Pakistan Economy - News & Updates - Archive

[RabzonKhan]

Stand-by arrangement with the Fund

EDITORIAL (November 18 2008): Adfter showing a great deal of reluctance, at least outwardly, the government of Pakistan has made the right move to avail itself of the stand-by facility of the International Monetary Fund (IMF). Announcing the decision, the Advisor to the Prime Minister on Finance, Shaukat Tarin said that the minimum amount of the bailout package would be $7.6 billion or five times of our quota in the Fund and the interest rate on the loan would range between 3.51 and 4.5 percent per annum.

The Facility will be available over a period of 23 months or seven quarters and Pakistan would be required to pay back the loan amount from 2011 to 2016. Making a simultaneous announcement from Washington, IMF's Managing Director, Strauss-Kahn added that this support was part of a broader package that includes financial assistance from other multilateral institutions and regional development banks.

He called on the donor community to act quickly to support Pakistan's programme in order to mitigate the impact of the current economic difficulties of the poor and ensure an adequate level of spending on development programmes.

It was also asserted in a press statement that Pakistan's programme was meant to restore the confidence of domestic and external investors by addressing macroeconomic imbalances through a tightening of fiscal and monetary policies and to protect the poor and preserve social stability through a well-targeted and adequately funded social safety net.

Giving the background which necessitated recourse to the Fund programme, Tarin highlighted the fact that Pakistan was facing challenging economic conditions brought about by a combination of global shocks, inaction of the previous government in certain key areas and the ongoing financial crisis hitting every part of the world.

The ultimate reflection of what has happened to Pakistan's economy is seen in the massive loss of exchange reserves from $16.4 billion in October, 2007 to less than $7 billion at present.

Other indicators of economic stress are the slowdown in growth, rising inflation, excessive expansion in monetary assets (21 percent reserve money growth during 2007-08), rising fiscal deficit, depreciating exchange rate (21.8 percent since March, 2008) and a steep decline in stock market valuation.

Salient features of the programme proposed by Pakistan are a sharp reduction in fiscal deficit from 7.4 percent to 4.3 percent of GDP, zero net borrowing from the State Bank, slowdown in monetary growth (M2) to 14 percent, monetary tightening stance of the central bank, adherence to exchange rate flexibility, raising of tax to GDP ratio from 9.6 percent to 15 percent over the next 5-7 years and the provision of adequately funded social safety net (SSN).

The Advisor was very frank in admitting that the government had approached the multilateral agencies and friendly countries to support our programme and help plug the financing gap. They were willing "to give us a helping hand" but advised us to get the endorsement of our programme from the IMF. The IMF, when contacted, showed a positive approach and felt that our targets were reasonable except the interest rate which was proposed to be enhanced further to curtail the core inflation.

The Advisor to the Prime Minister on Finance has, in our view, made a good case and provided adequate justification for going to the IMF and seeking its assistance at a time when major indicators of the economy were fast deteriorating or becoming untenable.

In order to placate the negative sentiments against the IMF prevailing in the country, it was also essential to establish that the financing gap was huge and no other source was willing to come forward to provide the needed assistance until and unless the programme was endorsed by the IMF and backed by its tangible assistance.

After the approval of the programme by the Fund Board, which is almost a certainty, we are sure that financial inflows including an amount of $4.5 billion from the IMF during 2007-08 would be enough to keep our foreign exchange reserves at a comfortable level and maintain solvency of the country.

A great advantage of the Fund programme would be restoration of credibility in our reform effort and the faith of international community that the country would soon regain macroeconomic stability. This will encourage both domestic and foreign investors and give a lot of comfort to donors and other multilateral agencies.

The improved investment environment coupled with the expected reduction in the imbalances in the economy would definitely help in overcoming the economic difficulties now being faced by the country. The claim by Shaukat Tarin that the programme was mostly home grown was probably directed to show that economic policies of the country would not be dictated by the IMF.

This was perhaps not needed because everybody knows that conditionalities are agreed by mutual consultations. It was another matter if, keeping the past experience in view, economic managers of the country were already aware of the IMF prescriptions and willing to accept them beforehand for successful negotiation of the programme at an early date.

However, experience suggests that negotiation of the programme is the easier part. The devil is in its details and implementation. For instance, while measures like tightening of monetary policy and maintaining exchange rate flexibility could be undertaken without much resistance, fiscal part of the programme would be most difficult to implement.

The Government of Pakistan has pledged to increase tax to GDP ratio to 15 percent in the medium term, reduce the budget deficit from 7.4 percent last year to 4.3 percent this year and maintain a strict financial discipline throughout the programme period. This would call for measures like imposition of income tax on exempted sectors and withdrawal of subsidies, besides pruning of both current and development expenditures.

Although it is well known that worsening fiscal outcome is the root cause of most of the economic problems of the country, the above mentioned measures are likely to be resisted all the way, risking the derailment of the programme. The recent uproar against the privatisation of Qadirpur gas field and increase in electricity tariff is a rough indication of the things to come.

Wriggling out of the Fund programme under public pressure would be highly regrettable and sure to hurt the image of the country very badly. Unfortunately, opposition parties of the country are not known for extending a helping hand to the government in matters of fiscal prudence and preparing the public for necessary sacrifices.

While Pakistan has its own difficulties, IMF also needs to change its outlook in order to ensure successful conclusion of its programmes. Assistance of $7.6 billion over a period of two years appears to be small compared to the projected current account deficit during this period and reflects the desire of the Fund to keep the country on a tight leash.

It would have been better to increase the loan amount under the Facility to about $10 billion so that economic managers of the country could fully concentrate on the reform process without feeling the need to run in other directions and negotiate for funds from other sources.

Also, the broad parameters of the (detailed conditionalities are not yet available) the terms agreed with the Fund indicate that compression of demand has been given more importance than supply side imperatives to restore macroeconomic stability. We feel that a Fund programme should be so devised that it is desirable and doable without inflicting an intolerable degree of pain.

 

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Sugarcane output may fall by 40pc in Sindh ​

Tuesday, November 18, 2008

KARACHI: Future of Sindh’s sugarcane crop seems bleak as delays in payments to growers as well as in crushing season have forced the growers to switch over to other crops, this year alone Sindh would face drop of more than five million tonnes in the cane production.

Last year Sindh’s sugarcane production remained around 14 million tonnes, this year it is expected to come down by 40 percent to less than nine million tonnes. This would result in huge sugar shortage by the end of next year. “We expect shortage of more than 40 percent,” said Cane Commissioner Sindh.

Each year the month of November witnesses protests and blames of growers and millers against each other. This year it is yet to start despite of delay in the crushing season by the millers.

Officially, crushing of the sugarcane was to start from 10th November but, due to policies of the sugar mills and strong involvement of its owners in the government, the officials remain reluctant to take action against them, Abdul Majeed Nizamani, President Sindh Abadgar Board told The News.

With exception to three sugar mills out of 30 operational mills, none started crushing cane on time resulting in losses to the growers as well as future of the sugarcane crop. It is no more a cash crop as, “More than Rs200 million are not paid to the growers from last year’s crop only,” said Nizamani.

Umer Latif, spokesperson PSMA Sindh zone when asked about the delay in crushing season told The News that it was not necessary that all mills have to start simultaneously, “it is not lunch that all eat together, some have to take time, which does not matter,” he said.

Some very influential mill owners are part of the current government set up and the officials were not taking any action against them. However, Cane Commissioner Sindh said they would take the ‘legal action’ against the mills if they failed to start crushing in this month.

Abdul Majeed Nizamani said influential groups own around 12 mills. “I don’t think anyone would take action. I don’t see any change. Two important persons like Chairman Pakistan Sugar Mills Association (PSMA) Pakistan and PSMA Sindh chapter were also silent on the issue.

Nizamani said that during his visit to Badin district he found that several sugar mills were not working. “Badin Sugar mills, Bawani sugar mills, Khoski Sugar mills, Army Welfare Sugar Mills, Pangrio Sugar Mills, Mirza Sugar Mills and Deewan Sugar Mills were silent,” he said.

Tando Muhammad Khan Sugar Mills and Sehri Sugar Mills were also having no activity on Thursday. Delaying in the crushing season results in loss to growers in three ways. Firstly, the crop loses weight and farmers get lesser amount for their yield.

Secondly, sugarcane crop needs more water and delay in harvesting causes wastage of water, which could be used in the cultivation of wheat. Thirdly, the sugarcane land would not be ready for wheat cultivation.

These three reasons besides delayed payments by the sugar mills have forced the growers to move towards other crops. “People cultivating around 200 acres have shrunk their sugarcane crop to 25 acres. I don’t see much crop on land,” said Nizamani.

More than Rs800 millions of the growers are outstanding towards sugar mills from the crop of 2007-08 only. There are also some payments from 2005-06 and 2006-7 crops towards some mills. “Time is the best tutor, now price security and peak season are gone. Growers would leave sugarcane and go to the other crops,” said the Abadgar Board President.

Cane Commissioner Sindh, Nazeer Jamali said the official date of starting sugarcane crushing was November 10, but only three mills started making sugar. Twenty mills fired boilers. Three sugar mills lit up boilers on Nov 12 and four were yet to start till Thursday evening. Whether government was willing to take action, the cane commissioner said, “the action goes through process and we would take it.”

Cane Commissioner said the growers were not in a hurry as sugarcane was not mature. On the contrary, sugar mills were worried about the quantity of the sugarcane. He said owing to pest attack and water shortage, more than 40 percent decline is likely to occur in the crop this year as compared to last year. A loss of 15 percent land use was also recorded, he added.

Jamali did not say any word about the decline in the crop due to policies of the sugar mills, which had been delaying payments and the cane crushing season most of the times.

After igniting their boilers the sugar mills must keep them burning using ‘baghas’ - local name for fuel made sugarcane waste. “All mills would start crushing from this week, the Cane Commissioner said.

Contradicting the Cane Commissioner, Syed Qamar ul Zaman Shah, Chairman Sindh Chamber of Agriculture said the crop was ready by the start of September. PSMA, on the other hand, requested the government for the import of raw sugar before the end of the season, as crop shortage would lead towards the increase in prices and shortage of sugar.

But growers have decided to block the move to allow millers to import raw sugar instead of buying sugarcane from local farmers, “we would oppose it,” Syed Qamar ul Zaman Shah vowed.

 

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LSM depicts negative growth of 6.76pc ​

Tuesday, November 18, 2008

ISLAMABAD: Hard hit by acute energy shortage, the Large Scale Manufacturing (LSM) sector during September 2008 registered negative growth of 6.76 per cent.

Three months (July-September) 2008-09 average growth also stood at negative 6.20 per cent over the same period of the last fiscal, the Federal Bureau of Statistics (FBS) reported on Monday. Pakistan economy is facing negative industrial growth for the last four months consecutively and the State Bank’s decision of increasing its discount rate by 200 basis points to 15 per cent would further deteriorate the situation, as economic pundits believe that this would resultantly increase unemployment in the country. According to the FBS latest bulletin on the large manufacturing industries, during the first quarter (July-September 2008-09), the hard hit sectors were the steel and petroleum.

Coke production declined by 1.50 per cent to 73,244 million metric tons (mmt), pig iron by 10.95 to 234,255mmt, billets/ingots by 39.26 per cent to 525,862mmt and H/C.R Sheets, strips, coils and plates production declined by 22.04 per cent to 849,733 million metric tons. During July-September 2008-09, the petroleum products production declined by 5.41 per cent to 3.376 billion liters.

Within the petroleum group, diesel oil production declined by 28.80 per cent to 31.8 million liters, jet fuel oil by 12.81 per cent to 310 million liters, Liquefied Petroleum Gas (LPG) by 19.19 per cent to 109 million liters, lubricating oil by 4.19 per cent to 55.2 million liters, jute batching oil by 14.59 per cent to 1.15 million litters, furnace oil by 6.66 per cent to 876.87 million litters, motor spirits by 9.89 per cent to 448.5 million litters, solvent naptha by 4.89 per cent to 291.3 million litters and other petroleum production declined by 18.20 per cent to 75.42 million liters over the same cycle of the last fiscal year.

Some categories of the sector gave encouraging figures as kerosene oil production up by 7.36 per cent to 68.17 million liters and high speed diesel increased by 3.04 per cent to 1.11 billion liters, during the period under review, cotton cloth production reduced by 0.88 per cent to 254.54 million square meters and cotton yarn by 0.55 per cent to 736,336 metric tons.

According to the FBS figures, production of buses declined by 41.25 per cent to 198, jeeps and cars by 47.16 per cent to 24,412 and motor cycles production edged down by 8.49 per cent to 222,876. However, tractors production during these three months increased by 5.14 per cent to 12,261, trucks 14 per cent to 993 and LCVs production up by 27.17 per cent to 5,981. Cement production increased by 0.64 per cent to 6.74mmt, nitrogen fertilizers by 5.31 per cent to 631,648 metric tons and Phosphatic fertilizers production increased by 8.65 per cent to 126,041 metric tons during July-September 2008-09.

The figures reveal that production of most of the electronic goods declined i.e. deep freezers production dip by 29.2 per cent to 29,041, electric bulbs by 21 per cent to 27,065, electric tubes by 11 per cent to 3,654, electric motors 32.43 per cent to 2,398, electric transformers by 5.86 per cent to 7,256, electric meters 19 per cent to 312,716, switch gears by 22.78 per cent to 3,319, TV sets by 10.83 per cent to 133,442, air conditioners by 22.55 per cent to 69,937 and refrigerators production decline by 1 per cent to 228,653.

Vegetable ghee production down by 12.49 per cent to 250,925 metric tons, cooking oil by 8.55 per cent to 62,085 metric tons, wheat and grain milling by 10.4 per cent to 1.15mmt, beverages 17.82 per cent to 1.98 billion bottles, woolen and carpet yarn by 6.13 per cent to 658 metric tons, knight wool 5 per cent to 800 metric tons, upper leather by 1.58 per cent to 5.1 million square meters, sole leather by 14.29 per cent to 24 metric tons, cycle tyres by 37.27 per cent to 741,000, cycle tubes by 42.44 per cent to 1.69 million, sugarcane machines by 52.84 per cent to 133, power looms by 62.42 per cent to 62 and bobbins and shuttles production dip by 15.38 per cent to 22,000 during the quarter review over the corresponding period of the last fiscal.

The commodities which witnessed growth in their production during July-September 2008-09 over the same period of the last FY, included tea blended whose production up by 10.82 per cent to 15,212 metric tons, footwear 26.59 per cent to 8.43 million pairs, plywood by 59.61 per cent to 23.8 million square feet, paint and varnishes (S) by 30.58 per cent to 7,818 metric tons, paint and varnishes (L) by 25.74 per cent to 17.5 million litters, motor tyres by 5.84 per cent to 1.9 million, motor tubes 22.78 per cent to 3.56 million, diesel engines by 18.28 per cent to 5,158 and wheat threshers production up by 20.3 per cent to 243.

 

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Pakistan 8th biggest gold consumer ​

Lack of hallmarking resulting in country losing exports​

Tuesday, November 18, 2008

LAHORE: Pakistan is the eighth biggest consumer of gold in the world and annually imports 127 tonnes gold but unfortunately there is no consumer satisfaction and Pakistani jewellery industry suffers from unfair competition by those who under-carat gold and therefore sell at a lower price.

Non-existence of hallmarking results in Pakistan’s increasing loss of exports, self-dependence and less acceptability of Pakistani jewellery products in local and global markets. These views were expressed by the speakers at a seminar titled “Latest Trends in Jewellery Hallmarking”, organised by Pakistan Gems and Jewellery Development Company (PGJDC).

Speaking on the occasion Project Director (PITMAEM), PCSIR Dr Shahzad Alam said that in order to improve the quality of jewellery products, complete quality assessment and hallmarking of gold is imperative.

He informed that hallmarking refers to physically marking a piece of jewellery according to specific laws to certify the purity of metal. Hallmarks are small markings stamped on gold, silver and platinum articles.

A hallmark means that the article has been independently tested and guarantees that it confirms to all legal standards of purity (Fineness). These tests are carried out only by an assay office. A number of successful jewellery industry in the world use hallmarking both as a marketing tool and to ensure consumer confidence, he added.

PGJDC CEO Fawad H Khan informed that the decision to develop hallmarking in Pakistan is part of national strategy submitted by SWOG and ministry of industry’s support. It was aimed at helping Pakistan’s small and medium sized enterprises to reposition themselves on a more competitive footing in the domestic and global markets.

Fawad said that apart from other countries of the world implementation hallmarking law in Pakistan would help country increase its export to approximately 18 signatories’ countries of Vienna convention. He said that the main objective is to create awareness among common people and to improve the image of our local jewellery industry at international levels.

He informed that PGJDC is working on setting up an assaying and hallmarking system with the help of government organisations like (PITMAEM, PCSIR Labs complex) and to develop a strong cooperation between local and international manufacturers of gold jewellery.

 

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‘Pak hydropower plans viable investments’ ​

Tuesday, November 18, 2008

LAHORE: Secretary Economic Affairs Division Farrukh Qayyum has said that the ongoing as well as upcoming hydropower projects in Pakistan provide excellent investment opportunities because of their attractive Economic Internal Rate of Returns (EIRR).

An international donors’ conference was held Monday for seeking financial assistance for various hydropower projects, especially Neelum-Jhelum Hydroelectric Project. The delegates of the Islamic Development Bank, Saudi Fund for Development, Kuwait Fund for Development and Abu Dhabi Fund for Development attended the conference.

WAPDA Chairman Shakil Durrani said that besides enhancing the water storage capacity, hydropower development is the prime focus of attention of WAPDA, as Pakistan has been blessed with a potential of generating more than 54,000 MW of hydropower.

He said that construction work on 969-MW Neelum-Jhelum Hydroelectric Project has already started early this year, while pre-qualification of the civil contractors for 4,500 MW Diamer-Basha Dam Project is underway.

Construction work on this gigantic project will start next year following the award of contract through international competitive bidding. Likewise, Golen Gol Hydropower Project of 160 MW is also ready for construction, he added.

WAPDA Chairman further said that the feasibility studies and detailed engineering designs of various other hydropower projects with accumulative generation capacity of 21,000 MW are also being carried out by the world renowned consultants. Most of these studies would be completed by the next year. These include Kohala (1,100 MW), Dasu (4,000 MW), Bunji (5,400 MW), Munda (760MW). He said that these projects could be undertaken with the involvement of the private foreign as well as local investors.

NJHEP General Manager Hasnain Afzal and Consultant Grosskops made presentation to the delegates on the project.

 

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FDI growth low ​

Tuesday, November 18, 2008

ISLAMABAD: Foreign Direct Investment (FDI) to Pakistan during the first four months of the fiscal year 2008-09 was up by only 0.15 per cent to $1.321 billion as compared to the corresponding month of the last fiscal 2007-08, when it stood at $1.319 billion, the State Bank of Pakistan (SBP) reported on Monday.

Portfolio investments however, dipped by 146 per cent to negative $158.68 million during July-October 2008-09 against the corresponding period of the last fiscal year when it stood at $345.65 million.

It is a well know fact that Pakistan is a place where profit ratio is high compared to other countries of the region and at the moment various countries and business tycoons are interested to invest in Pakistan. Economic experts believe that stabilising the political and economic situation would help boost investment inflow in the country.

According to the break-up of investment by region, developed countries direct investment in Pakistan declined by 35 per cent to $611.7 million and its portfolio investment declined by 147.5 per cent to negative $165.4 million. During the same period of the last fiscal, the economy fetched $940.6 million FDI and about $348 million portfolio investment.

Among developed countries, Western Europe made a direct investment $257 million, while it withdrew $56.6 million portfolio investment from the economy. Last year in the same month its FDI stood at $232.6 million and portfolio at $31.9 million. European Union FDI stood at $150.5 million and portfolio at negative $24.4 million against last year’s FDI of $156.5 million and portfolio at $57.4 million.

Interestingly, developing economies FDI into Pakistan increased substantially. These economies’ direct invest into the country was up by 89.6 per cent to $546.8 million and portfolio investment by 221.5 per cent to $5.8 million. Asian countries (West Asia, South, East and South East Asia) direct investment in Pakistan was up by 137.9 per cent to $492.8 million against $207.1 million recorded in previous year.

USA was the major investor in Pakistan with total FDI of $270.3 million. However, it was 58 per cent less than what it invested in the corresponding period of the last fiscal ($643m). It also withdrew its $104.6 million portfolio investment, which stood at $339 million in the corresponding period. Singapore was the second major investor in Pakistan with total FDI of $219.4 million against $17.5 million in same period of the last fiscal. Malaysia was the third, with FDI of $205.9 million.

United Kingdom’s (UK) direct investment to Pakistan stood at $95.6m, experiencing a dip by 14.9 per cent as during the same period of the last fiscal it stood at $112.3m. Mauritius’ FDI in Pakistan stood at $63m, Switzerland $56m, Norway $50.3m, Hong Kong $41m, Japan $31.1m, Netherlands $27.3m, Australia $25m, Sweden $16m, Saudi Arabia $12m, Germany $10.6m and Bahrain direct investment in Pakistan stood at $10.5m.

 

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Power generation from Thar Coal to start in next five years: Raja Pervaiz ​

Tuesday, November 18, 2008

KARACHI: Federal Minister for Water and Power, Raja Pervaiz Ashraf on Monday said power generation from Thar Coal deposits will start within the next five years. Presently, the country is short of 3500 MW to 4000 MW of electricity.

Another major step in this direction is the construction of Bhasha Diamir dam and the contract of which has been awarded to the Chinese Consortium. The project has 25,000 MW identified potential. China excels in the construction of dams.

The Minister was talking to the media during a seminar on “Energy Trade in South Asia: Prospects and Challenges for Regional Integration “ here. The seminar was organised by SAARC Chamber of Commerce and Industry (SCCI) led by Tariq Sayeed, in collaboration with the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

He said Pakistan is a very attractive land for foreign investment. “We floated bids of $1.5 billion for the dam but received offers of $4 billion with bank guarantees,” he said. He informed that a Turkish Company was installing a windmills power generation project with the capacity of 1000 MW.

The Government has also purchased 1100 MW from Iran for Balochistan. He said under the long term plan, we need $13 billion for power generation, $10 billion out of which will be from the private sector, he said.

Pervaiz noted by the end of 2009, there will be no load-shedding in the country. The Federal Minister said that the present government was trying its best to provide maximum relief to the common man despite the economic recession, which is a global phenomenon. “We will cut power rates in line with international oil prices,” Raja Pervaiz Ashraf said. The major component of power generation in the county is oil-based. Sixty-five per cent of total generation is thermal, which is certainly costlier than other hydel and coal fired generation.

He said the government has offloaded the burden of $4 billion from the shoulders of the public by revising the electricity tariff. Now, the government will have to bear the burden of $117 billion. He said the PPP led government was very concerned about the people’s grievances and all its policies/decisions are meant to provide relief to them, instead of accepting any outside dictation. He also clarified that those who have paid the excess amount of electricity bills will get the respective amounts adjusted in their next bills.

 

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Pakistan may lose compensation from India in Rabi season ​

Tuesday, November 18, 2008

ISLAMABAD: Pakistan may lose the opportunity of getting compensation from India in the current Rabi season as New Delhi is constantly engaged in delaying tactics to avoid the resolution of the issue of Chenab water stopped at the Baglihar Dam, The News learnt on Monday.

“The water will be of no use in case not available in the ongoing six-month Rabi season and the Indian authorities are attempting to delay the things despite reminders and warnings on the part of Islamabad,” official sources said at the Ministry of Water and Power and the Foreign Office.

There are three channels — the Foreign Office, the Indus Waters Commission and the highest level (president, prime minister) — to take up the issue with the neighbouring country to ensure that more than 200,000 cusecs of water blocked at the Baghliar Dam is restored within the Rabi season — from October 2008 to March 2009.

At present, the Foreign Office is comparatively slow moving and there is no progress since President Asif Ali Zardari announced to write a letter to the Indian prime minister to get back the blocked water.

Neither is the Foreign Office active nor there is any headway to formally write letters on behalf of the president. However, the Pakistani officials of the Indus Waters Commission have formally approached their Indian counterparts, reminding them of the pending issue. But, so far, New Delhi is tight-lipped.

At the same time, neither the Foreign Office nor any other body has planned to move

the World Bank for arbitration or appointment of a neutral expert on the pending issue

as a further delay would ultimately damage the interests of Pakistan.

“We have formally reminded and offered the Indian Indus Waters commissioner to come along with his team in the last week of this month (November) to examine the Marala water inflows as per their demand,” said Pakistani Indus Waters Commissioner Syed Jamaat Ali Shah when contacted.

He said that the Indian commissioner had promised to respond by Tuesday (today) or Wednesday (tomorrow) to give a reply on the formal invitation in the backdrop of the New Delhi talks held between the two sides at the platform of the bilateral commission on October 23-24.

The session was called after President Zardari personally took up the matter with Indian Prime Minister Manmohan Singh in their meeting in New York.

In the session, the Indian side had not only refused to compensate either in the form of commodity or cash but also rejected the data presented by Islamabad and the violation of the Indus Waters Treaty, 1960, which their country had committed.

There was a big gap between the statistics presented by the Pakistani team and the Indian officials. Pakistan had accused India of stopping huge quantity of water to fill the Baglihar Dam without maintaining the discharge under the Indus Waters Treaty. This was not only untimely but also caused a substantial decrease in the flow of the Chenab River, causing losses to standing crops in the Punjab.

Pakistan had demanded compensation for stopping the water and called for releasing the same quantity in the Rabi season.Islamabad heavily depends on the waters from India in the season as the flow of the Indus River decreases due to slow snow-melting on glaciers.

 

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IHC to decide Munda Dam case in two months ​

Tuesday, November 18, 2008

ISLAMABAD: A division bench of the Islamabad High Court (IHC) here on Monday announced its decision in an intra-court appeal of awarding the contract of building the Munda Dam to Wapda.

The division bench, comprising Chief Justice Sardar Muhammad Aslam and Justice Raja Saeed Akram, directed a single bench of the august court to decide the matter within two months, while the stay orders on building of the dam by Wapda would remain effective during this period.

In its appeal before the IHC, the Munda Hydro Power Project Company had stated that it had been given the project for building the dam. After approval of the project, it even prepared its feasibility report. The company challenged the decision of the government to give away the contract of the project to Wapda.

In its decision, the IHC said that during this period, both parties could furnish some additional facts before the court. Earlier, the company had filed a petition before the IHC for grant of stay in the case.



A single bench dismissed the petition, but a division bench of the IHC granted stay in the case. The plaintiffs have filed a civil suit for US $1.2 billion against Wapda, Private Power Infrastructure Board (PPIB), government of Pakistan and government of NWFP.

 

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Shahbaz seeks Chinese help to tap ME market ​

Tuesday, November 18, 2008

LAHORE: Punjab Chief Minister Shahbaz Sharif said on Monday that cooperation between Pakistan and China in the agriculture sector could help tap huge Middle East market.

According to a DGPR handout, the chief minister, talking to the Chinese Vice-Minister for Agriculture Niu Dun, said Punjab is the granary of Pakistan and it could export its finished agriculture products to the Middle East and beyond with the cooperation of China. He said Middle East was importing agricultural products from America, Europe and Far East.

“China has made tremendous achievements in the field of agriculture,” Shahbaz said and added, “We have come here to share your experience and use it in our country for the common benefit.”

Shahbaz said Punjab produces 70 per cent of total agriculture produce in Pakistan. He said in Punjab there were small dams to provide irrigation water to adjoining areas, but to further develop the sector he would like to seek Chinese advice on how to grow crops with minimum water. In this regard, he especially mentioned drip and pressurise irrigation systems.

The chief minister identified various areas of cooperation and said his government would also seek advice and cooperation from China on the construction of water reservoirs on River Chenab. He said water stored in the reservoir could greatly help the farming community for crop cultivations when there was a shortage of water.

Earlier, welcoming the chief minister and his delegation, the Chinese vice-minister said his visit would further enhance cooperation in the agriculture sector between the two sides. Meanwhile, chairman of Chinese People’s Political Consultative Conference (CPPCC) Jia Qinglin has lauded Nawaz Sharif for strengthening relations between China and Pakistan. During a meeting with Shahbaz Sharif at the Great Hall of the People, he said Nawaz had made commendable efforts for strengthening economic, trade and cultural relations between the two countries.

APP adds: Identifying areas of trade and economic cooperation between Pakistan and China, Shahbaz said partnership in the fields would greatly help cement bilateral bonds. He expressed these views in a meeting with Chinese Vice-Minister for Commerce Chen Jian.

The Punjab chief minister said he was impressed by the network of flyovers and expressways in Beijing and invited China to come forward and contribute to the development of the road network in Punjab.

 

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Construction of dams a must to meet energy crises: Wapda chief ​

Tuesday, November 18, 2008

PESHAWAR: Chairman Wapda Shakil Durrani said construction of big and small dams was the utmost requirement of the country so that the country’s energy and water requirements could be fulfilled.

He said this while presiding a high-level meeting at the Wapda House here on Monday. The meeting was held to review the pace of work on all the ongoing hydel and power projects in the NWFP.

The chairman Wapda said the country is facing worst energy crisis of its history and Wapda is taking all possible measures in order to increase the power generation capability so that the country’s energy requirement could be fulfilled.

He said the government has chalked out a strategy to overcome the current energy crisis. He said the NWFP has a great potential for hydel power generation and efforts are under way for utilisation of these natural resources.

He directed all the project directors to accelerate the pace of work so that the people and the country could benefit from it. He was optimistic that the completion of the projects would bring prosperity in the country and more economic activities would be generated.

He said these projects on completion will contribute more than 206 MW of electricity to the national circuit and more water resources would be available for irrigation. Earlier, the general manager (Projects) North, Mehar Ghani gave a comprehensive presentation to the chairman Wapda regarding the status and pace of work on all ongoing development project.

He told the chairman in detail about the pace of work, technical progress of Kurram Tangi Dam, Gomal Zam Dam and Golden Gol Hydro power projects. He said efforts are under way to complete all the ongoing development projects within the stipulated timeframe.

 

[Neo]

Total foreign investment down $487m in July-Oct​

KARACHI: The country’s foreign investment has slightly declined by $487 million or 29.8 percent to $1.145 billion in July-October this year compared to $1.633 billion received in 2007-08.

The main reason behind this fall in the total foreign investment is the outflow of portfolio investments, which remained negative $175.48 million or 155.8 percent during last four month.

The data shows that the country did not receive any privatisation proceed including the sell-off money of Pakistan Telecommunication Company Limited (PTCL) in last four months. An amount of $133 million per year is due from the privatization of PTCL.

According to the State Bank of Pakistan, the country received direct investment of $1.321 billion in July-Oct compared to $1.319 billion received in the same period last year. The direct investment, however, rose by $1.96 million or 0.15 percent.

Major outflows were recorded by the western countries including USA, which pulled back an amount of $104 million from the local bourses in last four months.

In spite of the flour set by the management of the Karachi Stock Exchange (KSE), the investment in the local bourses was received from two countries namely Qatar and Caribbean Islands, which stood at $11.5 million and $16.1 million, respectively in last four months, the data shows.

“The outflows are the major reason of declining portfolio investment,” an analyst said, and added “there is no indication of any improvement in the coming months.”

In last four months, USA made a direct investment of $270 million compared to $642 million received in the same period last year, down by 57 percent.

The develop countries invested $611.7 million July-October compared to only $940 million in the same period last year, Western Europe $257 million against its previous year investment of $232 million and European Union $150.5 million this fiscal year compared to $156.5 million in July-October 2007-08.

Analyst said, “internal law and order situation is blocking foreign direct investment and this investment’s trend would continue till the normalcy.” Sanctioning of $7.5 billion from the International Monetary Fund for reserve-building may help boost the economy.

Shaukat Tareen, newly appointed finance advisor of the government, had said, “it is not a proper time to privatise government’s entities.” “After there is no chance of any new GDR in the coming months,” the analyst claimed.

In the last fiscal year, the SBP received total foreign investment of $5,193 billion, while $20 billion was received in portfolio investment. The government had received an amount of $133 million from the privatisation proceed of PTCL.

 

[Neo]

Soros fund to provide technical assistance to Pakistan​

ISLAMABAD: Soros Economic Development Fund (SEDF) has agreed to provide technical assistance to the government of Pakistan in economic, finance, tax reform, export, and agriculture sectors.

This was agreed in a meeting between a delegation of Soros Economic Development Fund led by Robert Franklin, Member of the Tax Advisory Group, SEDF and Deputy Chairman, Planning Commission, Salman Faruqui.

The Soros Fund delegation is currently visiting Pakistan to discuss the possibilities of providing technical assistance to Pakistan in various areas of economy. The delegation would hold its discussions with the relevant ministries/ Boards including Privatisation, Finance, Federal Board of Revenue, Economic Affairs Division, and Foreign Affairs. The delegation would prepare a report pointing out the areas the fund could assist Pakistan in bringing about structural reforms in economy.

The need to improve tax collection, especially the reforms in the collection of direct taxes was discussed.

Salman Faruqui briefed the delegation about the present government’s plan of bringing about macroeconomic stability in the country. He further elaborated that planning commission was being restructured from merely a project approval body to a knowledge commission that would be able to give actionable plans to the government in all the development areas.

 

[Neo]

Pakistan shows positive signs of stability: new report​

WASHINGTON: A new report released here on Monday has found "positive signs and opportunities for Pakistan's democracy and, ultimately, stability."

The report issued by the Centre for American Progress points out that despite a history of interference in the political process, the Pakistani military has intentionally provided space to Pakistani civilian leaders to find their footing since the Feb. 18 election. However, Pakistan will pose "one of the greatest foreign policy challenges" for the incoming Obama administration, and how Pakistan addresses its militancy, weak governance, and economic difficulties will directly influence the security of the United States and its people. "The Obama administration must seize these opportunities and work with Pakistan, its friends, and neighbours to create a new strategy for enhancing security in Pakistan," the report recommends.

According to the report, US policymakers must understand the key challenges facing Pakistan and the region, as well as the critical opportunities that the Obama administration can leverage over the next four years. The challenges include a growing insurgency, weak governance, and a collapsing economy, problems with which Pakistan must be helped by its international partners. There is growing internal violence and regional instability. Pakistani fears of encirclement by India translate into continued support to some of the militant groups by elements of the Pakistani security establishment to counterbalance India. Pakistan ranks as one of the weakest countries worldwide: the ninth state most at risk of failure out of 177 countries. A dangerous disconnect exists between the needs of the Pakistani people and the ability or inclination of their leaders to provide for them. Pakistan's economy is in a downward spiral.

The United States needs to make a shift from a reactive, transactional, short-term approach that is narrowly focused on bilateral efforts in favour of a more proactive, long- term strategy that seeks to advance stability and prosperity inside Pakistan through a multilateral, regional approach.

The report is critical of US policy towards Pakistan, which it calls reactive. The United States has suspended aid, imposed sanctions, and intermittently renewed contacts for decades, depending on the paramount strategic concerns at the time. What's worse, the United States has approached Pakistan in a vacuum, neglecting to recognise the regional nature of Pakistan's challenges and the competing and sometimes contradictory roles played by numerous countries in Pakistan. However, for the first time in almost a decade, the United States and the world have partners in a democratically elected government of Pakistan, which while internally divided and weak, has greater legitimacy than previous governments because of the February 2008 elections, which most observers deemed as a legitimate expression of the will of the Pakistani people.

Pakistan has numerous allies in the region and the world beyond the United States that are assisting Pakistan in addressing the challenges it faces.

The report points out that the current distrust that the government of Pakistan and its people hold towards the Bush administration has undermined a cooperative Pakistan-US relationship. The Obama administration has the potential to mend the strained US-Pakistan relationship and offers a fresh opportunity to reach out anew to other strategic players in the region and the world to coordinate international efforts on Pakistan. Pakistan's civil society, including the lawyers' movement and the media, are increasingly calling Pakistan's leaders to account. These forces have the potential over time to influence their leadership to address their leading concerns, including unemployment and inadequate education, as well as to demand a strengthening of civilian government institutions.

The report recommends that the US should make a shift in its approach to Pakistan, recognising both the importance of Pakistan to regional and international security, as well as the limitations of US power. US policy must recognise that the military component alone is insufficient to build stability and security in Pakistan. Military operations alone will not defeat Pakistan's militant groups. Even if Al Qaeda were to be destroyed in Pakistan tomorrow, Pakistan would face other challenges to its stability including domestic militancy, fragile governance, regional tensions, and economic turmoil. The United States must integrate all the elements of American power to engage more deeply on these sources of instability. Addressing Pakistan's instability will not be easy. Pakistan presents an exceptionally difficult strategic challenge. A deep tension exists between the short-term challenge of confronting terrorism emanating from the borderlands and the long-term challenge of strengthening Pakistan's governance structures and economy. Short-term measures such as military strikes to increase pressure on Al Qaeda and the Taliban may undermine the credibility and effectiveness of Pakistan's civilian leadership. The United States will need to find the proper balance of responding to the urgent security threat without undermining broader goals.

The report also recommends that the US recognise the limitations of direct US influence in Pakistan and continue moving towards a multilateral approach, with Pakistan as a full partner. At this point in time, Pakistani perceptions of the United States are so dismal that efforts to pursue change in Pakistan with the United States in the lead may automatically discredit the effort. The United States needs to work with Pakistan's neighbours, other global powers, and international organisations such as the World Bank, IMF, and the United Nations in order to assist Pakistan over the long term. The Obama administration should with Congress and the international community strive to help Pakistan weaken Al Qaeda, the Taliban, and affiliated militant groups; secure borders between Pakistan and its neighbours, with all border disputes including Kashmir and the Durand Line either resolved or in a credible process for resolution; foster a stable internal political system that is based on the inclusive participation of all Pakistani citizens, civilian oversight of key security and intelligence agencies, and governing authorities that respect basic human rights; and create an economy that is integrating with the global economy, and providing for the needs of its citizens.

 

[DarkStar]

Soros fund to provide technical assistance to Pakistan​

ISLAMABAD: Soros Economic Development Fund (SEDF) has agreed to provide technical assistance to the government of Pakistan in economic, finance, tax reform, export, and agriculture sectors.

This was agreed in a meeting between a delegation of Soros Economic Development Fund led by Robert Franklin, Member of the Tax Advisory Group, SEDF and Deputy Chairman, Planning Commission, Salman Faruqui.

The Soros Fund delegation is currently visiting Pakistan to discuss the possibilities of providing technical assistance to Pakistan in various areas of economy. The delegation would hold its discussions with the relevant ministries/ Boards including Privatisation, Finance, Federal Board of Revenue, Economic Affairs Division, and Foreign Affairs. The delegation would prepare a report pointing out the areas the fund could assist Pakistan in bringing about structural reforms in economy.

The need to improve tax collection, especially the reforms in the collection of direct taxes was discussed.

Salman Faruqui briefed the delegation about the present government’s plan of bringing about macroeconomic stability in the country. He further elaborated that planning commission was being restructured from merely a project approval body to a knowledge commission that would be able to give actionable plans to the government in all the development areas.

Georuge Soros door hi rahe to achha hay...tiger economies ka is nay jo haal kya tha, sub jantay hain...