Pakistan Economy - News & Updates - Archive

[Neo]

Present government to reduce budgetary deficit: chief executive TDAP​

MULTAN (September 22 2008): Present regime would succeed in reducing the budgetary deficit by imposing heavy duty on luxury items, unproductive items and big cars, however, previous regime did not care for the imports nor increased the exports to maintain the balance.

Our imports climbed to 40 billion dollars while exports were less than 20 billion dollars, said Chief Executive Officer of Trade Development Authority of Pakistan (TDAP), Syed Mohib-ullah Shah while addressing the member of executive committee of Multan Chamber of Commerce and Industry (MCCI) chaired by Khawaja Muhammad Jalaluddin Roomi here on Sunday. He said, "we are bringing a big trade project for Multan which would be completed in two years while an expo centre would be developed at Multan airport.

He said that exporters, manufacturers and traders would avail 50 percent more opportunities than preceding years to take part in trade exhibitions, festivals. He said that TDAP had formed nine advisory boards including agro-food, engineering, minerals export, and human resource advisory boards. These boards would keep vigilant eye on the world market with the collaboration of exporters and it would meet quarterly to recommend the exports of Pakistani products where these are required.

He said that TDAP was focussing on the needs and priorities of the stakeholders. He said that Pakistan's textile exports are 62 to 64 percent while India was exporting only 16 percent. However, our mineral export is zero while India's export climbed to 18 percent. Secretary TDAP Naveed Arif also spoke on the occasion.

In his welcome address Khawaja Muhammad Jalal-uddin Roomi said that due representation must be given to MCCI in different official committees and quota be fixed for Multan Chamber in trade fair, exhibitions, seminar and trade delegations. He suggested that a ten-member trade delegation comprising MCCI members should be arranged for foreign visits. Proper representation be given to MCCI in federal economic board and export development fund, mark-up rate on export refinance scheme be cut considerably.

 

[Neo]

'Marriott blast to hit economy hard'​

ISLAMABAD (September 22 2008): Pakistan Economy Watch has condemned Marriott bombing in strongest possible terms and described it an inhuman act aimed at destabilising Pakistan.

The way common people have been targeted a day ahead of International Day of Peace only shows the effectiveness and reach of terrorists and failure on the part of the government, said Dr Murtaza Mughal, president, Pakistan Economy Watch, on Sunday.

He said that America knows that its policies are behind such carnage and yet it would always offer help in probing such incidents. Dr Murtaza Mughal said that this bombing will hit economy in general while hospitality, stocks, tourism and IT industries would be major losers.

"Hotel business has already lost around 50 percent of revenues due to political uncertainty and the bombing will add to its sufferings," he said, adding that the future of many under construction hotels is now uncertain.

As far as the IT is concerned, said Dr Murtaza Mughal, it is the single most loosing sector. Every Marriot bombing results in lost opportunities for Pakistan's IT sector.

A number of companies operating in Software Park have gone bankrupt after earlier bombings. Some of these companies were in business of keeping critical date of western companies from security breaches.

 

[Neo]

Marble exports decline by 50 percent due to power cuts​

KARACHI (September 22 2008): Prolonged load shedding, which is being carried out for months, has caused negative impact on almost every industry especially the marble sector where over 50 percent decline in exports has been witnessed.

Sanaullah Khan, former chairman, All Pakistan Marble Mining Processing Industry and Exporters Association (PMMPIEA) told Business Recorder on Saturday that Karachi Electric Supply Company (KESC) is carrying out 10 to 12 hours load shedding daily, causing immense financial losses to the sector, which already suffers due to inadequate resources.

He urged the government to take positive measures to facilitate marble sector, saying the government should make a plan to provide interest free loans to install gas generators and demanded from the government to make efforts for providing gas for the sector.

Khan said that domestic consumption, which was earlier generating around Rs1 billion per annum, has depicted 50 percent decline where marble processors have failed to meet the market demand, owing to recurrent prolonged load shedding.

He however said that electricity tariff has also massively been increased and termed it as another factor for the decline of marble exports, saying that the government has increased 31 percent electricity rates, which directly reflects on its cost. "Marble exporters are facing difficulties to compete international market with high cost of production, causing considerable decline in its exports," he was quoted as saying.

 

[Neo]

Pakistan ranks 62nd on IT index ​

Tuesday, September 23, 2008

KARACHI: Pakistan ranks 62 in the world in the 2008 IT industry competitiveness index, falling two places from its 2007 ranking of 60 in the index.

In comparison, most neighbouring South Asian countries were ranked more favourably; for example India ranked 48th, Sri Lanka ranked 54th and Bangladesh ranked 60th. These are among the findings of a new study issued by the Economist Intelligence Unit and sponsored by the Business Software Alliance (BSA).

The study, now in its second year, assesses and compares the information technology (IT) industry environments of 66 countries to determine the extent to which they enable IT sector competitiveness. Although the top 20 economies remain the same from one year ago, nine countries moved up and 11 went down in the rankings. Three countries in the top five are new: Taiwan, Sweden and Denmark. The top five countries in Asia-Pacific Region are Taiwan, Australia, South Korea, Singapore and Japan.

“This year’s index shows that a country’s IT competitiveness rankings can move upward or downward very quickly,” said Aly Harakeh, BSA spokesperson for Eastern Mediterranean & Pakistan, “The ability of local governments and IT industries to deliver jobs and a better quality of life through IT is strongly affected by how they handle the six drivers of competitiveness.

Pakistan needs to invest in its R&D environment and IT infrastructure in order to improve its competitiveness in the IT industry. Although fair scores were achieved for the business environment as well as support for IT industry development and legal environment, there is still a lot to do to move up the global ranks.”

The study finds that Pakistan performed strongest in business environment (55.3) as well as support of IT industry development and legal environment (both 41.0) areas of improvement include R&D environment where the country scored the lowest, 0.2 points.

“Policymakers and business leaders need to address the full combination of factors that enable competitive IT industries,” maintains Denis McCauley, Director, Global Technology Research with the Economist Intelligence Unit. “Few countries can hope to build strong IT production sectors without strong business and legal environments, deep pools of talent, support for innovation, and the widespread use of technology throughout society.”

According to the Economist Intelligence Unit, six factors work together to create a sound environment for the IT sector, including: an ample supply of skills; an innovation-friendly culture; world-class technology infrastructure; a robust legal regime that protects intellectual property, such as patents and copyrights; an open, competitive economy; and government leadership that strikes the right balance between promoting technology and allowing market forces to work.

Those countries that perform well in these six ‘competitiveness enablers’ generally are home to high-performance IT industries. High performing IT sectors directly contribute more than 5 per cent to the gross domestic product of most advanced nations. They also drive momentum in the wider economy by helping organisations and workers to be more efficient and productive.

 

[Neo]

WB interested in capacity building ​

Tuesday, September 23, 2008

KARACHI: World Bank mission showed keen interest in capacity building and other technical assistance programme dealing with food security, water efficiency and dairy related programmes in Pakistan.

The World Bank’s mission headed by Christine Rennie visited the Zarai Taraqiati Bank Limited (ZTBL) head office in Islamabad on Monday, and exchanged views on matters of mutual interest with ZTBL Chief Muhammad Zaka Ashraf.

During the meeting water conservation, irrigation, innovative technology for agriculture and other areas of investment for agriculture uplift came under discussion.

Zaka Ashraf President Zarai Taraqiati Bank Limited gave a detailed presentation on the bank’s operational activities and business plan for agricultural development and financing the agriculture community to alleviate rural poverty.

He apprised the delegation that the bank held a major share of institutional credit in the agriculture sector and has devised a plan to focus particularly on off farm activities and increase in yield per acre through innovative use of agriculture technology.

 

[Neo]

Import of raw cotton to cost $1.5 billion​

KARACHI, Sept 22: While the foreign exchange is running out, it may be difficult for the country to spend a huge sum of about $1.5 billion on import of raw cotton.

The textile sector, which earns over 60 per cent of total export proceeds for the country, needs additional imported cotton worth $1.250 to $1.50 billion for the new fiscal year.

Both the US Department of Agriculture’s “World Agricultural Supply and Demand Estimates” for September 2008 and the International Cotton Advisory Committee (ICAC) have predicted a significant reduction in world cotton production and observed that Pakistan would be one of the low producing countries.

Last year, the country had to import raw cotton worth $1.101 billion when it faced a shortage. The problem is more intense this year than last year.

The cotton prices in the international market have gone up by over 40 per cent compared to last year as the world bodies watching cotton production, have predicted a global shortage of cotton.

The country is facing a serious shortage of foreign exchange and the reserves are not enough to finance import of petroleum products for this year.

Analysts said any effort to discourage import of raw cotton would make an impact in two ways. First the exports would drop with a further widening of the trade deficit; secondly, there would be a slow economic growth, with the possible laying-off of thousands of workers in the textile industry.

During July and August, the country imported raw cotton worth $93.65 million, which reflected a complete awareness of the textile sector regarding cotton shortfall.

During this period, arrival of cotton in the domestic market was nonstop.

The imported raw cotton would be translated into exportable products to attract more dollars than the investment initially required for raw cotton import.

However, currency experts and analysts said the outflow of $1.5 billion would cost much more to the country. They said with an outflow of each dollar from the reserves, the rupee gets weaker.

The historic fall of rupee suggests that the rupee gets weaker with shrinking reserves.

The rupee continued to shed its weight since the fall of reserves in October 2007 when it touched a peak level of over $16.5 billion. The rupee lost 24 per cent since January 2008.

“What is more serious about the shortfall of cotton production is that the country is unable to import raw cotton or in other words it is unable to finance this import for textile which is the backbone of the economy,” said an analyst.

He said that the economy is already under severe internal and external pressures, and any addition in it would aggravate the situation, making it more difficult for the survival of economy.

The newly-elected government trapped by the situation is making efforts to get Saudi oil on deferred payment, get soft loans from friendly countries and to get loans from donors, like the IDB, the World Bank and the IMF.

The finance minister had recently denied that the government was getting IMF help, but the IMF delegations have been in Islamabad, meeting high-ups, which is an indication that the IMF is already active to clear the path for its entry.

 

[Neo]

Export of non-textile goods up by 57pc: July-Aug​

ISLAMABAD, Sept 22: The export of non-textile products soared by 57.2 per cent to $1.73 billion during the first two months (July-August) of the current fiscal year against $1.1 billion in corresponding period 2007-08, mainly due to a substantial increase in export of edible products.

Led by high growth in export of food commodities, the trend showed that the fiscal year started with an impressive growth in export of traditional products, like rice, sports goods, leather products, footwear, surgical and engineering goods despite the fact that the input cost of such products witnessed a substantial increase during the period under review.

Data released here on Monday by Federal Bureau of Statistics revealed that however, textile and clothing exports dipped by 4.21pc to $1.759 billion as against $1.836 billion in the same months last year.

Export of food group inched up by 73.52pc. Of these export of rice went up by 147.34pc during July-August 2008-09. In the rice group the export of basmati rice up by 84.82 pre cent, others 326.49 percent.

This showed that Pakistan became one of the leading exporters of rice following export restrictions on rice from India, Vietnam, Thailand etc., due to shortages in the yield of the commodity last year.

The export of fish products export up by 31.53pc, fruit 1.46pc, sugar 100 per cent and meat 34.40pc.

Export of petroleum products increased by 39.65pc, sports goods 11.24pc, leather products 4.92pc, footwear 20.27pc, surgical instruments 16.60pc, engineering goods 44.20pc, cement 73.80pc, molasses 264.75pc, jewellery 183.20pc, gur 10.92pc during July-Aug 2008 over the same months last year.

On the other hand, product-wise details showed that export of readymade garments declined by 3.64pc, cotton yarn 21.24pc, cotton cloth 0.53pc, cotton carded 54.79pc, knitwear 8.52pc, bed-wear 12.51pc, made-up articles 0.94pc, other textile material 28.84pc during the period under review over the same months last year.

However, export of raw cotton was up by 236.34pc, towels 38.12pc, and tents 0.75 per cent.

Analysts said this showed a natural diversification of the export base, as share of textile and clothing in total exports declined to 50.4pc in the months under review from 62.5pc last year despite support of billions of rupees to the sector.

While the share of non-textile products soared to 49.58pc in July-Aug 2008 from 37.4pc last year, without any financial package from the government.

Analysts say that subsidies are not the real issue, but there is a need to address the structural weaknesses in the textile sector.

This also means that the production capacity of the sector has reached a saturation point.

With the exception of raw cotton and towels, all other major components of textile manufactures registered a negative growth despite a major depreciation of the rupee and an appreciable gain made by the currencies of the competitor countries, like India and China.

 

[Neo]

‘Pakistan loses $1.5bn due to water blockade’​

ISLAMABAD: Pakistan Economy Watch said that India has inflicted a loss of $1.5 billion on Pakistan due to the water blockade. Over five million acres of Kharif crops, particularly cotton and sugarcane, are facing devastation but the prime sufferer would be Rabi crop. The continuous closure of Chenab will hit the Rabi crops especially wheat, and lack of water will result in low production which will have serious consequences. “We had over 23 million tonnes of wheat this year but additional 2 million tones were imported; the ratio is set to increase as a shortfall of 40 percent water is expected during,” said Dr Murtaza Mughal, President, Pakistan Economy Watch. Pakistan is facing a shortfall of 36,000 to 37,000 cusecs daily and Government is being forced for excessive discharge from dams to save the standing crops.

 

[Neo]

Package likely for Gwadar EPZ to attract investment: ECC meets today ​

ISLAMABAD (September 23 2008): The Economic Co-ordination Committee (ECC) of the Cabinet is likely to approve an incentives-laden package for Gwadar Export Processing Zone (GEPZ) when it meets here on Tuesday (September 23). Prime Minister Yousuf Raza Gilani would be in the chair. The Ministry of Industries and Production has submitted a summary to the ECC for grant of a lucrative package of incentives to attract investment for the GEPZ.

Sources said the incentive package included 10-year tax holiday for the GEPZ, and added the tax holiday would be applicable to the investors from the date of start of commercial operation of the project, permission for export of production from the zone to tariff area of the country up to 80 percent on the payment of normal duties.

According the sources, the package also promises normal incentives for exports from the GEPZ as available to projects, established anywhere in the country, would be applicable to exports from the projects in the zone. As an incentive, the plots in the GEPZ would be provided to investors on lease (as per the existing EPZA procedure) at a reasonable rate to be determined in consultation with the government of Balochistan, said the sources.

The package also includes zero-rated sales tax on supply of construction materials to the GEPZ investors or development of zone infrastructure. It also includes exemption from stamp duty and exemption from import policy orders issued from time to time.

The sources said the presentation on national economy was another important item of the ECC agenda, and added the Finance Division would brief the ECC on the latest economic condition of the country and the challenges it was facing due to slow down of its major sectors and widening gap of the current account deficit. The committee would be also apprised of the measures taken to overcome financial crisis and the negotiations held with an International Monetary Fund (IMF) mission.

The presentation will cover the impact of international credit cards crisis on Pakistan's economy, the sources, and added the Finance Division would apprise the committee about Economic Monitoring Committee's (EMC) decisions. Trading Corporation Pakistan (TCP) Chairman would brief the committee on availability of sugar, wheat and urea fertiliser. He would also inform the committee on the latest status of import of urea from Saudi Arabia, said the sources.

According to the sources, the Utility Store Corporation (USC) Managing Director would inform the committee on the steps taken by his department to sell items of daily use on subsidised rates and availability on its outlets. The committee would also review key indicators of the economy and their performance to support the ailing economy. The ECC would also consider for approval a textile industry's summary for tariff structure of polyester chain and magnetisation of tariff, said the sources.

 

[Neo]

5.78 percent decline in textile exports in two months ​

ISLAMABAD (September 23 2008): Textile exports declined by 5.78 percent in August 2008 to $853.516 million from $905.12 million of July, according to Federal Bureau of Statistics (FBS) on Monday. Figures released by FBS showed a negative growth of 4.21 percent in July-August 2008 against same period of last year, with the exports declining to $1.759 billion in 2008 from $1.836 billion of 2007.

The growth in export cotton yarn declined by 21.24 percent during the first two moths of current fiscal year; cotton carded or combed by 54.79 percent; cotton yarn other than cotton by 18.15 percent; knitwear by 8.52 percent; bed wear by 12.51 percent; readymade garments by 3.64 percent; made-up articles by 0.94 percent; and other textile materials declined by 28.84 percent.

The exports growth in cotton carded of combed decline to $264 million during the first two months of current fiscal year against $584 million of last year; cotton yarn $195.467 million from $248.188 million; yarn other than cotton $4.603 million from $5.624 million; knitwear $325.574 million from $355.903 million; bed wear $279.890 million from 319.917 million; readymade garments $254.545 million from $264.150 million; made-up articles to $90.315 million from 91.172 million; and other textile materials $42.834 million from $60.197 million.

The positive growth was witnessed only in raw cotton with its exports going up during the period under review from $4.368 million to $14.754 million. The export of towel also increased from $80 million to $111 million; tents canvas and tarpaulin to $10.011 million from $9.936 million; and art silk and synthetic textile to $117.647 million from $82.312 million.

Analysis of monthly figures showed that a decline of 11.40 percent was witnessed in cotton yarn in August from previous month, 30.77 percent in cotton carded or combed, 3.61 percent in knitwear, 3.51 percent in bed wear, 37.17 percent in tents canvas and tarpaulin 35.74 percent in readymade garments, 12.93 percent in made-up articles and 7.05 percent in other textile materials.

 

[Neo]

Services sector trade deficit amounts to $1.16 billion ​

KARACHI (September 23 2008): The country has faced a deficit of 1.16 billion dollars in the services sector trade deficit during first two months of the current fiscal year mainly due to high payments on account of transportation, travel and government services, besides decline in service exports.

The State Bank on Monday said that the country's services sector trade performance was improving as overall imports and deficit had decline by 2.52 percent and 2 percent respectively during the July-August period of current fiscal year.

The two months' services sector exports amounted to 423.188 million dollars against imports of 1.49 billion dollars, depicting a deficit of 1.0675 billion dollars, which, however, was lower that 1.089 billion dollars of the same period of last fiscal year.

"Heavy payments, on account of transportation, travel services, insurance, technical fee, royalties and government sector, were the major contributors in the services trade deficit," economists said. They said that declining exports of services sector was also matter concern, and policy makers should take some steps to check the poor performance in exports.

However, they said, decline in imports of services sector was a positive indication, which should help to reduce current account deficit. During the period under review, exports of services sector declined by 3.7 percent to 423.188 million dollars as against exports of 439.494 million dollars during the same period of last fiscal year.

Services sector imports dipped by 2.25 percent to 1.49 billion dollars as compared to 1.529 billion dollars during the July-August of fiscal year 2008. Only imports of transportation sector contributed 638.34 million-dollars share in overall deficit faced by services sector due to the increasing international freight, analysts said.

Meanwhile, services deficit in August stood at 541.709 million dollars with 759.895 million dollars imports and 218.186 million dollars exports. The country earned some 177.861 million dollars on account of transportation services, 41.361 million dollars from travel, 15.89 million-dollars in communication, 16 million dollars in insurance and 5.8 million dollars from financial sector during July-August.

On the other hand, transportation imports stood at 638.34 million dollars, travel 281 million dollars, communication 18.02 million dollars, construction 3.56 million dollars, insurance 13.83 million dollars, financial sector 35.42 million dollars and computer and information sector imports at 20 million dollars.

Similarly, royalties and licence fee payments reached 18.88 million dollars, government services 37.43 million dollars and other business services payment at 424.17 million dollars. It may be mentioned here that the country's overall services trade sector exports stood at 3.59 billion dollars against imports of 9.892 billion dollars during last fiscal year, depicting a deficit of 6.302 billion dollars.

 

[Neo]

President in New York with heavy assignment of seeking aid ​

NEW YORK (September 23 2008): President Asif Ali Zardari arrived here Monday to lead Pakistan's delegation at the 63rd session of United Nations General Assembly. Besides addressing the world top forum.

The President is scheduled to meet leaders from a number of countries including President Bush, Prime Minister Wen Jiabao of China, President Mahmoud Ahmedinejad of Iran, Prime Minister Manmohan Singh of India, President of France Nicolas Sarkozy, President of Turkey Abdullah Gul, President of Brazil Luiz Ino Lula da Silva Afghan President Hamid Karzai and South Korean Prime Minister.

Arrangement for his meeting with US presidential candidate John McCain is yet to be finalised. Zardari is also expected to talk to Democratic presidential candidate Barrack Obama on phone to discuss the situation in Pakistan's tribal areas and Afghanistan.

Analysts are of the view that it would be very difficult for President Zardari to convince the American Administration that Pakistan Army, especially Inter Services Intelligence (ISI), is fully co-operating with the government to wipe out terrorists from the tribal areas.

The President will be accompanied by Foreign Minister Mahmood Qureshi, Finance Minister Naveed Qamar, Information Minister Sherry Rehman, Advisor to Prime Minister on National Security Mahmoud Ali Durrani and senior officials. In his address to General Assembly, the President is expected to spell out priorities of his government in security and economic areas.

Soon after his arrival here, the President will meet Deputy Secretary of US Treasury Robert M Kimmitt. In the evening, he will attend the banquet to be hosted by President George Bush in honour of the heads of states and governments attending the UN meeting. He will also have a meeting with UN Secretary General Ban Ki-Moon.

A special conference aimed at evolving a comprehensive plan to provide urgently-needed economic assistance to Pakistan would also take place on September 26 on the sidelines of UN summit of world leaders. The 'Friends of Pakistan' will be hosted by President Asif Ali Zardari and would be attended by US Secretary of State Condoleezza Rice and British Foreign Secretary David Miliband and other representatives of the G-8 countries including France, Russia, Germany, Japan, Italy and Canada, China, Saudi Arabia and United Arab Emirates (UAE).

The conference will assess Pakistan's needs and come up with short-term and long-term strategies to help the country come out of its economic hardships. Analysts are of the view that economic assistance, if any to be committed by the Friends of Pakistan, would be based on Pakistan's commitment to war on terror as they would press for 'do more' policy.

During the visit, the President has interviews lined up with the Washington Post, CNN and the Wall Street Journal. Democratic vice presidential candidate Josehp Biden will also call on President Zardari and discuss US-Pakistan relations. Biden is a key sponsor of a landmark legislation pending before Congress on increasing US assistance for Pakistan to $1.5 billion annually for a period of ten years.

 

[Neo]

Pakistan to hold two investment conferences in China ​

BEIJING (September 23 2008): In order to lure Chinese investors, Pakistan is scheduled to hold two investment conferences in the month of November this year. These conferences are part of Pakistan government's efforts to attract FDI from China in terms of latest policy initiative of Chinese government to invest abroad as per policy of diversification of investment and business, said Economic Minister at Pakistan Embassy, Sardar Aminullah Khan while talking to APP on Monday.

He said the first Pakistan-China Investment Conference will be organised by the Investment Division of Board of Investment on November 17. The second such conference will be held in Shanghai on November 19, he added. He pointed out that conferences are likely to be attended by businessmen of both the countries interested in making investment in different sectors of power generation, mining, manufacturing and infrastructure.

Aminullah further said Pakistan is one of the attractive places for Chinese investors in view of most cordial relations between the two countries, besides geographic proximity, resource endowment of Pakistan and complementary in large economic fields.

 

[Neo]

88.17 percent rise in July-August oil import bill ​

ISLAMABAD (September 23 2008): July-August 2008 oil import bill surged by 88.17 percent to $2.532 billion, against $1.334 billion of same period of last year, according to Federal Bureau of Statistics (FBS). Figures released by FBS on Monday showed 97.73 percent increase in import of petroleum products, followed by 79.37 percent crude oil products over the same period of last year.

Total import bills of petroleum products and crude petroleum products amounted to $1.296 billion and $1.236 billion respectively against $655.701 million and $689.105 million for the same period of last year.

Pakistan oil import bill was closed at $11.30 billion in 2007-08 with 55.14 percent increase over previous year's $7.335 billion on the back of steep rise in oil prices in the international market. As a result, Pakistan witnessed highest ever trade deficit last year.

Further analysis of the data showed that there was a decline of 3.26 percent in imports of oil products in August over July, apparently because of falling oil prices in the global market. Oil imports of $1.245 billion in August were slightly less as compared to $1.287 billion in July 2008.

A decline of 27.73 percent was also witnessed in imports of petroleum products with the bill going down to $543.917 million in August from $752.618 million in July 2008. In contrast, the imports of crude oil in contrast increased during August 2008 by 31.20 percent, swelling to $701 million against $534.625 million for July 2008.

The imports of food products showed an increase of 13.52 percent during the period under review due to import pf un-milled wheat, milk cream and milk food for infants, pulses, tea, spices and palm oil. The import of food items was further increased in August over previous month of July 2008 with showing an increase 17.56 percent.

Pakistan imported $309.937 million food items in August as against $239.088 million over the month of July 2008. Pakistan imported 7.66 percent milk more during the first two months over the same period of previous year, wheat 1610 percent, tea 44 percent, spices 13.66 percent, palm oil 14.30 percent and import of pulses was 44.81 percent higher. Machinery import increased by 3.48 percent during July-August 2008 over the same period of last year mainly because of power generation and construction machinery imports.

 

[Contrarian]

Moody's cuts Pakistan bond outlook to negative

Pakistan's government bonds to negative from stable because of the country's depleting foreign currency reserves as economic reforms are hit by political mayhem.

Moody's analyst Aninda Mitra said on Tuesday he was concerned about arrears on sovereign debt and missed repayments as Islamabad's access to foreign exchange worsens.

The agency also highlighted the risk the economy faces from the growing political turmoil, rising religious extremism and high inflation that could hold up reforms such as liberalisation, deregulation and privatisation.

Pakistan has to contend with heightened security fears. Total foreign currency reserves stood at $8.91 billion on Sept. 13, barely enough to cover two months of imports at a time when alarming levels of current account and trade deficits could require emergency funding, analysts said.

The current account deficit is running well ahead of target: It widened to $2.57 billion in July and August --equivalent to about 1.6 percent of gross domestic product and more than a quarter of the government's full-year target of 6percent of GDP.

"The outlook has been changed mainly due to the deteriorating economic and law-and-order situation of Pakistan," said Muhammed Imran, head of research at First Capital Equities Ltd.

"The government needs to step up and take some quick, concrete and constructive measures on the economic front to promote exports and curtail imports. Otherwise there will be no improvement.

Moody's cuts Pakistan bond outlook to negative