Pakistan is likely to achieve 7 percent GDP growth and is targeting 3 to 3.5 percent fiscal deficit for the current fiscal year. This was stated by Dr Salman Shah at the inauguration of a Picic Commercial Bank branch. He said that this growth rate might be achievable due to higher cotton and wheat crops and higher investments in the industrial sector. Banks project investment is also growing.
He said that interest rates would not cross double digit in anyway, as there are growing concerns for the inflation rate. The inflation rate is not reducing from 9 percent, while five months of currency financial year are over.
As the fiscal deficit is quite comfortable and the macro situation is very stable, it bodes well for creating no pressure on interest rates. Inflation rate would not be far out of reach of the targets set. It is just having July impact, which is still visible in the figures compiled during November.
He said that most of the macro indicators are under control and are focused for exceeding 7-8 percent GDP growth in the medium term.
He said that prices of petroleum products were raised to meet the fiscal deficit targets. He said that last year the deficit was 2.8 percent of GDP, which would not cross 3.5 percent this year.
Dr Shah said that higher imports were driven by machinery imports, which would be helpful for future growth.
The Finance Adviser said that the government had been absorbing the increase in oil prices, which have now been passed on to save the fiscal deficit target.
He appreciated the work of Picic and the growth it has achieved during the last few years.
PICIC Managing Director Muhammad Ali Khoja said that after completing 'Vision 2005' by at least one-and-a-half years in advance, Pakistan Industrial Credit and Investment Corporation (Picic) has launched its 'Vision 2008' to transform its concept of a true financial supermarket into reality. The 'Vision' would also include celebration of Golden Jubilee of the Corporation, which will complete 50 years in 2007. "This will be an eventful year for us," he said, and added that two new closed-end mutual funds would be launched under 'Vision 2008' ie one Picic Energy Fund, and the other Picic Balance Fund.
The size of these funds will be Rs 1.5 billion each, of which Rs 500 million will be offered to public under green-shoe option. The ratio of mutual funds to the bank's deposits is more than 100 percent in USA, 80 percent in Europe and 20 percent in India. However, it is only 4 percent in Pakistan. This share needs to be enhanced, he added.
Referring to the two mutual funds of Picic, he said that net asset value of these funds has increased from Rs 5 billion to Rs 12 billion, showing a phenomenal rise of 140 percent in just one-and-a-half years. He said that after the sharp fall in the returns on bank deposits and national saving schemes, small investors are looking for investment instruments, which can offer better returns on their savings. Picic has paid more than 35 percent returns on its investment Fund and 45 percent on Picic Growth Fund. Credit agency Pacra has further improved the credit rating of Picic from0 'AA-' (Double A Minus) in 2003 to 'AA' (Double A) for long term and for short term credit rating it maintained its ranking at 'A 1+' (Single A One Plus) which is highest.
Picic has included an insurance company and asset management company in its fold. He said that it has been decided in principle to merge Picic Commercial Bank into Picic. The committee constituted for merger would finalise the scheme for merger, which would be prepared by financial consultant.
Commenting on portability of Picic, he said that the after-tax profit of Pakistan Industrial Credit and Investment Corporation (Picic) has surged by 51 percent to Rs 1.323 billion during the quarter ended on September 30, 2004, as compared to Rs 876 million during the corresponding period of last year. Net interest and non-interest income also increased by 46 percent to Rs 1.847 billion during the period under review, compared to the corresponding period of last year.
The mark-up earning also surged by Rs 48 million to Rs 828 million during July-September 2004, compared to Rs780 million in the same period of last year. Similarly, non-mark-up expenses soared to Rs 368 million as against Rs 341 million.
Picic made a total disbursements of Rs 4.323 billion during January-September 2004 which is higher by 147 percent when compared with the disbursement of Rs 1.748 billion during nine months of 2003. Picic's earning per share (EPS) has improved by 51.30 percent to.7.58 per share during the third quarter compared to Rs 5.01 per share in the corresponding period. During the same quarter Picic launched two unique leasing products--Picic Power and Picic CNG.
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