Pakistan Economy - News & Updates - Archive

[Neo]

Friends of Pakistan agree to road map​

ISLAMABAD (November 18 2008): A group of donor countries dubbed as Friends of Pakistan Group agreed on Monday to a roadmap with a resolve to enabling Pakistan overcome its present financial crisis, according to sources. The experts meeting, which was held in Abu Dhabi, was jointly chaired by the UAE and Pakistan, also overwhelmingly offered complete support to Pakistan in providing financial resources, investments, technical assistance and technology to help better its economy.

Senior diplomats from 16 nations and multilateral agencies attended the day-long presentations. Speaking to reporters after the meeting, Pakistan ambassador Aizaz Ahmed said that the meeting was essentially organisational in nature. According to him, the participants are trying to put together a frame work for co-operation and have identified four key areas of co-operation which include economic development, energy, security and institution building.

Sources said detailed presentations were made on the health of the country's economy, resource gaps, areas of potential investment, and the recent letter of intent issued to IMF for a $7.6 billion assistance. "This is the road-map we have prepared today for the experts' meeting in Islamabad in the third week of January next year. There was unanimous agreement on the road-map, which will be discussed in detail and in the experts' meeting, which will conclude a set of recommendations that will be sent to the Friends of Pakistan group ministers' meeting to be held in Islamabad in February," sources quoted him as saying.

He termed the meeting as a road-map of need assessments, where areas were identified for what he called "Partnership", according to sources. The meeting, Chaudhary said was successful as there was a unanimous support expressed by senior diplomats of all friends of Pakistan, in fighting its economic problems and rebuilding the nation's economy besides supporting economic development projects.

Apart from economic issues a presentation was made on internal security also, where capacity of law enforcement agencies in fighting the war on terrorism was spotlighted, as Pakistan wants to re-build its internal security forces on modern lines, in order to tackle the security challenges it faces. Asked what are Pakistan's expectations from the Group, Chaudhary said since it was an initial meeting so there was no request discussed.

In the course of next two months, meetings would be held at experts level, where the areas of co-operation identified, would be further fine tuned in order to prepare concrete proposals for investment projects. In the next meeting experts will present their reports showing their interest in specific areas and present it at the foreign ministers meeting to be held in Islamabad, in the third week of February.

To a question about Pakistan seeking oil supplies on deferred payment, he said it was not the platform to make such requests." It can only be discussed at the next meeting, where request for help in specific areas could be made", said Chaudhary. Delegates from Australia, Canada, Britain, US, China, Saudi Arabia, Turkey, European Union, European Commission, UN, Japan, Germany attended the meeting.

 

[Neo]

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

Bhai aajkal to Pakistan mai sab kuch jazi hai, calta hai, halal hai.
Inko bhi anay do!

 

[Neo]

Public-private sector to invest $30 billion in power generation: Ashraf ​

KARACHI (November 18 2008): To meet the growing power requirements, some $30 billion will be invested in power generation, while letters of intent (LOIs) of companies which did nothing for generating power will be cancelled soon.

Minister for Water and Power Pervaiz Ashraf announced this while addressing a seminar on 'Energy Trade in South Asia', organised by Saarc Chambers of Commerce and Industry in collaboration with the Federation of Pakistan Chambers of Commerce and Industry at a local hotel on Monday.

The minister said that the government ($10 billion), in collaboration with private sector ($20 billion), would invest $30 billion by the end of 2015 to mitigate the growing energy requirements due to the liberal policy of the PPP-led government.

The minister blamed the previous government both for causing energy crisis and giving of LOIs to incompetent companies, "those who damaged the country's wealth and created hurdle in energy generation". He added that soon, in meeting of Alternative Energy Development Board (AEDB), all such LOIs would be cancelled.

About giving subsidies on energy, he claimed that the previous government was giving Rs 77 billion subsidy, but after recent withdrawal of increase in power tariff this subsidy had increased to Rs 177 billion. Regarding power generation from Thar coal, the minister said that the project would start power generation in next five years. He said that the entire Saarc region was facing different challenges as it was a region of 1/3 population of the world.

He said that country was facing shortage of some 4000 mw, which is 1/3 of total energy consumption that compelled the government to do eight-hour load shedding. "The government will meet this shortage of energy by the end of 2009, and government had done agreements for 1500 MW on war footing," he added.

The minister said that to meet the rest of energy requirements work on Naleem-Jhehlum hydro power project has already been started, while power generation would be initiated soon from Kuholo hydro power project. He said that government is mulling to import energy from Central Asian states, and added that a plan of 1100 mw was under consideration of government to import energy from Iran to fulfil Balochistan energy needs. He said that a Turkish company would start work for generating 100 MW energy through windmill at Jhimpir.

About Karachi energy situation he expressed hope that new Karachi Electric Supply Company (KESC) administration would fulfil the energy need of the industrial hub of Pakistan with better performance. He said the government is drawing plan to provide 6000-7000 MW to Karachi by the end of 2015.

On water shortage made by India, he said that due to first filling of Baglihar dam, the country had faced severe shortage of 0.2million acre-feet (MAF) water shortage, and a claim in this regard had been filed in International Court. To overcome the water shortage, the minister said that government has already approved many dam projects.

Commenting over nation's fate Ashraf said that Pakistanis are not poor, but poorly managed for past 60 years. These crises were due to lack of policy, planning failure and intense negligence.

Regarding consumption of energy in South Asia, the President of Saarc Chambers of Commerce and Industry, Tariq Sayeed, said that as compared to last two decades, when the energy consumption was 5.8 percent against low energy production of 2.3 percent, the demand for energy was growing at a rate of 10 percent annually, which has almost doubled in last decades. Chief Executive Officer KESC Navid Ismail, Vice President FPCCI Zubair Tufail and other also spoke on the occasion.

 

[Neo]

PPIB opens bids for 301 megawatts rental power projects ​

ISLAMABAD (November 18 2008): The Private Power Infrastructure Board (PPIB) on Monday opened financial bids for two rental power projects of 301.4 mw cumulative capacity, which are being planned by consortiums of local and international investors. The issue of tariff of both projects will be placed before the evaluation committee prior to taking a decision.

"We have opened financial proposals for two fast track rental power projects, to be commissioned by end of 2009, and are making every effort to realise these projects as early as possible," said one of PPIB officials. The meeting was presided over by Managing Director, Fayyaz Elahi.

The bid evaluation committee had recommended two bids--Gulf Rental Power (80.5 MW), and Independent Power Pvt Ltd (220.9 MW)--as "responsive", which are in accordance with the evaluation criteria.

The proposed tariffs for Gulf Rental Power and Independent Power Pvt Ltd ares 16.3724 cents per kwh and 18.8824 cents per kwh respectively. The term of the tariff for each these projects is five years. However, the tariff will be reviewed by the bid evaluation committee and the successful bidder will be notified within a week.

PPIB stated that the government had approved fast track private sector power initiatives in order to address the immediate power shortfall in the country. This was advertised on September 26, 2008 on the basis of International Competitive Bidding (ICB).

Three bids for establishing rental power projects of around 500 MW cumulative power generation capacity were received within the bid submission deadline and the technical and qualification bids were opened on October 30, 2008 in the presence of all stakeholders and the media.

Minister for Water and Power Pervaiz Ashraf had conveyed to the investors that a bid evaluation committee comprising members from PPIB, Nepra, Wapda/NTDC and Finance Division would review the technical proposals according to the predefined criteria and the financial proposals of the bids would be opened at an early date.

 

[Neo]

THE RUPEE: IMF deal helps recovery ​

KARACHI (November 18 2008): The rupee managed to recover more ground against the dollar on Monday in both open and interbank market as was expected that it will improve further after the government's agreement with the International Monetary Fund (IMF) for a 7.6 billion dollars emergency loan is signed, dealers said.

In the interbank market the rupee posted fresh gain versus the greenback, rising by 40 paisa for buying at 79.80 and by 35 paisa for selling at 79.90 in process of trading, they said. In the meantime some dealers were of the opinion that the rupee nay stabilise in the short-term, following the IMF accord, but a balance of payments (BoP) is still a crisis.

In beginning session of the Asian trade yen trimmed losses against dollar and euro as Tokyo stocks erased much of their earlier gains, fuelling investors' risk aversion. Investors had initially turned more risk averse after the Group of 20 financial summit at the weekend failed to produce concrete measures to avert a global downturn, underpinning the yen as a safe-haven currency.

OPEN MARKET RATES: The same reflection was mirrored on the open market as the rupee showed its muscles with solid gain of 100 paisa in terms of the US currency for buying and selling at 78.50 and 79.00, they said. The rupee also gained sharply against euro for buying and selling at Rs 99.50 and 100.00, they said.

================================
Open Buying Rs 78.50
Open Selling Rs 79.00
================================

Interbank Closing Rates: Interbank Closing Rates For Dollar On Monday.

==============================
Buying Rs 79.80
Selling Rs 79.90
==============================
=================================================================
Repo Rates (Yield p a)
-----------------------------------------------------------------
Tenor Low Bid High Bid Low Offer High Offer Average
=================================================================
Overnight 1.00 7.00 1.50 8.00 4.38
1-Week 9.00 9.50 9.75 10.00 9.56
2-Week 10.00 10.75 10.75 11.25 10.69
1-Month 11.00 11.50 11.25 11.75 11.38
2-Months 12.75 13.00 13.00 13.25 13.00
3-Months 13.50 13.75 13.75 14.00 13.75
4-Months 13.50 13.75 13.75 14.00 13.75
5-Months 13.60 13.90 13.80 14.10 13.85
6-Months 13.60 14.00 14.00 14.25 13.96
9-Months 13.90 14.20 14.25 14.50 14.21
1-Year 14.00 14.25 14.30 14.55 14.28
=================================================================
Call Rates (Yield p a)
-----------------------------------------------------------------
Tenor Low Bid High Bid Low Offer High Offer Average
=================================================================
Overnight 4.00 12.00 5.00 13.00 8.50
1-Week 12.00 14.00 13.00 15.00 13.50
2-Week 14.00 15.00 14.50 15.50 14.75
1-Month 15.00 15.50 15.50 16.00 15.50
2-Months 15.25 15.75 15.50 16.00 15.63
3-Months 15.50 16.00 16.00 16.50 16.00
4-Months 15.50 16.00 16.00 16.50 16.00
5-Months 15.75 16.25 16.25 16.75 16.25
6-Months 16.00 16.50 16.50 16.75 16.44
9-Months 16.25 16.75 16.75 17.00 16.69
1-Year 16.50 17.00 17.00 17.50 17.00
=================================================================
RUPEE IN LAHORE: The rupee remained unchanged on buying side while it lost 30 paisa on selling side in relation to the greenback in the open currency market on Monday. There was no visible change in the dollar's demand and supply situation that helped rupee stability on buying side while it slide down on the selling side against the dollar. The dollar was traded at Rs 79.00 and Rs 80.50 on buying and selling counters against last Saturday closing of Rs 79.00 and Rs 80.20, respectively. On the contrary, the rupee showed significant gain and improved against the pound sterling. The pound was purchased and sold at Rs 117.00 and Rs 121.00 as compared to last week closing of Rs 121.00 and Rs 125.00, respectively.

 

[Neo]

ADB to provide $1.3 billion in three years ​

ISLAMABAD (November 18 2008): Asian Development Bank will provide $1.3 billion quick disbursement loans to Pakistan to support broader reforms, correcting macro imbalance and budgetary support over next three years, says Manila based bank's documents. These programmes are designed under "Accelerating Economic Transformation Programme" approved as a technical assistance in September 2008.

The programme's total lending stands at $1.8 billion. First part of the programme loan of $500 million in the series was approved in October this year and the next in the series would be of $450 million, to be taken up by ADB Board by June 2009. Another $450 million for 2010 and last one $400 million are scheduled to be considered in 2011.

Pakistan now needs to transform itself in three directions. First, it has to address the immediate distortions facing the economy, particularly in the agriculture and energy sectors.

The pricing and procurement system for wheat needs to be restructured, and subsidies better targeted to benefit the poor and vulnerable. Untargeted wheat subsidies cost the government Rs 40 billion ($600 million) in FY08, the bank said. In the electricity sector, Pakistan does not have an automatic tariff adjustment mechanism.

The government needs to reform the subsidy system in the sector, since it has not been able to settle the payments owed to distribution companies, which has resulted in a vicious circular debt problem and debt overhang. This needs to be addressed urgently to resolve the present energy crisis. Electricity subsidies are estimated to have cost Rs 133 billion in FY2008 ($2 billion).

In addition to these subsidy needs, an estimated $1.6 billion is required to partially protect the poor. ADB further says that secondly, Pakistan needs to strengthen financial intermediation to facilitate structural transformation. At the macro level, the Government has relied heavily on the central bank for its fiscal requirements, a practice that needs to be reversed.

In parallel, the legal and regulatory framework should be strengthened to manage risks more effectively in the financial sector, promote consumer confidence, and deepen financial intermediation. At third place, over the medium to long term, the production and trade structure of the economy needs to be transformed so that Pakistan could compete more effectively in the global economy.

A deeper industrial base is vital, along with a more productive agricultural sector, greater value creation in the service sector, and far greater export sophistication. To achieve this, the government has to address short-term policy and institutional distortions, identify industries where it might compete on a global scale, and attract private sector investments.-PR

 

[DarkStar]

love to know the interest rates that ADB is charging...

 

[Neo]

Investments, not aid, likely from ‘Friends’​

WASHINGTON, Nov 17: Pakistan is not expecting pledges of financial support from a group of friendly nations that met in Abu Dhabi on Monday to consider various proposals to help revive its ailing economy.

Diplomatic sources in Washington told Dawn that Monday’s meeting only included mid-level officials and focussed on exploring investment opportunities in Pakistan.

Pakistani officials briefed the officials on investment needs and opportunities.

Based on this information, the member countries will encourage their investors to invest in Pakistan.

Although Pakistani officials briefing the media tried to give the impression that the group would offer financial assistance as well, President Zardari had taken a totally different position during a media briefing in New York after the forum’s inaugural meeting.

“We are not asking for fish,” he said. “We are asking for the equipment and want to do our own fishing.” His statement made it obvious that if there’s an infusion of funds from the Friends of Pakistan group, it would come in the form of investments, not aid.

On Monday, the group adopted a work plan for cooperation in broad areas that cover economic development, financial stability, energy needs, building institutions and bringing peace and stability to the region.

Pakistan, however, expects bilateral financial assistance from the United States and China, particularly after concluding an agreement with the International Monetary Fund for a $7.5 billion rescue package.

Diplomatic sources in Washington told Dawn that Islamabad would be among the first to receive US assistance when the new Obama administration took charge in January.

Official US sources also confirmed that the US Congress was likely to approve a multi-billion aid package for Pakistan, known as the Biden-Lugar bill, early next year.

Senator Barack Obama backed this bill when it was introduced in the Senate and promised to use his influence to get the bill passed after he was elected president on Nov 4. Senator Biden, who was elected vice-president in the same election, has promised similar support.

Two other senior senators —Hillary Clinton and John Kerry — also pledged to push for an early adoption of the bill when President Asif Ali Zardari telephoned them from his hotel in New York last week.

Mr Zardari received similar assurances from senior members of the Obama team.

Pakistan’s another close ally, China, has promised to deposit $500 million in the State Bank of Pakistan to strengthen foreign reserves. They money, however, will not be available to the government for current spending.

China provided a similar assistance in 1996 by depositing $500 million in the State Bank of Pakistan. In 2001, the loan was renewed for additional five years but in 2006 Pakistan refused to pay back, annoying the Chinese.

The Chinese shared their annoyance with President Zardari when he visited Beijing last month and asked for financial assistance. Beijing has since overcome its annoyance and is now willing to loan another tranche of $500 million.

Pakistan, however, will have to pay interest on this loan which will be determined later.

Pakistan’s other key ally, Saudi Arabia, is still reluctant to provide financial assistance as it will have to give similar support to other nations as well if it accepted Islamabad’s request.

The Saudis also are experiencing a massive increase in their own domestic spending, which limits their capacity to offer financial assistance to others.

 

[Neo]

Current account deficit up 98pc​

KARACHI, Nov 17: Pakistan’s current account deficit rose sharply in the first four months of the running fiscal to $5.943 billion, reflecting the depressing inflow and the higher outflow of the foreign exchange.

Data issued by the State Bank showed on Monday that the current account deficit during July-October 2008-09 was 98.5 per cent higher than the corresponding period of last year.

The country is facing a serious balance of payments problem and reached an agreement with the International Monetary Fund (IMF) to meet the imbalances.

The imbalances are rising despite steep fall of oil and food prices in the world market which forced the government to spend over $12 billion alone to import petroleum products during the last fiscal ended on June 30, 2008.

The four-month data tells that Pakistan was still paying the highest amount for import of oil and food.

During the period, Pakistan’s payment for oil went higher than the four months of last year. The oil bills rose to $4.924 billion compared to $2.551 billion of last year which is 93 per cent higher.

The oil prices, which had reached $147 per barrel during this calendar year, have now fallen to just $50 a barrel. The demand fell in the developed economies because of slowdown of economic growth after financial meltdown started a year ago.

The food bill of the four months rose to $1.577 billion against the corresponding period of last year when the food bill was limited to $890 million. This is 77 per cent higher.

The State Bank report reflected a continued steep rise in import bill while the export was rising with traditional speed of just 14 per cent. The import of four months reached $12.899 billion which is 35 per cent higher than previous year’s four months.

Pakistan reached an agreement with the IMF for a total loan of $7.6 billion for two main purposes; first to meet the severe balance of payments problem and secondly to strengthen the exchange rate.

Analysts said the second quarter report (October-December) would reflect the falling oil and food prices and the balance of payments position would improve.

They said the government’s effort to reduce the import bill seems to have failed and the prescription for the purposes lost its significance.

“We are curiously watching the balance sheet of the country. If it improves, the economy will get strength and recovery from the current economic status is possible,” said an analyst.

“But the impact of IMF loan is equally important to be watched as interest rate has gone up to 15 per cent and a slowdown of economy might not allow its recovery in short term,” he said.

“If the economy goes for a long-term recovery, its dependence on economy will prevail and hard time for general people will not be over for at least three to five years,” he said.

 

[Neo]

Bids for 300MW on fast-track opened​

ISLAMABAD, Nov 17: A bid evaluation committee on Monday recommended Gulf Rental Power and Independent Power Pvt Ltd for generation of 80.5 and 220.9 megawatts, respectively.

The two companies were recommended after the financial proposals of bids received for fast-track rental power projects to be commissioned by the end of next year were opened at a meeting at the Private Power and Infrastructure Board (PPIB).

The meeting was headed by PPIB Managing Director Fayyaz Elahi and attended by Water and Power Minister Raja Pervez Ashraf, the responsive bidders and members of the board.

The read out tariff of Gulf Rental Power is $16.372 per kilowatts (Kwh) and that of Independent Power Pvt Ltd is $18.882 per Kwh.

The term of tariff for both the projects is 60 month each. However, the tariff will now be reviewed by the bid evaluation committee and the bidders will be notified within a week.

The evaluation committee has recommended the bids as per the 2005 government tariff guidelines, an official announcement stated.

The minister said that the government had advertised its demand for bids on September 26 in order to generate the power on fast-track basis.

He said that the PPIB, Water and Power Development Authority (Wapda), the National Transmission and Dispatch Company (NTDC) and Finance Division will review technical proposals according to the predefined criteria and the financial proposals of the bids would be opened at an early date.

 

[dr.umer]

China to set up car manufacturing plant in Pakistan ​

RAWALPINDI, 18 Nov (APP): China has shown interest to set up car manufacturing plant which was commendable and appreciable and will open avenue of trade between two friendly countries.

There would be a tremendous investment in the country due to this plant.

These views were expressed by the President Rawalpindi Chamber of Commerce & Industry (RCCI) Abdul Rauf Chaudhry here on Tuesday.

He said Pak‑ China friendship was deep rooted and time tested.

He lauded China for making huge investment in Pakistan saying this shows bonds of love and affection towards each other.

RCCI president said this project would persuade other countries to make investment in Pakistan.

China has been evincing keen interest for the development and prosperity of Pakistan saying by setting up of car manufacturing plant would open new avenue of trade and economic activities and the cars would be available on cheap rates.

Initially, 1000 vehicles would be brought in the market and then the plant would start production according to market trend, he added.

He referred Federal Minister for production statement that there are extensive opportunities of investment in Gwadar saying that would open new avenue of trade and boost the economy of the country.

He further said that by establishing the car manufacturing plant would help generate economic activities as well as employment opportunities in the country.

 

[dr.umer]

Govt to facilitate Chinese investors in EZs​

19 Nov 2008

ISLAMABAD: The Government is committed to ensure active facilitation for the Haier-Ruba Group, who are in process of setting up China Pakistan Economic Zone in the Country.

China Pakistan Economic Zone would house a large number of Industrial units to produce goods for duty free export to China and would encourage Chinese investors for setting up industries and manufacturing units in Pakistan.

Already some thirty companies have expressed interest.
With the success of this project, Pakistan will reap in the field of economy, business, investment, trade and employment generation an official of the Ministry of Investment told state news agency here today.

The Ministry of Investment acknowledges the positive approach of the Chinese group towards investing in Pakistan and assures all the due support and the facilitation on behalf of Government of Pakistan, so as to successfully complete this exemplary project.

 

[dr.umer]

Pak-Turkey keen to boost bilateral ties​

19 Nov 2008

ISLAMABAD: Turkey is keen to promote bilateral cooperation with Pakistan in various sectors particularly in economic and trade, technical education and culture.

This was stated by the leader of the visiting 32-member Turkish delegation and Chairman of Pak-Turk Foundation, Unal losur while speaking at a reception hosted by National Vocational and Technical Education Commission (NAVTEC) here today.

Expressing the desire of Turkish business community to invest in Pakistan, Mr. Unal expressed the hope that the investors will be facilitated in the country.

He also suggested the bilateral visits of university students to each other’s countries under bilateral exchange programme.

He was confident that these visits would enhance cultural relations and will make positive impact on economic ties which will ultimately benefit the people of the two countries.

He also wished all success to NAVTEC in its endeavours to skilling Pakistan.

Earlier, welcoming the Turkish delegation, the Executive Director, NAVTEC, Mr. Muhammad Athar Tahir said “We were trying to establish strong links between technical trained workforces of Pakistan with Turkish business community”.

Outlining the objectives of the establishment of NAVTEC, Athar Tahir said that all possible efforts were being made to upgrade the level of technical education in the country at the desired level.

 

[dr.umer]

Italy to invest in energy, marble, agri sectors​

19 Nov 2008

ISLAMABAD: Italian government Tuesday expressed its interest in investing in Pakistan’s various sectors including energy, textile, agriculture and marble.

The Ambassador of Italy Vincenzo Prati in a joint news conference with Chairman Board of Investment (BOI) Saleem Mandiwalla here said that despite the hurdles in Pakistan, there were a lot of investment opportunities in various sector of the Pakistani economy.

“We are aware of the fact that the problem of insecurity has become a major issue in Pakistan but we want to initiate various projects in energy, marble, agriculture and textile sectors in Lahore, Karachi and Islamabad,” he said.

A Memorandum of Understanding (MOU) regarding the cooperation in different sectors of the economy has already been signed between the two governments as too boost bilateral investment. Law and order situation definitely affected Foreign Direct Investment (FDI) in Pakistan but there were several opportunities for enhancing investment, particularly in energy and marble and granite sectors, he said.

About the exact amount of foreign direct investment (FDI), the ambassador said that not only one or two Italian companies were ready to come here for investment but also substantial numbers of companies would come along with modern machineries and equipments in Pakistan.

Chairman Board of Investment (BOI) Saleem Mandiwalla turned down the report that foreign investors were hesitant to invest in Pakistan due to security situation. He noted that foreign businessmen were still visiting Pakistan to seek investment opportunities. Government will facilitate all the companies that want to invest in Pakistan.

He said government was taking appropriate measures for improving law and order. Most of world economies were suffering from war on terror but Pakistan was suffering the most.

He said local investors were flying out of the country due to the rumours about fragile economic situation. He assured that economic situation was under control and the local investors shouldn’t believe in false statements and forecasts. BOI Chairman said former government invested mainly in banking and services and neglected manufacturing sector. He stressed for increased investment in manufacturing sector.

“We also support investment in services sector but the present government focus is on increased investment in neglecting sector i.e. manufacturing,” he maintained.

The government wanted to promote both local as well as foreign investors in the country. He said foreign investors had some concerns regarding law and order situation but it couldn’t be said that they were not investing or winding up their business operations in Pakistan.

 

[dr.umer]

External debt decreased by $613m during first quarter​

19 Nov 2008

ISLAMABAD: Pakistan’s economy external debt has declined by $613 million during the first quarter (July-September) 2008-09 because of favorable foreign currency translation impact, as US dollar till end September 2008, appreciated sizably against major currencies including euro, pound sterling and Japanese yen.

Pakistan eternal debt has declined to $43.85 billion at the end September 2008, which was at $44.47 billion at the end of the last fiscal year (June 2008).

It is interesting to note that at March 2008, dollar’s depreciation against these major currencies piled up external debt burden to record $44.59 billion and now dollar appreciation is benefiting in reducing its burden on the economy. The other main reduction of $124 million was noticed in foreign exchange liabilities due to withdrawal of money from foreign currency accounts (FCA’s).

Combined external liabilities (external debt and foreign exchange liabilities) have also been reduced by $737 million to $45.547 billion at the end September 2008 against $46.28 billion earlier at the end June 2008.

The government is finding it hard to get disbursement of agreed loans from the World Bank, Asian Development Bank and friends of Pakistan because they require nod from the International Monetary Fund (IMF) regarding macroeconomic stability.

It is hoped that in the future, the government would receive it. According to the government figures, during the last six years the external debt increased significantly. On June 30, 2003, it stood at $32.46 billion, June 2004 ($32.93 billion), June 2005 ($34.04 billion), June 2006 ($35.97 billion) June 2007 ($39.00 billion) and at the end of June 2008, it jumped to $44.47 billion. Economists believe euro and dollar bonds floating in the Pervez Musharraf regime built up the country’s reserves but increased its liabilities. According to the bank’s data, the country’s public and publicly guaranteed debt declined to $39.72 billion against $40.24 billion at the end June 2008. Out of this, the medium and long-term debt (more than one year) during the period under review decreased from $39.33 billion to $38.99 billion at the end of September 2008.

According to the break-up of the medium and long-term debt, the multilateral debt by end-September 2008 come down to $21.34 million from $21.45 billion while bilateral debt rose to $1.14 billion from $1.13 billion recorded at end June 2008. During the period under review the volume of Paris club debt also edged down as at the end September 2008, it stood at $13.68 billion against $13.93 million at the end June 2008. Short-term external debt (less than one-year) from Islamic Development Bank (IDB), also dip to $540 million against $713 million recorded at the end of June 2008.

The Private non-guaranteed debts (more than one-year) during the period under review also were reduced by $11 million to $2.623 billion. IMF debt also declined by $98 million to $1.239 billion at the end of first quarter as against $1.337 billion recorded at June 2008.

The foreign exchange liabilities excluding foreign exchange bearer certificates, foreign currency bearer certificates and dollar bearer certificates up by $344 million during the period under study to $1.82 billion from $1.47 billion at the end June 2007.

The foreign exchange liabilities excluding foreign exchange bearer certificates, foreign currency bearer certificates and dollar bearer certificates declined by $124 million during the period under study to $1.69 billion from $1.817 billion at the end June 2008. Of this, during the period under review the special US dollar bonds declined to $119 million, as it was $121 million at the end of the fiscal 2008.

Besides, foreign currency bonds declined by $22 million to $44 million from $66 million end June 2008. While the central bank deposits stood stagnant at $1.2 billion for the last three months, while NBP/BOC deposits declined to $300 million at the end September 2008 from $400 million recorded at end June 2008.

Economic pundits believe each one rupee appreciation in US dollar, the stock of Pakistani external debt increases by Rs44 billion. It is interesting to note that during the fiscal year 2007-08, greenback appreciated against rupee by more than Rs12.