The Pak Banker

Re­mit­tance growth credit pos­i­tive for Pak­istani banks: Moody's

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Rat­ing agency Moody's has termed growth in re­mit­tances in Pak­istan as credit pos­i­tive for banks, say­ing for­eign in­flows im­prove their ac­cess to low-cost and stable de­posits.

Moody's in its lat­est re­port on Pak­istan has stated that in­crease in work­ers' re­mit­tances for 7MFY21 is con­trary to their ex­pec­ta­tion that the pandemic would keep re­mit­tances flat and the World Bank's fore­cast of a sharp de­cline in global re­mit­tances.

It main­tained that the in­creased re­mit­tances sup­port Pak­istani house­holds' dis­pos­able in­come and bor­row­ers' re­pay­ment ca­pac­ity, re­duc­ing the po­ten­tial for non­per­form­ing loans (NPLs).

"Pak­istani banks' con­sumer lend­ing has his­tor­i­cally out­per­formed lend­ing to com­pa­nies, and con­sumer loan NPLs ac­counted for 4.9% of gross loans as of 31 De­cem­ber 2020, com­pared with 9.4% for corporate loans," it said.

"In­creased re­mit­tances and re­sult­ing higher house­hold in­comes are also likely to fa­cil­i­tate in­creased mort­gage, small and mid­size en­ter­prise and agri­cul­tural lend­ing, which are im­por­tant com­po­nents of the govern­ment's fi­nan­cial in­clu­sion tar­gets." Pak­istan's govern­ment is plan­ning to is­sue a $500 mil­lion green bond in the next few months to help boost its de­vel­op­ment of hy­dro­elec­tric power.

The bond, de­nom­i­nated in euros, will be the govern­ment's first to fund en­vi­ron­men­tal goals, Ma­lik Amin As­lam, an ad­viser to Prime Min­is­ter Im­ran Khan on cli­mate change, said in an interview. It is set to be is­sued through the coun­try's state-owned Wa­ter & Power De­vel­op­ment Au­thor­ity, with JP­Mor­gan Chase & Co. ad­vis­ing, he said. "We've got a lot of hy­dro po­ten­tial in Pak­istan," he said on Thurs­day. "The bonds are there to ac­cel­er­ate this."

Khan's govern­ment is in­vest­ing in re­new­able en­ergy to ramp up its eco­nomic stim­u­lus in the wake of the pandemic. It's also promised to ban new coal power plants and is look­ing to plant 10 bil­lion trees. The na­tion's cities rank among the worst glob­ally for air pol­lu­tion, ac­cord­ing to IQAir.

The South Asian na­tion has a frag­ile econ­omy that goes through reg­u­lar boom and bust cy­cles. It re­ceived debt re­lief dur­ing the pandemic, restor­ing its $6 bil­lion bailout pro­gram that it se­cured from the In­ter­na­tional Mon­e­tary Fund in 2019 to avoid bank­ruptcy.

Is­suance of green bonds glob­ally is seen surg­ing to $375 bil­lion in 2021 by Moody's In­vestors Ser­vice, after record sales last year. While Europe has led the way, coun­tries from Singapore to Brazil plan to sell their first to tap buoy­ant in­vestor de­mand.

Min­is­ter for In­for­ma­tion and Broad­cast­ing Se­na­tor Shi­bli Faraz said on Mon­day that Sindh govern­ment had ar­rested Op­po­si­tion Leader in the Pro­vin­cial As­sem­bly Haleem Adil Sheikh on po­lit­i­cal grounds to vic­tim­ize him for ex­pos­ing its cor­rup­tion and in­ef­fi­ciency.

Ad­dress­ing a press con­fer­ence here, he de­manded im­me­di­ate re­lease of Haleem Adil and said that in­ef­fi­cient and cor­rupt Sindh govern­ment had politi­cized the in­sti­tu­tion by in­duc­tion of its own peo­ple in the depart­ment.

Shi­bli Faraz said that the main op­po­si­tion par­ties had the net­work of crim­i­nals which they use for both busi­ness in­ter­ests and pol­i­tics. He said that the in re­cent Tharparkar bye-elec­tions, the Pak­istan Tehrik-e-In­saf work­ers were ha­rassed and in­tim­i­dated by mis­us­ing the govern­ment in­sti­tu­tions. He said that ar­rest of the Haleem Adil was also an ef­fort to in­flu­ence the up­com­ing Se­nate elec­tions. He said that the plight of Sindh prov­ince was a proof of in­ef­fi­ciency and cor­rup­tion of the govern­ment and Haleem Adil was the per­son who had been ex­pos­ing the Sindh govern­ment's cor­rup­tion.

The min­is­ter said if an elected mem­ber and leader of the op­po­si­tion was not safe in Sindh one could im­age how would be the sit­u­a­tion with the com­mon man. Asif Zar­dari used to claim that there were no po­lit­i­cal pris­on­ers dur­ing the PPP rule but this was the worst ex­am­ple of po­lit­i­cal vic­tim­iza­tion, he re­marked. The min­is­ter said that the Sindh govern­ment was pro­tect­ing the in­ter­ests of only one class whereas the poor peo­ple es­pe­cially in the ru­ral ar­eas were fac­ing great hard­ships and even they did not ben­e­fit from the slo­gan of "Roti, Kapra aur Makan".

He said de­spite hav­ing no ma­jor­ity, the PPP was claim­ing that its can­di­date would win which was in a sense con­fes­sion of in­dul­gence in the horse trad­ing. He said Im­ran Khan had the prin­ci­pled stance since past over two decades, that nei­ther the econ­omy, nor democ­racy or so­ci­ety's eth­i­cal val­ues could im­prove with­out end­ing the role of money in pol­i­tics.

The min­is­ter said that pol­i­tics of bul­ly­ing, vi­o­lence and ter­ror­ism could not be called democ­racy.

He said that the govern­ment was stand­ing firm on its stance of trans­parency in elec­toral process to en­sure that fruits of democ­racy should reach the com­mon man.

He re­called that the PTI was the only party which ex­pelled its mem­bers of the as­sem­bly for sell­ing their votes in 2018 and the PTI was the only party which was prac­tic­ing what it was ad­vo­cat­ing.

He said that this was a con­test between trans­parency and the forces of dark­ness as Im­ran Khan wanted trans­parency and fair­ness whereas his op­po­nents com­pris­ing PDM rep­re­sented the cor­ri­dor of dark­ness, cor­rup­tion and horse trad­ing and time had come to de­feat this men­tal­ity. Re­ply­ing to the ques­tions of the me­dia per­sons, he said PTI did not be­lieve in give and take in pol­i­tics and when the op­po­si­tion par­ties were asked to ex­plain the sources of their as­sets, they cry foul and claim they were be­ing vic­tim­ized.

The min­is­ter said that PTI per­for­mance had im­proved in the bye elec­tions and in the con­stituency of Wazirabad that it lost the mar­gin was nar­row whereas in Daska, the PTI can­di­date was win­ing.

He said that that the PML-N had be­lieved in pol­i­tics vi­o­lence and ter­ror whereas the PTI had a po­lit­i­cal strug­gle and it had ac­cepted the re­sults of the bye elec­tions. He said that PML-N leader Shahid Khaqan Ab­basi had said last month that now elec­tions would be held on gun point and they had proved that by fir­ing on the PTI work­ers in Daska.

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