Pakistan Economy - News & Updates - Archive

[Neo]

$13.2 million rise in 2007-08 FDI​

KARACHI (July 24 2008): Foreign direct investment (FDI) increased by a paltry 0.3 percent during last fiscal year (2007-08). As per State Bank of Pakistan statement, FDI stood at $5.153 billion at the end of fiscal year 2007-08 against $5.140 billion of 2006-07, depicting an increase of $13.2 million.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Rs 300 million to be spent on mines, minerals sector: minister​

LAHORE (July 24 2008): Senior Punjab Minister Raja Riaz Ahmed has said that the government will spend Rs 300 million on the promotion of mines and minerals in the province. Addressing a workshop held at a local hotel on Wednesday, he said that Rs 216 million of the allocation is being spent on 13 ongoing schemes while Rs 83 million will be spent on seven new mining projects.

Funds amounting Rs 18 million have been allocated to explore coal reservoirs in the Kallar Kahar areas, with Rs 32 million marked for coal exploration at Khushab. He said work has also been initiated on the repair and maintenance of roads in the mining areas.

Funds amounting to Rs 50 million are being spent on electrification in these areas of Khushab, he said. Raja Riaz said that the 8km long Silanwali-Sargodha link road is being executed at a cost of Rs 69.76 million, while Rs 34 million has already been spent on the scheme.

The government is taking effective measures to provide health care facilities to mine workers, while their children are also being provided education with the collaboration of mine owners, the minister added. Representatives of mine owners and NGOs also addressed the function and presented various proposals for the development of the mines and minerals sector.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

IT industry size stands at $2 billion: President PASHA​

KARACHI (July 23 2008): The size of Pakistan's Information Technology & IT-enabled Services industry stands at two billion dollar annually with a 50 per cent growth rate. IT Exports stand at one billion dollar according to a Research Study commissioned by Pakistan Software Houses Association (PASHA)

This was stated by Jehan Ara, President PASHA, while talking to the Media during a one-day Career Expo for IT students and professionals organised by PASHA in a local hotel. However, she said that, Pakistan Software Export Board (PSEB) claimed a higher figure with 2.8 billion dollar industry size and 1.8 billion-dollar exports.

IT professionals and students learnt about the different career tracks in various segments of the ICT sector, participated in Interactive workshops, listened to company presentations and attended Career counselling sessions.

President PASHA said that PASHA is creating a career experience for the young people so that they are more knowledgeable about the kind of challenging careers and remuneration that is available to them across the spectrum of ICT and are also aware of the growth and maturity of the sector they are either joining or are already a part of. Jehan Ara said that Pakistan produces approximately 20,000 IT graduates annually, who need proper guidance in order to explore their true potential. Currently over 110,000 IT professionals are working in IT sector and there is a lot more potential for quality IT HR.

The IT industry needs people with different skill sets - in addition to Computer Science graduates, they also require business analysts, domain specialists, project managers, senior management, marketing professionals, call centre professionals, animations, Interface Designers amongst others.-PR

Business Recorder [Pakistan's First Financial Daily]

 

[ejaz007]

OGDC discovers oil and gas well in Sindh

KARACHI: Pakistan’s largest oil and gas exploration company, Oil an & Gas Development Company limited (OGDCL) has discovered gas/ condensate in its Exploratory well Kunnar South 01, located in district Tando Allah Yar, Sindh.

Kunnar South well number 01 structure was delineated in Tando Allah Yar E.L. license area, which is a joint venture between OGDCL (Operator) and GHPL having 95 percent and 5 percent working interests, respectively.

According to the company’s website, the well was drilled and tested using OGDCL in-house expertise to the target depth of 3,355 meters in the targeted energy rich area upon which 03 zones were selected for testing based on drilled and log data.

The reports said the product ion testing of Zone-1 (Massive-Sands) of lower Goru Sand started on July 21, 2008, which proved productive. As per initial results the quantity of Gas is 11 (MMSCFD) and quantity of Condensate 200 barrels per day whereas the specification of the Gas is 2125 WHFP (PSI). staff report

Daily Times - Leading News Resource of Pakistan

 

[ejaz007]

IT industry job growth rate rises to 41 percent
By Muhammad Yasir

KARACHI: Pakistan’s employment growth rate in Information and Technology (IT) and its related sectors has increased by 41 percent in 2007-08 from 27 percent in 2006-07, a study commissioned by Pakistan Software Houses Association (P@SHA) reported.

According to the study entitled “Annual Review of Pakistan Software/BPO Industry 2007”, the number of full-time IT professionals has risen to12,232 by the end of 2007 as compared to the 4,619 employees registered in 2004.

P@SHA commisioned a study in the last quarter of 2007 which would serve as a State of the Industry Report for the Pakistan IT & ITES sector. The Consultants for this study, which was carried out over a 4-month period, were Technomics International - a UK based consulting firm.

The average employee per companies has increased to 214 in 2007 as against 81 in 2004. On the other hand, the average length of professional employment has risen to 2.9 years from 2.6 years during the period under review.

The study said the number of IT Quality Assurance (QA) Professionals have doubled in the last three years with 20 percent foreign qualified professionals employed in the sector.

105 national and multinational software companies participated in the report. P@SHA’s current membership exceeds to 370 software houses from its beginning four companies in 1994, it said.

President P@SHA, Jahan Ara, said the industry still has job opportunities in various related fields of IT industry despite its constant growth in employment rate.

She recommended the government should finance to prepare a refresher diploma courses that aims at grooming unemployed IT graduates to enter in this professionals, adding, “the industry has capability to accommodate a large number of unemployed people.”

She mentioned that scores of IT graduates and diploma holders are required to obtain advance studies in order to update their professional skills with respect to latest modules of the industry.

The study forecast the industry will exceed the $11 billion US mark within next 5 years keeping the same growth rate in this period.

The study mentioned that most technology companies are growing in excess of 30 percent a year annually and the industry as a whole is doing over $2 billion a year in revenue, up from less than a billion dollars a few years ago.

About half of this growth is coming from foreign software and high end services projects. IBM, Cisco and Microsoft are expanding Pakistan operations aggressively while several startups are now backed by venture capitals such as ePlanet, Ventures, Motorola, Adobe and Innovacom1.

The Pakistan IT and ITES industry has started to appear on the radar of firms like Gartner and IDC and in reports by AT Kearny and the World Bank. It is a transformed industry growing exponentially and creating a stir, it also mentioned.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Rice output expected to be over 6m tonnes ​

Friday, July 25, 2008

ISLAMABAD: Pakistan’s rice output should rise at least 10 per cent to over 6 million tonnes in the 2008/09 fiscal year on a larger planted area, officials and growers said on Thursday, and exports could top 4 million tonnes.

A large rice harvest would add to the picture of growing supplies that has seen Asian benchmark prices come off 30 per cent from a record high reached in March.

Pakistan, the world fifth-largest rice exporter, produced 5.5 million tonnes of rice in the year to June and exported 3.33 million tonnes.

Fresh grain will start flowing to the market in late August, according to rice traders.

“There is nearly a 10 per cent increase in the cultivation area and the production is likely between 6.2-6.4 million tonnes,” said Ibrahim Mughal, chairman of the Agri-Forum, a farmers’ association.

“Several farmers switched over to rice from cotton because of rising prices for the grain both in domestic as well as international markets.” The government has set a production target of 5.7 million tonnes for the 2008/09 year, but Food Ministry officials were also hoping output will top 6 million tonnes. The rice crop was targeted to be grown in an area of 2.5 million hectares (6.177 million acres).

Rice exporters however expected a harvest of around 7 million tonnes from the new crop, thanks to early rains and farmers using better inputs to enhance yield. “With this kind of output, we will be touching 5 million tonnes in rice exports in this financial year,” said Azhar Akhtar, chairman of the private Rice Exporters Association of Pakistan, which handles the bulk of the country’s rice exports.

Pakistan’s eight-month-long rice season runs from April to November. Final estimates of the crop could be made in late December.

Rice accounts for about 8 per cent of Pakistani exports and 1.2 per cent of gross domestic product.

Annual domestic consumption of rice is about 2.3 million tonnes.

Domestic prices doubled this year despite a good crop, as exporters took advantage of a tight global market. Pakistan exported 3.33 million tonnes of rice in 2007/08, from 3.12 million tonnes the year before, with the value of exports up 61.53 per cent at $1.18 billion, according to official data.

Exports of basmati increased by over 40pc to 1.28m tonnes, while other varieties declined by 7pc to 2.06m tonnes.

Rice output expected to be over 6m tonnes

 

[Neo]

WB to lend $5.5m for water reservoirs’ cell ​

Friday, July 25, 2008

ISLAMABAD: On the special directives of PPP Co-Chairman Asif Ali Zardari, the federal government has appointed PPP’s former MNA Ghulam Murtaza Satti as head of Infrastructure Project Development Facility (IPDF).

Ijaz Ahmed Khan, CEO of IPDF would continue to perform on his existing slot and the new political appointment will also look after the affairs of IPDF.

Meanwhile, Ghulam Murtaza Satti was given a detailed briefing by senior officials of the IPDF about its significant role in public-private partnership projects and financial models of PPP projects in terms of their profitability, durability, reliability and legal aspects.

The briefing was given by officials including Senior Advisers Projects Ali Rehman and Arslan Salahuddin Wardag, Senior Adviser Legal Ikram-ul-Haq and Manager Finance Muhammad Fahim Akhtar.

The IPDF head was informed that the World Bank would provide $5.5 million as technical assistance to establish a multi-purpose water reservoirs’ financing cell. This cell would devise an enabling framework for the development of hydropower projects with private sector’s participation.

This framework would pave the way for enhanced participation of the private sector in financing large proposed hydroelectric projects involving electricity generation from 3,000 to 6,000 MW.

He was also apprised that under the PPP modality the Ministry of Tourism would construct two tourism complexes each, in the federal capital and Sindh. Meanwhile, the IPDF head accompanied by Advisor Projects Qaiser Javed held a detailed meeting with Managing Director, Pakistan Tourism Development Corporation Brig (Retd) Emanullah and discussed various projects regarding the promotion of tourism in the country.

On the occasion, the PTDC MD disclosed that the Gorakh Hills in Sindh, which is a tourist place like Murree, would be named after Mohtarma Benazir Bhutto Shaheed.

WB to lend $5.5m for water reservoirs’ cell

 

[Neo]

Rice exports rise to $1.82bn, sugar exports at $82.29m ​

Friday, July 25, 2008

ISLAMABAD: Pakistan’s textile exports fell by 2.1 per cent to $10.56 billion, while food items exports increased by 38.38 per cent to $2.79 billion and petroleum and coal exports increased by 40 per cent to $1.2 billion during fiscal year 2007-08.

Textile sector exports during the last fiscal year 2006-07, stood at $10.78 billion, food items at $2.02 billion and petroleum and coal exports were recorded at $859 million. During July-June 2007-08, gems, jewelry and furniture exports also showed a sizeable growth which have the potential to earn foreign exchange and help boost the volume of the economy.

According to the Federal Bureau of Statistics (FBS) figures, gems exports rose by 35.65 per cent to $7.46 million, jewelry by 38.2 per cent to $202.74 million and furniture by 6.38 per cent to $11.24 million as in the corresponding period, their exports were $5.50 million, $42 million and $10.56 million respectively.

According to the government planners’ assessments, northern Pakistan had enough amounts of gems and precious stones, that if exported, they could earn about $5 billion a year for the country. However, the mining, cutting and polishing techniques of the gems and precious stones, that could have made them more valuable, were not up to the international standard.

Jewelry exports also provided encouraging figures during the fiscal year under review, proving that there is immense potential in the sector. The lack of expertise, however, is a major constraint in its growth and development.

The textile sector exports are occupying a major share of about 55 per cent of the country’s total exports, which stood at $19.22 billion. During the period under review, total exports showed an increase of 13.23 per cent against $16.97 billion earned in July-June 2006-07.

A cursory look at the export data reveals that in the textile sector, a sizeable decline was registered in the exports of cotton yarn, cotton cloth, cotton carded or combed, yarn other than cotton yarn, bed wear, towels and readymade garments.

During the period under review, cotton cloth exports fell by 4.63 per cent to $1.93 billion against $2.03 billion the previous year, bed wear earned $1.89 billion against $1.99 billion the previous year, showing a decline of 5.43 per cent; yarn, other than cotton yarn, earned $49.16 million, which is 27 per cent less than the $67.39 million received in the corresponding period of the last fiscal. Cotton carded or combed revenues fell by 21.76 per cent to $12.32 million against $15.75 million in the last fiscal. Cotton yarn exports decreased by 9.37 per cent to $1.93 billion and readymade garments were down by 3.16 per cent to $1.498 billion during the period under review.

In contrast, knitwear earned $1.83 billion against $1.79 billion, depicting an increase of 1.82 per cent; art, silk and synthetic textile increased by 16.74 per cent to $489.98 million and made-up articles (excluding towels and bed wears) exports increased by 4.24 per cent to $536.11 million and raw cotton exports were up by 38.85 per cent to $69.73 million compared to what was earned in July-June 2006-07.

Food group also jacked up total exports, with the major contributors being rice, fruit, vegetables, meat, meat preparation, oil seeds, nuts and kernels.

Rice category, as a whole, posted about 61.53 per cent growth with an earning of $1.82 billion against $1.12 billion last year. Fruits’ earning was also up by 27.32 per cent to $144.67 million, meat and meat preparation by 20 per cent to $49.92 million, vegetables by 1.64 per cent to $55.44 million, oil seeds, nuts and kernels exports were up by 124 per cent to $39.71 million, spices by 11.2 per cent to $26.74 million, fish and fish preparations earned 12.71 per cent more during the fiscal year 2007-08 by earning $212.25 million foreign exchange. During the year under review, sugar worth $82.29 million was exported. Tobacco exports on the other hand, declined by 18.57 per cent to $7.31 million.

Other manufacturing group exports also increased to $3.75 billion during July-June 2007-08 as compared to $2.68 billion last year, showing an export growth of about 39.89 per cent.

Under this category, leather manufactures exports were up by 24 per cent to $687.48 million, chemical pharmaceutical products by 60.19 per cent to $627 million, leather tanned by 15.52 per cent to $412.3 million, sports goods by 4.23 per cent to $300.59 million, footwear by 8.21 per cent to $123.92 million, surgical goods and medical instruments earned $255.49 million against $190.79 million and posted a growth of about 33.92 per cent. Engineering goods exports also increased by 42.54 per cent to $338.50 million. While, handicraft exports fell by 30.63 per cent to $4.34 million and carpets, rugs and mats were down by 7.24 per cent to $216.44 million.

Rice exports rise to $1.82bn, sugar exports at $82.29m

 

[Neo]

IT exports hit half a billion dollars ​

It needs to be bankrolled for youth training​

Friday, July 25, 2008

LAHORE: The government should focus on investments in information technology for training youth in order to ensure an ‘IT Pakistan of Tomorrow’ as the country has a comparative demographic advantage compared to the rest of the world.

Investment in IT will also be helpful in achieving a substantial increase in its export as this sector has less hurdles and no impact on the environment.

This was revealed by NetSol Technologies Ltd Chairman & CEO Salim Ghauri while talking to The News in an interview in which he urged the government to focus on youth development.

Ghauri was optimistic about the bright future of the country’s IT resources and said that IT export has reached half a billion dollar and the number of highly-skilled human resource is very impressive but it still needs the government’s support to do more.

He said the country’s 60 per cent population is almost under 25 years of age, which is an added advantage for this country to invest in them. “Once the government realises this potential and is poised to invest in the technical training of youth, an IT revolution will start in the country,” he said.

Talking about the success of the company, he mentioned NetSol software LeaseSoft is being exported. He said LeaseSoft, a suite of end-to-end leasing and finance software solutions catering to the needs of retail and wholesale finance businesses, has touched the level of $20 million in a short span of time. “We are foreseeing exports of LeaseSoft will hit $100 million in the next three years,” he said.

According to him, leading international business houses like Mercedes Benz, Yamaha Motors, Toyota Motors, Dongfeng Nissan, UMF, BMW and FIAT group in the Asia-Pacific region, besides a good number of leading brands in Europe and North America are successfully deploying LeaseSoft.

Ghauri said the IT industry has already realised the potential and started putting infrastructure in place to have more and more human resource in the years to come.

“NetSol has recently come up with the concept of NetSol Technology Institute (NTI) and it has planned branching out all over the country to ensure short courses for the youth,” he said, adding: “We want to dispel the impression that IT belongs to the youth of elite class.”

The government can ensure a real economic revolution by providing IT training to youth on war footing basis on the one hand and automation of public sector organizations on the other, he expatiated.

He was of the view that the majority of the country’s youth lives away from major cities, in rural areas, therefore, a strong network of IT training institutes was the only way of spreading IT education in the country. Ghauri said one quick way to come out of economic crisis is earliest start of automation of public sector that would double public sector’s efficiency.

He said the IT sector has registered 30 per cent growth in revenue in a very short period and this growth pattern can easily be doubled by simply reviewing the priority list.

“This growth in revenues has enabled the industry to hire high-skilled IT professionals and thus contributed to the national economy in a big way,” he said, adding: “More the trained human resource of the IT sector has, more the country’s economy will flourish and prosperity will sustain.” The fundamentals of the sector are highly strong and recent appreciation in dollar value has boosted revenue of the sector.

He said decline in the stock market is due to different reasons and it has nothing to do with the strong fundamentals of the sector. He said the IT sector stocks will shoot up once again the inflationary pressure on economy is away.

IT exports hit half a billion dollars

 

[Neo]

US likely to grant non-stop flight rights to PIA​

WASHINGTON, July 24: During Prime Minister Yousuf Raza Gilani’s forthcoming visit to Washington, the United States and Pakistan will sign an agreement to grant non-stop flight rights to PIA, sources told Dawn.

The two countries are also expected to conclude an agreement on providing US food assistance to Pakistan to help it deal with the current food crisis, the sources said.

Pakistani lobbyists are also trying to persuade US senators to at least start formal hearing on a $15 billion aid package for Pakistan during the July 28-29 visit.

The agreement for flight rights will allow PIA to operate direct, non-stop flights to and from New York. Initially, PIA will operate one flight a week from New York to Lahore, but later it may be allowed to operate non-stop flights to Karachi as well.

In October 2002, PIA purchased eight Boeing 777 long- and extended-range aircraft after a period of 10 years of no new orders. The goal was to operate non-stop flights between Pakistani and North American cities with sizeable Pakistani populations.

PIA has already started non-stop flights from Toronto, but plans for similar flights to and from US cities could not materialise because the Department for Homeland Security refused to permit such flights.

Apparently, the Americans had no objection to direct flights from the US to Pakistan, but they refused to allow non-stop flights from Pakistan. They told Pakistani authorities that they believed Pakistan did not have adequate security arrangements at its airports to prevent terrorists from using such flights for their activities.

American officials insisted that flights originating from Pakistan must stop at an international airport for a thorough security check before proceeding to the United States.

The proposed agreement will remove this objection but before the flights begin Pakistan will have to update security arrangements at its airports.

Another agreement to be finalised during the prime minister’s visit concerns Pakistan’s request last month for 500,000 tons of wheat from the United States to help them deal with the current food crisis. While the Americans have agreed in principle to help Pakistan, it is not yet clear how much wheat they are going to give.

“It may range anywhere between 100,000 and 500,000 tons,” said a source aware of the negotiations.

US likely to grant non-stop flight rights to PIA -DAWN - Top Stories; July 25, 2008

 

[Neo]

Gas in Tando Allahyar​

ISLAMABAD, July 24: The Oil and Gas Development Company Limited announced on Thursday discovery of hydrocarbon in Tando Allahyar district of Sindh.

The company said it had drilled the Kunnar South Well No-1 to a depth of 3,355 metres and selected three zones for testing.

Production testing at Zone-1 (Massive Sands) of Lower Goru Sand started on July 21. The well turned out to be productive.

Initial results showed the quantity of gas at 11 million standard cubic feet per day (MMSCFD) and condensate of 200 barrels per day. The gas flowed at a pressure of 2,125 PSI (pound per square inch).

The Kunnar South Well is located in the Tando Allahyar exploration licence area, which is a joint venture of OGDCL (95 per cent) and the Government Holdings Private Limited (five per cent).

Gas in Tando Allahyar -DAWN - Top Stories; July 25, 2008

 

[Neo]

Trade policy called ‘India-centric’​

ISLAMABAD, July 24: The Pakistan Muslim League (Q) on Thursday rejected the Trade Policy-2008-09 and announced that the opposition would take the business community into confidence to launch a countrywide strike as the policy was covertly aimed at granting India the status of a ‘most favoured nation’.

“This trade policy is ‘India-centric’ and a bid to appease the Indian government, while the PML thinks that all trade routes to India pass through Kashmir.”

Talking to reporters at the Parliament House here, party MNAs Sheikh Waqas Akram and Marvi Memon said that the PML would not allow ‘loot sale’ of its natural resources to Indian businessmen and all such bids would be resisted with the support of Pakistani business community.

The PML leaders claimed that the government had already awarded the contract of Thar coal project to India’s Reliance Group.

Sheikh Akram said: “a conference will be held in America regarding Thar coal project during prime minister’s visit while it has already been decided in Dubai to award this project to the Indian company”.

The commerce minister has announced a policy which only encouraged imports from India while exports to that country have been ignored totally, the PML leaders said.

No country allows its adversary an open access to its natural resources, they said, adding India is active in efforts to destabilise Pakistan through its 13 consulates in Afghanistan.

He alleged that the government had unleashed a reign of ‘terror’ against its own people by raising prices of petroleum products and other commodities.

“The government of so-called well-wishers of the poor has raised petroleum prices from Rs57 per litre to Rs87 despite fall in oil prices in the international market from $147.5 per barrel to $125 per barrel,” Sheikh Akram said.

He demanded an urgent session of parliament so that all such issues could be debated. He called the new set-up “ineffective, dysfunctional and semi-exiled” government.

Marvi Memon termed the trade policy ridiculous, saying that this would turn Pakistan into a “dumping ground” for Indian commodities.

She regretted that the policy should have economic targets, such as economic prosperity, employment, exports, better market access, and product diversification.

“We demand that the government should immediately stop the ‘violence of inflation’ against the nation as poorest of the poor are compelled to commit suicide,” the PML leaders said.

Trade policy called ‘India-centric’ -DAWN - Business; July 25, 2008

 

[Neo]

KSE continues upward drive as index jumps 138.18 points​

KARACHI: The Karachi stock market witnessed a firm trading session on Thursday as investors were active in the ring due to the result announcement session and the expectations that the Rs 20 billion fund would start investment in the market today (Friday), analysts said.

The Karachi Stock Exchange (KSE) 100-share index gained a substantial 138.18 points to close at 11,156.68 points as compared with 11,018.50 points of the previous session. The KSE 30-share index gained 199.74 points to close at 12,662.35 points.

Analysts said the KSE 100 index opened in the green zone with a positive 61.67 points and later touched 150 points but profit-taking halted the massive gain. Banking, cement and other individual index heavy weights came in for the rescue when the market witnessed profit-taking in oil and gas exploration stocks and the incoming float was digested at adjusted levels.

Rumours were that the window that is supposed to manage the ‘grand fund’ that will be activated form Friday has already start shopping, they added. The market turnover declined 20.31 percent and traded 143.70 million shares as compared to 180.34 million shares of the previous session. The overall market capitalisation increased 1.19 percent to Rs 3.477 trillion as compared with previous session’s Rs 3.436 trillion. Out of 307 companies, 149 closed in the positive zone, 145 in negative, while 13 remained unchanged.

Husnain Asghar Ali, Analyst at Aziz Fida Hussein and Company said the bulls continued to dominate the market, as assurance offered by the ‘Rs 20 billion’ seems to have energised the bulls. The official statistics reveal that foreign funds have been constant sellers with international oil prices on a declining trend offloading by the local as well as foreign counters led to wiping off of early gains of 150 points.

Aggressive buying towards the fag end supported accumulators (those who have been buying on dips throughout the session). Low turnover, however, continued to stay a point of concern as it depicts that only those who know the criteria of investment of the new fund are active or the market men. Ahsan Mehanti, Senior Analyst at Shahzad Chamdia Securities said the market was on a positive note due to improvement in SCRA balances to $113 million reflecting foreign interest in local market. Arif Habib Securities was the volume leader in the share market with 12.63 million shares as it closed at Rs 143.75 after opening at Rs 141.95 making a financial gain of Rs 1.80.

The futures’ market turnover went up to 32.87 million shares as compared to 30.11 million shares traded in the previous session. Forty-eight of the companies closed in the positive zone, 23 in negative while one remained unchanged.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

US wants to move two-thirds of aid to ageing F-16s​

* $230m in US aid to be diverted from counter-terrorism funds
* NYT report says Pakistan needs jets for use against India​

WASHINGTON: The United States said on Thursday it planned to divert $230 million in aid to Pakistan from counter-terrorism programmes to the upgrade of the country’s F-16 fighter jets.

“The F-16s ... are used in counter-terrorism operations. We made them available to [Pakistan] and they need to be maintained,” White House spokeswoman Dana Perino told reporters.

Modernisation of Pakistan’s fleet of ageing F-16s is estimated to cost around $891 million that was to be paid out of Pakistan’s national funds. Because of the current economic crunch, Islamabad had asked the Bush administration to divert $226 million from the overall military aid programme with Pakistan in finance year 2008 and $140 million in finance year 2009, making up the balance from its own resources.

The $226 million that Pakistan seeks will need to be diverted from the $297 million it is to receive from the Foreign Military Funds (FMF) and not from the Coalition Support Funds (CSF). The total F-16 package – from the days the first aircraft were acquired to the last ones Pakistan is purchasing – carries a cost of $3 billion.

The US has so far only allowed $108 million to be diverted out of the FMF and if the other two amounts that Pakistan seeks for 2008 and 2009 come through, the total amount divertible to the F-16 purchase account would come to $474 million.

Pakistan’s purchase of the jet fighter aircraft appeared to be going through smoothly so far. The Indian lobby on Capitol Hill may however have made its first move to muddy the waters for the F-16 deal.

Also on Thursday, the New York Times reported the Bush administration’s plans to divert funds.

The angle of the report was that Pakistan should be denied this facility because it does not need F-16s to fight the insurgency in its tribal areas bordering Afghanistan. The newspaper linked the administration’s request on Pakistan’s behalf as an attempt to make up for the death of 11 Pakistani soldiers killed in an American airstrike last month, considering the upcoming visit to Washington of Prime Minister Syed Yousuf Raza Gilani.

No need: The newspaper stresses that Pakistan does not need F-16s in the fight against insurgency, as it would amount to ‘killing a fly with a sledgehammer’. On the other hand, it needs them against India, and the request, therefore, should be denied by Congress.

The newspaper reports that in a two-page notification to Congress, the State Department said that upgrading the avionics, targeting and radar systems of Pakistan’s older F-16s would “increase the survivability of the aircraft in a hostile environment” and make the “F-16s a more valuable counter-terrorism asset that operates safely during day and night operations.”

The notification said the modernised systems would also increase the accuracy of the F-16s’ support of Pakistani ground troops, lessening the risks of civilian casualties.

In 2006, the newspaper notes, Pakistan was a major recipient of US arms sales, including the $1.4 billion purchase of up to 36 new F-16 C/D fighter aircraft and $640 million in missiles and bombs. The deal included a package for $891 million in upgrades for Pakistan’s older F-16s. At that time, the US agreed to use $108 million of its annual security aid to Pakistan to retrofit the older F-16s with equipment to make them comparable to the newer models that will be delivered in the next several years. But the administration promised Congress that the Pakistani government would pay for the rest of the upgrades with its own funds. With Pakistan now facing economic hardships, top Pakistani leaders appealed to senior State Department officials to help defray the costs of the ongoing upgrades. khalid hasan/afp

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Pakistan's foreign exchange reserves stand at $10.728 billion​

KARACHI (July 25 2008): The country's total liquid foreign exchange reserves stand at 10.728 billion dollars, says a statement issued by State Bank of Pakistan here on Thursday. On 19th July 2008, the foreign exchange reserves held by SBP figured 7.777 billion dollars, whereas net reserves held by the banks other than SBP amounted to 2.950 billion dollars.

Business Recorder [Pakistan's First Financial Daily]