Pakistan Economy - News & Updates - Archive

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TUESDAY, MAY 30, 2006


KARACHI The government of Pakistan plans to sell a 10 percent stake in Habib Bank on the stock exchange as part of its plan to accelerate asset disposals and reduce its role in the financial industry.

The initial offer, which will reduce the government's stake to 39 percent, is likely in the next few months, Habib Bank's president, Zakir Mahmood, said in an interview.

"We're a very well-known brand and there's been a lot of clamor for Habib to be listed," Mahmood said. The government will probably divest its entire 49 percent stake in the bank - the country's second-biggest lender - in five to seven years, he said.

Pakistan is selling state assets to help repay $36.7 billion of overseas debt, under a divestment program expected to raise a record $3.6 billion in the year ending June. The Habib IPO is also one of the last steps in a World Bank-funded revamp of Pakistan's banking industry, in which the government has managed to slash its holdings.

As part of the revamp, banks have pared bad loans, invested in technology to improve efficiency and cut costs by reducing the number of branches and employees.

Habib Bank has shut 400 branches and more than halved its workforce to 16,000 from 33,000 since the revamp began in 1997.

"The banking sector is one of Pakistan's success stories," said Agost Benard, a credit analyst at Standard & Poor's in Singapore. "It's something other countries in the region could learn from."

Habib was valued at $757.5 million when the government in February 2004 sold 51 percent of the bank to the Aga Khan Foundation, raising $390 million. Stock-market investors have since been anticipating an IPO.

Habib Bank's profit has surged almost 20 times since Mahmood took the helm in 2000 after spending 23 years at Bank of America and Credit Agricole Indosuez. Habib had net income of 8.9 billion rupees, or $148 million, in 2004, compared with 493 million rupees in 2000.

Pakistan's economic expansion has contributed to profit growth at the nation's 38 banks. The $118 billion economy expanded 8.4 percent in the year to June 30, 2005, the fastest in two decades, and is poised to grow at an annual pace of as much as 8 percent over the next five years, Prime Minister Shaukat Aziz has predicted.

"Banking is one of the most attractive sectors on the market," said Habib ur Rahman, chief executive officer of Atlas Asset Management Company, "At the right price, Habib's IPO will be very well received."

KARACHI The government of Pakistan plans to sell a 10 percent stake in Habib Bank on the stock exchange as part of its plan to accelerate asset disposals and reduce its role in the financial industry.

The initial offer, which will reduce the government's stake to 39 percent, is likely in the next few months, Habib Bank's president, Zakir Mahmood, said in an interview.

"We're a very well-known brand and there's been a lot of clamor for Habib to be listed," Mahmood said. The government will probably divest its entire 49 percent stake in the bank - the country's second-biggest lender - in five to seven years, he said.

Pakistan is selling state assets to help repay $36.7 billion of overseas debt, under a divestment program expected to raise a record $3.6 billion in the year ending June. The Habib IPO is also one of the last steps in a World Bank-funded revamp of Pakistan's banking industry, in which the government has managed to slash its holdings.

As part of the revamp, banks have pared bad loans, invested in technology to improve efficiency and cut costs by reducing the number of branches and employees.

Habib Bank has shut 400 branches and more than halved its workforce to 16,000 from 33,000 since the revamp began in 1997.

"The banking sector is one of Pakistan's success stories," said Agost Benard, a credit analyst at Standard & Poor's in Singapore. "It's something other countries in the region could learn from."

Habib was valued at $757.5 million when the government in February 2004 sold 51 percent of the bank to the Aga Khan Foundation, raising $390 million. Stock-market investors have since been anticipating an IPO.

Habib Bank's profit has surged almost 20 times since Mahmood took the helm in 2000 after spending 23 years at Bank of America and Credit Agricole Indosuez. Habib had net income of 8.9 billion rupees, or $148 million, in 2004, compared with 493 million rupees in 2000.

Pakistan's economic expansion has contributed to profit growth at the nation's 38 banks. The $118 billion economy expanded 8.4 percent in the year to June 30, 2005, the fastest in two decades, and is poised to grow at an annual pace of as much as 8 percent over the next five years, Prime Minister Shaukat Aziz has predicted.

"Banking is one of the most attractive sectors on the market," said Habib ur Rahman, chief executive officer of Atlas Asset Management Company, "At the right price, Habib's IPO will be very well received."

 

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Tuesday, May 30, 2006

LAHORE: Kinnow exports from Pakistan have touched the 200,000 tonnes mark this year, with the opening up of new markets like Russia and Iran.

"Exports may reach 250,000 tonnes next year when Pakistan's kinnow will also have access to China's market," said Shamoon Sadiq, chief executive officer (CEO) Pakistan Horticulture Development and Export Board (PHDEB). Hopefully the ongoing problems in the Indonesian market would also be resolved by that time, he said in an interview with APP. He said, there was also great potential for Pakistani citrus fruit in Poland, the Czech Republic, Australia and South Africa. Sadiq said, the major destinations of Pakistani kinnow this year were the United Arab Emirates, Russia, Iran, Singapore, Saudi Arabia, Philippines, Sri Lanka, Holland, Ukraine and Mauritius.

 

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Tuesday, May 30, 2006

ISLAMABAD: The GST/CED collection from telecom sector has reached Rs. 18.9 billion mark during the first three quarters of 2005-06 which is Rs. 5.1 billion higher as compared to the same period last year.

According to Pakistan Telecommunication Authority (PTA), 70 percent of the General Sales Tax and Central Excise Duty contribution came from mobile sector during the period.

The regulatory Authority in its quarterly telecom review said the telecom sector is increasingly contributing in the national exchequer and the GST/CED collection from this vital area during Jan-Mar 2006 reached Rs 7.1 billion as compared to Rs 4.1 billion in the corresponding quarter of last year.

During the quarter, Telecard and Link Direct International have deposited Rs. 119 million under the head of GST/CED, it added.

The PTA further said with the expansion of Long Distance International (LDI) operations, the GST/CED contribution from LDI operators is also increasing.

Regarding Universal Service Fund (USF), which has been introduced to meet the needs for basic telecommunication and ICT services in un-served and under-served areas throughout the length and breadth of the country, the review said around Rs. 2.084 billion have been collected in this account during the first nine months of current fiscal year.

Prior to deregulation of telecommunication sector, the only contributor to universal services obligation was PTCL. However, with the new licensing regime in place, all the telecom licence holders including Local Loop (LL), LDI and Mobile will contribute in the USF.

It is expected that access to the USF fund would provide sufficient incentive on its own to trigger investment in geographic service extension.

So far, LDI operators have deposited the revenues from incoming International traffic terminated on cellular mobile networks into the Universal Service Fund account, maintained by the Authority.

 

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Close to buying Paktel’s parent company

By Imran Ayub

KARACHI: China Mobile is likely to enter Pakistan’s cellular industry as the Asian telecom giant is close to acquiring Luxembourg-based Millicom International - the parent company of Paktel and one of six cellular operators in Pakistan.

Telecom sources said Millicom International, which operates both AMPS and GSM cellular services through Paktel in Pakistan, was wrapping up its operations amid rising competition and declining profits.

“There have been talks between the two (China Mobile and Millicom) groups and now it seems the deal between them is a matter of days,” said a source close to Millicom’s Pakistan operations.

Millicom entered into Pakistan in early 90s, introducing cellular services in the country. Earlier, the company owned two cellular companies in Pakistan in partnership with local telecom operators but later it offloaded shares in one of the companies to local partner.

He said currently Millicom owned Paktel, which offered both GSM (global system for mobile communications) and AMPS (advanced mobile phone system) cellular services across the country and the transfer of Pakistan’s operations to China Mobile would be part of the deal.

Millicom reported around 16 per cent rise in subscribers in the first quarter of 2006, with profit of $33.4 million compared to a loss of $11.3 million a year earlier. The company, with over 10 million subscribers, registered a 20 per cent increase in revenue to $322 million in the first quarter compared with the same period last year.

Millicom authorities in November 2005 announced they were discussing the sale of one of its Pakistani units. In January 2006, following a high number of unsolicited approaches Millicom International announced its board of directors had decided to conduct a review of strategic options for the company and appointed Morgan Stanley as financial advisers.

Sources said the size of Millicom-China Mobile deal had not been disclosed by any party but it would be over $5 billion, the biggest-ever overseas acquisition by the Chinese company. With more than 250 million wireless customers as of last month, China Mobile is by far the world’s biggest wireless carrier and controls about two-thirds of the mobile market in China.

“The move may trigger a new kind of competition in the emerging telecom markets, including Pakistan,” said the source. “China Mobile has built one of the most extensive national cellular networks in the world, covering all of mainland China and the company’s strategy clearly shows its target market is Asia and other emerging telecom markets.”

He said though Millicom’s Pakistan operations were not in a very attractive position, still the country offered one of the best business opportunities to telecom operators, as most of the rural areas were without basic telecom facilities.

“By March 2006, Paktel enjoyed 1.004 million subscribers, which ranked the company fifth in terms of market share among six cellular operators with a total 27.34 million cell phone users across the country,” added the source.

He said for China Mobile Pakistan was among emerging markets, which represented a particularly attractive destination for telecom companies as western markets became saturated. “In many developing nations, fixed-line infrastructure is poor and limited in its range, so cellular networks, which are cheaper to roll out than traditional lines, are used as the primary means of communication,” added the source.

 

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KARACHI: The Microsoft intends to come up with investment in the IT sector in Sindh. This was stated by the members of a delegation of Microsoft, which called on the Adviser to the Sindh Chief Minister on Information Technology, Muhammad Noman Saigal, in his office here on Monday. Country Chief of Microsoft Pakistan, Jawad Rahman also accompanied the delegation.

On the occasion, Saigal said that Sindh IT Department is making efforts for the grant of scholarships abroad to students and those who possess expertise in the IT. Members of the delegation informed the adviser that not only that Microsoft intends to come up with investment in the IT sector here but is also asking other international IT firms to do so as well.

They said that in accordance with a comprehensive plan, the IT experts and students who want to utilise their skills would be extended scholarships abroad for pursuing further education in this discipline.

It was pointed out that the assistance of the Sindh government would be required for the purpose. The members of the delegation further said that Microsoft would extend assistance in the ongoing IT projects in the province. The adviser said that Microsoft’s plan would help provide job opportunities in the IT sector in Pakistan.

 

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Tuesday, May 30, 2006

* Reconstruction in quake-hit areas and smuggling of imported items to Afghanistan said to be the reason behind increasing imports

By Tanveer Ahmed

KARACHI: The rising demand for iron and steel in the country due to large-scale reconstruction and development activities has resulted in massive growth of 57 percent in iron and steel import bill in July-April of current fiscal over the same period of last year.

The total import of iron and steel stood at $1.101 billion in the first 10 months of fiscal 2005-06, compared with $703 million in the corresponding period of 2004-05.

The importers of iron & steel attributed this unprecedented surge in import of the commodity mainly to earthquake-related construction activities, industrial expansion and export of these items to Afghanistan through illegal channels. The steel consumption figures hover between 4-5 million tons annually. Last year steel consumption stood at about 4.2 million tons, in which the Pakistan Steel Mills contributed about 25 percent by production 1-1.1 million tons while the rest was imported to meet the demand.

The rising import bill of steel & iron has further burdened the forex reserves of the country, which is already under pressure due to soaring trade deficit, mainly because of rising oil and machinery imports.

A quick glance at the import figures of July-April of 2005-06 shows the metal group, in which iron & steel makes a big part, is among the top few import groups.

Senior Vice-President of the Karachi Iron & Steel Merchants Association (KISMA) Shamoon Bakir Ali, counting various reasons for this surge in import of iron & steel, said that whenever construction and expansion takes place, the consumption of iron & steel is bound to increase, and also because the country’s domestic production is far below the consumption.

Because of the earthquake, Mr Shamoon said, the whole housing industry in the NWFP and AJK has been badly affected.

“As you are aware that the houses built in these areas are all without RCC and are based on structures and corrugated steel sheets on the roof. An average house consumes a minimum of about 50 sheets of 10 X 4 feet, and each sheets weights about 14 kgs, thus consuming about 700 kg per house, he pointed out, saying that if one million houses are to be made, the ultimate consumption will rise by 25%.

Referring to industrial growth, he said that an increase in industrial growth in any sector increases the demand for steel. Even if a textile mill makes a building for expansion or a new garment unit is set up, the consumption of steel will increase.

The whole industrial sector and the textile industry in particular went for expansion, which is still under way, Mr Shamoon pointed out, saying that this also contributed to the increasing demand for iron & steel in the country. Citing the export of steel bars to neighbouring Afghanis-tan, he said as there is no steel mill neither any steel rolling plants in Afghanistan, all their basic steel requirements are fed by Pakistan, either through legal or illegal channels.

He predicted that overall steel consumption would be hovering between 6-7 million tons by the end of this year in view of further demand, which is evident from the orders being placed with the iron and steel traders.

 

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Cutting edge

I Hassan

It seems that people in Pakistan have suddenly woken up with a fright to the reality that there is hardly any water for the burgeoning population and something has to be done about it. This addiction to somnambulance is not new. We have this habit of putting everything off till tomorrow and then suddenly that tomorrow arrives.

Years ago, it was apparent that potable water and for that matter water for all purposes, particularly for irrigating, was a finite gift from God and unless something was done about it, it would run out.

When Pakistan was born, its population was about 40 million, around a quarter of what it is today. This means that you have to grow more food to feed this increased horde. For that one needs more water to irrigate extra land. You need more water to drink, wash and more so for sewerage purposes.

Fifty years ago, the population did not have the benefit of being able to use a drainage and sewerage system. Karachi was the only place which had this luxury. The rest of the country had a primitive system of a sweeper visiting once a day to collect all the human waste in a basket and carry it away on head to God knows where. Over the years, almost all the towns and cities have adopted a water-borne sewerage system with the consequent increase in use of water. And yet, it is far from complete because in all our rural areas, people still grace the fields to relieve themselves. But gradually people are learning and adopting non-traditional ways of fulfilling this function. This means that there is a need for more and more water. Traditionally, our people bathed once a week on Fridays but now they are having to do so daily with the result that more and more water is required and the requirement will continue to grow.

Not only will the requirement continue to grow but so will the population. It stands at 150 million today. It is estimated that at the current rate of increase, by 2125 the population will be 300 million. With the source and supply of water limited, it is difficult enough to cope with the requirements of the existing population. Hence it will be impossible to cater to that increased population.

Unless we begin to plan now, we face a complete disaster. The first and foremost step to take is to limit the rate of population growth. Many years ago, the Chinese decided to do just that and a draconian law was passed that each couple was to have just one child only. Through this measure, the Chinese have been able to cope -- and are coping -- with the situation. Unless we try something similar we do not have the slightest hope of survival.

Our resource of water is limited to two sources. The first is rain, which, as we all know, is extremely limited. The other is snow-fed rivers like the Indus, Jhelum and Chenab. That again is limited for water in the rivers depends on the snow that falls on the high mountains and then melts during the summer. Even if we build more dams and create more storage facilities, the resource will remain limited. Since we cannot increase either rainfall or snowfall, however much may we store water, our total supply will remain the same whilst the need would continue to multiply.

The only way to overcome this difficulty is to find new sources. We are fortunate that we have such a source -- the Arabian Sea. Seawater is being used by the waterless Arabian states. They are doing that most successfully. To us, with our population already at 160 million, it would be a stupendous undertaking but one we can't do without.

Of course, the water would have to be de-salinated. Not only would it have to be de-salinated but it will have to be pumped up all the way up to the Northern Areas and the cities in between.

This would be a mammoth project vastly expensive but a man in the middle of a desert does not and cannot quibble over the price of a glass of water. Either you pay what is being demanded or you perish. The world is changing so fast that the price of a glass of water will beat the price of gold in a cocked hat.

 

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ISLAMABAD (May 31 2006): A Rs 1.5 trillion federal budget for 2006-07 will set a solid foundation to sustain the current growth rate, besides addressing the key issues confronting the common man. This was the crust of the pre-budget briefing jointly held by advisor to prime minister on Finance, Dr Salman Shah, and state minister for Finance, Omer Ayub Khan, for print media here on Tuesday.

Dr Salman listed priority areas for next year's budget. These included social sector development, poverty alleviation, employment generation, price hike, expansion of industrial base and competitiveness of local products at home and abroad.

The GDP has been estimated for next year at $145 billion, fiscal deficit 5.2 percent and inflation 6.5 percent and growth rate 7 percent of GDP. Salman said the government was stood for bringing all potential areas into tax net to generate maximum income through local resources for spending more on developmental projects.

He was asked whether the government plans to bring real estate sector into tax net in the next budget. The advisor deplored that as a nation the country was yet to decide what was in the national interest and what was not, and added that how one could expect any miracle in the given situation.

He asserted that the cost of doing business would not come down as long as the nation remained misdirected and indecisive on issues like dams.

The advisor quoted Singapore and Malaysia as models for rapid progress and stressed the need for working out a national approach for tackling the thorny issues. He said that Pakistan's case can not be seen in isolation and instead of painting bleak picture, the critics should guide the government to help address the basic issues.

He said that the government was taking a number of initiatives in the 2006-07 budget to create jobs for the unemployed and expanding industrial base. He said that employment generation and poverty reduction were some of the few focal points of the next year's PSDP.

He told a questioner that PSDP's reasonable portion would be spent on vocational training programme to improve professional skill of labour and less educated people.

The advisor also highlighted the importance of an independent authority to collect reliable data for official consumption and work out a workable policy framework.

He conceded that cartelisation in different areas such as cement, sugar and petroleum sector was an outcome of poor monitoring system. However, he hinted at setting up a 'competitive authority' to address such issues of monopoly and protect the consumers against profiteering.

The advisor also hinted at increasing pensions and salaries of government employees, in the budget, for immediate relief. He said the government would spend billions of rupee in the next fiscal year for safe drinking water scheme and other basic facilities to improve the living standard of the common man.

He said that in terms of GDP ratio defence budget for the next year would not be increased. However, the government would remain committed to meet all needs of the armed forces to acquire modern technology to ensure the national security.

 

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ISLAMABAD (May 31 2006): The government has admitted that 38.7 million people are still living below poverty line but at the same time it claims that per capita income has risen to $845 from $732, showing an increase of $103 in one year.

The Planning Commission quoted 'Pakistan Standards Living Measures' (PSLM) latest survey as depicting that population below poverty line had come down from 32.1 to 25.4 percent in 2005, but still 38.7 million people in the country were living below poverty line.

The Planning Commission has warned against decline in domestic savings, saying that its ratio to GDP tabulated to 13.9 percent against 14.5 percent of last year, indicating 0.6 percent decline.

"One aspect of the monetary policy in recent years, which needed continuous attention, had been the spread between the banks' lending and deposit rates. The spread, though was down to 7.24 percent in February, was still high and needed to be further reduced with a view to encouraging domestic savings," the Commission said in its Annual Plan (2005-06) review.

The Annual Plan further said that the country's two major sectors, agriculture and industry, which contribute a lot to the GDP, had failed to show growth as per the government targets set for the current fiscal year.

In the 2005-06 budget, the government had fixed 4.8 percent growth target for the agriculture sector, and 9.5 percent for industry, but the latest available statistics indicate that agriculture growth would not cross 2.5 percent while industrial growth would touch 5.9 percent, which respectively is 2.3 percent and 3.6 percent below the targets.

However, an impressive improvement was registered in the livestock sector where growth has been estimated at 8 percent, against the target of 3.5 percent, while the construction sector also surpassed the target.

The Annual Plan claims that the services sector has shown a robust growth of 8.8 percent, of which the main contributors are finance and insurance (23 percent) followed by wholesale and retail trade (9.9 percent), and transport, storage and communication registered 7.2 percent growth.

Based on July-March data, large-scale manufacturing sector growth rate worked out to be 9 percent, which is lower than the growth of 15.6 percent in 2004-05 and the target of 13 percent for the current year.

Major increase has been recorded in the production of jeeps, cars and light commercial vehicles (29 percent), vegetable ghee (13.2 percent), cotton yarn (11.2 percent), cement (9.7 percent), phosphatic fertiliser (12 percent) and cigarettes (4.7 percent).

To achieve 7 percent GDP growth for 2005-06, the government had projected total investment at Rs 1369.2 billion (18.1 percent of GDP) at the current market prices. Of this, fixed investment was targeted at Rs 1,248.2 billion, consisting of Rs 393.4 billion and Rs 854.8 billion for public and private sectors, respectively. Of the total investment, 87.9 percent was to be financed through national savings, and the remaining 12.1 percent from external resource inflows.

According to provisional estimates, total investment is expected to be Rs 1,544 billion during the current fiscal year, which is about 30 percent higher than last year's level. In terms of ratio to GDP, it stood at 19.6 percent, about 2 percentage points higher than the ratio for 2004-05.

Of the total investment, about 79 percent was financed through national savings, while the remaining 21 percent was from external resources inflows. As ratio to GDP, domestic saving works out to be 13.9 percent against 14.5 percent of last year.

The latest information available on employment position in the country shows additional employment generation of 5.64 million during two years 2005 and 2006. The employment level, which was 42 million for 2004-05, rose to 47.6 million in 2005-06, reflecting reduction in unemployment rate from 7.7 percent to 6.5.

 

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KARACHI (May 31 2006): As per a feasibility report shrimp fanning on 100,000 acres can generate 1.6 billion dollar annually. This was stated by Chairman All Pakistan Seafood Industry Association (APSIA) Sardar Hanif Khan during an interview with AAJ markets.

He further added that according to United Nation's Food and Agriculture Organisation (UN-FOA) Pakistan has approximately 1 million acres of land suitable for shrimp fanning.

He said seafood industry was prioritised during the last budget but there is nothing significant witnessed from the government, it is in focus for coming year but until some thing practically done prospect for growth will be limited. Pakistan seafood export averages l5O million dollar a year but for the year it is expected to fetch 1 80-200million dollar due to tuna catching. Tuna was scare in Pakistani sea due to over exploitation in 1993 but lately it has returned back.

Hanif was off the view that this industry is a gold mine. It can easily achieve 1 billion dollar export target set by the government and has potential to create employment in the country, which will help in fighting poverty but for that, government will have to address issues like creek fishing, illegal netting, dumping industrial pollution in the sea and deep sea fishing.

He said law is already there for proper education, better opportunities. Law implementation would solve the problem and government will have to address these issues.

The biggest issue for the seafood industry at the moment is raw material availability, he suggested fish fanning can solve this problem. Besides he said 3 percent export financing rate was the only incentive seafood industry had, which is also not there as the vary rates we at 9 percent.

 

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LAHORE (May 31 2006): Net private capital flows to developing countries reached a record high of US $491 billion in 2005, driven by privatisation's, mergers and acquisitions, external debt refinancing, as well as strong investor interest in local-currency bond markets in Asia and Latin America.

This was disclosed by the World Bank's annual 2006 Global Development Finance report, which was made public on Tuesday. It further states that the surging flows, including record bank lending and bond issuance, among others, coincided with 6.4-percent economic growth in the developing world last year, more than double the 2.8-percent growth in developed countries.

According to the report, sharp rise in private flows to developing countries came despite uncertainties caused by high oil prices, rising global interest rates and growing global payments imbalances. Private debt flows to developing countries rose to an estimated US $192 billion, up from US $85 billion in 2003, driven by abundant global liquidity, steady improvement in developing country credit quality, lower yields in rich countries, and expansion of investor interest in emerging market assets.

Many developing countries have received credit-rating upgrades to accompany record-low spreads on their bonds, enabling them to raise a record US $131 billion in bond issues in 2005, up from US $102 billion in 2004.

"These gains reflect estimated GDP growth of 6.4-percent in low and middle income countries in 2005, buoyed by China and India, whose output grew, respectively, by 9.9 and 8-percent. Excluding these two countries, growth in other oil-importing developing countries was 4.3-percent, down from 5.7-percent in 2004. Growth is expected to exceed five percent through 2008 in Africa, Asia and Eastern Europe, and close to four percent in Latin America," it observed.

The report revealed that the surge in capital flows also reflects rising trade flows and financial integration among developing countries.

South-South trade rose to US $562 billion in 2004, up from US $222 billion in 1995, and in 2004 accounted for 26-percent of developing countries' total trade. South-South foreign direct investment (FDI) also rose, reaching US $47 billion in 2003, up from US $14 billion in 1995, and in 2003, accounted for 37-percent of developing countries' total FDI, it added.

According to it, while these South-South flows are a relatively small share of total private flows, they have the potential to change the face of development finance, particularly if growth in developing countries continues to outpace that in the developed countries.

Much South-South FDI originates with middle income country firms, and is invested in the same region, for example, Russian and Hungarian firms investing in Eastern Europe and Central Asia, and South African companies investing elsewhere in southern Africa. About half of China's FDI, however, went to natural resources projects in Latin America.

The report pointed out that amid the encouraging trend of increased capital flows to developing countries, a gap in access to international credit persists among these countries. One group has issued bonds regularly since 2002. It includes "stars" such as China, Chile, Hungary, Malaysia, Mexico, Poland, Russia and Thailand, which are rated investment-grade, and enjoy lower bond spreads than the overall developing-country bond issuers' average.

A second group has access to bank lending because of well-defined revenue streams such as exports, remittances or extractive industries, but lacks access to bond markets. A third group of low income countries has no access to private capital except short-term trade finance or FDI, and depend mainly on official financing for their long-term capital needs.

"This last group benefited from gains in development aid and debt relief. Donors increased official development assistance (ODA) to 0.33-percent of their gross national income (GNI) in 2005, up from 0.22-percent in 2001, and just below the early-1990s high of 0.34-percent. Most of the record US $27-billion increase is due to debt relief provided to just two countries, Iraq and Nigeria. Still, the trend indicates that donors are enhancing their aid effort.

ODA likely would decline in 2006-7 from its record level of US $106.5 billion in 2005, as debt relief falls, but rise again gradually to reach 0.36-percent of GNI in 2010. Donors plan to allocate at least half of the US $50 billion increase in ODA by 2010 to Sub-Saharan Africa, doubling aid to the region. In addition, debt relief provided under the Heavily-Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Reduction Initiative (MDRI) would significantly reduce the debt service of poor countries that qualify, providing additional finances needed to support progress on the Millennium Development Goals," the report analysed.

 

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Published: 05/31/2006 12:00 AM (UAE)

Kuwait City: Pakistan's budget for the next fiscal year will boost spending by tens of percentage points, partly due to a substantial increase in social expenditure, the country's economy minister said yesterday.

Pakistan will announce its budget for the year to end-June 2007 on June 5.

"The budget is going to be much more than before, especially spending on social sectors," Hina Rabbani Khar said on the sidelines of a meeting of the Islamic Development Bank in Kuwait. "[The increase will be] at least in the tens of percentages."

The current year's total budget is Rs1,098 billion ($18.23 billion). Its deficit target was 3.8 per cent of GDP, but the actual figures are yet to be announced.

Ratings agency Standard & Poor's said last year that Pakistan's expansionary budget for the current year threatened to delay an improvement in the country's credit ratings.

Khar said yesterday that the new budget would not introduce new taxes.

She said Pakistan would go back to international debt markets during the next fiscal year and would forge ahead with its privatisation programme.

"We will continue to tap international markets," she said. "The decisions about how much are usually made fairly on the spot but it will probably be similar to last year."

Privatisation

Khar said Pakistan would continue privatising one or two companies a month, with a number of sales pla-nned in the services sector.

"There are two or three big ones that have not yet been announced," she said, but did not give details.

Khar said the current account deficit had stayed within its target of 4 per cent of gross domestic product over the past year.

"We have no problems with [the current account deficit]," she said. "It's under 4 per cent, which is the target we set."

 

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Wednesday 31 May 2006,


DUBAI, May 31 (Reuters) - United Arab Emirates firm Emaar Properties (EMAR.DU: Quote, Profile, Research) has signed an $18 billion deal with Pakistan's Port Qasim Authority to develop land in Karachi.

A Emaar statement on the Dubai bourse Web site said on Wednesday that the development would include apartments, commercial and retail space as well as hotels and other leisure facilities.

An Emaar official said the deal was signed in Pakistan.

http://today.reuters.com/business/n...ryID=nL31559572

 

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Wednesday, May 31, 2006

By Fida Hussain

ISLAMABAD: The National Economic Council (NEC), which is to meet on Wednesday, is likely to approve an all-time high Rs 451 billion as total outlay of the Public Sector Development Programme (PSDP) for 2006-07 fiscal in which the water sector has been tipped for the proposed allocation of around Rs 55 billion, a senior government official told the Daily Times on Tuesday.

It is the first time that the overall size of the PSDP allocation proposed by the Annual Plan Coordination Committee (APCC) after consultation with the president is very close to the demand of Rs 454 billion made by the ministries and autonomous and semi- autonomous organizations and corporations for their ongoing and new projects during the fiscal 2006-07, the official said.

The proposed total outlay of PSDP allocation is 47 percent higher over the total outlay of Rs 306 billion in the current financial year, according to the official. The Water and Power Development Authority (WAPDA) and the National Highway Authority (NHA) will spend Rs 30 billion and Rs six billion, respectively, outside the actual budgeted PSDP. WAPDA and the NHA had raised Rs 34 billion and Rs five billion, respectively, from their own resources and have spent the same on the implementation of some of their development schemes in 2005-06.

The budgeted PSDP has been proposed at Rs 415 billion for the next fiscal, which is an increase of around 52 percent over this fiscal allocation of Rs 272 billion. In the proposed allocations, the federal PSDP is Rs 270 billion that shows an increase of 32 percent over this fiscal allocation of Rs 204 billion for the federal development programmes.

Provinces will get Rs 115 billion in the next fiscal for their development programmes that show an increase of 76 percent over the current fiscal allocation of Rs 65 billion. The corporations will get Rs 48.2 billion for their development programmes during the next fiscal. The proposed allocation for special areas to be looked into by the NEC with Prime Minister Shaukat Aziz in the chair has been proposed at Rs 16.2 billion. The special programmes are expected to get Rs 35.4 billion during the year 2006-07. A special allocation of Rs 50 billion has been proposed for the rehabilitation and reconstruction of earthquake-affected areas.

According to sector wise allocation, the allocation for the infrastructure sector has been proposed at Rs 132.5 billion, which is 49 percent of the total PSDP allocation. The social sector will get Rs 130.8 billion, which is 48.4 percent of the proposed allocation. Other sectors, which include the production sector, are expected to get Rs 6.7 billion that is 2.5 percent of the total allocation. The allocation under the head “operational shortfall” has been proposed at Rs 20 billion.

The allocation for Basha Diamer project, whose ground-breaking ceremony was performed by President General Pervez Musharraf a few months ago, has been proposed at Rs 500 million while the allocation for Neelam Jhelum Project is Rs five billion. The installation of “controversial” telemetry system is expected to get Rs 20 million in the next fiscal.

The Planning and Development Division (P&D) has informed that during the first 10 months of the current fiscal actual utilization of PSDP was Rs 149 billion which is 10 percent higher than the amount utilized during the same period of the last fiscal. The P&D has said that there is dire need to streamline the procedure of funds releases to the development schemes.

 

[Neo]

Wednesday, May 31, 2006

Emaar Properties, the leading property developer has announced three real estate developments in the cities of Islamabad and Karachi in Pakistan. The projects, with a total investment of AED 8.8 billion (US$2.4 billion), will include a series of master planned communities that will set new benchmarks in commercial, residential and retail property within Pakistan.

The nation’s capital, Islamabad, is home to two Emaar Pakistan projects: the Highlands and Canyon Views. With 1,500 acres between them the Islamabad communities offer 9,000 luxury single-family town homes and villas in a range of architectural styles with easy access to amenities including retail centres, community club houses, parks, lakes, schools and mosques.

Karachi will be home to Crescent Bay, a 75-acre development featuring high- and mid-rise towers for residential and commercial use, a shopping centre and five-star beachfront hotel. The towers will contain approximately 4,000 residential apartments. Mohamed Ali Alabbar, Chairman, Emaar Properties said Pakistan represented a vital link in Emaar’s global and regional plans. “These current projects are only a small and initial part of our commitment to providing world-class living and infrastructure in Pakistan,” Alabbar said.

He added: “Pakistan will play an important role in the development of Emaar’s reputation in Asia, and remains one of our most significant commitments outside of the UAE.”

The Highlands development is located within the Defense Housing Authority Islamabad (DHAI) Phase 1 extension and Canyon Views is within the DHAI Phase 2 extension. Offering approximately 50 separate community districts with its own individual identity, a spectrum of architectural styles ranging from Mediterranean, Tuscan, Mughal, Arabic and Spanish, will be available to select from.

Crescent Bay, located within Karachi’s DHA Phase 8 and in close proximity to the DHA golf course, will also offer individual architectural styles for each tower within the development. All three projects are expected to be completed in the next four to five years.

Mohammed Al Falasi, Managing Director of Emaar Pakistan said: “Our goal is to create a series of exciting developments that set new standards for commercial and residential property. Highlands, Canyon Views and Crescent Bay will set these standards and are the first of many projects that we have planned for other cities in Pakistan, which we will be developing over the next few years.” World famous master planners on the Crescent Bay development are Halcrow International with architects Norr and Holford while master planners WATG, RNL and JZMK are working on Highlands and Canyon Views projects.

Architects for the Islamabad projects are Mazen N. Issa, Alexandra Hayes, Bassenian Lagoni and Saunders & Wiant. The master planners have brought inspiration from the world’s best designed residential communities to Pakistan – offering another Emaar signature landmark to the region.

Al Falasi added: “Furthermore, we are aiming to preserve 20 per cent of the project area as green space, offering a haven of peace and natural beauty in the middle of a thriving community.”

Emaar’s innovative offering of self-contained, amenities-rich communities have created lifestyle options that have been the first choice for many residents around the world. The integration of schools, health facilities, parks, landscaped grounds and retail centres into master-planned golf, equestrian and marina-themed lifestyles has proved a winning combination.

With joint ventures and projects covering Saudi Arabia, Syria, Morocco, Egypt, Tunisia, Turkey and India, Emaar is taking its winning formula first conceived in its home base Dubai to the rest of the world.

http://www.strategiy.com/realestate...=20060531104257