Pakistan Economy - News & Updates - Archive

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Power generation up by 1,000 megawatts in NWFP ​

PESHAWAR (October 28 2008): The measures of supplying 90 MMC gas, increase in outflow of water from Mangla Dam and initiation of power generation by two units in Muzafargarh had improved electricity production by 1000 megawatt that would result in respite of people from hours-long power load shedding.

This was disclosed by Chief Executive, Peshawar Electricity Supply Company (PESCO), Engineer Mohammad Qasim Khan while addressing a news conference here at Wapda House on Monday. He said that one thousand decline in demand of the power would ultimately cut down the size of the load shedding. "Today (Monday) we are following the scheduled load shedding and no suspension had been carried out from Islamabad," Qasim Khan stated.

The situation of supply and demand of electricity has improved and the company is following only scheduled load shedding of 9 and 12 hours. The PESCO chief was optimistic that in next two days the situation would be further improved and with the beginning of November, the company would further cut down the size of load shedding to 6 to 8 hours.

The decline in power generation vis-à-vis demand, he said was overloading grid stations and the situation was so deteriorated that the companies were even not in position to identify the station for closures. In such a situation, he said only National Power Control Company (NPCC) was in a position to take decision resulting in 2 to 3 consecutive power suspension in the areas of our distribution company.

The situation, he said was not only limited to PESCO, but other power distribution companies (DISCOs) had to face the burden of load shedding. However, he said that they are now hopeful that after November first the situation would be further improved.

He informed the newsmen that during the next two years, 6000 megawatt power would be included in the system as the government had initiated a number of small and large power generation products that would start production.

These projects, he highlighted were included Neelam Power Project, Basha Dam and number of other thermal units, which would be completed in 2010. "By the end of 2009, the people would be completely retrieved of the load shedding," he added.

He said that during the crisis, the difference between supply and demand was more than 7,500 megawatt while generation was merely 6,000 megawatt. Load during that period, he said was more than 1,3000 megawatt. That huge gap, he said, is now fill able through only schedule load shedding. Presently, Wapda is facing the shortage of 3,800 megawatt against the demand of 14,000 megawatts. The proportion share of the PESCO, he said is 15.5 percent of the shortfall.

He said that the shortfall would be filled through conservation of energy and requested consumers to co-operate with the company in this regard and avoid the unnecessary consumption of energy. The company, he said has 2.3 million connections and the switching of at least one bulb could save 230 megawatt of electricity.

Regarding 40 percent interim relief in the utility bill of the electricity, he said that the decision was not implementable for NWFP consumers. He said that the government of NWFP had obtained stay from Islamabad High Court (IHC) against the proposed increase in power tariff. He urged the consumers to pay their bills before the due date.

 

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Zardari asks India to stop blocking flow of water ​

ISLAMABAD (October 28 2008): President Asif Ali Zardari on Monday asked India to stop blocking Pakistan's water because this could damage the relations between the two countries. President Zardari talking to Indian High Commissioner to Pakistan Satyabrata Pal, who called on him at Presidential House, said that India should abide by the terms of Sindh Taas Treaty.

The violation of the treaty by India could dent the confidence building measures between the two countries, he added. President Zardari was of the view that blocking of Chenab River's water damages the fertile land in its catchments area as most of the time India releases Chenab water which destroys standing crops. Pakistan wants talks with India on all the issues that are required to be resolved, he said. Bilateral relations, regional situation and other matters of importance came under discussion during the meeting.

It may be recalled that President Zardari had also taken up the water issue with Indian Prime Minister Manmohan Singh during a brief meeting with him at the sideline of UN General Assembly Annual Session in New York last month.

Despite Indian Prime Minister's assurance to President Zardari that New Delhi would not violate the treaty; the India side has again stopped the flow of the Chenab River water to Pakistan to fill the Baglihar Dam on the occasion of its inauguration. Experts say the situation is very critical for Pakistan with its food security totally dependent on availability of water resources divided between India and Pakistan with their share determined under Sindh Taas Treaty.

The violation of treaty by the India, according to economists could be disastrous for Pakistan in term of its agriculture output. It could hit hard Pakistan crops and subsequently the country would face acute shortage of staple food, eg wheat and rice, they added. The Indus Water Commission had apprised the federal government of this situation and demanded of them to take up the issue at the highest level to avert any disaster.

 

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NSS attracts Rs90bn investment ​

Wednesday, October 29, 2008

ISLAMABAD: National Savings Schemes (NSS) generated Rs90 billion during last financial year 2007-08 against a target of Rs80 billion, data compiled by the Central Directorate of National Savings (CDNS) revealed on Tuesday.

The government has set a target of Rs150 billion for CDNS in current financial year 2008-09 but the finance ministry is said to be creating hurdles in the way of approving various products, currently in the pipeline.

The government claims it is making efforts to lessen its dependence on borrowing from the central bank but finance ministry high-ups are blocking other available options to generate required resources for meeting current year’s fiscal deficit target of 4.3 per cent of GDP.

“CDNS had requested to raise the rate of Defence Saving Certificate, but the finance ministry has not yet granted its approval,” a source said and added it sent alternative proposals, on ministry’s request, for introducing new schemes, but those were also lying on the tables of finance managers.

“CDNS has failed to meet its target of Rs37 billion by attracting investors in the first quarter (July-Sept) of the current fiscal year,” said the official source in the budget wing of the finance ministry.

When high-ups in CDNS were contacted, they said efforts to attract investors slowed down in the first quarter of every fiscal year and gained pace in the second quarter. “If the government approves a corporatisation plan, there will be no problem in achieving the target of Rs150 billion for 2008-09,” the source said.

Pakistan has the lowest investment-to-GDP ratio in the whole South Asian region. Without launching new products, investors would not invest their money in their own country. “Without making a corporation, CDNS cannot exploit its real potential,” the source said.

Various plans have been put on hold owing to a lack of independence required by this institution. A proposal was under consideration for joint ventures with reputed financial institutions in the Middle East to lure millions of dollars of investment from non-resident Pakistanis (NRP) but nothing has been done so far.

NSS expects to attract investments of around $500 million per annum from NRPs. The NSS management can utilise available avenues by inking agreements with Western Union and others for fast delivery of remittances through its 378 branches across Pakistan.

The government, the sources said, had prepared a feasibility report for expanding NSS operations in the Middle Eastern region.

 

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Japanese IT co to invest $50m ​

Wednesday, October 29, 2008

KARACHI: A Japanese information technology company has planned to invest US$50 million in Pakistan by establishing a state-of-the-art call centre, data centre and Japanese language centre in Karachi.

DTS Inc is a Japanese IT concern founded in 1996 and has worldwide operations. It has been operating in Pakistan since 2002 serving NUST and Karachi University in the IT sector.

Sindh Minister of Commerce & Industries Rauf Siddiqui and Consul General of Japan Akinori Wada will grace the foundation stone laying ceremony of DTS on October 30.

Director DTS Irfan Siddiqui said “DTS has planned to invest $50 million in the IT sector in the coming five years. The business plan will generate more than 1,500 employment opportunities for Pakistani graduates.” He added, “DTS is willing to make more investment by enhancing its infrastructure in Karachi.”

In Pakistan, DTS has initial plans to establish call a center, data center, business consultant center and a Japanese language center; DTS will proceed towards manufacturing of computer hardware and IT related products as well.

 

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Foreign investors inject fresh funds into local equities ​

Wednesday, October 29, 2008

KARACHI: Local investors maintained their highly cautious stance on Karachi bourse while the overseas investors poured in more dollars on Tuesday.

Fresh injection of $145 thousand foreign funds in the absence of local support could not turn the bourse up and pessimistic sentiments kept activities dull.

The number of active stocks on trading floor further reduced to mere 21 in the aftermath of fresh developments on economic front, while indices remained squeezed.

The KSE 100-share Index, KSE 30-share Index and KMI 30-shares Index remained flat at 9,182.88 points, 10,003.99 points and 11,224.18 points, respectively.

The KSE-All Share Index fluctuated by 0.48 point either side of the fence and ended at 6,638.59 points with a nominal decline of 0.47 point.

Turnover in the ready market, however, rose to 402 thousand shares from 249 thousand shares in the ready market - showing an increase of 61 per cent on day-to-day basis.

After attracting trade of zero shares in the last 12 consecutive sessions, the future market at last witnessed change of hand of 1,000 shares in NIB Bank at Rs8.50 pre-opening price.

But, the overall market capitalisation fell by Rs200 million to Rs2.829 trillion.

Commenting on the situation, analysts said that there was no investment-friendly development since long, but the continuous appearance of bad news in the circulations made the situation more misery. The Moody’s downgrading of Pakistan’s bond rating from B2 to B3 has mounted further pressure on local currency. Rejection of Rs300 million assistance by World Bank on the intervention of IMF, and IMF’s tough conditions to aid Pakistan to save it from default were all disturbing news.

Analysts, however, expressed doubt over the fresh foreign inflow under the current economic situation and questioned that none-of the front line stocks were active in market then where these dollars were being invested.

If dollars are being invested in the tier two active stocks of these days then are foreigners changing their mindset or reshuffling their portfolio, or was it just speculation from overseas investors to trap the local? Hasnain Asghar Ali at Aziz Fidahusein said that steps taken by SBP to ensure smooth financing against shares and permitting banks to invest up to 30 per cent of their equity in shares will certainly be beneficial if done without delay; while benefit is likely to be felt on unfreezing market. “It is therefore recommended to start weighing the stocks having huge growth potential,” he added. Among 21 active issues 16 closed unchanged, four in red and one in green.

Highest volumes were witnessed in Trust Modaraba at 283 thousand closing pegged at Rs1.35, followed by First.Fid.Leasing at 50 thousand closing at Rs4.10 with a loss of 10 paisa, Sitara Energy at 29 thousand closing at Rs18.11 with a loss of 14 paisa, Gharibwal Cement at eight thousand closing at Rs17.20 with a loss of 78 paisa and Unilever Pak at five thousand closing pegged at Rs2,340.

 

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Punjab industrial zones to install power plants ​

Wednesday, October 29, 2008

LAHORE: Punjab has allowed all industrial zones to install their own power plants so that they could be able to cope with ongoing energy crisis.

Provincial Industries Secretary Tahir Rizvi announced that while speaking in a meeting of the Board of Management of Quaid-e-Azam Industrial Estate.

The provincial secretary said full cooperation would be extended to all industrialists who wanted to get licence from the Lahore Electricity Supply Company (LESCO) for installing their own plants. He said the business community was the backbone of the economy and resolution of their genuine problems would be given priority.

He said the government was working out an economic revival plan which would help the industry and facilitate business community which had been under tremendous pressure owing to multiple factors.

 

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Tough IMF conditions difficult to accept: Asif​

ISLAMABAD, Oct 28: President Asif Ali Zardari said on Tuesday the government could ‘ill-afford’ International Monetary Fund’s financial assistance with tough conditions.

“Time is running out and there is an urgent need for the ‘Friends of Pakistan’ to extend a helping hand,” he told Adviser to the British Prime Minister Simon McDonald who had called on him at the President’s House.

Mr Zardari, however, made it clear that Pakistan was not looking for aid, but needed friends’ help to enhance trade and economic and investment opportunities.

According to a Foreign Office news release, the discussion focussed on Friends of Democratic Pakistan Initiative, measures and options being considered by the government to address the economic difficulties, Doha Process, situation in the border region, Afghanistan and bilateral cooperation. The president highlighted the government strategy to handle economic issues, socio-economic initiatives to settle tribal areas, including the Benazir Card for every household, and negotiations with the IMF.

He stressed that the war on terror, which had its roots in other regional events, had now become Pakistan’s war and the country and its people were paying a heavy price that needed to be acknowledged by the international community.

Mr Zardari quantified how one incident of terrorism impacted the already turbulent economy. He stressed the need to identify the forces that were funding militants in this expensive war. He was not convinced that drug money could be the only source of funding.

The president informed the British official about the state of relations with Afghanistan and termed recent exchanges and developments such as mini-jirga a manifestation of growing understanding and forward movement in relations.

Mr McDonald conveyed greetings from Prime Minister Gordon Brown and said that he fondly recalled the president’s visit to the UK in September when they had a fruitful and candid exchange.

The British adviser was highly appreciative of the unanimous resolution adopted by parliament on government’s policy for tackling terrorism.

 

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FDI rises to tap lucrative sectors​

KARACHI, Oct 28: While the global financial system is facing a worst scenario since the great depression of 1929, Pakistan’s traditionally attractive sectors maintained their charm during the last troubled three months.

Oil and gas exploration, petroleum refining, power, telecommunications and most importantly financial business attracted foreign direct investment to push the first quarterly (July-Sept) FDI over nine per cent higher than the same period last year.

Financial business attracted the highest investment of $295.5 million, an increase of 68 per cent compared to the first quarter of last fiscal.

Financial business (banking and finance) is the main target of current turmoil in the financial system of developed economies of which the economists are predicting a complete meltdown and discussing finding a new financial system.

The situation is encouraging for Pakistan as banking system is still intact and the Governor, State Bank of Pakistan, announced last week that country’s financials system escaped unhurt.

The mammoth growth of telecommunications which attracted huge foreign investment, continued to prove its potential for growth and a total inflow during the said quarter attracted $259 million, though it was 29 per cent less than three months of last year.

Oil and gas exploration sector’s performance was morale boosting for the country facing severe shortage of foreign exchange and fearing that it will have to embrace IMF.

The sector during the quarter attracted $190.7 million, 43 per cent higher than the same period of last year.

With slight fluctuation of investment, the FDI is on the same pattern and could provide up to $4.5 to $5 billion till the end of the fiscal year 2008-09 as it gathered a total of $1.110 billion during this period.

“The oil prices are just 44 per cent of what it was six months before which means the country’s oil bill could drop to $4.5 to $5.5 billion against over $12 billion of last year,” said Abid Saleem , an analysts, adding that it would provide enough space to adjust the balance sheet with a big slash in current account deficit.

He also pointed out that commodity prices have started falling in the global market like the edible prices which fell to 35 per cent of what it was during the 10 months till September.

Further, Pakistan is expected to produce enough wheat this year, thus there would be no requirement to import the commodity.

Analysts believe that things are improving for Pakistan even on external front but it depends on the perception of economic managers which shape of economy they would like to craft.

 

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Restore macro-economic stability: WB removes 2 projects from lending plan, puts another on hold​

* It has 12 projects under consideration for loan programmes 2008-09​

ISLAMABAD: The World Bank has removed a $79 million project of Karachi Dockers Labour Board Restructuring from its lending programme and has put on hold the $300 million project for restructuring National Trade Corridor Improvement Programme till macro-economic stability of the country is not restored, a World Bank report said on Tuesday.

The WB has also removed a loan of $300 million of Economic Stabilisation Support Programme from the lending programme for the current fiscal year as this programme, according to the WB was not recommended to the WB board for consideration.

World Bank’s Pakistan country operation report gives complete overview of projects under consideration for loan programmes for the current fiscal year 2008-09.

Higher Education Support Programme: The objective is to support the government of Pakistan’s higher education medium term development framework to foster public private partnership in the delivery of higher education and to provide substantial technical support to the client in developing a reasonable financing plan consistent with the macro-framework of the country. Project preparation is underway for a loan of $100 million (IBRD).

Mineral Sector Technical Assistance: The objective is to implement a strategy to accelerate sustainable mineral sector development by strengthening governance, transparency, and capacity in the management of mineral resources. Project preparation is underway for a loan of $50 million (IDA).

Rural Telecommunications and e-Service: The objectives are to (a) accelerate access to communications in un-served and underserved areas by using targeted subsidies for rural expansion, (b) strengthen legal, policy, regulatory and spectrum management and (c) monitor functions and expansion of e-services. Negotiations are scheduled for December 2008 for $124 million (IBRD) loan.

Second Sindh Structural Adjustment: The objective is to implement reforms to improve fiscal and financial management, governance, public service delivery, and the state’s regulatory framework. Project preparation is underway for $100 million loan.

Support to Safety Nets: The objectives are to support the effective strengthening of implementation and monitoring mechanisms for delivery of cash transfer programmes. Project preparation is underway for a loan of $50 million (IDA) loan.

Karachi Dockers Labour Board Restructuring: The objective is to make the nation’s ports more competitive by reducing their labour costs and thus the cost for users. This project is no longer in the lending programme.

National Expressways: The objective is to improve trade flows, lower transit costs and times along the programme corridor through the sustainable delivery of a high-speed, safe and reliable access-controlled expressway system. Appraisal scheduled for January 12, 2009 for a loan of $500 million (IBRD).

National Trade Corridor Improvement Programme: The objective is to enhance export competitiveness by reducing the cost of trade and transport logistics and bringing service quality to international standards. This project is put on hold until the macro-economic situation does not improve and the loan is worth $300 million (IBRD).

Trade and Transport Facilitation II: The objectives are to (a) facilitate the implementation of the NTCIP; and (b) facilitate the simplification and modernisation of Pakistan’s international trade procedures and practices. Decision meeting is scheduled for late-September 2008 for $24 million (IDA) loan.

Punjab Large Cities Development Policy: The objective is to promote economic growth in the major cities through strategic planning, integrated infrastructure investments, and efficient urban service delivery. Appraisal is scheduled for late-October, 2008 for $100 million (IBRD) a PHRD grant for preparation is anticipated.

Second Punjab Barrages Rehabilitation and Modern-isation: The objective is to prevent the occurrence of disastrous barrages failure and ensure their sustainable use, providing improved and reliable irrigation and drinking water supplies. Decision meeting is scheduled for June 1, 2009 worth $120 (IBRD).

 

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Pakistan looking for trade, not aid: FM​

* Qureshi seeks German support for greater EU market access
* Germany says will help Pakistan in IMF deal​

ISLAMABAD: Pakistan is looking for strengthened trade ties with Germany and access to European markets particularly in the textile sector for sustainable progress, Foreign Minister Shah Mehmood Qureshi said on Tuesday.

“What we are looking forward to is not aid but trade,” he said while addressing a press conference with his German counterpart Dr Frank Walter Steinmeier.

Steinmeier said Germany would support Pakistan on bilateral and multilateral forums in its efforts for both short and long term economic stability, including a loan deal with the International Monetary Fund. “Germany will support Pakistan on short and long term basis in the economic as well as social sector, especially health and education,” he told reporters.

But he refused to quantify the assistance when asked, saying Germany and the rest of the world would continue to support Pakistan.

Steinmeier also met President Asif Ali Zardari and Reuters said both had told him Pakistan would not be able to move ahead without IMF involvement.

“We need to talk about ways and means in which the international community can provide assistance to Pakistan, especially in the border and Tribal Areas,” he said.

Qureshi proposed initiating a Pakistan-Germany Strategic Dialogue at the foreign secretary-level to institute closer co-operation.

He said Germany was Pakistan’s largest trading partner in Europe and its help was crucial in a greater access for Pakistani products to the European markets.

He said he also raised the issues of anti-dumping duties by the European Union (EU) on Pakistani textile products that make 69 percent of all the country’s exports, adding that withdrawal of the duty would help improve Pakistan’s economy.

Qureshi also called for more German investment in Pakistan and said the government would address the security concerns of German firms interested in investing in the country. He said that the two countries shared common interest in the stability of Afghanistan.

Qureshi appreciated German support to Pakistan in the Friends of Pakistan forum as ‘encouraging, supportive and positive’, particularly in education and development of the Tribal Areas. He said defence co-operation between the two countries would also continue.

The German foreign minister said the issue of cross border attacks inside Pakistan by US-led forces was Pakistan’s internal matter and it was the prerogative of Pakistan to decide on such matters.

He appreciated the ongoing jirga between Pakistan and Afghanistan and hoped that the process would continue and help calm down the situation in the Tribal Areas.

He said political ties between Pakistan and Afghanistan need to be enhanced, as they were vital for achieving stability in the region.

Steinmeier also mentioned eight ‘partner schools’ in Pakistan to boost co-operation between the Pakistan and Germany in the education sector.

He urged the world to help Pakistan meet its challenges.

 

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Pakistan calls for steps to meet N-energy demand​

* Delegate says IAEA should ensure equitable access to nuclear materials, technology and equipment for peaceful purposes​

UNITED NATIONS: Pakistan on Tuesday called for evolving a universal and non-discriminatory criterion that would ensure every state’s right to peaceful nuclear energy use to meet the growing worldwide energy demand.

“In this regard, principles should be placed above expediency and commercial interests,” Raza Bashir Tarar, the Pakistani delegate to the United Nations General Assembly said on Monday, while reaffirming Pakistan’s commitment to nuclear non-proliferation.

“A non-discriminatory approach in promotion of civilian nuclear co-operation would help reinforce confidence and creditability in the IAEA (International Atomic Energy Agency) safeguards system and strengthen the non-proliferation regime,” he said.

Access: Tarar said the agency could make a ‘significant’ contribution in meeting the century needs by ensuring equitable access to nuclear materials, technology and equipment for peaceful purposes.

The agency’s founding ‘Atoms for Peace’ paradigm must be at the centre of any future vision, he said, explaining that such a vision could be ensured only with a balance between its promotional activities, and work in verification, nuclear safety and security.

The Pakistani delegate urged the agency to maintain its focus on its technical promotional character.

He also appreciated the Department of Technical Co-operation’s excellent programme delivery. For its part, Pakistan was prepared to contribute to the agency’s promotional activities.

Pakistan had advocated harnessing nuclear technology for peace, and had developed the entire range of the nuclear fuel cycle facilities, Tarar said, noting that two nuclear power plants were in operation, a third was under construction, and plans were under way to establish a uranium conversion and enrichment facility.

He added that he looked forward to the agency’s assistance to complete its nuclear power generation plan.

Tarar said Pakistan’s atomic energy development programme had always recognised nuclear safety and security, in the national and international context, as a vital objective, and the government had followed guidance contained in the agency’s Code of Conduct on the safety and security of radioactive sources.

Tarar reiterated Pakistan’s commitment to nuclear non-proliferation, noting that his country’s track record on safeguards was ‘immaculate’. app

 

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‘Karachi to have 550MW power plant in 14 months’ ​

KARACHI: City Naib Nazim Nasrin Jalil has said that the Ministry of Water and Power (Private Power and Infrastructure Board) has given approval to the setting up of a 550 MW power generation station in Karachi that will be installed by UAE’s Dhabeen Power Engineering Company.

Besides power generation, the plant will also supply 50 mgd water. In this regard Nasrin Jalil thanked Federal Minister Raja Parvaiz Ashraf and MNA Faryal Talpur. Talking to Dhabeen Engineering CEO Tanvir Zaidi at her office on Tuesday, the naib nazim said that after the power station goes into operation, it would greatly help in overcoming the ongoing power shortage and difficulties being faced by the citizens.

She said the plant would be setup in the area of Lyari Development Authority that will particularly help Lyari’s youth to get jobs. She said the company would also establish a training centre here to produce technicians for the power plant. On the occasion Tanvir Zaidi thanked Sindh Governor Dr Ishratul Ebad Khan, City Nazim Mustafa Kamal, Naib Nazim Nasrin Jalil, MNA Dr Farooq Sattar and Dr Mohammed Ali Shah whose efforts and interest resulted in the federal government giving approval to the setting up of 550 MW power plant in the city. He said the plant would become operative in 14 months after issuance of letter of support from the government. He said in the first phase, 350 MW of electricity would be supplied, followed by 550 MW and 50 mgd water in the second phase, while an addition of 1800 MW would be supplied in the third phase along with desalination and supply of 150 mgd seawater. He said in the third phase, the plant would be run on coal gas. app

 

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PM urges Turkish businessmen to invest in Pakistan​

* Pakistan, Turkey vow closer defence, energy, trade ties
* Erdogan urges international community to extend co-operation to Pakistan​

ANKARA: Prime Minister Syed Yousuf Raza Gilani on Tuesday asked Turkish investors to take full advantage of Pakistan’s investment friendly atmosphere and assured them the government would extend full support and co-operation to them.

Addressing a luncheon reception hosted in his honour by Union of Chambers and Commodity Exchanges (TOBB), Gilani said, “Pakistan offers vast investment opportunities in the sectors of energy, oil, gas mining, engineering, automobiles, infrastructure development, construction, IT and Telecom, health, education, agri-business as well as small and medium enterprises.”

“We would welcome Turkish brothers to invest in any sector and we assure you that your investment will bring rich dividends in the lines of those already doing in wind energy and thermal power stations,” he said.

The prime minister said the government had implemented measures to encourage foreign investment with liberal foreign exchange framework and full legal protection to foreign investment.

“All sections of the economy are now open to foreign investment. Foreign investors can hold 100 percent equity and the business opening process has been extremely easy,” Gilani said.

He thanked the TOBB for its initiative in developing business in Pakistan, especially in the fields of construction, power generation, auto and textile industry.

Reaction: Gilani said the deteriorating law and order in Pakistan was in reaction to the military action taken by the government against terrorists. However, he said the situation was improving due to the timely government action.

The prime minister said he was confident that the private sectors of Pakistan and Turkey would join hands with the governments of the two countries to create greater links and inter-dependencies for the mutual benefit of the people and contribute towards the strengthening of brotherhood.

Gilani said Pakistan and Turkey shared common interests and aspirations and the strategic partnership was a factor for global peace, stability and progress.

“We are united in our desire to promote the peaceful resolution of all international disputes, including Cyprus and Kashmir and the promotion of mutually beneficial co-operation among all countries,” he added.

Gilani also expressed gratitude on behalf of the people of Pakistan for the sacrifices made by the Turkish people whenever Pakistan faced adversity, especially after the 2005 earthquake.

Meanwhile, after bilateral talks between the prime ministers of the two countries, Islamabad and Ankara vowed to further strengthen their bilateral relations in defence, energy, commerce and communication sectors and set up a target to raise annual bilateral trade to $1 billion.

Addressing a joint press conference with Gilani after bilateral talks, Erdogan appreciated Pakistan’s role in the war on terror and urged the international community to extend full support to the country.

The two countries also agreed to enhance their bilateral relations in trade, economic, defence and communication sectors.

Co-operation: Erdogan said Turkey would provide more assistance to Pakistan in the defence sector and had already offered to provide expertise in F-16 upgradation and joint production of 973 GMC trucks. He said more joint ventures in defence production were being discussed at the highest level.

AFP quoted Erdogan as saying the two sides were working on a defence agreement.

Erdogan said a trilateral summit of Pakistan, Turkey and Afghanistan would soon be held in Turkey to ensure peace in the region. agencies

 

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2-hour load shedding respite as 1,000MW added to system​

ISLAMABAD: With the addition of 1,000 megawatts of electricity to the national grid station, the Pakistan Electric Power Company (PEPCO) has cut the load shedding duration by 2 hours across the country. PEPCO sources told Daily Times that following President Asif Ali Zardari and Water and Power Minister Raja Pervez Ashraf’s intervention, 90 million cubic feet of gas (MMCFD) were now being supplied to thermal power plants across the country – a move that had increased the production of electricity. One third of the additional supply is being provided by the Sui Northern Gas Pipeline Limited.

The sources said that two 300-megawatt power plants in Muzaffargarh had also started their operations, and the increase in water levels at Margala had also added to the power generation capacity of the country. They said that all these steps had led to a reduction in the number of loadshedding hours a day. In addition, the Indus River System Authority (IRSA) has decided to increase the flow of water from Mangla and Tarbela reservoirs for Rabi crops from November 1 – which would also facilitate the generation of power. zafar bhutta

 

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Pakistan resisting IMF's insistence on 3.5 percent hike in SBP discount rate​

ISLAMABAD (October 28 2008): The talks between Pakistan and the International Monetary Fund (IMF) to build up country's foreign exchange reserves with a clear objective to enable it avoid default are expected to conclude in Dubai, UAE, on Wednesday. While an agreement on most of the performance, as well as indicative, criteria, has reportedly been reached one thorny issue is still needs to be settled - the Fund insistence that policy rate by the State Bank of Pakistan is raised further.

-- Agreement on containing fiscal deficit for fiscal year 2009 at 3.9 percent of GDP.

-- IMF prescription would push over 5 million more people under the poverty line and render 1.5 million jobless.

According to informed sources in corridors of power, the Fund staff is insisting on a 3.5 percent hike in the SBP discount rate which, at present, is 13 percent. Six months KIBOR is around 14.7 percent and most corporates are already paying interest in the range of 16 to 17.5 percent.

Pakistani negotiators while agreeing to a partial increase have produced empirical evidence of industrial slowdown resulting in the erosion of corporate profitability and therefore an adverse impact on tax collection. According to the module - IMF's prescription would push over 5 million more people under the poverty line (ie falling below $1 a day) and render 1.5 million jobless.

Due to an abnormal rise in oil prices and mismanagement in administered prices of food, the year-on-year inflation has nearly doubled from 16 percent in February 2008 to 30 percent in November. The period average for July to September is 32.6 percent.

The non-food, non-energy inflation is half of this, ie, 16.1 percent. This is basically due to high government borrowing from SBP. This is inflation financing by the government and Fund wants to bring this borrowing under control. Pakistan is reportedly asking for a pause in further hike in SBP discount rate.

The Fund wants further tightening and wants the Budget deficit is reduced from 4.7 to 3.5 percent. According to informed sources, the two sides have agreed to contain the fiscal deficit at 3.9 percent of GDP for FY-09. It was also learnt that the recent government decision to restrict the electricity tariff hike and allow consumers to pay 60 percent of the bill for month of September was frowned upon by the Fund staffers.

However, the Pakistan side reportedly convinced the Fund that the hike would substantially reduce the government subsidy. With oil prices coming down, the government will have more space to fully eliminate the subsidy like it has happened in the case of POL products.

In the stabilisation programme the Fund had presented tough conditionalities like cut in budget deficit, privatisation of government managed entities and liberalisation of markets. However, the stance taken by US and European authorities in the current crisis shows that the old IMF needs to diverge from its old script and agree to policy prescriptions that improve long-term sustainability without crippling the short term outlook.

Asking Pakistan to increase the lending rates looks rather odd at a time when the world is cutting them to counter a growth slowdown. Pakistani authorities hope that the Fund would soften the stand and avoid unacceptable political strings. Pakistan is banking on its friendly countries dominating the Fund Board for help in this regard.