Pakistan Economy - News & Updates - Archive

[Neo]

June 09, 2007
Indian market grows faster

ISLAMABAD, June 8: The pace of growth in Pakistan’s capital market was just half of the Indian bourses this year despite existence of heavy capital gains tax in the neighbouring country -- a move still unthinkable in Pakistan -- and a higher ratio of capital value tax (CVT).

Though Pakistan was part of the world’s 16 leading stock markets from June 30, 2006, to May 11, 2007, its 23.5 per cent growth rate in terms of US dollars has been dampened by the 45.9 per cent growth in the Indian stock market, shows the Pakistan Economic Survey 2006-07.

The Indian stock market shone and attracted investors while still under the burden of seven per cent capital gains tax and 0.2 per cent CVT.

In Pakistan, the CVT ratio is very minimal, 0.02 per cent. The Pakistan’s government was unable to slap even the proposed marginal capital gains tax of 0.001 per cent on the market in the last budget after facing stiff resistance from the brokers that led to a market crash of moderate intensity in May last year as the investors had pulled out money from stocks as a threat.

The leading world stock markets which recorded growth of more than 45 per cent during current fiscal year are China (150 per cent), Philippine (75.3 per cent), Indonesia (63.4 per cent), Malaysia (59.8 per cent), Singapore (49.1 per cent) and India (45.9 per cent).

The survey states that aggregate capitalisation of the Pakistani stock market increased by 35 per cent from Rs2.801 trillion in July 2006 to Rs3.781 trillion as of May 2007.

Some big blue chip companies, including OGDC, PTCL, NBP and Hub Power, etc., primarily influenced the Karachi Stock Exchange (KSE).

During the first three quarters of the current fiscal year, the combined turnover of shares of 10 big companies -- OGDC, PTCL, Bank of Punjab, D.G. Khan Cement, Fauji Fertiliser Bin Qasim, Pakistan Petroleum, National Bank of Pakistan, Muslim Commercial Bank, Lucky Cement and Hub Power Company -- was 13.3 billion, which constituted 39.7 per cent of the total turnover at the KSE.

These 10 companies earned a profit after taxation of Rs122.6 billion in the current fiscal year up to March 2007.

Out of Rs122.6 billion profit-after-tax, the share of PTCL and OGDC was Rs66.8 billion, representing 54.5 per cent of the 10 big companies.

In the first nine months of 2006-07, PTCL’s after taxation profit was Rs20.8 billion. Earning per share (EPS) of the 10 big companies ranged from 2.39 in the case of Hub Power Company to 20.9 in respect of National Bank of Pakistan. This indicates that the business environment in the current fiscal year has improved appreciably for the blue chip companies.

The performance of Islamabad and Lahore stock exchanges was not satisfactory.

According to the survey, the leading market indicators witnessed mixed trends in Lahore and Islamabad stock exchanges. The turnover of shares on the Lahore Stock Exchange (LSE) during July-March 2006-07 was 5.6 billion compared to 11.9 billion shares in the same period last year. Total paid-up capital with the LSE increased from Rs469.5 billion in June 2006 to Rs491.4 billion in March 2007.

The LSE index, which was 4379.3 points in June 2006, declined to 4249.3 points in March 2007.

However, the LSE market capitalisation has increased from Rs2.693 trillion in June 2006 to Rs2.948 trillion in March 2007. Seven new companies were listed with the LSE during July-March 2006-07, as compared to 15 companies in the fiscal year 2005-06. The Islamabad Stock Exchange also witnessed a mixed trend during the first nine months of fiscal 2006- 07.

The ISE 10 index started at 2,522.6 points and ended at 2,568.8 points depicting an increase of 1.8 per cent only.

The highest level of index was 2,999.87 as on Jan 25, as compared to the lowest level of 2,428.38 as on July 10, 2006.

The average daily trade volume in the ISE during this period was 0.23 million shares, which was substantially lower as compared to the preceding period. The ISE index, however, increased to 2738.3 points on April 30.

http://www.dawn.com/2007/06/09/ebr4.htm

 

[Neo]

June 09, 2007
Rising prices hit the poor most

ISLAMABAD, June 8: Price hike in Pakistan has hit hardest the poorest section of the population living on less than Rs3,000 per month, says Economic Survey 2006-07.

Data pertaining to inflation rate for various income groups reveal that the increase of 7.9 per cent in Consumer Price Index (CPI) during 2006-07 was largely borne by lower income brackets.

Rising prices reduce the purchasing power of the average consumer, particularly the poor.

Category-wise increase in inflation rate in the case of lowest income group up to Rs3,000 per month was 8.3 per cent and lower income group up to Rs5,000 per month was 8.1 per cent, which is larger than the increase in overall CPI.

Whereas in the case of middle income and upper income brackets, average increase in inflation was at 7.8 per cent and 7.3 per cent, respectively, which indicates that inflationary incidence was highest for lowest income groups and lowest for highest income groups.

The higher incidence of inflation in case of lower income groups is likely due to the fact that lower income groups spend larger shares of their income on food, which has been the driving force in inflation in the current fiscal year.

The survey says that the CPI-based inflation during July-April 2006-07 averaged 7.9 per cent as against 8 per cent in the same period last year. The single largest component of the CPI is the food group, which showed an increase of 10.2 per cent.

On the other hand, the non-food prices grew at a slower pace compared to last year. The non-food inflation averaged 6.2 per cent between July -April 2006-07 while it stood at 8.8 per cent in the corresponding period of last year.

The non-food non-energy inflation (core inflation) decelerated sharply to 6 per cent in first 10 months of the fiscal year as against 7.7 per cent in the same period last year.

A more detailed analysis of the food group shows a considerable variation in inflation rates of the items included in the group. For example, considering the perishable and non-perishable items in the food group separately shows that non-perishable food prices rose by 9 per cent while the perishable items prices grew by 17.6 per cent.

An analysis of individual food items suggests that the major portion of food inflation during the current year stemmed from a limited number of items including rice, edible oil, pulses, meat, milk, tea, eggs, wheat, vegetable and fruit.

These items have experienced relatively larger increase in their prices during the course of 2006-07. However, prices of other important food items like sugar, potatoes, tomatoes, moong pulse and chicken (farm) have shown a decline in their prices owing to improved availability of these items in the market.

http://www.dawn.com/2007/06/09/ebr8.htm

 

[Neo]

June 09, 2007
Tax-to-GDP ratio rises to 9.5pc in 2006-07

ISLAMABAD, June 8: The tax-to-GDP ratio has increased to 9.5 per cent in 2006-07 from the 9.2 per cent of last year, says the Economic Survey released on Friday.

The survey says that the tax revenue in relation to GDP has remained stagnant at 9 to 9.5 per cent during the last eight years.

The government recently projected to raise the tax-to-GDP ratio to 15 per cent by the year 2014-15. The increase in the ratio was mainly because of the higher growth of revenue, which stood at Rs835 billion to be achieved by end of the current year.

Pakistan’s GDP was re-based at 1999-2000 from a two decades old base of 1980-81.

According to the report, during the last eight years, tax collection has increased by 141 per cent to Rs835 billion expected to be collected in 2006-07 against Rs346.6 billion in 1999-2000.

The revenue deficit (the difference between total revenue and total current expenditure) was at 0.2 per cent of GDP in 2005-06 compared to a deficit of 2.2 per cent in 2000-01.

It has further progressed towards revenue surplus of 0.6 per cent of GDP in 2006-07. Pakistan has attained revenue surplus first time in 2003-04 since 1984-85, when it recorded 0.8 per cent of GDP surplus.

During the last four years this is second time when revenue surplus is mobilised and in the remaining two years revenue deficit existed, though at an insignificant level, as a result of some unavoidable increase in committed expenditure heads.

Fiscal Responsibility and Debt Limitation Act 2005 envisages a revenue surplus starting from 2007-08.

The primary balance (total revenue minus non-interest total expenditure) was in surplus from 1999-2000 to 2004-05 but turned into deficit of 0.9 per cent of GDP in 2005-06 due to the increased spending on earthquake related activities. Primary deficit is projected in 2006-07 for similar reason.

The positive aspect of reforms is the structural transformation in the structure of taxes, which has undergone considerable changes since the 1990s. Firstly, the share of direct taxes in total taxes (collected by the CBR) has increased from 18 per cent to over 38.5 per cent in July-April 2006-07.

The share of indirect taxes declined from 82 per cent to 61.5 per cent during the same period. Even within the indirect taxes, dramatic changes have taken place.

The collection from custom duty used to account for 45 per cent of total tax collection and 55 per cent of indirect taxes in 1990-91, its share has now been reduced to 18.6 per cent and 32.3 per cent, respectively.

The share of sales tax increased at a tremendous pace from 14.4 per cent to 41 per cent of total taxes and from 17.6 per cent to 60.3 per cent of indirect taxes during the same period. Central excise duty’s share in total taxes and indirect taxes were 22.5 per cent and 27.5 per cent, respectively, in 1990-91. These have now been reduced to 8.3 per cent and 12.3 per cent, respectively, during the same period.

http://www.dawn.com/2007/06/09/ebr2.htm

 

[Neo]

June 09, 2007
Agriculture production expands by 5 per cent

ISLAMABAD, June 8: The agriculture sector has recovered well this year by registering 5pc growth compared to the last year’s 1.6pc despite marginally less production of rice and cotton and negative growth in maze, barley rapeseed and mustard.

Major crops have bounced back from the last year’s negative growth of 4.1pc and posted a positive growth of 7.6pc, mainly due to historic production of wheat and vibrant performance by sugarcane crop, shows the Pakistan Economic Survey 2006-07 released by the government here on Friday.

In 2004-05, agriculture sector had grown by 6.7pc, 1.7pc more than this year.

This year’s historic wheat production of 23.5 million tons is 10.5pc higher than the last year’s 21.27 million tons and 0.4pc higher than this year’s target of 22.5 million tons.

Wheat contributes 14.4pc to the value added in agriculture and 3pc to the country’s GDP.

Sugarcane production has reached 54.75 million tons compared to last year’s 44.6 million tons, showing 22.6pc increase. The crop’s share in value added of agriculture and GDP are 3.5pc and 0.7pc, respectively.

The 13 million bales cotton production this year has remained mostly unchanged in comparison to 13.02 million bales of last year. Rice production at 5.4 million tons was marginally less than 5.5 million tons produced last year. Despite the lower yield, higher demand abroad for Pakistan Basmati rice and high international prices are expected to surpass the last year’s export earning from Basmati rice.

The growth in three major crops included maize, barely and rapeseed and mustard have decreased by 4.5pc, 5.7pc and 13.4pc respectively over the last year.

However, gram, another major crop, has exhibited an impressive growth of 75.4pc this year due to the increase in intervention price of the crop and good rains in “Thal” area.

Minor crops registered a weak growth of 1.1pc while it was 0.4pc last year. However, amongst the minor crops, production of potato increased by 67.2pc, mung and masoor pulses improved by 21.5pc and 17.9pc respectively.

Production of chillies, onion and mash pulse decreased by 49.6pc, 14.3pc and 3.6pc respectively, compared to last year.

Livestock registered a strong growth of 4.30pc over the last year’s impressive growth of 7.5pc due to increase in the livestock and poultry products.

The country’s performance in the forestry has been dismal this year as well as forestry decreased by 3.8pc. Last year, forestry had decreased by 43.7pc.

In Pakistan, only 5pc of total land area is under forest, ranking it under Low Forest Cover Countries. Of this total forest area, commercial forest is just one-third (32.8pc) and the rest (67.2pc) is under protected forest, performing soil conservation, watershed protection and climatic functions. Existing forest resources are under severe pressure to meet the fuel wood and timber needs of the country and wood-based industries including housing, sport, matches, boat making and furniture industries.

http://www.dawn.com/2007/06/09/ebr6.htm

 

[Neo]

June 09, 2007

External liabilities rise to $38.86bn

ISLAMABAD, June 8: Pakistan’s external debt and liabilities (EDL) have increased to $38.86 billion by end of March this year, up by $1.6 billion from $37.24 billion at the end of June 30 last year, says Pakistan Economic Survey 2006-07.

This included a total of $37.36 billion of total external debt while foreign exchange liabilities stood at $1.5 billion. Majority of the EDL were in the form of medium term borrowing from multilateral and bilateral lenders that accounted for nearly 80 per cent of the outstanding debt.

Of the total EDLs, public and publicly guaranteed debt also increased by $1.2 billion in nine months of the current financial year to $31.08 billion as of March 31 compared with $29.875 billion last year. The medium and long term (Paris Club, multilateral, and other bilateral) debts also increased by about $1.6 billion to $31.

Of the total EDL, 33 per cent comes from the Paris Club, 36.3 per cent from multilateral lenders, 4.9 per cent private non-guaranteed and 5.5 per cent foreign currency liabilities.

Pakistan’s total stock of external debt and foreign exchange liabilities grew at an average rate of 7.4 per cent per annum during 1990-99 - rising from $20.5 billion in 1990 to $38.9 billion by the end of June 1999. Foreign exchange earnings on the other hand either remained stagnant or increased at a snails pace.

Despite the accumulation of almost $18.4 billion debt in the 1990s, foreign exchange earnings rose by only $4 billion. Consequently the debt burden raised from 256.6 per cent in 1990 to 335.4 per cent in 1999.

The external debt and liabilities have, however, declined from 50.9 per cent of the GDP at the end of fiscal year 2002 to 26.3 per cent of the GDP by end of March 2007. Similarly, the EDLs were nearly 5.8 times the foreign exchange reserves at the end of fiscal year 2002 but declined to 2.8 per cent by end of March 2007.

Outstanding external debt and liabilities included all government debt denominated in foreign currency, loans contracted by enterprises with government ownership or more than 50 per cent, as well as the external debt of the private sector.

The EDLs grew by 1.6 per cent in fiscal year 2005, 3.9 per cent in 2006 and 4.4 per cent in 2007. The largest increase in stock was seen in debt by multilateral donors with a change in stock of $1.5 billion or 8.9 per cent.

http://www.dawn.com/2007/06/09/top3.htm

 

[Neo]

June 09, 2007
WB approves $451m package for Pakistan

WASHINGTON, June 8: The World Bank has approved a $451 million package, including both credits and loans, to help Pakistan improve education, health and other facilities.

The assistance will be used for improving education in Punjab and Sindh, enhancing irrigation in Punjab, implementing education and health reforms in the NWFP and eradicating polio throughout the country.

Islamabad had in recent years made good progress towards improving human development indicators and reducing poverty and vulnerability, said Yusupha Crookes, World Bank Country Director for Pakistan. But there could be no room for complacency.

According to the World Bank, only half of Pakistan’s adult population is literate, over 40 per cent of five-nine year olds are not in school, and poor health outcomes and high fertility will remain obstacles to economic growth and poverty alleviation.

The $130 million for the second NWFP development policy credit is designed to broaden and deepen human development reforms in key sectors such as education and health.

The $100 million for the fourth Punjab education development policy credit supports the ongoing Punjab education sector reform programme, which has now entered its second phase.

The $100 million for the second Punjab irrigation sector development policy loan will support reforms designed to improve management and maintenance of the irrigation system to ensure its long-term physical and financial sustainability.

The $100 million for the Sindh education sector development policy credit is the first of a series of three operations designed to support the provincial government’s medium-term education sector reform programme.

The $21.14 million for the additional financing credit for polio eradication will help supply the oral vaccine for the supplementary immunisation activities during the second half of 2007.

http://www.dawn.com/2007/06/09/top10.htm

 

[Neo]

June 09, 2007

4pc deficit target set

ISLAMABAD, June 8: The government had achieved the 4.2 per cent GDP fiscal deficit target for the current financial year and set a target of four per cent for the next year, said Adviser to the Prime Minister on Finance Dr Salman Shah.

“We have achieved this 4.2 per cent fiscal deficit target by having a 30 per cent increase in revenues,” he told a press conference here on Friday where he released the Economic Survey 2006-07.

He said the growth in direct taxes helped the government achieve its fiscal deficit target. “The underlying fiscal deficit is targeted at 3.7 per cent of GDP, excluding earthquake spending for the current fiscal year, which is slightly higher than the previous year’s deficit level of 4.4 per cent,” Dr Shah said.

He pointed out that higher deficit was targeted to finance the growing Public Sector Development Programme. Pakistan, he said, needed to strengthen its physical and human infrastructure to sustain the growth momentum.

http://www.dawn.com/2007/06/09/top9.htm

 

[Neo]

June 09, 2007

Country received $1.76bn foreign aid

KARACHI: Pakistan received $1.761 billion as foreign aid in the first nine months of the current fiscal, according to the Economic Survey of Pakistan for 2006-07 released Friday.

This shows the government’s dependence on foreign economic assistance against claims that Pakistan is now a nation that offers economic assistance to others.

Besides, the government received $961 million as aid for budgetary support, contradicting claims that foreign inflows were used to finance development projects. Pakistan’s external debt and liabilities have risen from $35.834 billion at the end of 2004-05 to $38.86 billion by March-end 2007, as the government resorted to financing development projects through borrowing from multilateral organisations, the government admitted in the economic survey.

The survey further reveals that the country still has to rollover its external debt and liabilities. The government rolled over an amount of $1.1 billion in the first nine months of the current fiscal.

The survey also said that during the first nine months of the current fiscal year 2006-07 (July-March), the project aid accounted for 41.9 percent stake while non-project aid share stood at 58.1 percent of the overall external assistance inflows.

However, external debt and liabilities as a percentage of GDP have fallen thanks to the rapid growth of GDP. It declined from 51.7 percent of GDP in 1999-2000 to 27.1 percent of GDP by March-end 2007. Similarly, the external debt and liabilities were 297.2 percent of foreign exchange earnings but declined to 119.7 percent in the same period. The external debt and liabilities were over 19 times of the foreign exchange reserves in 1999-2000 but declined to 2.8 by the end of March 2007. Interest payments on external debt were 11.9 percent of current account receipts but declined to 3.2 percent during the same period. External debt and liabilities at the end of March 2006-7 were $38.86 billion.

http://www.dailytimes.com.pk/default.asp?page=2007\06\09\story_9-6-2007_pg5_6

 

[Neo]

Saturday, June 09, 2007

Agriculture sector grows 5pc: Economic Survey


* Wheat production at 23.5m tonnes
* Sugarcane production up by 22.6 percent to 54.8m tonnes

KARACHI: The agricultural sector has registered growth of 5 percent with a sharp recovery in 2006-07 as against the previous year’s growth of 1.6 percent.

The performance of agriculture had been weak during 2005-06 because its crops sector particularly major crops could not perform well.

According to the Economic Survey, released on Friday for the year 2006-07, the agriculture major crops posted strong recovery from negative 4.1 percent last year to positive 7.6 percent, mainly due to higher production of wheat and sugarcane. Wheat production of 23.5 million tonnes is highest ever in the country’s history, registered an increase of 10.5 percent over last year. Sugarcane production improved by 22.6 percent over the last year to 54.8 million tonnes, both being record high productions.

The agriculture growth has experienced mixed trends over the last six years. The country witnessed unprecedented drought during the first two years of the decade ie (2000-01 and 2001-02) which resulted in contraction of agricultural value. Hence agriculture registered negative growth in these two years. In the following years -- 2002-03 to 2004-05 -- relatively better availability of irrigation water had a positive impact on overall agricultural growth and this sector registered strong recovery.

Despite the lower yield, higher demand abroad for Pakistan Basmati rice and high international prices are expected to surpass the last year’s export earning from Basmati Rice.

Amongst the other major crops, gram crop, exhibited an impressive growth of 75.4 percent in 2006-07 due to the increase in intervention price of the crop and good rains in Thal area where the gram crop is mainly concentrated. Minor crops registered a weak growth of 1.1 percent while it was 0.4 percent last year.

However, amongst the minor crops, production of potato increased by 67.2 percent, moong and masoor pulses improved by 21.5 percent and 17.9 percent respectively. Livestock registered a strong growth of 4.30 percent over the last year’s impressive growth of 7.5 percent due to increase in the livestock and poultry products.

Fishery performed positively at 4.2 percent though the previous year’s growth stood at 20.5 percent. Pakistan’s agricultural output is closely linked to the supply of irrigation water. Against the normal surface water availability at canal heads of 103.5 million-acre feet (MAF), the overall both for Kharif and Rabi water availability has been less in the range of 5.9 percent (2003-04) to 29.4 percent (2001-02).

However, it remained less by 2.6 percent in 2005-06 against the normal availability. Relatively speaking, Rabi season faced more shortage of water than Kharif during these periods.

During the current fiscal year (2006-07), the availability of water for Kharif 2006 (for the crops such as rice, sugarcane and cotton) has been 6 percent less than the normal supplies and 10.8 percent less than last year’s Kharif. The water availability during Rabi season (for major crops such as wheat), as on end-March 2007 was estimated at 31.2 MAF, which was 14.3 percent less than the normal availability, and 3.7 percent more than last year’s Rabi.

Sufficient water supplies coupled with timely winter rains in Rabi season had a good impact on Rabi crops particularly on gram, masoor and wheat as production of these crops increased by 75.4 percent, 17.9 percent and 10.5 percent, respectively.

http://www.dailytimes.com.pk/default.asp?page=2007\06\09\story_9-6-2007_pg5_4

 

[Neo]

Saturday, June 09, 2007

Growth in GDP, LSM drives energy sector up

KARACHI: The growth in all components of energy sector during 2006-07 is driven by an 8.8 percent growth in large-scale manufacturing (LSM) sector and 7.0 percent growth in real GDP for the year 2006-07, Economic Survey 2006-07 released on Friday reveals.

The oil and gas sector has attracted huge foreign investment in the country including import of piped natural gas from Iran and Turkmenistan, import of LNG; increase in oil and gas exploration in the country; utilizing 175 billion tonnes of Thar coal reserves; setting up of new nuclear power plants; exploiting the affordable alternate energy resources.

Pakistan’s production of crude oil has increased to 66,485 barrels per day during July-March 2006-07 from 65,385 barrels per day during the same period last year, showing an increase of 1.7 percent. The overall production of crude oil has increased to 18.2 million barrels during July-March 2006-07 from 17.9 million barrels during the corresponding period last year, showing an increase of 1.7 percent. On an average, the transport sector consumes 50.7 percent of the petroleum products, followed by power sector (32.1 percent), industry (11.4 percent), household (2.2 percent), other government (2.3 percent), and agriculture (1.3 percent) figures for the last 10 years show.

The average production of natural gas per day stood at 3,876 million cubic feet during July-March, 2006-07, as compared to 3,825 million cubic feet over the same period last year, showing an increase of 1.3 percent. The overall production of gas has increased to 1,062,124 million cubic feet during July-March 2006-07 as compared to 1,048,190 million cubic feet daily in the same period last year, showing an increase of 1.3 percent.

The total installed capacity generation witnesses no change during July-March 2006-07, it was 19,440 MW in first nine months of current financial year. Total installed capacity of WAPDA stood at 11,363 MW during July-March 2006-07 of which, hydel accounts for 56.9 percent or 6,463 MW, thermal accounts for 43.1 percent or 4,900 MW.

http://www.dailytimes.com.pk/default.asp?page=2007\06\09\story_9-6-2007_pg5_5

 

[Neo]

Saturday, June 09, 2007

‘Technologycapabilityassessment of firms suggested’

LAHORE: The Federal Minister for Industries, Production and Special Initiatives (MOIP&SI), Mr Jahangir Khan Tareen, during a visit to TUSDEC head office, has suggested forming technical committees for identification of targeted technologies and effective technology capability assessment of companies and firms for the industrial Technology Upgradation Fund (iTUF).

The Minister advised TUSDEC to establish a Project Management Unit (PMU) for the iTUF on a fast track basis and stated that its setup would be funded by the MOIP&SI. This PMU will be responsible for identification of targeted technologies, marketing strategies, formalizing relationships with stakeholders, outlining policies and procedures, sector identification and other related technical matters.

The Minister was given a detailed briefing about the urgent need for a technology and skill acquisition fund to stimulate and assist private investment in the industrial sector. The Director Financial Services, Mr Arif Kitchlew, introduced iTUF as a device designed to cater to the overall rapid industrial growth strategy as envisaged by the MOIP&SI. Mr Tareen was informed that in order to address the limitation of acquiring technology by industrialists, a financial scheme is required that not only provides monetary assistance but also facilitates in terms of technical expertise and knowledge. There have been similar technology upgradation funds in countries like Malaysia, Singapore, India etc. and are working successfully for uplifting the status of technology in the targeted industrial sectors of their respective countries.

The iTUF would be a facility available for existing Pakistani industries to acquire new technologies & skills to upgrade their obsolete machinery, or to make other interventions through which acquisition and assimilation of these technologies could be facilitated to gain a competitive edge within the global value chain.

http://www.dailytimes.com.pk/default.asp?page=2007\06\09\story_9-6-2007_pg5_7

 

[Neo]

Saturday June 9, 2007
Pakistan's forex reserves cross $15 bln-cenbank

KARACHI, June 9 (Reuters) - Pakistan's foreign exchange reserves crossed the $15 billion mark for the first time, thanks to healthy growth in external inflows, including proceeds from a sovereign bond issue, the central bank said on Saturday.
The State Bank of Pakistan said in a statement that the country's forex reserves stood at $15.03 billion in the week ending on June 9, $1.243 billion higher than a week ago.

Reserves held by the central bank rose to $12.65 billion from $11.588 billion a week earlier, while those held by commercial banks jumped to $2.38 billion from $2.20 billion, it said in a statement.

"The achievement of this record level of foreign exchange reserves has been made possible by the healthy growth in external inflows during this fiscal year," Shamshad Akhtar, the central bank governor, said in the statement.

The external flows include higher foreign direct investment, home remittances, portfolio investment and proceeds from a recently issued sovereign bond, she said.

"The growth in foreign inflows reflects the confidence of foreign investors in the economy of Pakistan," the central bank governor said.

Syed Wasimuddin, chief spokesman of the central bank, said Pakistan received inflows worth $750 million this week from the sale of its sovereign eurobond last month.

The previous all-time high level of the reserves was $13.793 billion, reached in the week ending on May 19.

http://asia.news.yahoo.com/070609/3/334vk.html

 

[Neo]

Development outlay pegged at Rs724bn

Allocation includes Rs520bn for Public Sector Development Programme

ISLAMABAD: The government on Saturday announced a Rs724 billion development budget for fiscal year 2007-08, including a Rs520bn Public Sector Development Programme (PSDP), with a special allocation of Rs37.6bn for land acquisition to build five major dams, including the controversial Kalabagh dam.

Out of the total PSDP, the federal government’s share has been fixed at Rs335bn and that of the provincial governments at Rs150bn. Both of which have been increased by 24 and 30 percent, respectively, from what was allocated for the outgoing fiscal. Besides, the government corporations will spend Rs204bn that is outside of PSDP.

The PSDP unfolded by Minister of State for Finance and Planning Omar Ayub Khan in the National Assembly on Saturday revealed an increase of 19.54 per cent or Rs85bn against the current year’s Rs435bn.

An amount of Rs35bn has also been allocated for the earthquake reconstruction and rehabilitation programme in addition to the Rs335bn development programme.

The infrastructure sector, which includes water, power and roads projects, has been given the main share of the total PSDP allocation. The sector will get Rs139.7bn or 41.7 percent of the federal PSDP. The remaining amount has been distributed between social and other sectors.

In infrastructure, a huge chunk of Rs84.15bn will go to the water and power sector to implement the ongoing and new projects. This includes Rs63.55bn for water and Rs20.60bn for the power sector. In the power sector, Rs72.83bn will be outside PSDP and will be generated by the sector itself. On balance, the sector will receive a total of Rs157bn.

Mega dams for which more than Rs37bn have been earmarked include Kalabagh, Basha, Akhori, Munda and Kurram Tangi. The allocated amount will be spent mainly on acquisition of land for the proposed dams during the next fiscal year. The total cost of new hydel projects, which are given in the power sector under PSDP, has been estimated at Rs16.01bn, and for the Alternative Energy Development Board projects Rs148 million have been allocated.

Among the ongoing power-sector projects, the Neelum Jehlum hydropower project was allocated Rs10bn, Basha Diamer Dam project Rs500m, Golan Gol Hydro power project, Chitral, Rs450m, Khan-kwarhydro power project, NWFP, Rs700m, Allai Khawar hydro power project, NWFP, Rs1bn, and Dubir Khawar hydro power project NWFP Rs1.5bn.

All the eight electric power distribution companies have been allocated Rs5.5bn for their projects. These include 6th secondary transmission and grids project (Rs8.968 bn) for their distribution and system augmentation programme, Rs2.585bn and another Rs2.915bn have been allocated for these distribution companies’ rehabilitation, distribution, renovation and augmentation projects.

For the ongoing water-sector projects, Rs20bn have been allocated for Mangla raising project, Rs500m for Mirani dam, Rs200m for Sabakzai dam, Rs2.847bn for Kurram Tangi dam, Rs900m Satpara multipurpose dam and Rs600m for Gomal Zam dam. Besides, Rs870m have been allocated for the construction of 20 small dams in the NWFP, and Rs67m for carrying out feasibility studies on small dams in the same province.

Irrigation projects also have been allocated a sizeable amount as Greater Thal Canal (P-I) and Rainee Kanal each has got Rs2.5bn. Kachhi Canal has been allocated Rs8.5bn, lower Indus right bank irrigation and drainage, Sindh, Rs1.9bn and revamping/rehabilitation of irrigation and drainage system of Sindh Rs2bn.

Special areas programme will get Rs34.42bn in the next fiscal year, including Rs4.42bn for the Khushhal Pakistan Programme (KPP-I), Rs10bn for the Khushhal Pakistan Fund (KPF) and Rs20bn have been allocated for KPP-II that will include

Rs10bn for new and Rs5 billion for old projects. Five billion rupees will be spent on village electrification through alternative energy sources.

Allocation for communication sector stands at Rs29.61bn and Rs6bn will come from outside PSDP for various projects.

For the National Highway Authority (NHA), Rs25.917bn billion have been allocated for the ongoing projects. Of which Rs18.275bn will come from PSDP and the rest from foreign loans. On new NHA projects, Rs3.08bn will be spent which also include Rs0.8bn foreign loans.

Under NHA allocation, Rs1.8bn are for Makran coastal road Balochistan, Rs1bn each for Islamabad-Peshawar Motorway (M-I), Lyari Expressway, Islamabad-Muzaffarabad Road and Indus Highway project Phase-III. Besides, Rs1.5bn have been allocated for Lowari Tunnel and Access Road, Rs1.8bn for Gwadar-Turbat-Hushab section. For new projects, besides others, Rs1bn have been earmarked for acquisition of land for Faisalabad-Khanewal Expressway (184km).

Under the development plan, the Pakistan Railways will get Rs11.64bn, including Rs420m for new projects and Rs7.91bn for ongoing projects.

Eighteen billion rupees will be spent on higher education, which includes 397 ongoing and new projects to develop and improve universities in the country.

For food, agriculture and livestock development, Rs15.79bn have been allocated with special focus on livestock production and development, agribusiness development, improvement of watercourses, land and water resources’ development, food security and research in the agriculture sector.

In health sector, Rs14.27bn have been allocated for construction of new hospitals, family planning and primary healthcare centres, TB control, HIV/AIDA control, research and development, training, establishment of laboratories and construction of medical towers.

An amount of Rs9.5b has been earmarked for industries, production and special initiatives. Under the sector, Rs6.5bn have been allocated for clean drinking water for all, Rs365m for Gujranwala Tools, Dies and Moulds Centre, Rs250m for gem and jewellery development, and Rs500m for marble and granite sector development.

The finance division will get Rs16.96bn, Planning Commission Rs14.43bn, Interior Division Rs9.5bn, Defence Division Rs9.5bn, and Commerce Division Rs1.579bn.

For the textile sector, the government has allocated only Rs828m, for law and justice Rs3.526bn, ports shipping Rs757m, education 6.51bn IT and telecommunications 3.21bn, science and technology Rs3.6bn, population welfare Rs4.33bn, women development Rs163m, social welfare and special education Rs428m, labour and manpower Rs198m, Overseas Pakistan Division Rs5m, KA & NA Division Rs13.722bn, State and Foreign Region Division Rs7.5bn.

For environment division Rs1.62bn have been allocated, local government and rural development Rs128m, culture Rs378m, sports 522.7m, youth affairs Rs152m, tourism Rs167m, statistics division Rs263m. The Cabinet Division will receive Rs494.8m, housing and works Rs1.21bn, foreign affairs Rs579m, narcotics control Rs277m, information and broadcasting Rs1.54bn, establishment Rs503m, law justice and human rights Rs4.02b, revenue division Rs2.53bn, defence production division Rs526m, National Reconstruction Bureau Rs50m and economic affairs division Rs10m.

http://www.thenews.com.pk/daily_detail.asp?id=59851

 

[Neo]

June 10, 2007
7.20pc GDP growth and 6.2pc inflation projected

ISLAMABAD, June 9: The government has projected the Gross Domestic Product (GDP) growth target for the next fiscal year 2007-08 at 7.2pc against the current 7pc while inflation rate at 6.5pc as against the average of 7.9pc recorded in the outgoing year.

The trade deficit is expected to increase to $10.631bn from this year’s $9.9bn despite an expected 10 per cent growth in export which is projected to increase to $18.921bn against $17.205bn estimated in the outgoing financial year.

The government has planned to achieve the export growth through increase in agricultural production and manufacturing output and improvement in the productivity of industrial workforce.

Imports are expected to increase by 9pc, states the government’s Annual Plan 2007-08 released here on Saturday.

The current account deficit is estimated to close at $8.11bn in the new fiscal year against a deficit of $7.12bn in the outgoing year.

The country’s foreign currency reserves are projected to swell up to $17.70bn from the current $14.535bn.

The overall investment is projected to be 23.8pc of GDP, with private investment taking the lead and public sector investment would mainly be made in developing the physical as well scientific and technological infrastructure. The government will try to achieve high value added in agriculture including livestock and fisheries and manufacturing especially engineering goods and services.

The agriculture growth target has been set at 4.8pc, 0.2pc less than the 5pc growth in the outgoing year. The government will try to achieve this target by improving timely water availability and water management besides quality seeds.

The value added of major crops is projected to increase by 4.5 per cent to Rs415.1bn compared to Rs397.2bn during 2006-07.

Cotton production is expected to increase by 8.8pc to 14.14m bales, while the production of sugarcane is targeted at 55.9m tons against 54.7m tons of the outgoing year. Rice and maize production are projected to increase to 5.7m tonnes and 3.2m tons respectively. Wheat target has been projected at all-time high 24m tons, two per cent more than the production in the outgoing year.

The 2006-07 economic growth was also led by wheat and it seems that this sole major crop is the main pillar of the government’s economic plan for the new fiscal year despite the fact that crop is highly dependent on weather – a thing beyond human control.

The value added of minor crops is expected to increase by 2.3pc to Rs130.8bn against Rs127.9bn of the outgoing fiscal. Livestock is projected to grow by 5.7pc against 4.3pc increase realised during the outgoing year. The fisheries sector is targeted to grow by 4.2pc, while forestry 3.5pc.

The manufacturing sector is targeted to grow by 10.9pc this year. In the outgoing year the government had targeted industrial growth at 11pc but was unable to achieve it, ending the year with just 6.8pc.

The government plans to achieve the manufacturing target by getting 12.5pc increase in large-scale manufacturing, 7.5pc in small-scale and 5pc in slaughtering.

The services sector, which is projected to grow by 7.1pc, would continue to be the main contributor towards the robust economic growth in this fiscal as well.

In order to achieve the GDP growth target, total investment is projected to increase by 18.9pc to Rs2.381bn from the present R2.003bn. Fixed investment is planned to reach Rs2.221billion reflecting an increase of 19.2pc over the investment level of the outgoing fiscal.

http://www.dawn.com/2007/06/10/ebr11.htm

 

[Neo]

June 10, 2007

250,000 low-cost houses planned

ISLAMABAD, June 9: The government will construct 250,000 low-cost housing units to provide cheap accommodation facility to the low-income group.

The Minister of State for Finance, Omar Ayub Khan, said in his budget speech on Saturday that low-cost housing scheme would be started in collaboration with the provincial and district governments for which the House Building Finance Corporation would provide soft loans.

He said under the scheme an estimated number of 250,000 units would be constructed in the next five years.

The minister said another scheme for low paid government employees would be launched under which 37,000 housing units would be given to the employees on ownership basis.

The government employees, he said, would have the facility to get loans for the construction work.

Meanwhile, the government has allocated a sum of Rs1.206 billion for the housing ministry against Rs1.194 billion fund provided to the ministry under the Public Sector Development Programme for the last fiscal year.

http://www.dawn.com/2007/06/10/top10.htm