Gen John Allen to visit Pakistan for Nato route talksISLAMABAD: General John Allen, top US commander stationed in Afghanistan, is expected to arrive in Pakistan on Wednesday to discuss the restoration of Nato supply routes, DawnNews reported.
General Allen will meet Chief of Army Staff Ashfaq Pervaiz Kayani to discuss the restoration. General Allen and Kayani will oversee the developments on implementation of cross-border contact as well.
Restoration of Nato supply routes will remain the foremost priority during the meeting.
Nato supply routes have been closed since November 2011, when Nato air strike killed 24 Pakistani soldiers.
US and Pakistani diplomats frequently discuss the restoration; however, no viable solution has been reached.
· PM convenes first Cabinet meeting Tue
· Ch Pervez Elahi appointed Deputy PM
· 13 Pak soldiers killed in Lower Dir
· Quetta: Terrorists, bombs, arms seized
· New bank theft software hits 3continents
· S Korea to suspend Iranian oil imports
· Pre-monsoonal rains to begin from today
· Gen Allen expected to meet Kayani tomorrow
· India claims arresting Mumbai attacks handler
· UN declares Pakistan poppy-free country
· Banks to remain closed on July 2
· US awards edu scholarships to 147 KP students
· Nawaz off to Karachi today
Banks invest 99pc money in govt papersKARACHI: How the debt-ridden government has changed the entire banking in the country was obvious from a latest report of the State Bank which showed that banks have just loaned 1.2 per cent of what they invested in government securities during a year.
This massive tilt of banks towards government kept the banks profitable, but the impact was disastrous as banks did not help the economy to grow.
The SBP reported that banks invested about 99 per cent of their available liquidity in government papers during May 2011 to May 2012, completely ignoring the private sector, the growth engine for an economy.
The cash-starved government never came out from the budgetary deficit for the last four years and chose banks to meet the revenue gap.
It never allowed bringing down the policy interest rate below single digit which may put it into competition with the private sector. The private sector said the high cost of money did not allow them to think for new projects’ expansions or renovations. This high cost of money produced huge defaults.
According to State Bank’s another report, non-performing loans of banks and Development Finance Institutions (DFIs) till March 2012 were Rs625 billion. This huge defaults forced banks to find an easy way to earn risk-free money by investing in government papers.
The State Bank reported that during a year (May 2011 to May 2012) scheduled banks’ loans to private sector were just Rs11 billion while banks invested Rs873 billion in government papers during the same period.
The government did not stop borrowing from the banking system as fiscal gap rose to 4.7 per cent of GDP till the end of third quarter of the current fiscal year.
The State Bank, in its third quarterly report issued on Friday, said that fiscal gap could be as high as 6.5 per cent of the GDP for the current fiscal year, ending on June 30, indicating another massive outflow of liquidity from banks to the government. Since the government has no other option to increase revenue, it is believed that the entire fiscal burden would be on banking liquidity, including printing of money by the State Bank.
So far, the government has failed to tap resources outside the country while revenue growth is not enough to meet the expenditures of the war-hit government with a poor growth rate of just 3.7 per cent.
The State Bank’s report reveals that total investment in government securities came close to total loans extended to private sector by scheduled banks. This vital change came in the last four years.
According to the report, the stock of investment in government securities rose to Rs2.730 trillion in May-12 while stock of loans to private sector was Rs2.770 trillion at the same date.
Though the grim situation is being realised by both banks and State Bank, the government seems to enter the debt-trap while its reliance on easy banking money has been increasing each year.