Pakistan Economy - News & Updates - Archive

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Foreign investment surges 40pc in July ​

Sunday, August 31, 2008

KARACHI: Net inflow of foreign investment in the country augmented by 40 per cent during July 2008 as compared to the same period last year.

According to latest figures of the State Bank of Pakistan (SBP), total foreign investment in the country stood at $220.5 million during the first month of fiscal year 2008-09 compared to $157.5 million during July 2007. The quantum of Foreign Direct Investment witnessed a substantial increase of 76.1 per cent to $340.7 million during July 2008 as compared to $193.5 million in the same period of fiscal year 2007-08.

It is pertinent to note that during fiscal year 2007-08, total foreign investment declined to $5.193 billion which was recorded at $8.428 billion in financial year 2006-07. However, during last fiscal year the net inflow of FDI slightly improved to $5.153 billion as compared to $5.139 billion a year back.

In the first month of current fiscal year 2008-09 the flight in portfolio investment continued which has been declining since third quarter of fiscal year 2007-08. In July 2008 the foreign portfolio investment declined by 970.1 per cent and finally stood at minus $119.2 million that was recorded at $13.7 million in July 2007.

In fiscal 2007-08 portfolio investment shed to $19.3 million against $1.821 billion in year 2006-07. In July FY09, total foreign investment from developed countries including Western Europe, European Union, Luxembourg, Denmark, France, Netherlands, Sweden, UK, other Western Europe, Norway, Switzerland, Northern America, Canada, USA, Australia, Japan and unspecified developed countries dropped by 101.4 per cent to minus $2.4 million.

In the meantime, July FY09 foreign investment from developing economies including Caribbean Islands, Cayman Island, Bahamas, other Caribbean countries, Libya, Egypt, Mauritius, South Africa, Oman, Iran, Kuwait, Bahrain, Qatar, Saudi Arabia, Turkey, UAE, Bangladesh, China, Hong Kong, Malaysia, Singapore, India, South Korea, and unspecified developing counties increased by 700.4 per cent to $222.9 million against $27.8 million in July FY08.

According to SBP figures during first month of current fiscal year, FDI investment from developing economies recorded $220.9 million against $58.9 million in corresponding period of fiscal year 2007-08. The highest growth in inflow of foreign investment was recorded from Asia countries at $213 million.

The breakup showed that in July 2008 out of total foreign private direct investment, $2.7 million landed in food sector, $18.7 million in pertro chemical group, $4.2 million in chemicals, $6.3 million in petroleum refining, $37.1 million in oil & gas explorations, $3 million in pharmaceutical & OTC products, $4.4 million in cement, $6.4 million transport equipment (automobiles), $8.7 in power sectors, $3.6 million in construction, $11.6 million in trade, $159.6 million in communications, of which $147.7 million was attracted by telecommunication sector alone. In financial sector $43.4 million came in, while sectors like social and personal services attracted only $0.3 million and $9.5 million respectively.

 

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Regulatory crutches prevent KSE from falling below 9,000 level ​

Sunday, August 31, 2008

KARACHI: The break up of PPP and PML-N coalition caused equity values to ebb to 26-month low on Karachi bourse during the week ended August 29.

This massive erosion of shares value convinced market representatives to cap the downward movement of the Index to Wednesday August 27 closing level. KSE 100-share Index fell 789 points or 7.86 per cent on weekly basis and concluded at 9,208 points on weekend due to panic selling.

The free float market capitalisation based 30-Index dropped 1,157 points or 10.19 per cent and finished at 10,198 points on week-on-week basis. The friction between PPP and PML-N over the reinstatement of deposed judges and then the end of this coalition on Monday when the latter decided to sit on opposition benches played havoc on the bourse.

The market had barely come out of the chaos caused due to recent tension between president and parliament and dismal economic numbers when the split in coalition sent the bourse in a nosedive as the hope of economic revival became bleak.

Moreover, it was the rollover week for August that forced investors and brokers to sell their holdings to clear their leveraged accounts. This unbearable selling pressure pushed market to new low of 26-month. The benchmark briefly fell bellow the 9,000 points level in middle of the week.

The shortage of hard cash in hands and inability of investors and brokers to pay mark-to-market and margins added pressure on selling counters furthermore.Therefore, none of the favourite sectors closed positive and majority of the actives feel deep in red. Prominent among those were the banking, energy, telecom, cement and fertilizer sectors.

Some analysts were of the opinion that market kept falling on the inability of government to inject funds from Equity Market Opportunity Fund (EMOF) and fund managing companies waiting for buying opportunity on further lower levels.

They complained that EMOF, which at its outset was introduced as a market support fund with a minimum size of Rs20 billion funds was reportedly short of Rs15 billion from its introduced volume.

In the backdrop of continuous heavy downfall in market since April, the Board of Directors of Karachi Stocks Exchange (KSE) fixed a “floor” on the bourse. They set the Wednesday’s closing share price as the minimum maintainable level in the session to come till further order.

The directors’ decision stopped further erosion of share values losses in an artificial way, but failed to invite aggressive recovery evident with total 63.33 points gain in the last two sessions of Thursday and Friday.

Foreign investors withdrew another $12.8 million from local bourse. However, they were found injecting $3.5 million on Friday (adjusted in total outflow of this week).

Negative sentiments turned average turnover to 69.6 million shares against 142 million shares of last week. Accordingly, the overall market capitalisation fell below Rs3 trillion to Rs2.881 trillion with a decline of Rs234.6 billion funds this week.

CFS investment stood at 18.4 billion, down 13 per cent on weekly basis. However, CFS rate stood 16.6 per cent versus 14.5 per cent previously. Analysts are of the view that the political stability and economic revival can only help reset market back on rails. They think the election for presidential post on September six should bring calm on political front and invite government full attention towards fixing economy in crisis.

 

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Prudent exploitation of resources ​

Trade deficit could be reduced by $12 billion​

Sunday, August 31, 2008

LAHORE: Pakistan has an export surplus of over $2.5 billion in textiles and the country could generate another $5 billion surplus through agriculture within a year through prudent government facilitation.

The News found that Pakistan could reduce its trade deficit by $10-12 billion within a year if the economic planners make a sincere effort in exploiting available resources in the country. The notion that Pakistan does not have trade surplus is wrong. Pakistan has export surplus in textiles, carpets, leather and sports goods, but the exports in most of these sectors have declined in terms of quantity.

This in other words means that the production capacity in these sectors has not been utilised fully due to a decline in exports. The decline occurred as numerous bottlenecks faced by exporters were not addressed by the government.

With the devaluation of the rupee, problems relating to competitiveness have been resolved but the exports still need government facilitation for getting market access. In quantity terms, exports of textile goods from Pakistan declined by 20 per cent in 2007-08. The decline in value though, was only 3 per cent. Had the exports in quantity remained at the 2006-07 level, textiles would have fetched $2.2 billion more last year. Traditionally, textile exports increase at an average of 5-7 per cent at least in quantity terms.

Pakistan should fetch additional $2.5 billion from this sector in the current year, provided the government pays attention to the genuine problems faced by exporters. Sustained supply of gas and electricity is also one issue that needs government attention. The industry should be given priority in this regard. Unjustified high interest rates are yet another issue. Even the IMF representative has stated that a two per cent decline in interest rates in Pakistan would not impact inflation much. Lastly, the government needs to spell out its research and development grant to the sector clearly instead of prolonging the issue.

Agriculture is another sector with huge unexploited potential. A country that is currently footing $5 billion bill on food imports could in fact reduce it to $1.5 billion, plus export agricultural products of around $5 billion in one year if the government pays proper attention to this sector. The legal system relating to agricultural marketing is in favor of trade and industry that marginalizes the farmers. This is the reason that high commodity rates have not benefited farmers much. Productivity of most of the major crops of Pakistani farmers is much below the global best. In fact the productivity difference between two adjacent farms having same soil is very high. If one farm produces 60 maunds of wheat per acre the adjacent farm produces only 25 maunds.

This is because the provincial agriculture extension departments are almost non-functional. They are sitting on knowledge and information that they do not pass on to the farmers in time. In fact majority of the farmers have never come in contact with the officials of agricultural extension department through out their life. Farmers that use the right inputs and time their irrigation according to crop’s need get better yield while the next door farmer might use high cost inputs and more water at inappropriate time and loses productivity.

Creating awareness about proper use of inputs and timely spraying of pesticides and irrigation is the job of the extension department. Technology required to ensure water conservation, introduction of biotech seeds could in fact boost the agricultural production further.

Pakistan is currently facing a trade deficit of over $20 billion per year, which is likely to increase to 22-24 billion this fiscal year if the government continues to ignore the economy. The exploitation of agricultural potential would doubly improve the trade deficit. First higher agricultural productivity would reduce food imports and secondly it would boost exports. The utilisation of industrial export surplus coupled with agricultural exports is a doable option that would ease pressure on the economy and rupee’s value in shortest time.

 

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ADB to release $500m in Sept ​

Sunday, August 31, 2008

ISLAMABAD: The Asian Development Bank (ADB) is due to release $500 million to Pakistan next month as part of a $1.3 billion loan programme that can be used for budgetary support, a finance ministry official said on Saturday.

“It’s a financial sector reform package which will also help us as budgetary support,” said the senior official who declined to be identified. “We are aiming to get the first tranche of $500 million before September 30 and it’s a soft loan programme,” he said but did not give more details.

Another government official said last month the ADB had negotiated a credit facility of $810 million with Pakistan for power projects and payments would begin in September. Fresh foreign inflows will help boost the country’s dwindling foreign exchange reserves, which the central bank said had fallen to $9.38 billion in the week ended on Aug 23, from $9.57 billion in the previous week.

Forex reserves hit a record high of $16.5 billion in October last year but have since been depleted by high payments for oil imports and foreign investors withdrawing money because of the country’s political uncertainty.

 

[Neo]

Govt to prepare macro-economic framework​

Sunday, August 31, 2008

ISLAMABAD: The PPP-led government will prepare a macro-economic framework in a bid to meet the conditions of multilateral creditors like the World Bank and the Asian Development Bank and to pave the way for obtaining $10 billion.

“The macro-economic framework will envisage GDP growth rate, fiscal deficit, current account deficit and other major targets for economy in the next five years. The government will also give a clear strategy for achieving the macro-economic targets during its tenure from 2008-2012,” an official told The News on Saturday.

After the preparation of the macro-economic framework, the country will be able to get over $2 billion per annum from the WB and ADB, totalling $10 billion over the next five years. During recent visits of World Bank’s Vice President for South Asian Region Isabel M Guerrero and Asian Development Bank’s Director General Juan Miranda, Pakistan’s economic managers agreed to work out a macro-economic framework as soon as possible in order to give a clear message to the donors that the economy was the top priority of the PPP-led government.

During official meetings with the country’s economic managers, the WB vice president asked Islamabad to bring its house in order by tackling major economic issues. “Attention should be paid to economy and only economy,” she said and added that Pakistan government had already wasted five critical months through inaction and indecisiveness. She also conveyed to the economic managers that there was no communications strategy devised by the government to address concerns of local and international investors.

Even profit-making companies go into losses if the entire management pays no attention to the working of the company, she cited an example during the meetings and said the government had taken some bold and tough steps but it remained unable to convey effectively to its targeted audience.

Going forward, the WB’s vice president said there was a need to put in place a credible roadmap and if the bank’s assistance is required, it would give all-out support to Islamabad in that connection.

She assured that if the country would devise a credible programme for the medium to long- term period then the bank would extend its financial support over the next three to five years. “The WB also asked Pakistan to accelerate its stalled privatization programme in order to lure investments,” she added.

“We are now working on preparing a macro-economic framework, which will be in place very soon,” an official from the Finance Ministry said when this scribe asked him in this regard on Saturday.

“The government is taking practical measures to deal with the current economic situation, and ADB stands ready to support its efforts,” said Miranda after the meeting with Prime Minister Yousuf Raza Gilani, Finance Minister Naveed Qamar and State Bank Governor Shamshad Akhtar here.

In a statement issued by the ADB here on Saturday, it noted the damage caused by unprecedented international fuel and food prices.Miranda said: “The government has defined and is executing a credible action plan to deal with these external factors. It has taken actions to contain spending, it has raised interest rates, put in place measures to manage and shore up foreign reserves, and drastically cut down on borrowing from the central bank.

Pakistan has also put together one of the region’s largest social safety net programmes, necessary to cushion the poorest against these external shocks.” In Pakistan, ADB supports the development of infrastructure, public utilities and economic reforms.

“As a major development partner, we will continue to work closely with the authorities to bring about economic transformation, prosperity and growth. We have full confidence in the government’s ability to deal with current economic challenges. It will succeed,” said ADB DG. —MH

 

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Pakistan, Iran agree on steps to facilitate trade ​

Sunday, August 31, 2008

ISLAMABAD: Pakistan and Iran have agreed on a number of steps for the business community to facilitate trade between the two neighbouring countries, said an official announcement on Saturday.

Steps for the businessmen include multiple visas, exemption from medical tests, exemption from freight amount, insurance policy for vehicles, abolition of attestation of phyto-sanitary certificate and National Logistic Corp’s border terminal at Taftan, said the official release.

Pak-Iran joint committee on road transportation in its fifth meeting, held on August 5-7 at Quetta, hoped that all these steps would help reduce the cost of doing business and also curtail non-tariff barriers in the way of trade between the two sides.

It was agreed in the meeting that all the Iranian consulates and embassies will grant one year multiple visas, with each stay for up to 2 months, to genuine businessmen and Iran also promised to exempt Pakistani businessmen from under-going medical tests at the time of submitting applications for business visas. Iran has also agreed that no amount under the head of freight will be charged from Pakistani transporters. However, the Iranian government can charge a 1 per cent surcharge from Iranian importers at the time of collection of import duty and taxes.

As previously practiced, the Iranian government will levy one per cent surcharge of the value of goods or 10 per cent of the freight amount, if the imported goods are transported in foreign vehicles/conveyance. Pakistani transporters were paying Rs5000 ie 10 per cent of the Quetta-Zahidan freight amount, thus placing them at a disadvantage, vis-‡-vis Iranian transporters.

Iran also agreed that Pakistani transporters would be at liberty to procure third party insurance for a longer period, ranging from 15 days to one year according to their requirement, which will minimise their cost.

During the meeting it was emphasised that the Iranian custom authorities had agreed earlier that they will accept all documents issued by Pakistani authorities and no further attestation will be required.

On the abolition of attestation of the phyto-sanitary certificate, Iran agreed to investigate the issue and come up with a positive response within one month. Pakistan was of the view that the attestation of phyto-sanitary should be done, as it is adding to the cost of business and acting as a non-tariff barrier.

The Iranian Consulate at Quetta charges Pakistani exporters Rs8,000 for the attestation of the phyto-sanitary certificate, in respect of each consignment.

The representative of the NLC informed the meeting that they have acquired land at Taftan and will begin working on the parking and other facilities along with the office building within 8 months.

 

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FDI inflows up by 76pc, telecom gets lion share​

KARACHI, Aug 30: The foreign direct investment (FDI) inflows recorded an increase of 76 per cent at $340 million in the first month (July) of the current fiscal year over the corresponding month last year.

The State Bank of Pakistan on Saturday reported that the telecommunication sector proved to be the most popular sector for foreign investors as it received the lion share of $147.7 million in the month under review as against the $27.2 million in the same month last year.

The country had attracted highest foreign investment of $1.626 billion in the communication sector in 2007-08 while the telecom alone pocketed $1.440 billion of the total.

Despite imposition of duty on mobile phones in the current budget its import has not shown any decline.

A senior analyst predicts that the telecommunication will receive much higher foreign investment this year as the government wants to divest its stakes in the Pakistan Telecommunication Company Limited (PTCL). He said the government still possessed about 60 per cent of the company.

The financial sector, which attracted $1.608 billion in 2007-08, received $43.4 million in July 2008 against $28 million the same month last year.

Analysts said most of the inflows of foreign investment in the banking sector were because of the merger and acquisitions. NIB Bank and Barclays have entered the country with hope to find the potential for their growth.

They said more investment was expected as the banks would go for expansion. Bankers said more local banks could be sold out to foreign buyers which would boost the foreign investment in the financial sector.

The government is likely to launch Global Depository Receipts of UBL and HBL in the international market to fetch badly-needed foreign exchange.

Oil and gas exploration sector attracted $37 million in FDI in July 2008. It fetched $635 million in foreign direct investment in 2007-08.

The government has significantly increased the wellhead prices of oil refineries and gas fields which may woo more foreign investment.

“The beginning is encouraging but the inflow of FDI depends on the policies of the government which currently busy at the political front paying little attention to the economy,” said a senior analyst.

 

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Govt may set wheat output target at 23.5m tonnes​

* Shortage of 0.5 million tonnes wheat seeds, 27 percent MAF water in the coming Rabi season​

ISLAMABAD: The government is likely to set a wheat production target of 23.5 million tonnes despite a shortage of certified wheat seeds and about 27 percent million acre feet (MAF) water for the coming Rabi season, the Task Force on Food Security said in a meeting held on Saturday.

The task force was of the view that attractive wheat support prices would play a decisive role in achieving the wheat production target and agreed that it would be fixed before the sowing season.

The Ministry of Food, Agriculture and Livestock (MINFAL) additional secretary Shahid Hussain Raja informed the meeting that all arrangements have been finalised in regard to the wheat support price and expressed hope that it would be announced by September 15. The meeting was chaired by the task force’s chairman former finance minister Sartaj Aziz and attended by high officials of MINFAL, representatives of four provinces, IRSA, Federal Seed Certification Department, Planning Commission on Food and Agriculture Member Dr Tusneem, Dr Kausar Abdullah and many others.

Seeds: The meeting identified the issue of non-availability of certified seeds of wheat for the coming Rabi season 2008-09. The meeting was informed that 50 percent wheat seeds (0.5 million tonnes) were available but the country needed one million tonnes for the whole Rabi season.

Out of the total seed requirement in the country, the meeting was informed there was a need for about 0.2 million tonnes of certified seeds. The majority of the growers were using their own produce as seed. These growers were asked to consult the government certified seed institutions for learning about the proper quality of seeds. The meeting was informed that proper legislation was required for encouraging plant breeding, which would also attract for investors in certified seed production process. An official who attended the meeting told Daily Times that the meeting also discussed fertilizer availability in detail. It was told during the meeting that the total availability of fertilizer for the coming Rabi season was about one million tonnes while the requirement was 0.85 million tonnes.

However, due to higher demand for fertilizer during Rabi season, the country needed to immediately import about 0.6 million ton of the commodity and its release should be made possible in the early part of November, it was told during the meeting.

The meeting was informed that despite urea shortage in the months of March and April this year, the import of the commodity could not be materialised soon enough and fertilizers prices increased considerably in the international market, creating a panic locally as well.

However, the MINFAL additional secretary said the record usage of urea this year for rice (paddy) crops has created a shortage of the commodity in the market.

Water: The IRSA official informed the meeting that during the year 2007-08, about 23 percent MAF water shortage was recorded and about 27 percent MAF shortage was expected for the coming Rabi season. The water shortage was due to climate change, cleaning of dams and many other factors.

The MINFAL additional secretary urged the participants to cover 8.5 million hectares are for wheat crop. The government would announce an attractive support price of wheat that would induce farmers to increase output. He also stressed the need for adopting best agriculture practices through involving growers in various sowing processes.

The growers would be informed that excess use of fertilizer is harmful for wheat crops and sufficient quantity must be applied.

Abudullah Kausar informed the participants that if the wheat support price mechanism were improved, then there would be no need for provision of any sort of subsidy either on wheat, fertilizer or other inputs.

Sartaj Aziz told the participants that it was the policy of the meeting to determine some principles and mechanism for setting the wheat support price and the task would be completed after making all the essential calculations keeping in view the higher cost inputs.

Other speakers said that expansion in utility stores corporation at each union council level would help the government to ensure food security in the country. They suggested that MINFAL should be empowered to monitor and check the availability of food items and took appropriate steps in this regard.

 

[Neo]

Balochistan revenue​

The total revenues of the Balochistan government stood at Rs 51.552 billion and the total expenditures of the province remained at Rs 64.993 billion during 2007-08. The provincial government received a sum of Rs 30.008 billion as NFC Award share from the federal government and the provincial government spent Rs 22.045 billion on its development programme. The overall fiscal balance of the province remained at minus Rs 13.387 billion. *

 

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Purchase of urea: Saudi Arabia requested to give $300-400 million credit facility ​

ISLAMABAD (August 31 2008): Pakistan has requested Saudi Arabia to provide $300-400 million credit facility for purchasing urea, well-placed sources told Business Recorder here on Saturday. This is in addition to the request made by the government of Pakistan for a $5.9 billion oil facility.

Last month, the Saudi authorities provided a credit facility of $125 million for fertiliser. This amount is over and above the credit facility of $133 million that was provided for the same purpose one and a half month ago. Thus far the Saudis have extended $258 million for purchase of urea.

Ziaur Rehman, Secretary, Ministry of Food, Agriculture and Livestock (Minfal), has left for Saudi Arabia to negotiate with the concerned authorities the additional credit facility of $300-400 million, sources said. They contend that Pakistan government is seriously considering requesting Kuwait for a similar facility to purchase fertiliser.

Sources said that almost 85 percent of our domestic requirement of urea is met through local production, but due to increase in the cultivation of rice which requires plenty of urea, a shortage of the commodity in the local market has erupted. "The international price of rice is on the rise which accounts for a corresponding rise in the area under rice cultivation," sources added.

The price of urea in the international market is $800 per ton while in Pakistan growers are purchasing it at $200 per tons. This huge difference has created shortage of the commodity in the market.

Well-placed sources say that fertiliser is also being hoarded and smuggled. They maintained that the total stocks of DAP available with the government stands at 0.475 tons. They said that in local market, the price of urea has increased. "After an increase in gas prices, urea manufacturers have increased the price of the commodity from Rs 625-Rs 700 per 50-kg bag."

The government is also importing 350,000 tons urea for the ongoing Kharif season to meet the shortfall and the TCP has placed tenders for the import of the commodity. They said that the Ministry of Food is hopeful that 20,000 tons urea would be imported from Saudi Arabia in next 2-3 days. The total consumption of fertilisers in the local market is 7 million tons, of which 5.4 million tons is urea fertiliser while the remaining 1.6 million tons is phosphorous and potassic fertilisers.

 

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Social sector PSDP will not be slashed ​

ISLAMABAD (August 31 2008): The government will not slash Public Sector Development Programme (PSDP) 2008-09 pertaining to health and education sectors, whose allocation is already meagre as compared to other countries of the region keeping in view the size of population growing at the rate of 1.9 percent per annum.

To cater for the need of education and health sectors it is trying its level best to pump in maximum resources, depending on GDP growth, and would not resort to any cuts. This was stated by Planning Commission Deputy Chairman Salman Faruqui here on Saturday at a two-day meeting with concerned ministries to prioritise projects in the PSDP so that they can be adjusted to respond to the changing economic resource situation.

The amount of revised estimates of 2007-08 for education sector was Rs 4.38 billion which has been increased to Rs 6.27 billion in the current year's PSDP. Similar is the case with health where the revised estimate of 2007-08 was Rs 13.85 billion whereas it has gone up to Rs 19.010 billion in 2008-09 PSDP.

Faruqui, however, added that measures would be put in place to ensure that all funds are used effectively. In addition, funds for income support for the poor (Shaheed Benazir Card Scheme) would not only be fully protected but may be enhanced, he said.

The meeting also decided to transfer several projects to the private investment mode through joint ventures, outsourcing and franchising in order to keep up the momentum of the development projects.

He said that the flow of funds to priority projects would be resumed in an orderly manner so that the development effort is not impaired. In consultations with the Ministry of Finance and the concerned Ministry, the Planning Commission will authorise funds for projects in the first week of each quarter. In this context procedures have been agreed upon between the Ministry of Finance and Planning Commission, he added.

The announcement by the Deputy Chairman at the end of detailed consultations with line ministries ended the uncertainty which shrouded the implementation of the PSDP this year. The meeting was attended by Secretaries of Finance, Defence, Interior, Health, Food and Agriculture, Industries and Production and Population Welfare. In addition, members of the Planning Commission, Chief Economist and Chiefs of Sections also attended the meeting.

 

[Neo]

FATA development schemes require Rs 28 billion ​

PESHAWAR (August 31 2008): The ongoing development schemes in FATA require almost Rs 28 billion and special efforts to arrange a big chunk of resources to complete them. This was stated in a meeting presiding over by NWFP Governor Owais Ahmad Ghani to review FATA annual development programme 2007-08 here at the Governor House on Saturday.

The meeting was attended by Additional Chief Secretary, FATA Habibullah Khan, Secretary to Governor Arbab Muhammad Arif, all administrative secretaries of FATA Secretariat, Regional Co-ordination Officers of Peshawar, Kohat and Bannu, Political Agents of tribal Agencies and District Co-ordination Officers responsible to govern the Frontier Regions and Additional Political Agents and Assistant political Agents of Frontier Regions.

The meeting was informed that out of total amount of Rs 6122 million, released under the annual development programme for the year 2007-08, Rs 6107 million was utilised on 1076 schemes, including 218 new ones, which reflected utilisation of 97 percent.

Out of the total amount, Rs 700 million was allocated for projects suggested by FATA Development Authority. Governor Ghani said that socio-economic uplift of FATA was the most important aspect of the government's strategies not only to resolve the FATA related issues and problems but also to ensure a prosperous future for the tribesmen on long term basis.

Appreciating the performance of the line departments, the Governor also referred to the newly created offices of Additional Political Agents in each tribal Agency and said that they should not only efficiently and regularly monitor the pace of work on the ongoing development projects but should also submit monthly progress reports to the quarters concerned.

The Governor also appreciated the services being rendered by FATA Monitoring Cell. He said, "Looking at the prevailing state of requirements, especially the level of interest of the respective people towards their future development, we have to do a lot to ensure their rapid socio-economic well being". To make this possible, he added, the government was sparing no effort to provide sufficient financial resources.

Referring to the working of Tesco, the Governor desired to have a detailed briefing on its activities in FATA shortly. "We have to look into the affairs of this organisation of vital importance with some more details not only to ensure proper implementation on development projects but also to make its working result oriented", he said. He also desired to have a project-wise review of the electrification development plans in FATA.

 

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Pakistan's debt is the riskiest in world ​

Bloomberg
Published: August 30, 2008, 23:47

London: Pakistan government debt is the world's riskiest as political and economic turmoil threatens the state's ability to repay lenders, according to traders of credit-default swaps.

The 'Chart of the Day' shows how the cost of default protection on Pakistan government bonds has overtaken Argentina's to be the most expensive after a political crisis led to the ouster of President Pervez Musharraf on August 18 and a breakup of the coalition government.

Default risk

"Default is a very real risk,'' said Sayem Ali, an economist at Standard Chartered in Karachi.

"Credit-default swap prices send an ominous signal that there is no interest or confidence in our economy or government.''

Contracts on Pakistan bonds increased 255 basis points last week to a record 950, according to CMA Datavision prices at 11am in London.

The cost of credit-default swaps soared from 655 basis points at the start of the month. Credit-default swaps on Argentina fell one basis point to 788 on Saturday.

The contracts are trading at "distressed levels suggestive of a near-term credit event," according to a Royal Bank of Scotland Group report on August 26.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.

An increase indicates a deterioration in the perception of credit quality; a decline, the opposite. A basis point on a contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.

 

[Neo]

Power prices in Pak to go up by 31 pc ​

Islamabad, Aug 31 : last evening reportedly okayed the decision to increase power tariffs by 31 percent, giving rest to the fears of the common man (to some extent) that the power prices might shoot up by 50-60 percent.

This is said to be an unprecedented hike in power prices in the history of Pakistan.

The notification for the rise in power rates is expected to take place in a day or two. Earlier, it notification was to be issued on Friday.

According to The News, the PM modified the decision of the National Electric Power Regulatory Authority (NEPRA) to increase the power tariff by 50-60 per cent, and allowed the prices to go up by 31 percent only.

“After a detailed review of the determination by NEPRA, the prime minister, in consultation with Finance Minister Syed Naveed Qamar and Minister for Water and Power Raja Pervaiz Ashraf, allowed a 31 per cent increase in power tariff,” the paper quoted an official as saying on the condition of anonymity.

He added: “It is for the first time in the recent history of the country that power tariff is being increased by 31 per cent.”

The official disclosed that after the notification of the new tariff, unlike the past practice, a consumer would pay the price of electricity in accordance with the rate of the slab in which his power consumption would fall.

He said that if the consumption of power by a consumer fell in the third slab, he would be charged for the whole consumption at the rate of the third slab and would not be allowed to benefit from rates of lower slabs. “There will be no increase in power tariff for consumers who consume only 50 units but those who consume more than 50 units will now have to pay huge bills," he added.

The official said that currently consumers were charged Rs 3.08 per unit for first 100 units, Rs 4 per unit for next 200 units and Rs 6.53 per unit above 300 units. But, after the notification of the new tariff and formula, a consumer who would consume more than 50 units of power would be charged the rate of the last slab for the whole consumption. (ANI)

 

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Country not facing default: Qamar​

ISLAMABAD: Federal Minister for Finance and Revenue Syed Naveed Qamar said on Saturday that Pakistan is not facing any default-like situation and those involved in spreading such rumours could only be enemies of the country.

Talking to reporters after the announcement of the Ramazan Package at the Ministry of Finance, Qamar said the country facing a default is out of the question, and our economy is undergoing a consolidation phase.

The measures put in place by the government would help provide solid base to the economy to grow at a much faster pace in the years to come, he added.

The minister said the International Monetary Fund (IMF) Executive Board in its next meeting would be issue a ‘Letter of Comfort’ to Pakistan that would help pave the way for release of funding from the Asian Development Bank (ADB) and the World Bank (WB).

He said some two months ago, Securities and Exchange Commission of Pakistan Chairman Razi-ur-Rehman Khan had submitted his resignation, however, he has been asked to continue his assignment till a suitable person is the available for this important position.

WB: Replying to a question on his recent meeting with the WB South Asia Region Vice-President, the minister said the WB side has not asked for any new measures as we are already putting each and every effort in place to consolidate the economy in the minimum time frame.

Measures such as rationalisation of oil, gas, electricity prices, cut in non-development expenditures, phasing out of subsidies and shifting of worth Rs 100 billion projects to public-private partnership are already in place, he said.

Qamar said no request has been put forward for funding for the Bhasha Dam, however, in near future this request would be placed before the WB authorities.

Due related issues: The minister also informed that required funds from the open market have been arranged to resolve the circular debt issue and on Monday (tomorrow), a meeting has been convened to settle all the dues-related issues of HUBCO, PSO and PEPCO.

No reduction: The minister ruled out the possibility of reduction in oil prices despite a decline in the prices in the international market and added that government was still paying Rs 14 per litre subsidy on high-speed diesel (HSD) and its consumption was four times higher as compared to petrol consumption.

Responding to a questing about levying the petroleum development levy over Rs 20 per litre on petrol, he said that government was adjusting the collection of PDL to cross subsidise diesel. sajid chaudhry