Pakistan Economy - News & Updates - Archive

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Exports up by 11 percent in July: Humayun ​

LAHORE (August 21 2007): Commerce Minister Humayun Akhtar Khan on Monday said the country's exports increased by 11 percent during the first month of the current financial year ie July 2007 against the corresponding period last year. Talking to journalists at the regional office of the Trade Development Authority of Pakistan (TDAP) here on Monday, he said.

Pakistan has registered growth in its exports which increased from $7.8 billion to $17 billion during the last three years. About the increasing trade deficit, the minister said it was not due to the trade policy rather it could be the outcomes of entire policies being persuaded by the country. The trade policy was compiled after taking all the stakeholders, including chambers of commerce and industry, into confidence, he added.

Talking about the School of Fashion and Designing, the minister said it has been decided to upgrade the school to university level and its campus would soon be constructed in Johar Town, Lahore, which would be helpful for the textile and apparel.

To a question about the reported deal between President Musharraf and Benazir Bhutto, he said the deal would not cause any harm to PML-Q and his party would be further strengthened in future. President Musharraf has already taken the MNAs and MPAs during his Friday's visit of Lahore into confidence on the deal issue.

Humayun Akhtar also said that he has no differences with Chaudhry brothers and he has congenial relations with them. About the party ticket and his participation in the elections, he said it would be decided after the presidential election and the announcement of the general elections' schedule.

Business Recorder [Pakistan's First Financial Daily]

 

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PGBF for growth in Pak-German trade volume ​

KARACHI (August 21 2007): Bilateral trade between Pakistan and Germany has crossed the mark of one billion Euro expected to grow further with the passage of time. This was revealed by Pakistan's new Ambassador to the Republic of Germany Shahid Kamal while speaking at a luncheon, hosted by Pakistan-German Business Forum (PGBF) on Monday.

Kamal said that although the trade volume between the two states was in favour of Germany, it was hoped that Pakistan's export to Germany would increase. The stable economic growth rate, which was over seven percent over the last four years, had enabled the country to extract its maximum share from the global trade and indicators of every sector of the country were had positive signs, he said. He also stated that Germany was assuming its status as a great political, economic and cultural centre of Europe as well as of the world.

The strong economic position of European Union (EU) member could be judged with the fact that it was the largest exporter of manufacturing goods in the world, he added.

Kamal viewed that his major task as a new envoy to Germany would be to change the mindset of people of Germany about Pakistan and its people as a good image of any country was imperative for doing good business anywhere in the world.

He said that a high level delegation of German lawmakers was expected to visit Pakistan next week to discuss and enhance bilateral ties between the two countries. According to a rough estimate, there were around 60,000 to 70,000 Pakistanis settled in Germany. These expatriates could help build the image of the country to improve relationship between Pakistan and Germany, he said.

Speaking on the occasion, PGBF President Qazi Sajid Ali said that the Pakistan-German Business Forum was playing a key role in enhancing trade ties between the two countries.

All business between Pakistan and Germany was being undertaken through the PGBF and it was serving as a platform to potential investors of Germany, willing to invest in Pakistan, he added.

Talking about the trade ties between Pakistan and Germany, he said that it was growing as compared to the earlier growth rate, which was not at satisfactory level. "German Embassy in Islamabad and its Consulate in Karachi should make their best efforts to improve the bilateral relations," he said.

Sajid observed that work on viable solution for issues and problems like anti-dumping duty and other several pending issues might further enhance the trade volume.

He suggested the new ambassador should uplift the image of Pakistan and promote cultural norms, including arts, literature, and film. Citing example of India's influence on Germany, he stressed penetration in every area of German society to build the positive image of the country in Europe. He also stressed the need for expanding bilateral links to share knowledge, information, technological changing and research.

Pakistan-German Business Forum is the largest forum of the country with 188 members onboard. The members include top players of corporate sector of the country and potential German companies, having investment in Pakistan.

Business Recorder [Pakistan's First Financial Daily]

 

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Productivity, competitiveness essential for development: Prime Minister ​

LAHORE (August 21 2007): Prime Minister Shaukat Aziz, emphasising the need for encouraging small and medium manufacturers to add value to their products for better marketing, both within the domestic market and for possible exports said that productivity and competitiveness are two driving forces essential for the development of small and medium industries.

He stated this while presiding over a meeting to review the progress of Small and Medium Enterprises Development Authority (Smeda) at the Governor's House here on Monday.

The PM asked Smeda to expand its scope into new sectors within recently announced SME policy to increase the opportunities for development of small and medium enterprises. He directed Smeda to contribute in extending guidance for skill development, which would improve the quality of products. He said that Smeda needs to launch public relations exercise to create awareness particularly in cities and regions, which are home to the small and medium enterprises.

He appreciated the Smeda project Ahan (Aik Hunar, Aik Nagar) and said the initiative has supported the rural economy by providing product development and marketing services for traditional crafts.

The Chief Executive Officer of Smeda, Shahid Rashid informed the PM that the authority has expanded its work with SMEs and launched several projects for infrastructural support in various sectors like furniture, surgical instruments, leather products and sports goods. He also highlighted the prospects to expand Smeda activities in various sectors like fans manufacturing, plastic goods and pharmaceutical products.

The meeting was attended by Punjab Governor, Lieutenant General (Retd) Khalid Maqbool, Federal Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen, State Minister for Economic Affairs, Hina Rabbani Khar, Advisor to Prime Minister on Finance, Dr Salman Shah and other senior officials.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Metro to build stores in big cities ​

LAHORE (August 21 2007): Provincial Minister for Industries, Muhammad Ajmal Cheema has said multi-national company of Germany Metro would set up 10-storied stores, initially in big cities of Pakistan, while the first store of Metro is being constructed at Tokkar Niaz Beg, which would be completed this year.

He expressed these views while talking to a delegation of industrialists at his residence here on Monay. The Minister said Metro would set-up stores in Lahore, Karachi, Rawalpindi, and Islamabad while the most of the stores would be located in Punjab. He said after the investment of "Metro" other multi-national companies of the world are also coming to Pakistan and these companies are taking keen interest to invest in this country.

He said the Metro would also impart training of modern techniques regarding protection of vegetables and fruits. He said business-friendly policies of the present regime have attracted the foreign investors and they are ready to invest in Pakistan. He said Punjab has become the hub of industrial actions, which have increased the industrial growth of Punjab.

Business Recorder [Pakistan's First Financial Daily]

 

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CSF and PBC sign MoU to promote investment ​

KARACHI (August 21 2007): The United States will continue to help the government of Pakistan in its efforts to raise income, jobs opportunities and well being of its citizens.

"We understand that providing economic opportunities for all Pakistanis is fundamental in building a solid, sustainable foundation for continued economic growth and peace", said US Consul General in Karachi Kay L. Anske, while speaking at the memorandum of understanding (MoU) signing ceremony between the USAID-funded Competitiveness Support Fund (CSF) and Pakistan Business Council (PBC) here on Monday.

The CSF and PCB signed the MoU to identify public policy initiatives to improve competitiveness of Pakistani businesses. The MoU was signed by Chief Executive Officer of CSF Arthur Bayhan and PBC Chairman Abdul Razzak Dawood.

According to MoU, the CSF and PCB will undertake joint initiatives in engaging the government, research institutions, academia and the private sector in developing evidence-based advice on changes in legislation relating to public policy initiatives.

The PBC will help the CSF in achieving its objective of supporting Pakistan's goal of a more competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks and enhancing public-private partnerships within the country.

The US Consul General said that the USAID's support to this agreement amounted to 12 million dollars and since 2003, the USAID had provided over 73 million dollars for economic growth initiatives.

"Competitiveness is the key of long-term economic growth and we are pleased to see that the government of Pakistan's policies of de-regulation, liberalisation and privatisation are working and providing concrete results", she said, and added that the benefits to Pakistan were evident as its companies strengthened their competitive position, the country's economy would grow and improve the economic condition of its citizens.

As a driver of global economic growth, the US also benefited from competitiveness as a competitive and prosperous Pakistan would create more trading opportunities for the US, as well as other countries in the region.

She said that this new collaboration between the PCB and the CSF would ensure that Pakistan was better poised to not only understanding the needs of the global market, but also meeting their demand of a highly skilled and well-trained workforce.

The CSF would continue to build on the momentum generated from the conference it held here in May last year on competitiveness and economic growth in the Asia-Pacific region, she said, adding the conference provided Pakistan an excellent opportunity to showcase its competitiveness initiatives and efforts under way to improve its standing in the global value chain.

The US Consul General said that the CSF had identify industry sectors - such as motorcycles and fisheries - with potential and competitive advantage. The motorcycle industry, for instance, would increase the motorcycle market from existing 750,000 units per annum to 1.7 million units by 2010-11. This would create additional 500,000 jobs by 2010-11 due to increase in the market size and approximately an additional Rs 40 billion would be generated as government revenue, she added.

She said that the CSF had also carried out a study, which was assisting the government of Pakistan in establishing special economic zones (SEZs), which would result in the formation of a task force on SEZs. This task force would identify the investors' demand and assess the economic impact of the SEZs and it would also define the incentives and the standards for the SEZs, which would generate investment and create jobs.

"In a short span of time, the CSF has managed to establish public-private partnership to promote innovation and competitiveness by working closely with the Higher Education Commission (HEC), Pakistan Agriculture Research Council, the provincial governments, the Board of Investment (BoI) and now with the PBC", she added.

She said that the MoU between PBC and CSF was a noteworthy step towards their objectives, and expressed the hope that this partnership would help the private sector in Pakistan to generate more economic activities in the country.

Speaking on the occasion, CSF CEO Arthur Bayhan said: "It is important to look into the three main economic pillars to measure the competitiveness of any country and these pillars are:

-- An appropriate legal and institutional framework that includes, among others, the intellectual property rights, company and insolvency laws, antitrust legislation or competition policies etc.

-- An investment regime which aims at creation of a business-friendly environment and attracts foreign and domestic investment. However, more important is the greenfiled investment, which generates new technology, know-how, skills development, professionalism in management.

-- Innovation systems. Federal, provincial and local innovation systems to promote knowledge-based enterprise development that includes the strengthening industry academia linkages, commercialisation of research and building capacity for adaptation of new technologies.

He said that the competitiveness was the key to a sustained economic growth and economic growth was the key to generate employment and reduce poverty. PBC Chairman Abdual Razzak Dawood and CEO Salim Raza also spoke on this occasion and briefed about the agreement.

The CSF is a joint initiative of the Ministry of Finance and the US Agency for International Development (USAID). It supports Pakistan goal to have a competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks and enhancing public-private partnerships within the country.

Support for the CSF is part of the 1.5 billion dollars in aid that the US is providing to Pakistan, through the USAID, over five years to improve economic growth, education, health and governance and for earthquake reconstruction.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan to provide access to Uzbek cargo via Gwadar ​

ISLAMABAD (August 21 2007): Pakistan will provide access to Uzbekistan for transshipment of its cargo to and from Gwadar port, sources in Communication Ministry told Business Recorder on Monday. The Cabinet, which is scheduled to meet on Wednesday, will accord ex post facto approval of the proposal.

The agreement, already signed between the two countries, envisaged free traffic in transit to the carriers of contracting parties through multi-modal transport system (land, rail and sea) in accordance with their existing national laws and regulations.

The main objective was to provide Uzbekistan access for the transshipment of their its cargo to/from Gwadar port. However, details of exit/entry points, land routes for traffic in transit as well as other operational details have to be worked out by the two countries in the form of a protocol to the agreement to be signed between the contracting parties.

Sources said that the Prime Minister, during his visit to Uzbekistan in March this year, had signed a number of agreements, Memorandums of Understanding (MoUs) including cooperation in transport and transit of goods without the consent of the Cabinet. They said that now the Ministry of Foreign Affairs has requested that the ex post facto approval of the Cabinet may be solicited for the signing of the agreement between Pakistan and Uzbekistan.

Business Recorder [Pakistan's First Financial Daily]

 

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Road sector:'high quality infrastructure being developed' ​

LAHORE (August 21 2007): The government is paying special attention to development of high quality infrastructure in road sector with focus on construction of new roads and widening of existing roads.

Punjab Communication and Works (C&W) Minister Chaudhry Zaheer-ud-Din Khan said this while presiding over a high level meeting here on Monday, disclosed an official. Punjab C&W Secretary Muhammad Ahsan, Additional Secretary (Technical) Javed Akhtar Lodhi, chief engineers highways (North and South), superintending engineers and other concerned officers also attended the meeting.

The C&W secretary informed the minister that the provincial road assets have increased from 40,000 km to over 77,232 km during the last five years and estimated value of road assets exceeded Rs 200 billion. In the recent years, the overall demand for road transport has grown at seven to eight percent per annum, he added.

He apprised that the ever-increasing demand for additional road links in the province has intensified the need to augment existing road densities.

The minister was informed that Rs 14.3 billion has been allocated during the current fiscal year and a target for the construction of 700 km new roads and widening 7,600 km existing roads has been fixed. Additional funds for the mega projects like Lahore Ring Road and Lahore-Sialkot Motorway have been earmarked.

Chaudhry Zaheer-ud-Din urged the officers of C&W department to ensure timely completion of schemes and utilisation of quality material. He warned that strict action would be taken against the supervisory officers who failed to complete the projects within stipulated period.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Economic progress under civilian and military set-ups​

By S. M. Shafi Azam & Vishnu Parmar

Pakistan’s economic history shows mixed performance over the past six decades with GDP growth rates varying between civilian rule and military regimes and also during different periods of the non-democratic set-up.

The economy grew by 6.8 per cent under the first military regime of Field Marshal Ayub Khan, slowed to 6.5 per cent over General Zia-ul-Haq’s period and dropped to an average of 5.5 per cent during President Musharraf’s tenure so far.

However, a study of the key economic and social indicators of two different periods-- the democratic rule (DR)(1989-1999) and the military regime (MR)(1999-2005) – shows that of 6 out of 28 variables, there is no significant difference in their group means. The remaining variables show some difference, with most of them worsening instead of improving during the current military rule.

The main conclusion of this study is that the current military regime has not performed significantly better as compared to the preceding civilian rule. Comparatively, the overall quality of life in terms of education, health, and poverty has also not improved significantly. In fact, it has remained stagnant or even worsened.

GDP: The average growth rate of GDP during the 17 years 1989-2005 was 4.6 per cent. Incidentally, during FY89-FY99, the GDP growth rate averaged 4.6 per cent while during FY00-05 it increased slightly to 4.8 per cent. Though there is no significant statistical difference between the two periods, there is a large variation in growth rates during the FY00-FY05. In the first three fiscal years,1999-2002 the average GDP growth was only 2.9 per cent, and it more than doubled during the next three years to 6.3 per cent- a jump of 3.4 per cent.

The acceleration in the growth rate is explained by events following 9/11, economic reforms and the re-basing on national accounts. The base year of measurement was changed from 1980-81 to 1999-2000. As a result of re-basing, the GDP estimates for 1999-2000 have improved from Rs2,952 billion to Rs3,529 billion--an increase of 19.5 per cent over the old base estimate. Thus, estimated agriculture sector performance improved by 18.5 per cent, industrial sector 18 per cent and the services sector by 21.9 per cent.

Per capita income has been estimated at $526 for the re-based year 1999-2000 as compared to $441 on the basis of 1980-61 base. Similarly, estimates of fixed investment have surged by 34.3 per cent to Rs607 billion over 1980-81 base estimates of Rs452 billion mainly due to improved coverage.

One can safely deduce that the 6.4 per cent GDP growth rate in FY04 and 8.4 per cent in FY05 are significantly over-stated. Unfortunately, the Economic Survey does not provide the data for these two years based on the common base year 1980-81 which would be the right basis of comparison for all the relevant data being analysed in this study.( See table 1)

Investment and savings: The total investment as percentage of GDP during the democratic era was 17.93 per cent, while under military rule it dropped to 17.07 per cent. The T-test and ANOVA test results show that there is no statistical difference between the two periods. The share of industry in GDP was relatively constant at 24.85 per cent of GDP for both periods. It was slightly higher at 25.59 per cent under civilian rule and dropped to 23.5 per cent under the military regime as the share of the services sector went up to 52 per cent. Over all, there was little variation during the two regimes

Savings as a percentage of GDP averaged 15.16 per cent for 17 years (1989-2005). It averaged higher during the military regime at 17.67 per cent and averaged lower at 13.79 per cent during the democratic era. It was 20.80 per cent in 2002-03 mainly after 9/11 because of increased remittances.

Defence spending: Though the volume of defence spending has been increasing every year, it, as a percentage of current expenditure and GDP, has been declining. The average defence spending ratio of current expenditure during (1989-2005) was 22.25 per cent. It was highest at 26.5 per cent in FY90 and lowest at 18.5 per cent in FY05.

The main reason for the reduction in defence spending as a proportion of current expenditure is due to ‘creative accounting’. Several items which are part of defence spending such as the salary and pensions of active and retired personnel of armed forces are included in the civilian budget.

Unemployment and inflation: There is significant statistical difference in the unemployment rate and Consumer Price Index in the two compared periods. The average unemployment rate during 1989-2005 was close to six per cent. During the civilian rule it averaged 5.19 per cent and increased to 7.52 per cent during the current military regime. Despite high growth rate like 8.4 per cent in 2004-05, and 6.40 per cent in 2003-04, the unemployment rate has increased which shows that the benefit of high growth rate is not benefiting the people. Unemployment touched the highest ever at 8.70 per cent in FY05. (see table 2)

The average inflation rate when measured by the consumer price index was 8.14 per cent during the last 17 years and 8.60 per cent when measured using the GDP deflator. It averaged close to 10 per cent during the democratic era and 4.75 per cent during the military regime.

Budget deficit: Budget deficit averaged 5.89 per cent of GDP during the last 17 years. It averaged close to seven per cent in the democratic era which is much larger than 3.95 per cent under the military regime. It was better contained within three to 4.3 per cent of GDP .

Trade: Exports as a part of the GDP was 12.92 per cent during 1989-2005. It was almost the same during the military regime at 12.95 per cent and the democratic era at 12.91 per cent. Export growth averaged 11.38 per cent during the military era and 5.45 per cent during democratic era.

Remittances: The average worker remittances as a ratio of GDP was 3.15 per cent during the last 17 years—civilian’s 3.13 per cent and military’s 3.21 per cent. So essentially, there is no difference in the workers remittances as a proportion of GDP during the two periods.

Foreign exchange reserves: Robust foreign exchange reserves position reduced vulnerability of the exchange rate and provided some stability to country’s currency value.

Education: Investment in education grew by 2.18 per cent of the GDP during the entire study period--- 2.28 per cent during civilian rule and two per cent during military regime. This important area was equally neglected by both civilian and military governments.

Health: The average growth rate of investment in health sector during the 17 years of study (1989-2005) was 0.7118 per cent. It was 0.74 per cent under civilian rule and 0.67 per cent under military regime. ( see table 3)

Poverty: During 1989-2005, the growth rate of poverty was 30.13 per cent. The average growth was 31.7 per cent under military regime and 29 per cent during the democratic rule. The definition of poverty differs from country to country. The level of poverty is defined by the government by the benchmark of rupee value of Rs25 a day or Rs748 a month-- enough to afford 2,350 calories a day. Anyone earning less than this is considered as absolute poor. (Table 4)

Economic progress under civilian and military set-ups -DAWN - Business; August 20, 2007

 

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Vision 2030’ launched



ISLAMABAD, Aug 21 (APP) - Pakistan Tuesday launched Vision 2030 programme, a roadmap for the development of the key areas of national importance. “Vision 2030 is focused on developed, industrialized, just and prosperous Pakistan through rapid and sustainable development in a resource constrained economy by deploying knowledge inputs,” Deputy Chairman Planning Commission Dr Akram Sheikh told participants at its launching at Aiwan-e-Sadr. He said the programme is aimed at making Pakistan a major regional hub for industry, trade and education. On achieving the economic goals, Dr Sheikh said the objective was to enhance country's GDP around US$ 1,000 billion with per capita income expected to quadruple from US$ 925 in 2007 to about US$ 4,000 in 2030. Reducing population growth from 1.9 to one percentand increasing literacy rate upto hundred percent by 2015 were the other targets.

 

[BATMAN]

Economic Survey for 2005-06
Arab News —
Economic Survey for 2005-06

Fiscal year 2005-06 proved to be a solid economic growth for Pakistan, according to its survey. This was consistent with the previous three years, despite the surging oil prices and devastating earthquake of Oct. 8, 2005, which caused extensive damages.

Pakistan’s economic growth, according to the survey, reflected a strong consumer spending and buoyant corporate sector, with per capita income rising to $847.

With a growth of 6.6 percent during the year, Pakistan’s economy grew at the rate of seven percent on aggregate during the previous four years, thus emerging as one of the fastest growing economies in the region.

The annual economic survey presents a comprehensive and balanced analysis of the country’s economy each year by covering all sectors of the economy. It analytically assesses the impact of government policies and reforms on the growth and development of the economy as well as focuses on microeconomic management and sectoral development.

Agriculture
Agriculture is the mainstay of Pakistan’s economy. Nearly 22 percent of total output (GDP) and 44.8 percent of total employment is generated in agriculture and further 45.9 percent of the country’s rural populace is directly or indirectly linked with it for their livelihood. It contributes substantially to the country’s exports. It contributes as a supplier of raw materials to industry as well as markets for industrial products.

Performance of the agriculture sector during the fiscal year has been relatively weak. Against the target of 4.2 percent and last year’s achievement of 6.7 percent, overall agriculture grew by 2.5 percent in 2005-06 due to a relatively weak performance of major crops and forestry.

Production of the two of the four major crops, cotton and sugarcane was less than the previous year due to many reasons including excessive rains at the time of sowing, high temperature at the flowering stage and inadequate availability of water. The wheat production remained more or less at the previous year’s level of 21.7 million tons with a 0.4 percent growth, failing to turn the negative growth in the major crop to a positive one. Minor crops accounting for 12.3 percent of the agriculture value added registered a growth of 1.5 percent in 2005-06.

Livestock sharing on one half of the agriculture value added registered an impressive growth of 8.8 percent on the back of a substantial increase in the population of species, milk etc. Though the production of cotton and sugarcane was estimated less, rice production registered an increase of 10.4 percent during the year.

Agriculture credit disbursement of 91.16 billion Pakistani rupees during July-March 2005 was higher by 23.5 percent. The fertilizer off-take was 6.1 percent higher as compared to the previous year.

Construction Sector
The construction sector continued a strong showing. Partly helped by activity in private housing market, spending on physical infrastructure and reconstruction activities in earthquake affected areas, it grew by 9.2 percent.

Services Sector
The service sector grew by 8.8 percent in 2005-06, which was attributable to a strong growth in finance and insurance sector, better performance of wholesale and retail trade as well as trade and communication sector. In fact services sector emerged as a new growth powerhouse. In real GDP terms, contribution of the services sector was two-third whereas one-third contribution came from agriculture and industry.

Manufacturing, Mining and Quarrying
Manufacturing sector continued to maintain its growth momentum with more vigor by recording an impressive and broad-based growth of 8.6 percent. Large scale manufacturing grew by nine percent, which included automobiles, engineering goods, leather, pharmaceuticals, electrical appliances and nonmetallic mineral products.

Investments
Domestic fixed investment grew by 30.7 percent. Private sector investment grew by 31.6 percent. Major growth private investments was in agriculture (15.3 percent), manufacturing (14.4 percent), mining and quarrying 45.5 percent, construction 9.5 percent, transport and communication 20.2 percent, wholesale and trade 424.5 percent. Public sector investment registered a massive growth of 46.7 percent. The growth in domestic sector investment was largely a public sector phenomenon in the previous year but in 2005-06 it was a public-private drive. Total investment increased to 20.2 percent of GDP, up by 1.9 percent as compared to the previous year.

Foreign direct investment (FDI) witnessed an increase of 238.7 percent in the first 10 months of the year surveyed, whereas net foreign investment stood at $3.376 billion.

Privatization
The privatization program maintained its pace during 2005-06 and succeeded in privatizing some high ticket items despite an inhospitable global environment. By the end of April 2006, Pakistan completed or approved privatization of public sector entities worth 985 billion rupees.

Poverty and Income Distribution
A poverty reduction strategy was launched by the government in 2001 in response to the rising trend of poverty in the country. Preliminary findings of the Pakistan Social and Living Standard Measurement Survey indicated that the poverty level in the country came down. As per the survey, the poverty level stood at 25.6 percent during the year as compared to 32.1 percent during the year as compared to 32.1 percent in 2001. More importantly, rural poverty declined more than its urban counterpart. The social sector and poverty related expenditure grew at an average rate of more than 20 percent per annum during 2001-05. There is nearly a threefold increase in the projected PRSP expenditure for 2006-07 when compared with actual expenditure of the base year 2001.

Fiscal Development
Pakistan gained further strength on fiscal side. Revenues were buoyant and expenditure was rationalized. Fiscal deficit remained at a sustainable level and revenue deficit had almost been eliminated. The central Board of Revenue (CBR) was targeted to collect 690 billion rupees but it was most likely to collect 710 billion rupees. Total expenditure remained more or less stable in a narrow band of 17 to 18.3 percent of GDP over the previous six years. Share of development expenditure doubled from 11 percent to 22 percent in the same period.

Total consolidated revenues were targeted at 1,095.6 billion rupees in 2005-06 compared to 900 billion rupees in 2004-05. This was primarily due to a rise in tax revenues. Size of fiscal deficit was estimated to be 4.2 percent of the GDP including the expenditure related to earthquake effects. The revenue expenditure gap was financed through external and domestic sources. Out of a gap of 327.3 billion rupees, financing from external sources was expected at 118.4 billion rupees. The remaining gap was likely to be financed from domestic sources. The public debt to GDP ratio declined to 54.7 percent of the projected GDP for the year, which stood at 61.4 percent by the end of June 2005. The ratio of domestic debt to GDP decreased during 2005-06. Interest payments as a percentage of total revenue had been reduced to 20 percent from 41 percent over the last six years, thereby releasing resources for development and social sector programs.

More importantly as percentage of GDP, interest payments declined from six percent to 2.6 percent over the previous six years. Money and the credit tight monetary policy stance by State Bank of Pakistan (SBP) was the hallmark of the year surveyed despite a drop in core and overall inflation.

Notwithstanding the tight monetary policy stance, the SBP continued to strike a balance between promoting growth and controlling inflation as well as maintaining a stable exchange rate. In order to revamp the financial sector in line with the global financial system, the SBP set out a road map for the implementation of a new regulatory capital adequacy regime, which offers a series of approaches for capital allocations against credit and operational risks.

The money supply during July-April 2006 remained well within the credit plan target for the year. Net credit to the government for budgetary purposes was 43.3 billion rupees compared to the annual target of 98 billion rupees. However, credit to the private sector exceeded the plan target and stood at 345.1 billion rupees as against 330 billion rupees envisaged for the year in the credit plan, reflecting the confidence of the private sector on the continuously improving macro economic fundamentals of the country.

Expansion in banking business can be gauged from the fact that scheduled banks opened 34 offices from April 1, 2005, to March 31, 2006. As a lead micro finance bank in the microfinance sector development program (MSDP), Khushali Bank is serving 250,000 clients with a cumulative disbursement of over 6 billion rupees in 75 districts of Pakistan.

Trade and Payments
Exports during the first nine months were up by 18.6 percent to $12.073 billion. Pakistan doubled its exports in seven years and increased its trade-GDP ratio to an estimated 34 percent in 2005-06. Our imports have risen by 43.2 percent in the first nine months to $20.693 billion primarily due to higher oil prices, rise in food imports and buoyant domestic demands of the industrial sector.

Education
Literacy rate was 53 percent, which was lower than the target set. However an encouraging aspect of the increase was in net enrollment by 10 percent during the year, which needed to be harnessed to achieve the Millennium Development Goals.

Health
Pakistan is fully committed of its commitment to achieve Millennium Development Goals, and initiatives have been taken to address health issues in PRSP. New health facilities added to overall health services during the year included construction of 56 new health facilities, upgradation of 59 existing facilities, and addition of 3,500 new doctors, 1,900 nurses and 15,000 female health workers. The total expenditure on health sector for the year was 40 billion rupees, up by 5.39 percent as compared to the previous year. In order to improve the health status of the people various programs remained operative during the year.

 

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Pakistan urged to comply with WTO standards​

ISLAMABAD, Aug 20: The government has decided to comply with the standards demanded by the World Trade Organisation (WTO) to survive in the export market. Official sources told Dawn on Monday that the WTO had been insisting that Pakistan’s manufacturers, exporters and entrepreneurs should meet the internationally acceptable standards, measurements and calibration in its foreign trade, commerce and industrial dealings.

There is a long list of standards demanded by different agencies in various sectors. The WTO wants Islamabad to comply with the requirements like Technical Barrier to Trade (TBT), including “metrology”, standards, testing and quality (MSTQ), sanitary and phyto sanitary (SPS), scientific metrology and legal metrology (weights & measures) to achieve the highest level of accuracy in measurement and calibration as obligatory requirements of the International Standard Organisation (ISO).

It has also asked Pakistan to enter into agreements on mutual recognition (MR) with other countries as recommended by the Bureau of International Weights and Measures (BIPR), Organisation of Legal Metrology (OIML), International Laboratory Accreditation Cooperation (ILAC), Asia Pacific Laboratories Accreditation Cooperation (APLAC) and International Accreditation Federation (IAF).

For achieving various international standards, the government has decided to go for the balancing, modernisation and revamping (BMR) of National Physical and Standards Laboratory (NPSL), Islamabad, for which Rs2 billion has been allocated for upgradation and strengthening of metrology base in Pakistan.

As a first step, the NPSL needs primary standards to essentially take part in international key comparison arranged by BIPM, which are set by the WTO for which the state-of-the-art equipment will be procured. This equipment will help establish primary standards of measures in chemical, physical, industrial and legal metrology.

After attaining the BMR, the NPSL will meet the demands of the potential customers from industrial trade, research development organisations for calibration, measurements, test and analysis.

The NPSL is the only organisation in the country responsible for maintenance and dissemination of national primary standards. Practically, limited facilities are available within the country. Some of the defence organisations are carrying out calibration work without going for establishing ‘traceability expression’ and they have to refer NPSL for their reference/traceability hierarchy due to their classified nature.

At present there is no mechanism of coordination among the newly emerging private sector laboratories. However, some sort of coordination could be visualised in near future as far as accreditation of laboratories and management of inter-laboratory comparison is concerned.

The government approved the establishments of NPSL in 1974 through an act of parliament, which started functioning in 1983 at its present premises in Islamabad. The laboratory was supposed to extend and refine its capabilities with time in accordance with requirements of the country. But unfortunately, sources said, it was very slow and NPSL could not prove its worth even after years. It was not in a position to provide the needful services to industry and other users in Pakistan.

With the allocation of new funding, the NPSL is expected to enhance about 10 to 15 per cent of existing test and calibration facilities and improvement of environment conditions in the laboratory to some extent.

The additional services by virtue of new facilities were being rendered to the industries and exporters. However, ranges and accuracy of most of the existing physical parameters and testing areas still needed to be increased and improved further.

Pakistan urged to comply with WTO standards -DAWN - Business; August 21, 2007

 

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Security problem may delay oil output in NWFP​

ISLAMABAD, Aug 20: The Hungarian-based MOL Pakistan, prospecting for oil and gas in Gurguri area of the Karak district, on Monday confirmed that a foreign sub-contractor had pulled out of petroleum exploration due to security reasons but had been replaced to avoid stoppage of the operation.

A press release quoting MOL Managing Director Janos Feher – the Tal Block operator in the NWFP (Karak) -- said the security issue in the area was well known to the government and that the company had always worked with both the federal and provincial authorities.

“What we have communicated to the government is that the security and land acquisition related issues can delay the development and the targeted oil and gas production from the field that are crucial for the energy security and economy of the country, the province and the local community,” Mr Feher added. He said that the MOL was working in the area for exploring petroleum and had no intention to stop its operation in the near future.

The MOL has been working in Pakistan through its subsidiary MOL Pakistan Oil and Gas Company, B.V. since April 1999.

The petroleum concession and exploration licence was granted to MOL (TAL Block No. 3370-3) in NWFP with the joint venture partners, Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), Government Holdings (Pvt) Limited (GHPL) and Pakistan Oilfields Limited (POL) for exploration of oil and gas.

Shah Abdul Aziz, a local MNA, told Dawn that the companies had actually received threatening letters from some unknown persons.

Security problem may delay oil output in NWFP -DAWN - Business; August 21, 2007

 

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Millers warn against looming sugar crisis​

LAHORE, Aug 20: Pakistan Sugar Mills Association (PSMA) drew the attention of the government on Monday towards “the worst emerging sugar and cane crises.” In a letter to Dr Salman Shah, adviser to Prime Minister on Finance, PSMA Punjab chapter chairman Ch. Zaka Ashraf said that the country was going to have a bumper cane crop next season, and the industry was likely to produce 4.3 to 4.5 million tons of sugar.

He said that the current minimum support price of sugarcane cannot be paid unless sugar was sold at an ex-mill rate of Rs32 per kg, inclusive of 15 per cent sales tax and one per cent special excise duty. The industry, he said, is likely to have surplus stocks, ranging between 300,000 tons and 500,000 tons out of next years’ crop.

If industry starts crushing from the first week of November, it would have a carry forward surplus of 200,000 tons from last year, which would take the surplus stocks to 500,000-700,000 tons next year.

“Unfortunately, in spite of domestic glut, the government is allowing unhindered flow of Indian sugar. If Indian sugar keeps on arriving through Wagha border, it will trigger a price crash in the domestic market because it costs $285 per ton, which is only Rs26.50 per kg.

In order to ensure start of crushing season by the first week of November, it is necessary that entire sugarcane crop is lifted on time and minimum support price of cane is ensured, and mills be allowed to sell their sugar by the first week of November.

The Trading Corporation of Pakistan (TCP) should only sell 100,000 tons between Oct 15 and Nov 15. No sugar should be sold by the TCP until Oct 15. This will enable the sugar mills to start crushing in the first week of November.

He further proposed that import of sugar from India must either be banned or import duty be raised from the 15 to 30 per cent.

Moreover, to enable the mills to pay minimum support price to sugarcane growers, the ex-mill sale price of Rs31-32 per kg must be maintained, the letter said.

If this price is not maintained, mills would neither be able to pay minimum support price to growers, nor they would be able to crush bumper sugarcane crop next year, the letter said.

He said that the industry is timely informing the government about the alarming situation and it is hoped that immediate corrective measures would be taken to bail the sugarcane growers out of the impending crisis.

Millers warn against looming sugar crisis -DAWN - Business; August 21, 2007

 

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APL to invest in associated companies​

KARACHI, Aug 20: Attock Petroleum Limited (APL) announced on Monday that it proposed to invest in shares of associated companies: National Refinery, Attock Refinery, Pakistan Oilfields and Attock Cement Pakistan.

A meeting of the board of directors held on Monday resolved that the chief executive be authorised “to invest from time to time as may be considered appropriate, through the Stock Exchange(s), for purchase of shares in the (above four) companies, collectively called the “investee companies”.

The announcement made at the KSE stated that the shares were proposed to be purchased through the stock exchange from the general public including shares held by any large shareholder(s) to the extent of a maximum of 2.5 per cent of the paid-up capital of each investee company (in addition to the existing investment of 1pc in NRL) with overall amount not to exceed Rs2,500 million at the price(s) ruling on the date of such purchase(s).

The ‘material information’ was conveyed by the company to the KSE in accordance with the Listing Regulation No.28 and Clause (xxiii) of the Listing Regulation No.37 under Code of Corporate Governance.

Earlier, the board approved financial results and appropriations for the year ended June 30, 2007. The payouts proposed included: cash dividend at Rs14 (140 per cent). No interim was earlier announced.

The company posted profit after tax in the sum of Rs1,728 million, translating into earnings per share (eps) at Rs43.22 for the year ended June 30, 2007. This compared with PAT at Rs1,393 million and eps of Rs34.82 the previous year. Sales amounted to Rs49.9 billion for the year under review and Rs46.2 billion the earlier year.

The results appeared to be in line with most analysts’ expectations, but the board’s decision to issue bonus shares and invest sum to the extent of Rs2.5 billion in associated companies were elements of surprise for most investors.

APL to invest in associated companies -DAWN - Business; August 21, 2007

 

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Philippines may import rice from Pakistan​

MANILA, Aug 20: The Philippines announced on Monday it would hold a tender on Sept 7 for import of 260,000 tons of rice. The government’s National Food Authority said the 25 per cent broken variety rice could be sourced from Thailand, Vietnam, China, Pakistan, India, Australia or US.

However, the maximum quantity of Indian rice to be imported would be 25,000 tons and the limit for Pakistani, Australian and US rice would be 50,000 tons. The rice is for arrival in September and October.

The import was announced after a prolonged dry spell in the main rice-growing areas of Luzon island that ended only two weeks ago. Officials have said the rains earlier in August came too late to save the full harvest.

Officials said the Philippines’ rice output this year would rise between 3.5 and four per cent, below a target of around five per cent.—Reuters

Philippines may import rice from Pakistan -DAWN - Business; August 21, 2007