FATF challenge: Citi Pakistan CEO sees no blacklisting prospects

Terming the Pakistan's economic prospect 'positive', Citibank Pakistan Monday said that the country will 'remain' on the grey list of FATF next year, however, there is no blacklisting probability.

Talking to journalists at Citibank Pakistan Media Roundtable in Karachi, Nadeem Lodhi, CEO of Citi Pakistan expressed satisfaction over the current economic policies of the government and called for continuation of these policies. "If the current political regime, where political leadership and Army look united, continues for next two years, things would be much better," he added.

Citibank Pakistan arranged a media roundtable on Monday at its office for insight views on economic and financial issues. During the roundtable, Citibank officials discussed a number of issues including economic outlook, FATF and risks to economy.

Citibank Pakistan CEO said that things are turning around and there are fundamental changes on the economic front. Pakistan's current account deficit is under control, imports are declining, trade numbers are good, markets are stabilizing, exchange rate is favorable, investor confidence is returning and notable fundamental changes visible on the fiscal side. With all these developments overall economic outlook is positive, he added.

Lodhi said there are some challenges on the system side and hopefully the economic team will manage these challenges well. "Blacklisting (of Pakistan) on FATF is not a probability now or any other time," the CEO Citibank Pakistan added.

Moiz Hussain Ali, Country Head of Treasurer and Markets Citibank Pakistan termed the FATF a geopolitical issue saying that Since Pakistan is showing progress it will remain in the grey list for rest of the year as the list given to Pakistan is quite long and will take time to meet the FATF conditions.

"FATF is a geopolitical or political issue as Afghanistan is on white list, but Pakistan is on grey list of FATF," he added.

He said our regulator is very strong and has made whatever they had to implement in the financial industry. "Our (Citibank Pakistan) business will not be affected due to FATF as we can handle the situation," he said.

Highlighting the risks to Pakistan's economy, the CEO Citibank Pakistan said that there are only three to four risk factors, including FATF blacklisting, which is not possible right now. In addition, Pakistan and India tensions and Saudi-Iran war, of which oil prices may go up.

Talking about the issuance of new bonds, Lodhi said that for the first time in the history of Pakistan, the govt has planned to launch Panda Bonds in the Chinese market. The homework on the issuance of Panda Bond has completed and the launch is expected shortly, he added.

Talking about the new ventures, he said currently a number of foreign companies are looking for investment opportunities in Pakistan in household, renewable energy and LNG sector.

Citibank officials said Pakistan is attracting more portfolio investment compared to past and so far investment in Special Convertible Rupee Account has reached about $1.3 billion. LSM's September statistics are better than previous months which means domestic productivity is gradually increasing.

The government is also working on import substitution and it will also help boost the domestic productivity. Improvement on the external account will increase the country's ability to pay off external loans, they added.

They said Pakistan's economy has paid much for 5 years due to exchange rate fixation, however, the market based exchange rate will help reduce current account deficit, boost tax collection and create new jobs.

They said that in the past, inflows of Coalition Support Fund (CSF) had largely supported Pakistan's current account, which was out of control in 2017.

At present there are fundamental changes on the economic front.

Moiz said there is also a change in the SBP's working since July this year and monetary policy statements are even different compared to previous announcements. With current economic developments, it is also being expected that the SBP may soften the monetary policy in future, he added.

"Overall economic prospects for Pakistan are positive as CA, imports are on the decline, exchange rate is stable, domestic productivity is growing," he maintained.

He said that surplus CA account always supports the economy and initial estimates are indicating that for the second consecutive month current account deficit will remain surplus in November 2019.

The Citibank officials said that the IMF program is good for Pakistan as the Fund is asking for implementation of those economic reforms, which are required for long-term growth.

Sarah Siddiqui, Head of Corporate Sales and Solutions, Amir Masood, Head of Multinational Business, Iqbal Azeem, Head of Treasury and Trade Solution, Rabiya Rizvi, Head of Cash Management and Digitization and Adeel Shahid, Head of Marketing and Public Affairs were also present.