June 15, 2008	Sunday	Jamadi-us-Sani 10, 1429

KARACHI, June 14: Country representative Hatton National Bank A B Shahid has cautioned that Pakistan’s oil import bill may reach $22 billion mark in 2008-09 if international crude price touches $150 a barrel.

Speaking on impact of budget on banking sector at a “budget breakfast forum,” organised by the Institute of Bankers Pakistan (IBP) here on Saturday, he said that this year, economy suffered because oil import was nearing $11 billion.

“What will be the consequences when it touches $22 billion and doubles the trade deficit as a result thereof,” he questioned.

It implies cutting oil consumption and consciously desisting from imports of peripheral economic value to contain the trade and current account deficits and the weakening of the Pakistani rupee.

“There is no alternative, and bankers can play a key role in achieving this aim.

He pointed out that in the context of resource mobilization, the notable developments are the two per cent rise in profit rates paid on National Saving Certificates, quarterly revision of these rates to continually align them with market rates, flotation of short-term commercial paper for investment by the public, and shifting the deposits of government offices and state-owned enterprises to the State Bank of Pakistan to limit public sector borrowings up to the net resource shortfall.

He said that the rise in NSS rates and proposal to float short-term commercial paper could attract banks’ short as well as long-term depositors.

“Banks, therefore, must revisit their lending ratios and hasten the process of developing innovative deposit products to hold on to their deposit base,” he suggested.

Shahid noted that banks won’t be able to avail the benefit of extension in the Capital Gains Tax till 2010. Banks will continue to pay CGT at 35 per cent on shares sold within 12 months of their purchase and at 10 per cent on those sold after 12 months of their acquisition.

He was of the opinion that this restriction limits the chances of increasing bank profit from share-trading activities requiring banks to rethink their business strategies.—APP