Pakistan Economy - News & Updates - Archive

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No shortage of wheat, flour in country: Gondal ​

Friday, October 17, 2008

Islamabad: Federal Minister for Food, Agriculture and Livestock, Nazar Muhammad Gondal here Thursday categorically rejected any shortage of flour and wheat in the country, saying that the crisis might have been caused due to mismanagement.

“There may be some management problems but as far as the stocks are concerned there is no shortage in the country,” Gondal told journalists after attending a seminar on World Food Day at NARC. He stressed the need for improving management to ensure timely and proper supply of the commodities to the people.

Gondal reiterated government’s commitment to provide incentives to the farmers with an aim to encourage them enhance crop productivity and make the country self-sufficient. The wheat support price has been enhanced to encourage farmers cultivate more wheat, which is a staple crop of the country he said adding that “when farmers do not get proper prices, they do less struggle to enhance productivity or switches to other crops.” To a question, he said that the enhancement in wheat support prices would have impact on other crops, however, added that the wheat was the most important crops as compared to others.

To a question, the federal minister said that the country was having more than sufficient DAP stocks and there was no shortage of the fertilizer. He said that DAP was being provided to farmers on subsidized rates of Rs3,050 per 50 kg bag to enhance production.

It may be recalled that the government had provided subsidy of Rs27 billion to the manufacturers and importers who would pass it on to the farmers by providing the commodity on subsidised rates. The wheat and potato cultivation season is already in progress which consume high quantity of DAP due to which October and November become the most consuming months of the fertilizers.

 

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President Zardari, Chinese premier hold formal talks: China vows to bail out Pakistan​

* Offers help and support ‘within capability’
* Ready to advance strategic co-operation
* Beijing, Islamabad agree to step up Five-Year Development Programme, convene meeting of Economic Co-operation Group​

BEIJING: China vowed on Thursday to do what it could to help cash-strapped Pakistan avert financial disaster as President Asif Zardari continued an official visit aimed at rustling up crucial Chinese investments.

The promise came as Premier Wen Jiabao met Zardari and said during formal talks China is ready to advance strategic co-operation with Pakistan.

“As a long friend of Pakistan, China understands it is facing some financial difficulties,” Chinese Foreign Ministry spokesman Qin Gang told reporters at a briefing. “We’re ready to support and help Pakistan within our capability.”

Qin offered no specifics on the form that Beijing’s financial help would take.

China’s massive foreign currency holdings make it a prime candidate to inject much-needed cash into Pakistan’s economy, where inflation running at 25 percent has wrecked the government’s finances and exacerbated a trade gap that is fast eating up the country’s foreign currency reserves.

China is already a leading source of investment for Pakistan. Bilateral trade between the two countries topped US$7 billion last year, with a goal of reaching US$15 billion by 2011.

In recent years, Pakistan’s manufacturing sector has suffered from cheap Chinese imports while the economy as a whole has benefited from Chinese investment and cut-rate prices for infrastructure projects such as road building and telecommunications.

Pakistan’s Ambassador to China Masood Khan said earlier this week an agreement on a civilian nuclear pact with China could be reached during the trip.

But Qin declined to give any details on the agreements made so far.

“I’m not aware of the specifics of the deals signed,” he said.

Joint statement: In a joint statement quoted by China’s Xinhua news agency, “Pakistan stressed that (the) Pakistan-China relationship is the cornerstone of its foreign policy, and friendship with China represents the common desire of all Pakistani people.”

It said the two countries also agreed to step up their Five Year Development Programme on Economic Co-operation and “make full use of their free trade agreement . . . and Pakistan-China Joint Investment Company”. They agreed to convene a meeting of Pakistan-China Economic Co-operation Group soon, the statement said.

 

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Pakistan seeking $3bn from China, says WP​

WASHINGTON: Pakistan is seeking $3 billion from China in emergency aid, according to the Washington Post. The visiting State Bank of Pakistan Governor Shamshad Akhtar told the Post that Pakistan is also seeing assistance from Saudi Arabia and the United Arab Emirates. The Bush administration and Congress have been shaping a long-term economic and military assistance package for Pakistan, but there is no indication the US is able to step in with a short-term financial lifeline, the report says. It says there are fears that Pakistan may not be able to secure the funds to avoid a debt default early next year, and its investor potential insolvency could grow into a panic in coming weeks. Investors are more concerned about Pakistan now because Saudi Arabia has not yet responded to a Pakistan request for an oil facility, it said.

 

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Total cost of PQ steel project is $740m: TSM​

KARACHI: A spokesman of Tuwairqi Steel Mills (TSM) has clarified that the total cost of its fast coming up steel making plant at Port Qasim is $740 million and not $100 million as quoted in a statement of Investment Division and Board of Investment which was reported earlier. In a clarification here on Thursday, the spokesman said that estimated investment of the DRI plant of TSM is $265 million and the total cost of the project including electric arc furnace is $740 million. He said the plant was coming up on fast track basis and is expected to start production in the middle of next year.

 

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New solar technology lab​

KARACHI: Provincial Minister for Environment and Alternative Energy Askari Taqvi laid the foundation stone of the first solar energy laboratory at Hamdard University on Thursday.

“To overcome the power crisis, it is mandatory to get electricity from alternative resources such as solar energy,” he said, adding that the technology must be introduced in Pakistan so that electricity can be provided to the public at cheaper rates.

He said that the Hamdard University is playing a significant role to boost the technology in the country and is also planning to start short courses in solar energy.

He said that formal permission has been taken from Sindh Chief Minister Syed Qaim Ali Shah for launching solar energy projects.

Earlier, Hamdard University Vice Chancellor Dr Naseem said that the university is working on a temporary solar energy laboratory from where students complete their final year projects. Taqvi visited various sections of the solar lab and inspected the projects.

 

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World has interest in helping Pakistan: Haqqani​

* Ambassador to US says Pakistan will serve as corridor for fast growing regional economies of China and India
* Says there has been ‘tribal awakening’ in parts of FATA​

WASHINGTON: Pakistan’s elected leadership wants to use the country’s strategic location as a regional trade and energy corridor, Ambassador to the United States Husain Haqqani said while urging world support for efforts to prosecute a ‘smart’ fight against extremists along the Afghan border.

Haqqani told a gathering of students and intellectuals at Johns Hopkins University that the Pakistani government was committed to consolidating democratic institutions, and wants to improve relations with its neighbours.

He said the world had an interest in helping Pakistan at the crucial time when the people were backing anti-terrorism efforts.

“Now more people know that the security of the US, and possibly the world, rests on the stability of Pakistan, and Pakistan’s security relies on global security because if terrorists take advantage in Pakistan-Afghanistan border, if the Taliban regain control over any part of Afghanistan and manage to expand their influence into parts of Pakistan and give Al Qaeda a safe haven, it will not be good for global security.”

Tribal awakening: Haqqani said there was a “tribal awakening” in parts of the Tribal Areas where people are supporting the fight against the Taliban.

“It is important for Pakistan’s friends like the US to understand that they need to work with the Pakistani government, they don’t need to position themselves as potential violators of Pakistani sovereignty.”

He particularly called for legislative progress in the US Congress towards creating Reconstruction Opportunity Zones under a preferential programme, saying the resultant job generation would help offset the influence of extremists in the border regions of Pakistan and Afghanistan.

The ambassador also sought passage of Biden-Lugar legislation on enhancing socio-economic assistance for Pakistan.

“There is an opportunity, we can actually get the international community engaged productively and seriously in the institution building, reconstruction in Afghanistan and parts of Pakistan, in isolating the terrorists and prosecuting a smart war against terrorism.”

Responding to a question on US-Pakistan relations, he said it was important that Americans leaders saw Pakistan as a friend and ally of the US. “There are issues between Pakistan and the US but they need to be resolved as issues are resolved between friends and allies.”

To a question, he said the government was committed to revamping the Tribal Areas’ political system, “introducing political parties like rest of the country, making sure there is a process whereby the Tribal Areas eventually become settled areas – it is not a six-month plan, (but) will take several years.”

On the state of democracy, he remarked there has been an intellectual transformation of the discourse in Pakistan and there is consensus on having democratic rule. He said there is a great opportunity to put Pakistan on rails of constitutional governance.

President Asif Ali Zardari has a vision for Pakistan where there is no place for extremism, but a nation of creative people and entrepreneurship that endeavours for development and where young do not resort to violence, he said.

Corridor: Regarding regional co-operation, the ambassador said Pakistan would serve as a corridor for two fast growing regional economies – China and India – that can benefit enormously from trade and energy supplies through Pakistan.

Commenting on relations with India, he said, both Pakistan and India needed to be reciprocal in assuring each other on security.

“I think it is time for India to take measures to strengthen Pakistan’s feeling of security.”

He saw a great opportunity between the two countries. and said they need to resolve issues and at the same time continue to work together. “That does not mean we will stop thinking about or talking about Kashmir. We will remain concerned about what happens in the (Indian-held) Kashmir. The people of Jammu and Kashmir definitely have a major stake in their future (and) India definitely needs to address that problem.” app

 

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Hydel power generation: sharp decline deepens power crisis, says minister​

ISLAMABAD (October 17 2008): The sharp decline in hydel power generation from 6000 megawatts to 1600 megawatts has deepened the power crisis in the country, said Minister for Water and Power Raja Pervez Asharf. Speaking at a news conference here on Thursday after a meeting at National Power Control Centre (NPCC), the minister said that reason for decline in hydel power generation was release of water from Tarbela and Mangla dams to the provinces on the requests of provincial governments.

The minister wanted provincial governments to review their indents on realistic basis from Tarbela and Mangla dams enabling generation of more power to cope with the shortage of electricity.

Asharf also acknowledged that 100 percent results of energy conservation programme could not be achieved. He said power generation projects initiated by the government would be completed by the next year to achieve 6,000 megawatts power. He said the mistakes committed by the Wapda and Pepco have also contributed to the power crisis but the government is taking measures to increase the production. The construction work on Basha Dam would be started by the next year, he added.

The minister said that the country was facing worst power crisis because of shortage of 4,000 MW but the efforts are afoot to bridge the demand supply gap. All means of power generation are being explored to overcome the shortage, he added.

Earlier, the minister directed the NPCC to chalk out a plan of action on war footing basis to minimise the load management on the country. He directed that all concerned authorities should work jointly to overcome the prevailing challenge of power crisis that was adversely affecting the economy as well as the household.

The minister was given a briefing about the objectives and functions of the NPCC and was informed that because of low flow of water from Tarbela and Mangla, the hydel generation had been badly affected. Similarly the shortage of gas supply to some power plants also affected the power generation capability of number of powerhouses.

The minister also directed the ministry to approach the concerned quarters including petroleum ministry to provide the required gas to these plants for generating maximum power.

 

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Petraeus seeking financial support for Pakistan​

WASHINGTON (October 17 2008): Even before he takes command of US military strategy for Afghanistan and Pakistan, General David Petraeus is reaching beyond the military sphere to encourage international support for stabilising the region.

Petraeus, whose innovative thinking is credited with helping save Iraq from civil war, met International Monetary Fund and World Bank representatives last week in preparation for new efforts in Afghanistan and Pakistan, officials said.

The move, unusual for a military commander, underscores the Pentagon's emphasis on unifying military, economic, political and diplomatic aid to help the two countries cope with militant violence and economic dislocation, officials said. On October 31, the Army general will become head of Central Command, responsible for American military interests in 20 countries across the Middle East and Central and South Asia.

"The purpose (of the World Bank and IMF meetings) was to touch base and note the Central Command's interest in supporting comprehensive approaches in Pakistan, Afghanistan, and others," said a military official close to Petraeus. His arrival at Centcom is widely expected to reinvigorate US strategy in Afghanistan, where US and Nato efforts face grave challenges from an increasingly confident Taliban.

Petraeus will launch a 100-day assessment of US strategy for Afghanistan, Pakistan, Iran, Iraq and other countries in the Centcom region once he takes over, officials said.

He has already spoken publicly of the strategic value of reconciling members of the Taliban with the Afghan government as a possible way to reduce violence in areas of Afghanistan where security has deteriorated this year.

Military officials say they are studying the country's tribal landscape to identify leaders who might be willing to join the West against hard core insurgents.

HELP FROM WORLD BANK, IMF: Petraeus has also spoken out about the need for military strategy to be sustained by major financial and development support for the region from the international community.

"That is one of the steps that has to be taken by our government together with other countries in the coalition and elsewhere including some of those in the Gulf states," Petraeus told the Heritage Foundation in Washington last week.

Officials said his recent meetings included a session with World Bank President Robert Zoellick to discuss what the bank might do for Afghanistan and Pakistan. There was no word of any outcome. The World Bank and IMF are already involved in talks about helping the countries.

Military officials are also looking at US relations with Colombia as a possible model for Afghanistan and Pakistan, saying something like Washington's Plan Colombia strategy could help the two countries against militants.

US officials credit the multibillion-dollar, multiyear Plan Colombia policy with helping Bogota overcome a threat from guerrillas and paramilitaries that once dominated large parts of the country and ran much of its drug trade. The United States has funnelled $5.5 billion in mostly military aid to Colombia since 2002.

Colombia "is a great overarching strategic model that I think we can look at for the way ahead," Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said recently. Pentagon officials have spoken favourably about a bipartisan measure in Congress that would triple non-military aid to Pakistan to $7.5 billion over the next five years.

 

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Pakistani garment export to US up, EU down: IMF​

ISLAMABAD (October 17 2008): Pakistan's garment export to European Union and Canada registered a decline while to the US market, the garment export posted a slight increase, an IMF report revealed on Thursday. The garment export to EU market declined from 1.7 percent in 2003 to 1.5 percent in 2007.

The share of Bangladesh in garment export to the EU has increased to 7.1 percent in 2007 as compared to 6.6 percent of 2003. This is 5.4 percent higher than that of Pakistan. The report further revealed that export of garments from India have also increased by 1.2 percent in 2007 as compared to 2003 while these were about 4.7 percent more than that of Pakistan.

Similarly, during 2003, the garment exports to Canadian market were around 1.5 percent that decreased to 1.0 percent in 2007 which shows a decline of 0.5 percent. The garment export of Bangladesh to the Canadian market has increased from 5.3 percent in 2003 to 6.4 percent in 2007 showing an increase of 1.1 percent while it was 5.4 percent more than that of Pakistan.

India exports show the same trend vis-à-vis Pakistan as its garments export to the Canadian market decreased from 7.3 percent in 2003 to 4.7 percent in 2007. According to the IMF report, the garment export of Pakistan to US market increased to 2.0 percent in 2007 from 1.6 percent in 2003 showing a decrease of 0.4 percent. On the other hand, the garment exports of Bangladesh and India to the US markets are showing an upward trend in 2007 being 4.0 percent and 4.3 percent, respectively.

 

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Pakistan's foreign exchange reserves fall below $8 billion​

KARACHI (October 17 2008): The country's foreign exchange reserves plunged by 571.9 million dollars to 7.7497 billion dollars, during last week that ended on October 11. The State Bank of Pakistan on Thursday said the country's foreign exchange reserves have declined to 7.7497 billion dollars during the week ended on October 11, against 8.3216 billion dollars a week earlier.

The major decline has been witnessed in the State Bank's reserves, which declined by 530.9 million dollars to 4.3353 billion dollars in a week. These reserves stood at 4.8662 billion dollars on October 4, 2008. The reserves held by banks also show a negative trend during the week as overall reserves stood at 3.4144 billion dollars as compared to 3.4554 billion dollars a week earlier, depicting a decrease of 41 million dollars.

 

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China to invest $1.7bn to generate electricity in Pakistan ​

BEIJING (October 17, 2008): A prominent Chinese power generating entrepreneur has said that it will make investment to the tune of $ 1.7 billion for generating low cost hydel electricity in Pakistan.

The assurance for investment was given to President Asif Ali Zardari when a delegation of China International Water and Electricity Corporation (CWE) held a detailed meeting with him here on Friday.

"We just met with President Asif Ali Zardari and the talk focused on Bhasha and Kohala Dams", said Deputy General Manager of CWE Jin Zheping, said talking to media after meeting the President here at State Guest House.

Jin said for Bhasha Dam CWE was developing concept with Chinese Hydel power generating groups and also with WAPDA as it is a gigantic project.

He said the MoU in this regard has already been signed.

Jin pointed out that President has shown high vision on cooperative relations in economic sector between the two countries.

The CWE Deputy General Manager said the President has assured that he will particularly welcome Chinese entrepreneurs for investment in Pakistan.

President Zardari specially mentioned that he will steer China-Pakistan trade economic cooperation to encourage Chinese companies to invest and come to Pakistan for setting up of various projects.

CWE has been working on water resources and hydropower engineering for over 50 years. Over the years, the Company has been active in international contracting, foreign economic aid, international trading and manpower export sectors. CWE is recognized one of the major state-owned enterprises in China.

By the end of September 2007, the company has completed over 600 international contracts in more than 60 countries and regions.

 

[fatman17]

Economic Indicators

Annual 2007/08
Foreign Debt $45.00bn
Per Cap Income $1085
GDP Growth 5.8%
Average CPI 12.00%

Monthly September
Trade Balance $-2.02bln
Exports $1.78bln
Imports $3.80bln

Weekly October 16, 2008
Reserves $7.7497 bln

Business Recorder [Pakistan's First Financial Daily]

 

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China to help build 2 Pakistan nuclear plants​

ISLAMABAD, Pakistan – Pakistan said Saturday that China will help it build two more nuclear power plants, offsetting Pakistani frustration over a recent nuclear deal between archrival India and the United States.

The agreement with China was among 12 accords signed during Pakistani President Asif Ali Zardari's recent visit to Beijing, said Foreign Minister Shah Mahmood Qureshi.

While Qureshi gave few details, the accord deepens Pakistan's long-standing ties with China at a time when its relations with Washington are strained over the dragging war against terrorism.

U.S. officials including Assistant Secretary of State Richard Boucher, who arrived in Islamabad on Saturday for talks, have rejected Pakistani calls for equal treatment with India on nuclear power.

Chinese leaders "do recognize Pakistan's need, and China is one country that at international forums has clearly spoken against the discriminatory nature of that understanding" between Washington and New Delhi, Qureshi said.

Zardari met with China's top leaders during his first official trip to Beijing since replacing stalwart U.S. ally Pervez Musharraf as president in September.

China, a major investor and arms supplier for Pakistan, has already helped it build a nuclear power plant at Chashma, about 125 miles southwest of the capital, Islamabad. Work on a second nuclear plant is in progress and is expected to be completed in 2011.

Qureshi said the Chashma III and Chashma IV reactors would provide Pakistan with an additional 680 megawatts of generating capacity.

He didn't say when they would be built or what assistance China would provide.

Nor did he discuss any measures to prevent nuclear materials from the new plants from being diverted to Pakistan's atomic weapons program. Pakistan has placed several other civilian reactors under International Atomic Energy Authority safeguards.

Pakistan's nuclear program remains a sore topic with Washington because of its past record of proliferation.

International sanctions were slapped on Pakistan after it detonated its first nuclear charges in 1998 in response to similar tests by India.

The sanctions were eased after Musharraf agreed to help Washington hunt down al-Qaida terrorists responsible for the Sept. 11, 2001, attacks in the United States.

But the revelation in 2004 that the architect of Islamabad's nuclear program, Abdul Qadeer Khan, had passed nuclear secrets to Iran, Libya and North Korea set back Pakistan's hopes of becoming a trusted member of the world's exclusive nuclear club.

The U.S.-India deal allows American businesses to sell nuclear fuel, technology and reactors to India in exchange for safeguards and U.N. inspections of India's civilian — but not military — nuclear plants.

Boucher told reporters earlier this month that the pact with India was "unique" and that a similar agreement with Pakistan was "just not on the table."

He said Washington would help Pakistan — where chronic power shortages are contributing to a gathering economic crisis — develop its huge coal reserves, expand hydroelectric power generation and build wind farms on its Arabian Sea coast.

Pakistan, the Islamic world's only known nuclear weapons state, began operating its first nuclear power station with Canadian assistance near the southern port city of Karachi in 1972.

 

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China to help Pakistan build two more nuclear plants​

ISLAMABAD (AFP) – Energy-hungry Pakistan said on Saturday that China had agreed to help it build two more nuclear power plants in a major boost to the country's long-term plans to end crippling electricity shortages.

Foreign Minister Shah Mahmood Qureshi announced the deal after President Asif Ali Zardari returned from a four-day state visit to China which Qureshi said had been "very significant."

Pakistan, which already has one Chinese-built nuclear power station and another under construction, would benefit from an extra 680 megawatts of energy from the two extra plants, he said without giving further details.

The government has an "energy security plan" envisaging an increase in nuclear power generation from the current 425 megawatts to 8,800 megawatts by 2030 to meet its growing energy demands.

China is one of Islamabad's closest allies as well as its largest arms supplier.

Pakistan's nuclear weapons programme has been under the spotlight since a 2004 confession by Abdul Qadeer Khan, the father of its nuclear programme, that he sold atomic secrets to Iran, Libya and North Korea.

Khan was pardoned by then president Pervez Musharraf in 2004 but has been kept at his Islamabad villa ever since, guarded by troops and intelligence agents.

Pakistan has rejected international demands for access to Khan.

 

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Pakistan central bank cuts cash ratio to inject liquidity​

KARACHI (AFP) – Pakistan's central bank moved to inject liquidity into the country's struggling financial system on Saturday by cutting the amount of cash commercial banks must hold in reserve.

The bank lowered the cash reserve ratio two percentage points to six percent, and said it would be cut to five percent on November 15, as it sought to ease tight credit conditions that have hit economic demand around the globe.

Shamshad Akhtar, governor of the State Bank of Pakistan (SBP), said the move would inject 180 billion rupees (2.2 billion dollars) into the system and that the overall package would total 270 billion rupees.

"The State Bank will monitor the liquidity flow after the injection of massive liquidity into the banking system," she said.

"We would like judicious use of liquidity," she said, adding Pakistan's banking sector was "quite resilient and fully capable of withstanding market shocks and adverse macro economic conditions."

The country's biggest stock market, the Karachi Stock Exchange, announced this week it would on October 27 remove the "floor" it imposed two months ago.

The bottom limit for the benchmark KSE-100 was put in place following a 40 percent fall in prices since April due to political uncertainty, terrorism and economic instability.

The country is still reeling from the bombing last month of the Islamabad Marriott Hotel, one of the few remaining symbols of foreign investment.

Pakistan's government has repeatedly denied that the country is at risk of defaulting on its foreign loans or suffering a balance of payments crisis.

Shaukat Tareen, the new finance adviser to Prime Minister Yousuf Raza Gilani, reiterated the stance to reporters on Saturday saying there was "no danger" of a loan default.

At the press conference, which followed President Asif Ali Zardari's return from a state visit to China, Tareen said a range of Chinese companies had vowed to invest 1.2 billion dollars in Pakistan over the next year.