARACHI: The Sindh Assembly on Tuesday approved a supplementary budget of over Rs156 billion for the fiscal year 2025–26, brushing aside fierce resistance of the opposition in the form of 735 cut motions, which were overwhelmingly rejected by the house. Chief Minister Syed Murad Ali Shah, who also holds the portfolio of Sindh's Finance Minister, presented 84 supplementary demands for grants, including charged expenditures for the Governor's Secretariat and the Provincial Assembly. These demands were passed by the assembly during a session chaired by Speaker Syed Awais Qadir Shah. The opposition had tabled over 735 cut motions against the supplementary grants, urging individual consideration of each. Leader of the Opposition Ali Khurshidi insisted that every motion was prepared with diligence and should be debated separately. However, the Speaker grouped the motions together and subjected them to a joint vote, in which they were rejected by a majority. Presenting the supplementary demands, Murad Ali Shah detailed the expenditure breakdown, stating that over Rs5 billion was allocated to the judiciary's charged expenditures, Rs3 billion for the Sindh Assembly, and more than Rs1 billion for the Governor House. He further explained that over Rs59 billion was earmarked for debt servicing. He clarified that expenses related to the courts are non-negotiable, but administrative departments including the Assembly could be asked to exercise restraint. Interestingly, the Chief Minister noted that while there were cut motions filed against CM Secretariat expenditures, none targeted those of the Governor or Speaker. MQM's Muhammad Mazahir Amir raised concerns over rising petroleum costs due to global tensions in the Gulf region and urged the government to curb fuel expenditures. Murad Ali Shah responded by clarifying that although fuel prices had indeed risen, consumption levels had remained unchanged, which is why related costs had gone up. In another cut motion, Muhammad Mazahir questioned an allocation for the CM House garden, to which the Chief Minister clarified that the funds were for stationery and supplies, not landscaping. Murad Ali Shah also disclosed that during the visit of the late Iranian President, who had come to the CM House, hospitality and protocol expenses had totalled Rs200 million, including traditional Sindhi gifts such as Ajraks and caps, and occasionally handcrafted items. 'These are not lavish expenses but unavoidable state protocols,' Murad Ali Shah said, while asserting that all valuable gifts he received were kept at the CM House or submitted to the Toshakhana, in accordance with national laws. In his address, the Chief Minister made it clear to the opposition: 'Forget that any of the cut motions will be passed.' He acknowledged the opposition's right to contest, adding, 'It is their democratic role to oppose, so the public can see what they are standing against.' MQM's Muhammad Rashid Khan suggested that state gifts should come from personal pockets. In response, Murad Ali Shah stated he receives many quality gifts, all of which are documented and stored appropriately. The Sindh Assembly session was adjourned to resume on Wednesday at 11 a.m., when the Finance Bill 2025 is scheduled to be tabled. Meanwhile, the opposition has also submitted over 2,000 cut motions on the upcoming fiscal year's budget, which the house will decide in the next sitting. Copyright Business Recorder, 2025
