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Pakistan has been able to add only 6,463 megawatts of hydropower to its energy mix over the past 60 years, as against an untapped potential of 41,000 megawatts, including 15,000 megawatts from Northern Areas alone, according to experts. As a result, the national economy has had to pay a steep price for this neglect.

Ironically enough, after 60 years the hydel sector is still not being given the degree of primacy it ought to have received by now, because under the Vision 2025 programme, only 769 megawatts of hydropower is planned to be added to the national grid by the year 2010.

The "go-slow" has widened the gap between power supply and demand to around 5,000 megawatts, with the country's average annual power growth rate standing at about eight percent. This means experts said, that we need to develop an additional annual generation capacity of at least 2,000 megawatts. Meanwhile, most of the hydropower projects unveiled under the Vision 2025 programme are behind schedule, and confined only to pre-feasibility or feasibility stage.

One of the main causes of the crippling delay, as quoted in a Recorder Report, is that our technocrats have mixed up priorities of power generation from "big multi-purpose water reservoir dams" to the "run of the river" power generation.

The main purpose of the dams is irrigation, with power generation being only a by-product, while the latter category is meant purely for power generation. We have given priority to Kalabagh, Bhasha and Akhori dams, which became hostage to political wrangling, at the cost of non-controversial "run of the river" projects.

The technical distinction pointed out by the experts should serve as a useful parameter for the government in future. The "run of the river" projects are relatively easier to execute, and the power obtained from them is inexpensive. According to experts, the government should prioritise power projects, with shorter-duration schemes being taken up first.

They have said that Pattan, Thankot and Dasu projects should be given priority over Bhasha, for instance, because the latter's cost would be over 15 billion dollars, with the execution period extending to 10-12 years. A look at the country's power generation capacity will help us put things in perspective.

According to available data, the country's total installed capacity stands at 20,456 megawatts, while its dependable generation has been worked out at 18,000 megawatts. However, firm power supply stands at 16,000 megawatts in summer and only 13,000 megawatts in winter after taking into account power theft, line losses, reduced gas supply and lean spells of hydel generation.

The total peak demand has been calculated at 17,800 megawatts at the national level which was projected to go up to about 19,000 megawatts by the end of 2008. According to analysts, the necessary policy tools have been in place for many years to ensure sustainable addition to our power generation capacity, but "non-professional" considerations of some of those who have traditionally dominated the water and power sector have stymied timely execution of projects.

This has landed us in our current energy predicament. Secondly, a major cause of the crisis is lack (non-implementation?) of a foolproof mechanism at the national level for predicting with accuracy the quantum of energy the country will need at a given point in time, to be able to attain the growth rate set by the government. In fact, things seem to be as dismal in assessment of energy requirements as in the crop production assessment.

Thirdly, although spells of accountability have been witnessed from time to time to set things right, to our knowledge there has been no major effort to hold to account those who have been in charge of our water and power sector over decades. Although attempts have lately been mounted to set things right, but there are unfortunately no signs of success in hydropower or coal sector generation, which appears to have been a victim of callous neglect.

In order to loosen the stranglehold of the energy squeeze we are caught in, we can now at best launch only additional oil-based thermal projects - an option for which there may be many takers. As experts in our report have suggested, the government should re-prioritise the power projects, by taking up the short duration projects first.

In fact, there is an urgent need for the government to undertake fast-track execution of projects across the entire power spectrum, to tide over the deficit that is threatening to bring the economy to a grinding halt. We do not agree with the experts quoted in our report that Kalabagh dam, etc, should be given priority, because it has a vast diversionary and divisive potential.

There is even a cynical perception that Kalabagh has at times been used by those at the helm for its divisive potential, to put the hydel option on the backburner, in preference to the easily implementable (and lucrative) thermal option. We would strongly advise against using this red herring, yet again. Secondly, fast-tract implementation of projects across the power spectrum needs to be launched immediately, under high-level political oversight.

Thirdly, the in-built system of accountability and supervision too should be activated to see to it that there is no foot-dragging any more. We believe that only by adopting a sincere and holistic approach to the issue can we rid the economy of the millstone of devious delays.
 
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The Pakistan Embassy in China has revealed that the two countries have successfully concluded negotiations on carrying out a joint study for comprehensive economic co-operation. According to the embassy, the study is expected to further strengthen co-operation in all sectors, including service, trade and investment.

One would hope that this would also include the banking sector, whereby Pakistani banks can provide their Chinese counterparts with access to the Western markets. The agreement to launch a joint study comes in the wake of the Chinese pledge to release around 500 million dollars for balance of payments support for Pakistan, a form of assistance that China normally does not extend to any country.

In addition, it has been reported in the Business Recorder that China is going to provide two nuclear plants to Pakistan, with a generation capacity of 320 MW. This deal was ostensibly struck during President Asif Ali Zardari's recent visit to Beijing and is seen as a follow up of the deal originally struck between Musharraf and the Chinese government.

There is no doubt that Pakistan-China friendship is legendary within the annals of Pakistan's bilateral relations with other countries. The US in particular and other Western countries in general have extended assistance to Pakistan only when they perceived that Pakistan had a strategic geo-political importance for them. At times when Pakistan did not have such importance, as evident during the time when the Taliban were in power in Afghanistan, co-operation was minimal.

More disturbing has been the fact that historically the US has forged relations with Pakistani leadership even at the cost of democracy. This was patently apparent during Musharraf's last days in power and it was only when there was overwhelming domestic demand for change in leadership that the US was forced to abandon its support for Musharraf. In marked contrast, China has been a friend to this country since independence, a friendship between the peoples of the two countries that is not dependent on the orientation of our leadership.

In spite of sustained friendship between the two countries, it is relevant to note that there is room for further improvement.

At present bilateral trade between the two countries is estimated at around 6.8 billion dollars, with the potential to more than double to 15 billion dollars in the foreseeable future. To-date trade is in China's favour, but this can change, when transit trade and route facilities through the Gwadar Deep Sea Port are operational. In addition, the India-Pakistan-Iran gas pipeline project can also benefit China if and when the modalities of a deal are worked out.

There is also tremendous scope for expanding relations with China at a regional level. The forums with which the two countries have been involved are Shanghai Co-operation Organisation (SCO), the ASEAN-Regional Forum (ARF) from East Asia to Eurasia, and Central Asia Regional Economic Co-operation (Carec).

Discussions in these forums have ranged from co-operation against extremism and terrorism to an energy corridor that would supply the energy starved sub-continent with electricity from the energy surplus Central Asian Republics. Thus the potential of operating within a larger regional context which provides opportunities for win-win situations to all member countries has also opened up with these forums. In this context, it is extremely helpful for Pakistan to have a 'genuine' friend at these forums.
 
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12 Dec 2008

ISLAMABAD: Ovex Technolo-gies, Pakistan's premier Business Process Outsourcing (BPO) service provider, was recently rewarded with a 'TIER-1 Business Partnership by IBM', (The Global IT Giant).

Speaking at the occasion, CEO of Ovex Technologies, Faisal S Khan said, "Our clients have expectations from their technology investments. Partnerships with the world's IT leaders, pave the way and turn those expectations into accomplishments. It can help mitigate the risks inherent in technology deployments and ensure smoother implementations".

As a Tier-1 IBM Business Partner, Ovex intends to further fortify its solutions portfolio, particularly the IT Solutions aspect of its offerings and add value to businesses in the domestic marketplace. Ovex will now utilise IBM's advancements in scalability, service reliability and performance," Khan added. staff report
 
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Pakistan's foreign exchange reserves rise to $9.095 billion

KARACHI (December 12 2008): Foreign exchange reserves of the country rose $14 million to $9.095 billion in the week that ended on December 6, the central bank said on Thursday. The State Bank of Pakistan's reserves fell to $5.916 billion from $5.942 billion a week earlier, and reserves held by commercial banks were $3.179 billion as compared with $3.139 billion.
 
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Negroponte appreciates government's economic measures

ISHFAQULLAH SHAWL
ISLAMABAD (December 12 2008): US Deputy Secretary of State John D Negroponte on Thursday appreciated the measures taken by the government for economic uplift and assured Pakistan of continued US support for its economic revival and development agenda.

The US will continue its co-operation with Pakistan to bail out it from economic problems and execution of the development projects, Negroponte said while talking to Shaukat Tarin, advisor to the Prime Minister on Finance and Economic Affairs. Negroponte said that the US government will continue to support and assist in the continuation of economic assistance to Pakistan through the Friends of Pakistan Forum.

The advisor shared with US Deputy Secretary the economic agenda and policies of the government to stabilise the economy and address the challenges faced by Pakistan on account of international fuel and food prices. Tarin while appreciating the US support, highlighted that it needs to consider enhancement of market access for Pakistan's exports to the USA.

Negroponte acknowledged Tarin's views and suggested that bilateral investment treaty would go a long way in enhancing trade and investment between the two countries. The two leaders agreed to continue bilateral interaction to ensure increase in pace of co-operation between the two count
 
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ADB extending $300 million loan to three provinces

RECORDER REPORT
FAISALABAD (December 12 2008): The Asian Development Bank (ADB) is extending three loans totalling $300 million to three provinces of Pakistan in support of local government programs to boost sustainable growth, reduce poverty, and improve the health of women and infants.

ADB is providing $100 million for the Second Balochistan Resource Management Program, $100 million for the Punjab Millennium Development Goals (MDG) Program, and $100 million for the Sindh Growth and Rural Revitalisation Program. The Balochistan and Sindh programs will also receive technical assistance grants.

The loans are helping the provincial governments address key constraints that hinder growth, poverty reduction and health gains. In the case of Punjab - which has the largest provincial population and economy in the country - funding for improving health care services will help it meet the MDGs for reducing maternal and infant mortality rates.

"The Program could potentially save the lives of up to 11,000 women and 235,000 infants by 2015 compared to a scenario without such support. It will also help Punjab improve public financial management in the health sector," said Rie Hiraoka, Senior Social Sectors Specialist for ADB's Central and West Asia Department.

The loan to the Sindh provincial government will help improve management of public spending and boost investment in rural areas, where poverty levels are high and economic opportunities are low. It will also promote private sector participation and public-private partnerships (PPPs) that can increase investment in much-needed infrastructure and social services. Technical assistance of $800,000 will be used to conduct studies and draw up options for PPPs. "The large rural-urban divide is a serious concern. Accelerating growth and improving the income of the rural poor are essential for economic and social stability in Sindh," said Xiaoqin Fan, Senior Public Resource Management Specialist at ADB's Pakistan Resident Mission.

In Balochistan - the country's largest but sparsely populated province - the loan will strengthen the provincial government's management of public finances, create a more sustainable and affordable civil service pension system, and help improve governance in the lucrative but largely-untapped mineral resources sector. A technical assistance grant of $800,000 will help the provincial government implement the Program.

"The Program will address some of the binding constraints on economic growth by allowing for more efficient use of public resources, while paving the way for greater private investment especially in the minerals sector," said Jose Antonio Tan III, Public Finance Economist in the Central and West Asia Department. The three loans will cover funding requirements for the first phase of each of the provincial programs, with ADB likely to provide further substantial funding for subsequent stages.
 
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Jobs to workers/professionals: Italy approaches ministry for accord on migration

MUSHTAQ GHUMMAN
ISLAMABAD (December 12 2008): The Federal Cabinet has been informed that the Italian government has approached Labour and Manpower Division for signing an agreement to strengthen co-operation in migration matters regarding provision of jobs to migrant workers/professionals.

The agreement would not only take care of the security concerns of the government of Italy, but would also help in resolving the issue of exploitation of migrant workers by unscrupulous agents.

During discussion, it was observed that the sponsoring division had not met the requirement of rules of business of 1973 negotiations with Italy. The meeting took exception to the conduct of Community Welfare Attache in Milan (Italy), who transgressed the Cabinet domain by initiating negotiations for memorandum of understanding (MoU) without prior approval of the Cabinet.

This was evident from bullet points 1 and 2 of para 2 of the summary and minutes of inter-ministerial meeting in Annex-Il, which confirmed that negotiations had been started without prior approval of the Cabinet.

It was emphasised that faithful observance of the rules of business of 1973 must be ensured. Moreover, some lacunae were pointed out in the draft agreement. The omission to seek prior approval of the Cabinet was regretted by the sponsoring division, which also advised to consult the Law and Justice Division for vetting of text as required under the rules of business of 1973.

The Prime Minister noted that this was an opportune time for such an initiative to exploit the existing excellent relations with Italy, which would assume the chairmanship of G-8 countries next year.

The Cabinet considered the summary, dated November 3 2008 submitted by the Labour and Manpower Division on "Permission in Principle to start negotiations with the government of Itay for entering into an agreement in order to strengthen the co-operation in migration matters" and accorded ex-post-facto approval to the proposal in para 4 thereof to start formal negotiations between Pakistan and Italy on an agreement in order to strengthen co-operation in migration matters.

The Law and Justice Division be consulted by the sponsoring division for removal of lacunae in the draft agreement. A directive would be issued to all ministries/divisions to strictly comply with the requirement of rules of business to seek prior approval of the Cabinet to start negotiations with the foreign governments and to ensure that such incidents involving transgression of the Cabinet domain do not recur.
 
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Pakistan ranks 34th in World Economic Forum’s Financial Development Report


ISLAMABAD, Dec 11 (APP): Pakistan ranked 34th in the World Economic Forum’s first Financial Development Report which was released in Pakistan through the Competitiveness Support Fund (CSF) on Thursday. CSF is a world Economic Partner Institute.

The report is a comprehensive analysis of financial systems and capital markets in 52 countries that explores key drivers of financial system development and economic growth in developing and developed countries and serves as a tool by which countries can benchmark themselves and establish priorities for financial system improvement.

Chief Executive of the Competitiveness Support, Arthur Bayhan, said: “I am very happy to see that financial system in Pakistan is well reformed and competitive vis-…-vis Asia and Europe. At 34th, Pakistan is ranked ahead of the Russian Federation which is ranked at 35, Indonesia 38, Turkey 39, Poland 41, Brazil 40, Philippines 48 and Kazakhstan 45.”

The United States narrowly edged the United Kingdom to take the top position in the Financial Development Index. The United Kingdom was second while China ranked 24th and India 31st.

The rankings are based on over 120 variables spanning institutional and business environments, financial stability, and size and depth of capital markets, among other factors, in assessing the complex financial systems of the 52 countries studied.

An important and unique measure captured by the Index includes the degree to which businesses feel they can easily access capital.

The Financial Development Index is based on three main pillars - Factors, Policies and Institutions, Financial Intermediation and Capital Availability and Access. These are further divided into sub - pillars.

Under Factors, Policies and Institutions pillar, Pakistan ranks 49th in institutional environment, 50th in business environment and 37th in Financial Stability. In the Financial Intermediation Pillar Pakistan ranks 25th in banks, 42nd in non banks and 17th in Financial Markets. Under Capital Availability and Access, Pakistan ranks 33rd.

Indicators showed that in Business environment Pakistan had development advantage in Cost to Export, ranking 6th, Cost of closing business 5th.

In Financial Stability Change in Rreal Effective Exchange rate ranked 20th, External debt to GDP 10th, Frequency of banking crises 1st, stability index 15th.

In corporate governance Pakistan ranked at the very top in shareholder rights index, 14th in strength of investor protection.

In the Non banks pillar, Pakistan ranked 9th in the Real growth of direct insurance premiums. In equity market movement Pakistan ranked at the top again in equity market turnover.

The report draws on data taken from a variety of publicly available sources as well as the World Economic Forum’s Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum with its network of Partner Institutes (leading research institutes and business organizations).
 
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Fuel and lighting charges up by 31.91pc, food by 30.44pc,transport and communication by 28.62pc​

Friday, December 12, 2008

ISLAMABAD: Fuelled by unbearable high food inflation, Pakistan’s Consumer Price Index (CPI) during November 2008 stood at 24.68 per cent decreased by 0.12 per cent in October 2008, when it stood at 25 per cent. Last year, in November 2007, CPI-based inflation was recorded at 8.67 per cent, the Federal Bureau of Statistics (FBS) reported on Thursday.

According to the latest CPI snapshot of the FBS, food inflation during November 2008 stood at 30.44 per cent, in which non-perishable food items’ price increased by 31.95 per cent and perishable food items’ by 21.29 per cent over November 2007.

Further more, five-month (July-November 2008-09) average inflation stood at 24.65 per cent while Wholesale Price Index (WPI) stood at 30.12 per cent last year during the same period, CPI stood at 7.85 per cent and WPI at 9.88 per cent. Huge increase in WPI-based inflation indicating further increase in retail prices of essential commodities. The rising inflation is also making it more difficult for pensioners and low income masses living on a very nominal fixed income a month in the country.

It is worth mentioning that the dwindling value of the Pakistani rupee, which is touching its lowest as a result of huge current account deficit, is pushing up prices of essential commodities on one hand, and on the another hand making imports costlier.

CPI covers the retail prices of 374 items in 35 major cities and reflects roughly the changes in the cost of living of urban areas. According to it, in November 2008, fuel and lighting charges were up by 31.91 per cent, food and beverages by 30.44 per cent, transport and communication by 28.62 per cent, clearing laundry and personnel appearances by 20.36 per cent, house rent by 16.80 per cent, education by 16.33 per cent, apparel textile and footwear by 15.85 per cent, household furniture and equipments by 15.02 per cent, recreation and entertainment by 12.48 per cent and medical expenses increased by 12.55 per cent over November 2007.

Economic pundits believe that imported inflation, which is expected to weaken as a result of declining crude oil prices, would also help in minimising the pressure of cost push inflation in the coming months.

They believe that for each one per cent increase in inflation, more and more Pakistanis fall in to poverty indicating that inflation was hitting poor Pakistani consumers harder than the more affluent ones. Specifically, the poor are highly sensitive to the price changes in food, particularly staple food items.

It is interesting to note that high inflation trend in food has been noticed since the start of the last fiscal (July 2007), when food inflation stood at 8.47 per cent, in August 8.62 per cent, September 12.97 per cent, October 14.67 per cent, November 12.47 per cent, December 12.21 per cent, January, 2008 it stood at 18.25 per cent, February 16.05 per cent, March 20.61 per cent, April 25.5 per cent, May 28.48 per cent, June 32.05 per cent, July 33.81 per cent, August 34.09 per cent, September 29.91 per cent, October 31.67 per cent and now during the month under review (November 2008), it stood at 30.44 per cent.

Despite the adverse impact on the low-income groups, no effective steps are being taken by the government to reverse the trend. The government seems to be indifferent to the plight of the poor and the lower middle class, who find it increasingly difficult to make both ends meet with the soaring prices of food stuff and medical expenses.
 
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Friday, December 12, 2008

KARACHI: Pakistani real estate investors in the United Arab Emirates (UAE) are not the only ones to have lost out heavily on their investments, for many well-off Pakistani families looking towards owning a home in the pearl of the desert are now in a lurch as construction for several projects has stopped due to the financial crunch the Arab country is facing.

One Pakistani investor, Waleed Mughal who had invested in a residential project is “worried to death” over what would happen now as he had made plans to move out of his rented villa and take up residence in his own home once completed.

He expressed that the freehold developers had promised to complete the project by early 2010 and he had invested heavily in owning an apartment. “Now the project is 80 per cent complete but the future of the remaining 20 per cent is uncertain. Despite repeated queries, I haven’t received any response on what is likely to happen next,” he articulated.

Many others like Waleed are in the same dilemma as the freehold properties of UAE promised world class luxuries and were priced for the same. Not being professional investors, and digging in to their savings to make their dreams come true, these families are now completely distressed.

According to a real estate expert’s analysis, the UAE real estate market has already declined by 22 per cent and a further 17 per cent of the downfall is expected before the year ends.

While local investors have been left severely wounded by the losses they experienced there, which run in millions and billions of rupees, many families dreaming of Dubai as their second home and having permanent residency are now pale with fear over their investments.

“Though the UAE government continues to decline the fact, several projects in the country have come to a standstill” informs a real estate expert from UAE. He shares that the Arab country claims that the projects have simply slowed down and all will be well by the beginning of the new year, but the reality is far from it.

“Take projects such as Burj Dubai, Palm Deira and Jumeirah Gardens as examples or real estate giants Emaar and Al Nakeel” he continued. “All of these have either backed out completely or are now reviewing their launched plans” he said.

The expert further shared that UAE officials were now taking action against anyone being verbal about the recession in the local real estate market. He went on to say that some had tried to ‘bribe’ Pakistani investors to continue investing while offering them facilities such as free visa, travel and living expenses in the UAE.

“The problem with our people is that they invest without thoroughly analysing the market” Senior Vice President of FPCCI Sub committee on Housing and Construction, Munir Sultan commented. “Our people saw that everyone is rushing towards the UAE market and they decided to head for it too” he voiced.

“We want short cuts and quick money without an ounce of hard work and that’s why our investors faced losses that have left them worse-off than from where they started. And unfortunately some honest families got caught in the middle of it too” Sultan added.
 
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Friday, December 12, 2008

KARACHI: The construction and housing industry is likely to attract a fresh inflow of foreign investment amounting to around two billion dollars, developers said.

“Talks are underway with foreign investors for investing more than $2 billion in the housing and construction industry,” Chief Executive of Rufi group, Manzoor Ahmed Rufi said addressing a press briefing on Thursday.

In this regards the group has convinced the Maqaseeb Group of Saudi Arabia, Theses of Abu Dhabi Housing Authority and Bilvadi of Dubai to invest this amount in the next two years in projects such as shopping complexes, hotels and residential and trading projects in Karachi, Lahore and Islamabad.

Manzoor Rufi said that overseas Pakistanis are grieved on the present economic situation of Pakistan and therefore in the current scenario, Pakistan’s housing and construction sector can play an important role.

“All they need is the government’s support because with its help we can launch constructions projects similar to Dubai which will also help activate more than 72 industries and create hundreds of jobs,” he further commented.

Ramiz Rufi said soon an agreement between Hassham Abdul Ghania of Maqaseeb group, Saidul Moossa of Theses group and Anthon Sari of Bilvadi group Abu Dhabi, will be signed.
 
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Friday, December 12, 2008

ISLAMABAD: With the recent rains contributing nothing to the water levels in Tarbela and Mangla Dams and the power generation falling sharply, heavy loadshedding may continue well into the New Year, officials warned on Thursday.

The daily water discharge from the Tarbela Dam would decrease from the present 48,000 to just 8,500 cusecs, they said, adding the release from the Mangla Dam would slump from 24,000 cusecs to zero by January 1, 2009 — a New Year gift for consumers already hit by power outages.

As the hydropower generation is set to see a fall of 3,000 megawatts (MW), the Indus River System Authority (Irsa) and the Pakistan Electric Power Company (Pepco) have confirmed reduced water discharge plan from Jan 1. Sources acknowledged the recent widespread rains did have a positive impact in terms of irrigating the standing crops and controlling a variety of diseases but hastened to explain that the wet spell failed either to jack up the water levels or help overcome the shortfall in electricity generation.

Water levels go up both in Mangla and Tarbela dams when rains fall in catchment areas or when there is a rise in glacier temperature. “You can assess the problem that water releases from both the main reservoirs would be cut down to merely 8,500 cusecs daily from the present 72,000 cusecs,” a Pepco official told The News.

At the same time, the Irsa has whittled down the daily water releases from Tarbela to a mere 3,500 cusecs from the previous 48,000 cusecs and from Mangla to 22,000 from 24,000 cusecs, adding to reduction in power generation.

“All these reductions are taking place in consultation with the provinces, Pepco and Wapda, as the use of water for irrigation has decreased considerably, forcing us to slash the discharges,” an Isra spokesman said.

The official, confirming the plan to further cut the water discharges, verified the release from Tarbela Dam — 70,000 cusecs a month back — had come down to 48,000 cusecs. By the same token, water releases from Mangla have also plummeted. “The provinces have every right to stop drawing water as the reservoirs are built primarily for irrigation purposes and electricity generation is a by-product,” he argued. Pepco official Tahir Basharat Cheema also confirmed the plan to reduce the water discharges and said the company had chalked out a strategy to deal with the situation, particularly when the releases would be at their lowest ebb from January onwards.

Cheema said Pepco would daily carry out load-shedding of up to four hours in urban stations and six hours in rural areas due to reduced water discharges from dams. As power demand came down almost by 3,000-4,000 MW in winter, the official pointed out it was 11,200 MWs before Eid, falling to 10,500 MWs on the day one of the festival and 10,800 MWs on the day two. “Today, we have a demand of 10,500 MW but the actual power availability is just 10,000 MW, so there is a shortfall of 500 MW on the third day of Eid. The reason is a cut of 24,000 cusecs in water releases from today (Dec 11). I fear a power shortage of 2,000-2,500 MW from January when the Mangla Dam discharge will be zero and Tarbela at only 8,500 cusecs,” Tahir Basharat Cheema concluded.
 
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ISLAMABAD: Trade deficit of the country has further widened to $8.74 billion in July-November period (5 months) of the current fiscal year 2008-09 as compared to $7.26 billion in the same period last fiscal year, depicting an increase of 20.38 percent.

According to the official sources, Pakistan's exports amounted to $8.27 billion in Jul-Nov period of current fiscal year 2008-09 as compared to the exports of $7.34 billion in the same period last fiscal year projecting an increase of 12.67 percent. Despite the depreciation of Pak-Rupee in the recent months country's major export oriented sectors like textile, leather, carpets, surgical goods, sports goods and carpets have failed to cash in on this.

Imports of the country jumped to $17.01 billion during first five months of current fiscal year as against the imports of $14.6 billion in the same period last fiscal year indicating a growth of 16.50 percent.

On the other hand governments efforts to control surge in imports have not yielded encouraging results and imports of the country are still on the rise putting additional burden on limited foreign exchange reserves. The government had imposed regulatory duty ranging between 15 to 50 percent on the import of luxury and non-essential items.

However, this effort of the government has not shown required results and economic managers at Ministry of Finance are again considering the possibility of imposing regulatory duty on a few more items and are also examining the possibility to cover luxury items included in lists of FTA and PTA's that Pakistan have already signed.

According to the trade performance during the month of November 2008 the country's exports stood at $1.53 billion and imports at $2.72 billion resulting in trade deficit to $1.2 billion.

The exports are projected to grow to $21.3 billion and imports to reach $35 billion in the current fiscal year 2008-09, however, the exports performance during the first five months predicts higher than expected trade deficit.

According to the Macro-economic Framework prepared by Panel of Economist headed by Dr Hafiz Pasha, balance of payments gap would be reduced to $ 4.5 billion in 2008-09 (from US $ 6.2 billion in 2007-08) and be largely eliminated in 2009-10. Growth of exports will take exports to $23.5 billion by 2009-10 whereas imports are expected to decline to $31.4 billion in 2008-09 from target of $35.4 billion in 2008-09. sajid chaudhry
 
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KARACHI (December 12 2008): Saudi Arabia and the United Arab Emirates (UAE) plan to pledge up to $2 billion to help Pakistan overcome a balance of payments crisis, a former International Monetary Fund (IMF) official said. "It is expected that the UAE ($1 billion) and Saudi Arabia ($500 million-$1 billion) will offer additional financing," said Mohsin Khan, former IMF director for the Middle East and Central Asia, in an e-mail response to Reuters received on Thursday.

Khan was part of the IMF team which negotiated an emergency support package for Pakistan that was agreed to last month. He retired in November. Khan, who is due to join the Peterson Institute for International Economics in Washington, said China is likely to offer Pakistan $500 million as well.

He said Saudi Arabia and the UAE were expected to pledge the funds at the next meeting of a donor conference. A date for the "Friends of Pakistan" donor conference has not been set but it will probably take place in January, he said. Pakistan agreed with the IMF on a $7.6 billion loan in November out of which Pakistan has already received the first tranche of $3.1 billion.

Khan said external financing will also be provided by multi-lateral organisations such as the Asian Development Bank (ADB) and World Bank. The ADB has already given $500 million of an expected $2.2 billion, and the World Bank is expected to come through with $1.4 billion, while the Islamic Development Bank will provide a smaller sum, Khan said.

Pakistan's gross external financing requirement for the 2008/09 (July-June) fiscal year is $13.4 billion, a senior IMF official said late last month. The IMF will provide $4.7 billion of that total, Juan Carlos di Tata, senior adviser in the IMF's Middle East and Central Asia Department said last month.

Khan said Pakistan's gross domestic product (GDP) growth will probably be 2 to 3 percent, far slower than the official forecasts for the 2008/09 fiscal year ending June 30.

"Nothing points to a more optimistic projection, unless agriculture booms," Khan said. "But 2-3 percent for Pakistan is a recession and that has to be accepted." Pakistan's central bank said on Saturday in its annual report that the country's GDP is expected to grow between 3.5 percent and 4.5 percent in current fiscal year ending June 30, slowing from 5.8 percent growth in the previous years.

The IMF has projected GDP at 3.4 percent for fiscal year of 2008/09. Khan said for the next fiscal year, 2009/10, there should be some pick up but "growth will at best be in the 4-5 percent range, but probably no more than 4 percent." He also added that Pakistan's economic crisis is a very serious one this time and it would take several years for its economy to recover.
 
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LAHORE (December 12 2008): The Chairman Federal Task Force on Information and Communication Technologies (ICT) Salim Ghauri has said the Pakistan's IT industry is mature enough to survive, and even benefits from the current global financial crisis.

"Pakistan was now poised to do what India achieved in the aftermath of the 2002 IT industry crisis. India's IT based service business was set to suffer in the global financial crisis, and Pakistan could benefit from this situation," he said, adding: "It should, however, try to capitalise on the opportunities to capture the business that India was set to lose," he added.

While presiding over a meeting of the working group on software development and exports, he assured the participants to take up with the government the tax holiday demand for the IT industry which is going to expire in 2011. He asked the participants of the meeting to review the current IT policy independently with the view of identifying key areas for driving the growth of the software industry and its export competitiveness.

While emphasising the need of an urgent study to estimate the size of the software industry and its export competitiveness in Pakistan, he assigned a task to recognised local IT university for undertaking a revenue and employment estimation study for the IT industry.

He also requested the Pakistan Software Exports Board to arrange necessary funds in this regard. The Managing Director Pakistan Software Exports Board Talib Baluch has agreed with the proposal of Chairman ICT and assured him of PSEB's full support in this respect. Meanwhile, Chairman ICT has also urged the Pakistan Software Houses Association (Pasha) to share a 30-page guidelines document, properly vetted by the PSEB, for the study proposes.

However, he mentioned that surveys and censuses conducted so far to assess IT industry's size had not been effective. An effective estimation model needed to be worked out. He also demanded of the Statistics Division to recognise IT and ensure proper data collection using international codes.

He said special incentives or exemption could be extended to all such companies, to the extent of their reported export revenue, as a complete picture of industry's revenues would be in a better positioning of IT industry in the eyes of government as well as general public. The international research is of the view that the basic fundamentals for Pakistan's IT industry were in place. The key areas that needed attention were HR promotion, infrastructure, IT security and funding, he added.
 
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