Pakistan Economy - News & Updates - Archive
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ISLAMABAD (June 25 2006): The World Bank (WB) has asked the government to liberalise the insurance industry through reforms in line with the banking sector, official sources told Business Recorder.
"Insurance penetration is very low, relative to other countries, at Pakistan's income level which requires further consolidation and liberalisation of the industry," sources quoted the bank's mission on Implementation Completion Report (ICR) as saying.
"The WB is of the view that the county's banking sector has gone through beneficial structural reforms, but the rest of the financial sector has not been subjected to reform process to the same extent."
The mission also met with the stakeholders in the private sectors including senior bankers in private and foreign banks, besides the Islamabad-based representatives of Asian Development Bank (ADB), International Monetary Fund (IMF) and the World Bank to discuss financial sector reforms.
The ICR mission said that there was general consensus that privatisation of the banking sector had been a success and they were happy the way privatisation had improved the performance of the banks after sell-off. As the financial practices in Pakistan have became more complex, there is a consensus that the human capital is not available to meet the requirements of financial sector.
They said that privatisation of public sector banks had enhanced the need for effective top management, and added that skill should be improved, especially in assessing the risk of consumers.
"There is also a general recognition of the need to develop the capital market and it is felt that current debt market is not very deep and effective. The practitioners expressed the need to develop this market further, especially the corporate bond and commercial paper market," sources quoted the mission as saying in the report.
Furthermore, it was felt that there was limited rationale for having a state-owned commercial bank and that one should work towards removing unfair advantage in terms of any tied-in business from the government. The stakeholders were also of the view that Pakistan was now in great need of an effective export credit agency.
Giving the background of loan, the report said that the proceeds/credit for the Banking Sector Development Policy Credit (BSDPC) were disbursed in record short time. The legal agreements were signed in January 13,2005 and the project was declared effective from January 18,2005. The bank obtained withdrawal applications for SDR 65 million and $200 under the credit and loan respectively on January 18 and funds were disbursed on January 20. The State Bank of Pakistan (SBP) received the funds on January 24 and credited the money to the consolidated account of the GoP the same day.
"Insurance penetration is very low, relative to other countries, at Pakistan's income level which requires further consolidation and liberalisation of the industry," sources quoted the bank's mission on Implementation Completion Report (ICR) as saying.
"The WB is of the view that the county's banking sector has gone through beneficial structural reforms, but the rest of the financial sector has not been subjected to reform process to the same extent."
The mission also met with the stakeholders in the private sectors including senior bankers in private and foreign banks, besides the Islamabad-based representatives of Asian Development Bank (ADB), International Monetary Fund (IMF) and the World Bank to discuss financial sector reforms.
The ICR mission said that there was general consensus that privatisation of the banking sector had been a success and they were happy the way privatisation had improved the performance of the banks after sell-off. As the financial practices in Pakistan have became more complex, there is a consensus that the human capital is not available to meet the requirements of financial sector.
They said that privatisation of public sector banks had enhanced the need for effective top management, and added that skill should be improved, especially in assessing the risk of consumers.
"There is also a general recognition of the need to develop the capital market and it is felt that current debt market is not very deep and effective. The practitioners expressed the need to develop this market further, especially the corporate bond and commercial paper market," sources quoted the mission as saying in the report.
Furthermore, it was felt that there was limited rationale for having a state-owned commercial bank and that one should work towards removing unfair advantage in terms of any tied-in business from the government. The stakeholders were also of the view that Pakistan was now in great need of an effective export credit agency.
Giving the background of loan, the report said that the proceeds/credit for the Banking Sector Development Policy Credit (BSDPC) were disbursed in record short time. The legal agreements were signed in January 13,2005 and the project was declared effective from January 18,2005. The bank obtained withdrawal applications for SDR 65 million and $200 under the credit and loan respectively on January 18 and funds were disbursed on January 20. The State Bank of Pakistan (SBP) received the funds on January 24 and credited the money to the consolidated account of the GoP the same day.
WASHINGTON (June 25 2006): The Adviser to Prime Minister on Energy, Mukhtar Ahmed, on Friday said Pakistan was 'moving ahead' with implementation of gas pipeline projects, import of LNG and import of power from Central Asia.
At the domestic levels, he said the government was determined to develop Thar coal while 'some movement is in place' on going ahead with five mega projects for hydel power generation, which would considerably enhance comparatively cheaper electric power resource.
Mukhtar Ahmed stated this while responding to questions at a day-long conference on 'Meeting Pakistan's Energy Needs in the 21st Century,' held under the aegis of the Asia Society at the Woodrow Wilson Centre for Scholars.
The conference was attended by experts, scholars and officials, and the consensus was that the blue print of the government's policy response was right, and let it be implemented.
Mukhtar Ahmed was the keynote speaker, who presented Pakistan's case for energy needs, with facts and figures and a power point presentation, followed by question-answer session. The conference had three sessions. He explained key elements of the policy response of the country to meet the energy requirements of an expanding economy, which had registered 8.4 and 6.5 percent growth rate during the past two years.
He said the key elements of an action plan to meet the energy requirements of the country in the long-term, to balance the risks associated with rising world energy prices and protect the economy against uncertainties in development of domestic resource base.
The adviser said the implementation of gas pipeline projects, LNG projects and projects for import of electricity from Central Asia was being pursued 'on a fast track basis'. He said the government expects the private sector and the foreign direct investment (FDI) to play a central role in development of the energy sector in the country.
Mukhtar Ahmed said production of oil and gas in the country is expected to improve slightly in the near term, but decline in the long-run, given the current onshore exploration activities and resource outlook, and a low likelihood of a major offshore discovery. Availability of coal, hydel, nuclear and renewable energy, he said, is projected to improve significantly in line with current resource development plans.
The availability of energy from these sources, however, will not be enough to meet the growing demand of the economy, he said, adding the energy deficit which stands at 15 MTOE (million tons oil equivalent) or 28 percent of the energy demand presently will increase to 122 MTOE by 2025, corresponding to 62 percent of the demand.
This outlook, he said, clearly indicates a need to place development of the indigenous resource base on a high priority, followed by long-term arrangements to acquire energy from external sources that are affordable and reliable.
Mukhtar Ahmed said as far as Turkmenistan was concerned, it was the gas availability factor, and transmission. "I have looked at numbers, which indicate that there is enough gas in the ground to support a 30 year project for Pakistan and India", he added.
The adviser said: "We have been assured in writing by Turkmenistan that the required amount of gas would be made available, so, now, gas availability is assured." "We have other issues to deal with, say for instance, transit issue. We recognise that many things need to be put in place. So, it is alive, and hopefully, someday, it will happen," he said on Turkmenistan project.
"We are in active discussion with Iran and Turkmenistan, while the Qatar alternative is on backburner, in a sense, because Qataris have told us that most of their gas is committed, and that they don't have gas for a 30 year commitment. These three things are under consideration. Some more active than others", he said.
He said Pakistan was also looking at power import in the country from Central Asia, adding: "We are looking at Tajikstan and Kyrghyzstan, as two possible sources of power.
The gas pipeline import project could deliver energy at competitive prices to meet energy requirements in residential sector and industrial sector. "So, this is an option that is being actively pursued." Responding to some of the points raised by the speakers, the adviser said the government was encouraging the private sector for investments.
He said the government following a two-pronged approach, "we are reacting, but at the same time, we are proactive, adding: "We are looking ahead, and development of energy sector on a sustainable track."
To a point, he said Pakistan was also supportive of regional co-operation at Saarc level in the energy sector, and added that "a lot of lessons" could be learnt, say for instance, from Bangladesh rural electrification programme."
Mukhtar Ahmed said Pakistan was giving due importance to biomass, which is a significant player in energy development. "We have announced plans about wind mills, while it believes in renewable energy resources." To a point, he said Pakistan already imported coal from Australia and Indonesia, while India is a potential source for coal.
In rural areas, which have access to agricultural waste like rice-husk the government was trying to promote use of that biomass for power generation. In urban centres, the government was moving towards utilisation of municipal waste for power generation. So, that is a two-pronged approach.
Solar power, he said, was again something the government was looking at in the context of rural electrification, adding: "We are trying to mainstream the energy." About nuclear energy, he said it was barely meeting one percent of energy requirements of Pakistan. On infrastructure, he said Pakistan has a well developed infrastructure for energy.
The gas transmission infrastructure connects to 4.26 million households and commercial establishments in addition to bulk of the industries and thermal power generating units in the country, and includes 9,060 km of high pressure transmission pipelines and over 225,000 HP of compression capacity. The power transmission and distribution network serves over 16.3 million residential and commercial and 0.23 million industrial customers, and includes 40,500 km of high voltage transmission lines.
At the domestic levels, he said the government was determined to develop Thar coal while 'some movement is in place' on going ahead with five mega projects for hydel power generation, which would considerably enhance comparatively cheaper electric power resource.
Mukhtar Ahmed stated this while responding to questions at a day-long conference on 'Meeting Pakistan's Energy Needs in the 21st Century,' held under the aegis of the Asia Society at the Woodrow Wilson Centre for Scholars.
The conference was attended by experts, scholars and officials, and the consensus was that the blue print of the government's policy response was right, and let it be implemented.
Mukhtar Ahmed was the keynote speaker, who presented Pakistan's case for energy needs, with facts and figures and a power point presentation, followed by question-answer session. The conference had three sessions. He explained key elements of the policy response of the country to meet the energy requirements of an expanding economy, which had registered 8.4 and 6.5 percent growth rate during the past two years.
He said the key elements of an action plan to meet the energy requirements of the country in the long-term, to balance the risks associated with rising world energy prices and protect the economy against uncertainties in development of domestic resource base.
The adviser said the implementation of gas pipeline projects, LNG projects and projects for import of electricity from Central Asia was being pursued 'on a fast track basis'. He said the government expects the private sector and the foreign direct investment (FDI) to play a central role in development of the energy sector in the country.
Mukhtar Ahmed said production of oil and gas in the country is expected to improve slightly in the near term, but decline in the long-run, given the current onshore exploration activities and resource outlook, and a low likelihood of a major offshore discovery. Availability of coal, hydel, nuclear and renewable energy, he said, is projected to improve significantly in line with current resource development plans.
The availability of energy from these sources, however, will not be enough to meet the growing demand of the economy, he said, adding the energy deficit which stands at 15 MTOE (million tons oil equivalent) or 28 percent of the energy demand presently will increase to 122 MTOE by 2025, corresponding to 62 percent of the demand.
This outlook, he said, clearly indicates a need to place development of the indigenous resource base on a high priority, followed by long-term arrangements to acquire energy from external sources that are affordable and reliable.
Mukhtar Ahmed said as far as Turkmenistan was concerned, it was the gas availability factor, and transmission. "I have looked at numbers, which indicate that there is enough gas in the ground to support a 30 year project for Pakistan and India", he added.
The adviser said: "We have been assured in writing by Turkmenistan that the required amount of gas would be made available, so, now, gas availability is assured." "We have other issues to deal with, say for instance, transit issue. We recognise that many things need to be put in place. So, it is alive, and hopefully, someday, it will happen," he said on Turkmenistan project.
"We are in active discussion with Iran and Turkmenistan, while the Qatar alternative is on backburner, in a sense, because Qataris have told us that most of their gas is committed, and that they don't have gas for a 30 year commitment. These three things are under consideration. Some more active than others", he said.
He said Pakistan was also looking at power import in the country from Central Asia, adding: "We are looking at Tajikstan and Kyrghyzstan, as two possible sources of power.
The gas pipeline import project could deliver energy at competitive prices to meet energy requirements in residential sector and industrial sector. "So, this is an option that is being actively pursued." Responding to some of the points raised by the speakers, the adviser said the government was encouraging the private sector for investments.
He said the government following a two-pronged approach, "we are reacting, but at the same time, we are proactive, adding: "We are looking ahead, and development of energy sector on a sustainable track."
To a point, he said Pakistan was also supportive of regional co-operation at Saarc level in the energy sector, and added that "a lot of lessons" could be learnt, say for instance, from Bangladesh rural electrification programme."
Mukhtar Ahmed said Pakistan was giving due importance to biomass, which is a significant player in energy development. "We have announced plans about wind mills, while it believes in renewable energy resources." To a point, he said Pakistan already imported coal from Australia and Indonesia, while India is a potential source for coal.
In rural areas, which have access to agricultural waste like rice-husk the government was trying to promote use of that biomass for power generation. In urban centres, the government was moving towards utilisation of municipal waste for power generation. So, that is a two-pronged approach.
Solar power, he said, was again something the government was looking at in the context of rural electrification, adding: "We are trying to mainstream the energy." About nuclear energy, he said it was barely meeting one percent of energy requirements of Pakistan. On infrastructure, he said Pakistan has a well developed infrastructure for energy.
The gas transmission infrastructure connects to 4.26 million households and commercial establishments in addition to bulk of the industries and thermal power generating units in the country, and includes 9,060 km of high pressure transmission pipelines and over 225,000 HP of compression capacity. The power transmission and distribution network serves over 16.3 million residential and commercial and 0.23 million industrial customers, and includes 40,500 km of high voltage transmission lines.
ISLAMABAD, Jun 23: Underlining the importance of a strong and well-functioning financial and banking sector for sustained higher economic growth, Prime Minister Shaukat Aziz on Friday said the banking industry in Pakistan, which had been transformed from the state-owned sector into a vibrant private sector industry, had not only gained strength from the positive interplay of economic and political factors, but had also become an engine of growth for the economy.
The prime minister was talking to Niall Booker, regional head for Middle East of HSBC, who called on him here at the Prime Minister's House.
Mr Aziz said Pakistan, with its growing market, strong economy and an emerging middle class, offered immense opportunities for business and investments.
Niall Booker said HSBC was impressed by the economic turnaround achieved by Pakistan and had decided to open more branches and expand their area of business in Pakistan. He said HSBC had opened one branch in Islamabad and would be opening one each in Karachi and Faisalabad.
The prime minister said as a result of the economic and structural reforms, the economic landscape of Pakistan had changed altogether, adding that Pakistan's economy exhibited solid economic growth in 2005-06 despite the surge in oil prices and the devastating earthquake of October 8, 2005.
The prime minister said increase in per capita income to $847 and sharp pickup in overall investment were reaching new heights, adding that private sector investments were buoyant and a robust consumer spending was ably supporting the ongoing growth momentum.
ââ¬ÅEnergy consumption continues to rise at a greater pace reflecting strong buoyancy in the economy,ââ¬Â Mr Aziz added.
Referring to various reforms, the prime minister particularly mentioned the Fiscal Responsibility Law as an important step taken by the government to maintain fiscal discipline by putting restriction on borrowing beyond a certain point.
Mr Booker said his bank was satisfied with the level of ease of doing business in Pakistan. He also appreciated the quality of human capital available in the country and added that addition to opening more branches in Pakistan, the bank is also expending its areas of business. He said from the corporate sector, the bank would be moving on SMEs and other areas, including Islamic finance.
The prime minister was talking to Niall Booker, regional head for Middle East of HSBC, who called on him here at the Prime Minister's House.
Mr Aziz said Pakistan, with its growing market, strong economy and an emerging middle class, offered immense opportunities for business and investments.
Niall Booker said HSBC was impressed by the economic turnaround achieved by Pakistan and had decided to open more branches and expand their area of business in Pakistan. He said HSBC had opened one branch in Islamabad and would be opening one each in Karachi and Faisalabad.
The prime minister said as a result of the economic and structural reforms, the economic landscape of Pakistan had changed altogether, adding that Pakistan's economy exhibited solid economic growth in 2005-06 despite the surge in oil prices and the devastating earthquake of October 8, 2005.
The prime minister said increase in per capita income to $847 and sharp pickup in overall investment were reaching new heights, adding that private sector investments were buoyant and a robust consumer spending was ably supporting the ongoing growth momentum.
ââ¬ÅEnergy consumption continues to rise at a greater pace reflecting strong buoyancy in the economy,ââ¬Â Mr Aziz added.
Referring to various reforms, the prime minister particularly mentioned the Fiscal Responsibility Law as an important step taken by the government to maintain fiscal discipline by putting restriction on borrowing beyond a certain point.
Mr Booker said his bank was satisfied with the level of ease of doing business in Pakistan. He also appreciated the quality of human capital available in the country and added that addition to opening more branches in Pakistan, the bank is also expending its areas of business. He said from the corporate sector, the bank would be moving on SMEs and other areas, including Islamic finance.
Sunday, June 25, 2006
LAHORE: The country's citrus export has enhanced to 200,000 tonnes earning an estimated $45 million foreign exchange during the year 2005-06, while various steps are being taken to increase fruit and vegetable exports.
The steps include provision of facilities and searching for new markets for Pakistan's produce. This was observed at a meeting of Agricultural Marketing held Saturday to review export facilities for perishable products.
The meeting was apprised that 281,256,000 kg fruit was exported in the year 2004-05, earning foreign exchange of US$90 million, whereas 170,921,000 kg vegetables worth $50 million dollars were exported.
According to a handout, a comprehensive strategy has been chalked out to increase the export of fruit, vegetables and flowers.
A modernized Citrus Resource Centre is being set up in Bhalwal to improve the storage system of this produce so as to encourage exports.
The infrastructure of 30 fruit and vegetable markets is being improved and development work is being carried out at a cost of Rs 1.19 billion in market committees of the province.
The marketing process will also be improved to boost the export of flowers.
Fruit and vegetable markets and market committees of the province will be computerized to ensure quick access to the latest market data.
Meanwhile. electronic display boards are being set up in major cities of the province on which prevailing market prices of commodities will be displayed for the public and stakeholders.
LAHORE: The country's citrus export has enhanced to 200,000 tonnes earning an estimated $45 million foreign exchange during the year 2005-06, while various steps are being taken to increase fruit and vegetable exports.
The steps include provision of facilities and searching for new markets for Pakistan's produce. This was observed at a meeting of Agricultural Marketing held Saturday to review export facilities for perishable products.
The meeting was apprised that 281,256,000 kg fruit was exported in the year 2004-05, earning foreign exchange of US$90 million, whereas 170,921,000 kg vegetables worth $50 million dollars were exported.
According to a handout, a comprehensive strategy has been chalked out to increase the export of fruit, vegetables and flowers.
A modernized Citrus Resource Centre is being set up in Bhalwal to improve the storage system of this produce so as to encourage exports.
The infrastructure of 30 fruit and vegetable markets is being improved and development work is being carried out at a cost of Rs 1.19 billion in market committees of the province.
The marketing process will also be improved to boost the export of flowers.
Fruit and vegetable markets and market committees of the province will be computerized to ensure quick access to the latest market data.
Meanwhile. electronic display boards are being set up in major cities of the province on which prevailing market prices of commodities will be displayed for the public and stakeholders.
Pakistanââ¬â¢s dependence on imported energy will go up: official
WASHINGTON: A one-day conference on Pakistanââ¬â¢s energy needs was told here on Friday that Pakistanââ¬â¢s dependence on imported energy would increase considerably in the near to medium term as it was not possible to develop its sizeable coal and hydel resources in the short term owing to ââ¬Åinherent restraintsââ¬Â.
This was stated by Mukhtar Ahmed, adviser on energy to Prime Minister Shaukat Aziz, in a keynote address to the conference held at the Woodrow Wilson Centre. The conference was made possible through the financial help extended by the Fellowship Fund for Pakistan, set up in 2003 by a number of leading Pakistani financial and business institutions to ââ¬Åprovide Pakistanââ¬â¢s most eminent thinkers with opportunities to take part in international deliberations on current and future issues facing Pakistan.ââ¬Â The Fund sponsors a Pakistani scholar to spend nine months at the Woodrow Wilson Centre to complete an approved research project relevant to Pakistanââ¬â¢s needs. The scholar selected for 2006-07 is Khaled Ahmed of this newspaper and The Friday Times.
The conference, spread over three sessions, was addressed by Shahid Javed Burki, Ziad Alahdad, Zaffar Khan, Asad Umar, John Hammond, Robert Hathaway, Dorothy Lele, Robert Looney, William Milam, Sanjeev Minocha, Bikash Pandey, Paul Simons, Vladislav Vucetic and Aram Zamgochian.
Mukhtar Ahmed said gas import pipelines could deliver energy at competitive prices in the near term to meet the demand of priority consumer segments such as the residential, industrial and power sectors. In the medium term, development of the vast Thar coal deposits in Sindh and nuclear power could secure the country against high energy prices in the global markets and risks associated with large-scale development of hydel resources. Development of indigenous coal cold be coupled with the inclusion of imported coal for greater diversity in the mix of imported fuels, he added. He said the key elements of an action plan to meet the energy needs of Pakistan in the long term, to balance the risks associated with rising world energy prices and to protect the economy against uncertainties in the development of a domestic resource base would include a number of steps. Gas pipeline and LNG projects and those involving the import of energy from Central Asian states should be implemented on a ââ¬Åfast-track basisââ¬Â. Indigenous energy resources should be developed through enhanced oil and gas production and a detailed technical and economic assessment of coal mining and coal-based power generation, while an assessment should be made of advanced technology options for coal gasification and coal-bed methane. He also called for enhanced hydroelectric and nuclear power generation and the mainstreaming of renewable energy.
The prime ministerââ¬â¢s adviser told the conference that the Government of Pakistan expects the private sector and foreign direct investment to play a central role in the development of the energy sector. He informed the meeting that LNG consultants have been engaged to provide advice on technical, financial and commercial issues and firms were expected to be short-listed in the near future. As for gas import pipelines, the technical parameters had been defined through pre-feasibility studies and technical working groups. Joint working groups had also been set up to address technical, commercial and financing issues. Offers of ââ¬Åexpression of interestââ¬Â had been invited for a 200,000 to 300,000 barrels per day coastal oil refinery near Karachi. He told the conference that ââ¬Åfurther workââ¬Â had been initiated to evaluate the technical and economic aspects of electric power imports from Central Asian states and proposals had been invited from the private sector for seven hydroelectric power projects with a total capacity of 1,620 MW. The private sector was being involved in the preparation of feasibility studies for mining the Thar coal deposits and for power generation.
Shahid Javed Burki, who was finance minister of Pakistan in 1996-97 and is a retired vice president of the World Bank, told the conference that Pakistanââ¬â¢s present annual growth rate is ââ¬Ånot sustainableââ¬Â because the economy simply does not have the resources to ensure the desired sustainability. He pointed out that investments that would ensure the sustainability of high growth rates were not forthcoming. He was also critical of the ââ¬Åpassive approachââ¬Â adopted by the countryââ¬â¢s economic planners vis-à-vis the energy sector. He proposed that Pakistan should treat energy as the ââ¬Åprime sectorââ¬Â. It must also concentrate on the development and strengthening of its agriculture. The countryââ¬â¢s coal deposits must be developed ââ¬Åaggressivelyââ¬Â but what was most important was to ââ¬Åtreat energy as the engine of economic growth and development in the coming years.ââ¬Â He added that he did not see that happening and it was worrisome. He also told the conference that India would face enormous energy demand as it moved ahead, since it simply does not have enough energy resources to keep up with the economic development it seeks and expects. He also asked why Pakistan should not invite India to invest in its energy sector, especially coal, considering that India has been investing in other countries, including some in Africa.
ââ¬ÅPakistan has to think regionally and globally,ââ¬Â Burki said. According to him, there is a serious East-West divide in Pakistan. The energy demand sectors exist primarily west of the Indus, while the sources of energy are located to the east of the Indus. Such a development pattern is uneven and it must be rationalised. He pointed out that the ââ¬Årentââ¬Â from provincial energy resources is being ââ¬Åcapturedââ¬Â by the central government, which is wrong. The first right to those resources and the wealth they generate is that of the people of the region or the province where those sources are located. Burki also called for the establishment of a National Finance Commission Award, something he felt should not be put off any longer.
WASHINGTON: A one-day conference on Pakistanââ¬â¢s energy needs was told here on Friday that Pakistanââ¬â¢s dependence on imported energy would increase considerably in the near to medium term as it was not possible to develop its sizeable coal and hydel resources in the short term owing to ââ¬Åinherent restraintsââ¬Â.
This was stated by Mukhtar Ahmed, adviser on energy to Prime Minister Shaukat Aziz, in a keynote address to the conference held at the Woodrow Wilson Centre. The conference was made possible through the financial help extended by the Fellowship Fund for Pakistan, set up in 2003 by a number of leading Pakistani financial and business institutions to ââ¬Åprovide Pakistanââ¬â¢s most eminent thinkers with opportunities to take part in international deliberations on current and future issues facing Pakistan.ââ¬Â The Fund sponsors a Pakistani scholar to spend nine months at the Woodrow Wilson Centre to complete an approved research project relevant to Pakistanââ¬â¢s needs. The scholar selected for 2006-07 is Khaled Ahmed of this newspaper and The Friday Times.
The conference, spread over three sessions, was addressed by Shahid Javed Burki, Ziad Alahdad, Zaffar Khan, Asad Umar, John Hammond, Robert Hathaway, Dorothy Lele, Robert Looney, William Milam, Sanjeev Minocha, Bikash Pandey, Paul Simons, Vladislav Vucetic and Aram Zamgochian.
Mukhtar Ahmed said gas import pipelines could deliver energy at competitive prices in the near term to meet the demand of priority consumer segments such as the residential, industrial and power sectors. In the medium term, development of the vast Thar coal deposits in Sindh and nuclear power could secure the country against high energy prices in the global markets and risks associated with large-scale development of hydel resources. Development of indigenous coal cold be coupled with the inclusion of imported coal for greater diversity in the mix of imported fuels, he added. He said the key elements of an action plan to meet the energy needs of Pakistan in the long term, to balance the risks associated with rising world energy prices and to protect the economy against uncertainties in the development of a domestic resource base would include a number of steps. Gas pipeline and LNG projects and those involving the import of energy from Central Asian states should be implemented on a ââ¬Åfast-track basisââ¬Â. Indigenous energy resources should be developed through enhanced oil and gas production and a detailed technical and economic assessment of coal mining and coal-based power generation, while an assessment should be made of advanced technology options for coal gasification and coal-bed methane. He also called for enhanced hydroelectric and nuclear power generation and the mainstreaming of renewable energy.
The prime ministerââ¬â¢s adviser told the conference that the Government of Pakistan expects the private sector and foreign direct investment to play a central role in the development of the energy sector. He informed the meeting that LNG consultants have been engaged to provide advice on technical, financial and commercial issues and firms were expected to be short-listed in the near future. As for gas import pipelines, the technical parameters had been defined through pre-feasibility studies and technical working groups. Joint working groups had also been set up to address technical, commercial and financing issues. Offers of ââ¬Åexpression of interestââ¬Â had been invited for a 200,000 to 300,000 barrels per day coastal oil refinery near Karachi. He told the conference that ââ¬Åfurther workââ¬Â had been initiated to evaluate the technical and economic aspects of electric power imports from Central Asian states and proposals had been invited from the private sector for seven hydroelectric power projects with a total capacity of 1,620 MW. The private sector was being involved in the preparation of feasibility studies for mining the Thar coal deposits and for power generation.
Shahid Javed Burki, who was finance minister of Pakistan in 1996-97 and is a retired vice president of the World Bank, told the conference that Pakistanââ¬â¢s present annual growth rate is ââ¬Ånot sustainableââ¬Â because the economy simply does not have the resources to ensure the desired sustainability. He pointed out that investments that would ensure the sustainability of high growth rates were not forthcoming. He was also critical of the ââ¬Åpassive approachââ¬Â adopted by the countryââ¬â¢s economic planners vis-à-vis the energy sector. He proposed that Pakistan should treat energy as the ââ¬Åprime sectorââ¬Â. It must also concentrate on the development and strengthening of its agriculture. The countryââ¬â¢s coal deposits must be developed ââ¬Åaggressivelyââ¬Â but what was most important was to ââ¬Åtreat energy as the engine of economic growth and development in the coming years.ââ¬Â He added that he did not see that happening and it was worrisome. He also told the conference that India would face enormous energy demand as it moved ahead, since it simply does not have enough energy resources to keep up with the economic development it seeks and expects. He also asked why Pakistan should not invite India to invest in its energy sector, especially coal, considering that India has been investing in other countries, including some in Africa.
ââ¬ÅPakistan has to think regionally and globally,ââ¬Â Burki said. According to him, there is a serious East-West divide in Pakistan. The energy demand sectors exist primarily west of the Indus, while the sources of energy are located to the east of the Indus. Such a development pattern is uneven and it must be rationalised. He pointed out that the ââ¬Årentââ¬Â from provincial energy resources is being ââ¬Åcapturedââ¬Â by the central government, which is wrong. The first right to those resources and the wealth they generate is that of the people of the region or the province where those sources are located. Burki also called for the establishment of a National Finance Commission Award, something he felt should not be put off any longer.
Its very simple;sigatoka said:
Go to your profile and click on 'User CP' (control pannel) and then click on 'Edit Options' on the leftside of your screen...its the fourth options from the top.
Enable PM and other options that you like and save changes.
You're done.
Text of report by Associated Press of Pakistan (APP) news agency
Islamabad, 25 June: The government under a novel plan to try and bring down the country's population growth has offered free schooling to families that have only one child.
The plan, the first of its kind in the country, is being launched with a survey starting on 1 July to determine the number of one- child families, said Minister for Population Welfare Chaudhry Shahbaz Hussain on Sunday [25 June].
The minister said at present, education is free in state schools only up to the primary level.
Ch. Shahbaz said "I am sure the plan to offer free education to one-child families until the age of 18 will have an impact. Definitely, incentives will increase the acceptance of family planning."
"People will be aware that if they have small families, they will get a lot of benefits, their kids will have a better chance of education," he said.
The minister said the government sees population growth as a major complication in its fight against poverty but he added a progress is being made in this regard.
Parliamentary Secretary for Population Welfare Donia Aziz said the country has seen good economic growth in recent years. She said efforts are being made to win over ulema [scholars] regarding population control programmes.
Islamabad, 25 June: The government under a novel plan to try and bring down the country's population growth has offered free schooling to families that have only one child.
The plan, the first of its kind in the country, is being launched with a survey starting on 1 July to determine the number of one- child families, said Minister for Population Welfare Chaudhry Shahbaz Hussain on Sunday [25 June].
The minister said at present, education is free in state schools only up to the primary level.
Ch. Shahbaz said "I am sure the plan to offer free education to one-child families until the age of 18 will have an impact. Definitely, incentives will increase the acceptance of family planning."
"People will be aware that if they have small families, they will get a lot of benefits, their kids will have a better chance of education," he said.
The minister said the government sees population growth as a major complication in its fight against poverty but he added a progress is being made in this regard.
Parliamentary Secretary for Population Welfare Donia Aziz said the country has seen good economic growth in recent years. She said efforts are being made to win over ulema [scholars] regarding population control programmes.
ISLAMABAD, June 24: Pakistan is keen to invest in Afghanistan and is identifying areas for investment there, says Prime Minister Shaukat Aziz.
He was talking to Afghan Foreign Minister Dr Rangeen Dadfar Spanta, who called on him at the Prime Ministerââ¬â¢s House here on Saturday.
Highlighting growing trade links between the two countries, he said bilateral trade had already reached the $1.5 billion mark. ââ¬ÅWe expect economic ties to expand as several new projects have been approved by the Joint Economic Commission,ââ¬Â he said.
Prime Minister Aziz said Pakistan was committed to supporting President Karzaiââ¬â¢s government and was closely working with it.
ââ¬ÅAfghanistan is the key element to the energy, trade and transportation corridor (that) Pakistan wants to establish with Central Asia. A stable Afghanistan is critical to these links,ââ¬Â he said.
The prime minister emphasised the need for sustained efforts to promote integration between the two countriesââ¬â¢ economies.
He said that Pakistan was keen to enhance cooperation and coordination with Afghanistan, especially in diplomatic, economic, defence and security fields.
Agreeing that regular contacts would strengthen bilateral ties, Mr Spanta said Afghanistan was equally keen to improve relations with Pakistan.
Online adds: Prime Minister Shaukat Aziz has said that Pakistan will not allow anyone to use its soil for terrorist activities in Afghanistan and Afghanistan should also take similar measures.
Mr Aziz highlighted Pakistanââ¬â¢s role in curbing terrorism and said it had deployed 80,000 troops on the Pakistan-Afghan border.
However, there was a need to allay misconceptions through the use diplomatic channels and intelligence links between the two countries, he said.
The Afghan foreign minister said that Pakistan should provide corridor for importing goods from India and other countries.
He was talking to Afghan Foreign Minister Dr Rangeen Dadfar Spanta, who called on him at the Prime Ministerââ¬â¢s House here on Saturday.
Highlighting growing trade links between the two countries, he said bilateral trade had already reached the $1.5 billion mark. ââ¬ÅWe expect economic ties to expand as several new projects have been approved by the Joint Economic Commission,ââ¬Â he said.
Prime Minister Aziz said Pakistan was committed to supporting President Karzaiââ¬â¢s government and was closely working with it.
ââ¬ÅAfghanistan is the key element to the energy, trade and transportation corridor (that) Pakistan wants to establish with Central Asia. A stable Afghanistan is critical to these links,ââ¬Â he said.
The prime minister emphasised the need for sustained efforts to promote integration between the two countriesââ¬â¢ economies.
He said that Pakistan was keen to enhance cooperation and coordination with Afghanistan, especially in diplomatic, economic, defence and security fields.
Agreeing that regular contacts would strengthen bilateral ties, Mr Spanta said Afghanistan was equally keen to improve relations with Pakistan.
Online adds: Prime Minister Shaukat Aziz has said that Pakistan will not allow anyone to use its soil for terrorist activities in Afghanistan and Afghanistan should also take similar measures.
Mr Aziz highlighted Pakistanââ¬â¢s role in curbing terrorism and said it had deployed 80,000 troops on the Pakistan-Afghan border.
However, there was a need to allay misconceptions through the use diplomatic channels and intelligence links between the two countries, he said.
The Afghan foreign minister said that Pakistan should provide corridor for importing goods from India and other countries.
Washington/Islamabad, June 24 (ANI): On the lines of the Indo-US civilian energy cooperation, Pakistan would again demand for a nuclear deal from US when the two nations meet on Monday in Washington for the bilateral Energy dialogue. akistan Foreign Office spokesperson Tasneem Aslam on Saturday said Energy advisor Mukhtar Ahmed who would be le leading Pakistan during the forthcoming dialogue would discuss Pakistan's demand for a nuclear deal from US.
"Pakistan would hold talks with US on energy need as our position is clear regarding civil nuclear energy deal with US", she said.
"We are hopeful that Pak-US energy talks will bring positive results", she added.
Meanwhile, in Washington few Congress members have called for a similar deal with Pakistan which has been rejected by the White House altogether.
Democrat Congressman R. Owens was quoted by Dawn as saying, "Why can't we offer a similar deal to Pakistan as well".
During US President George W. Bush visit to the subcontinent earlier this year, Bush had openly rejected Pakistan's demand for a nuclear deal.
The Energy Cooperation signed in March this year only talked about "exploring ways to meet Pakistan's growing energy needs and strengthen its energy security".
The Energy-Dialogue between the two nations is also the result of that Joint Declaration.
"Pakistan would hold talks with US on energy need as our position is clear regarding civil nuclear energy deal with US", she said.
"We are hopeful that Pak-US energy talks will bring positive results", she added.
Meanwhile, in Washington few Congress members have called for a similar deal with Pakistan which has been rejected by the White House altogether.
Democrat Congressman R. Owens was quoted by Dawn as saying, "Why can't we offer a similar deal to Pakistan as well".
During US President George W. Bush visit to the subcontinent earlier this year, Bush had openly rejected Pakistan's demand for a nuclear deal.
The Energy Cooperation signed in March this year only talked about "exploring ways to meet Pakistan's growing energy needs and strengthen its energy security".
The Energy-Dialogue between the two nations is also the result of that Joint Declaration.
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Go to your profile and click on 'User CP' (control pannel) and then click on 'Edit Options' on the leftside of your screen...its the fourth options from the top.
Enable PM and other options that you like and save changes.
You're done.
Thanks i just did it, so did u want to send me a message?
KARACHI (June 26 2006): Monetary expansion has nearly reached the level it attained in early June in FY05. At Rs 396 billion, or 13.3 percent on June 10, 2006, monetary expansion closely followed the Rs 402 billion figure reached on June 11, 2005.
Looking at the weekly rate of increase in the last two weeks (viz Rs 12 billion per week), it appears that the actual monetary expansion at the end of the year might reach Rs 450 billion, depicting an increase of about 15 percent, compared with the target of Rs 380 billion, or 12.8 percent.
Last year, the increase in money supply during the last three weeks had roughly amounted to Rs 77 billion. A comforting factor, however, is that while last year the private sector credit was still increasing, this year it is either stationary at the existing level, as in the previous two weeks, or decelerating, as in the week under review.
The case with government sector is, however, different.
For many weeks since its borrowing first plummeted to its lowest to about Rs 10 billion in late March/ early April because of revenue effect generated by sovereign bonds/privatisation proceeds, it has generally been rising in big chunks and stood at Rs 132 billion on June 10, 2006.
A break-up of government borrowing showed that both budgetary borrowing and commodity operations increased by Rs 39 billion and Rs 4 billion, respectively, during the week ended on June 3 and by another Rs 16.5 billion and Rs 0.5 billion respectively during the week ended on June 10.
Break-up of budgetary borrowing during the week showed that the major borrowing occurred on account of provincial governments (up Rs 13 billion, entirely on account of SBP) while Federal Government's borrowing amounted to some Rs 3.5 billion, though entirely accounted for by scheduled banks (up Rs 4.9 billion) as borrowing from SBP squeezed by Rs 1.4 billion. Borrowing for commodity operations, which is mainly for on-going wheat procurement, increased by another Rs 0.5 billion to Rs 11.4 billion on June 10 implying that the off-take of credit for wheat procurement had since started decelerating. Originally, the government had thought that borrowing under commodity operation might reach Rs 20 billion by the end of the year.
Component-wise break-up of monetary expansion of Rs 395.5 billion showed that during the year, up to June 10, deposit money contributed Rs 290.9 billion of it while currency in circulation accounted for the remaining Rs 104.6 billion. Monetary expansion during the week ended on June 10 amounted to a little more than Rs 8 billion and was entirely represented by an increase in currency in circulation of about Rs 13 billion as deposit contracted by about Rs 5 billion.
The increase in currency in circulation was because of increase in government borrowing while decline in deposit money was because of deceleration in private sector credit.
Among other developments, the negative balance (liabilities being higher than assets) of other items (net) or OINs of the banking system stood reduced by over Rs 14 billion during the week, which brought about a net increase in domestic credit and hence monetary expansion between June 3 and 10. Net foreign assets (NFA) of the banking system, in the meanwhile, continued squeezing, as witnessed by the level of liquid foreign exchange as on June 10, and contributed to a net reduction in money supply of about Rs 11 billion during the week under review.
Depletion of reserves on the back of rising imports and maturing foreign liabilities continued during the week so that liquid foreign exchange reserves of the country stood lower at $12,969.7 million on June 10 losing the grip on the $13 billion mark for the first time since April 29. However, according to advance data on reserves, liquid foreign exchange reserves climbed again to $13,000.9 million as on 17th June.
The increase of over $31 million during the week was entirely on account of SBP whose reserves increased by $48.2 million while reserves held by scheduled banks shrank by $17 million.
Looking at the weekly rate of increase in the last two weeks (viz Rs 12 billion per week), it appears that the actual monetary expansion at the end of the year might reach Rs 450 billion, depicting an increase of about 15 percent, compared with the target of Rs 380 billion, or 12.8 percent.
Last year, the increase in money supply during the last three weeks had roughly amounted to Rs 77 billion. A comforting factor, however, is that while last year the private sector credit was still increasing, this year it is either stationary at the existing level, as in the previous two weeks, or decelerating, as in the week under review.
The case with government sector is, however, different.
For many weeks since its borrowing first plummeted to its lowest to about Rs 10 billion in late March/ early April because of revenue effect generated by sovereign bonds/privatisation proceeds, it has generally been rising in big chunks and stood at Rs 132 billion on June 10, 2006.
A break-up of government borrowing showed that both budgetary borrowing and commodity operations increased by Rs 39 billion and Rs 4 billion, respectively, during the week ended on June 3 and by another Rs 16.5 billion and Rs 0.5 billion respectively during the week ended on June 10.
Break-up of budgetary borrowing during the week showed that the major borrowing occurred on account of provincial governments (up Rs 13 billion, entirely on account of SBP) while Federal Government's borrowing amounted to some Rs 3.5 billion, though entirely accounted for by scheduled banks (up Rs 4.9 billion) as borrowing from SBP squeezed by Rs 1.4 billion. Borrowing for commodity operations, which is mainly for on-going wheat procurement, increased by another Rs 0.5 billion to Rs 11.4 billion on June 10 implying that the off-take of credit for wheat procurement had since started decelerating. Originally, the government had thought that borrowing under commodity operation might reach Rs 20 billion by the end of the year.
Component-wise break-up of monetary expansion of Rs 395.5 billion showed that during the year, up to June 10, deposit money contributed Rs 290.9 billion of it while currency in circulation accounted for the remaining Rs 104.6 billion. Monetary expansion during the week ended on June 10 amounted to a little more than Rs 8 billion and was entirely represented by an increase in currency in circulation of about Rs 13 billion as deposit contracted by about Rs 5 billion.
The increase in currency in circulation was because of increase in government borrowing while decline in deposit money was because of deceleration in private sector credit.
Among other developments, the negative balance (liabilities being higher than assets) of other items (net) or OINs of the banking system stood reduced by over Rs 14 billion during the week, which brought about a net increase in domestic credit and hence monetary expansion between June 3 and 10. Net foreign assets (NFA) of the banking system, in the meanwhile, continued squeezing, as witnessed by the level of liquid foreign exchange as on June 10, and contributed to a net reduction in money supply of about Rs 11 billion during the week under review.
Depletion of reserves on the back of rising imports and maturing foreign liabilities continued during the week so that liquid foreign exchange reserves of the country stood lower at $12,969.7 million on June 10 losing the grip on the $13 billion mark for the first time since April 29. However, according to advance data on reserves, liquid foreign exchange reserves climbed again to $13,000.9 million as on 17th June.
The increase of over $31 million during the week was entirely on account of SBP whose reserves increased by $48.2 million while reserves held by scheduled banks shrank by $17 million.
SIALKOT (June 26 2006): Chairman, Task Force for Industry, Mian Muhammad Riaz has said that a strategy is being evolved for promoting non-traditional products for increasing the export volume to many fold in the province of Punjab.
Talking to Business Recorder here on Sunday, he said that Pakistan could earn handsome foreign exchange through the export of non-traditional products, which becoming much popular in the international market.
Besides, he said special attention would be accorded on bringing innovation in products being produced in the province.
Mian Riaz was of the opinion that in the absence of research and development the industrial cannot survive because of rapid change of global trends and standards. It is high time that business community should divert its attention on obtaining modern industrial technology for bringing innovation and quality products, he said.
He said that efforts would be made for developing sector-wise industrial research and development enabling the business community to cope with the world market challenges more easily.
The task force chairman vowed that all means would be mobilised for reducing the mark up rate for the larger interest of SMEs of the province.
The government was making strenuous efforts for brining industrial revolution aimed at ensuring a strong industrial base in Punjab, he said.
He said that with consultation of members of business community, chambers and other trade bodies a line of action would be chalked out to promote non-traditional products.
He said the diversification of products and export of non-traditional products would not only help enhancing the export volume but also help expanding the small-scale industries, which will generate large employment opportunities of the educated and skilled persons, he said.
Mian Riaz said that the government had already introduced business-friendly policies for attracting overseas Pakistanis and foreign investment resultantly a large number of foreign investors had showed their willingness for investing in different trade fields in Punjab.
He said the aim of setting up task force was to ascertain the problems and difficulties being faced by the business community and hindering the process of industrialisation.
Mian Riaz said that meetings would be arranged with all chambers and other trade bodies to identify the problems and redress the same.
Talking to Business Recorder here on Sunday, he said that Pakistan could earn handsome foreign exchange through the export of non-traditional products, which becoming much popular in the international market.
Besides, he said special attention would be accorded on bringing innovation in products being produced in the province.
Mian Riaz was of the opinion that in the absence of research and development the industrial cannot survive because of rapid change of global trends and standards. It is high time that business community should divert its attention on obtaining modern industrial technology for bringing innovation and quality products, he said.
He said that efforts would be made for developing sector-wise industrial research and development enabling the business community to cope with the world market challenges more easily.
The task force chairman vowed that all means would be mobilised for reducing the mark up rate for the larger interest of SMEs of the province.
The government was making strenuous efforts for brining industrial revolution aimed at ensuring a strong industrial base in Punjab, he said.
He said that with consultation of members of business community, chambers and other trade bodies a line of action would be chalked out to promote non-traditional products.
He said the diversification of products and export of non-traditional products would not only help enhancing the export volume but also help expanding the small-scale industries, which will generate large employment opportunities of the educated and skilled persons, he said.
Mian Riaz said that the government had already introduced business-friendly policies for attracting overseas Pakistanis and foreign investment resultantly a large number of foreign investors had showed their willingness for investing in different trade fields in Punjab.
He said the aim of setting up task force was to ascertain the problems and difficulties being faced by the business community and hindering the process of industrialisation.
Mian Riaz said that meetings would be arranged with all chambers and other trade bodies to identify the problems and redress the same.
ISLAMABAD (June 26 2006): Barring Peshawar-Charsadda section, Islamabad-Peshawar Motorway (M-1) will be opened for all kinds of traffic from Islamabad to Charsadda in August this year.
Talking to APP Member Motorways, National Highway Authority (NHA) Altaf Ahmed Chaudhry said on Sunday that Islamabad-Burhan section and Rashakai-Charsadda sections have already been opened for traffic.
He said two more sections; the Burhan-Swabi and the adjacent Swabi-Rashkai sections will also be opened for traffic in early August.
Altaf Chaudhry said the Islamabad-Peshawar Motorway (M-1) was one of the most important projects of NHA and its quality construction was its top priority.
He said the project would be completed accorting to schedule in January 2007 when the last section Peshawar-Charsadda will also be opened for traffic.
He said that one side of Indus Bridge has already been opened for traffic while the work on the other side is in full swing and it will be opened for traffic in July. About Kabul Bridge, he said it would be completed by December this year. To a question, Altaf Chaudhry said that 18 flyovers, two service areas, five rest areas and 556 culverts are also included in the project. He said that interchanges would be constructed at Burhan, Swabi, Rashakai, Charsadda, Fatehjang, Jhang Bahtar and Chhach.
He said that the 152-km Islamabad-Peshawar Motorway (M-1) would be a six-lane motorway similar to the Lahore-Islamabad Motorway (M-2), and would help promote inter-provincial harmony.
Talking to APP Member Motorways, National Highway Authority (NHA) Altaf Ahmed Chaudhry said on Sunday that Islamabad-Burhan section and Rashakai-Charsadda sections have already been opened for traffic.
He said two more sections; the Burhan-Swabi and the adjacent Swabi-Rashkai sections will also be opened for traffic in early August.
Altaf Chaudhry said the Islamabad-Peshawar Motorway (M-1) was one of the most important projects of NHA and its quality construction was its top priority.
He said the project would be completed accorting to schedule in January 2007 when the last section Peshawar-Charsadda will also be opened for traffic.
He said that one side of Indus Bridge has already been opened for traffic while the work on the other side is in full swing and it will be opened for traffic in July. About Kabul Bridge, he said it would be completed by December this year. To a question, Altaf Chaudhry said that 18 flyovers, two service areas, five rest areas and 556 culverts are also included in the project. He said that interchanges would be constructed at Burhan, Swabi, Rashakai, Charsadda, Fatehjang, Jhang Bahtar and Chhach.
He said that the 152-km Islamabad-Peshawar Motorway (M-1) would be a six-lane motorway similar to the Lahore-Islamabad Motorway (M-2), and would help promote inter-provincial harmony.
EDITORIAL (June 25 2006): The Finance Ministry's decise/ion to focus on five major challenging areas of the economy during 2006-07, ie an increase in the tax-to-GDP ratio, improved provincial receipts, review of various subsidies, strict monitoring of public sector expenditure and timely completion of privatisation transactions, are the challenges that the budget makers face in keeping fiscal deficit within manageable limits and maintaining fiscal discipline.
The leadership needs to worry about the "slow improvement" in the tax-to-GDP ratio at federal and provincial levels. The ratio at federal level at 10.1 percent is the lowest among developing countries. And, for several years provinces' own receipts have stagnated at 0.9 percent of the GDP. The Finance Ministry's summary submitted to the government contends that only significant and equitable increase in the tax receipts will ensure sustainability of expenditures.
And it exhorts the provinces to launch a serious endeavour to improve the tax receipts instead of depending on the federal government for their growing needs. Lower dependence of provinces will allow the federal government to focus on national infrastructure projects, including construction of mega dams.
The summary proposes that various subsidies be carefully targeted and reviewed on the basis of needs. It also calls for strict adherence to the deadlines set for privatisation of various public sector units.
The medium term budgetary framework commits the government to improvement of the tax to GDP ratio to 11 percent by 2008-09. This modest improvement in itself is a challenge as constitutional hurdles regarding taxing of income from agriculture, imposing GST on services, capital gains tax on properties lie outside of the purview of the Central Board of Revenue.
As identified by CBR, causes of a low tax-GDP ratio include a mismatch between sectoral shares, a narrow tax base, poor compliance by taxpayers, too many exemptions (for instance, agriculture), the presence of a large underground economy, leakage due to administrative weaknesses etc CBR itself has been working at cross purposes. Sometimes it feels that the presumptive tax regime (PTR) inhibits its ability to collect actual tax due on profits. At the same time, it continues to enlarge the scope (PTR) and keeps on pushing more and more categories of taxpayers into the Final Tax Regime, while treating withholding tax deduction as final tax payment.
The recent decline in tax-GDP ratio is believed to be due to debasing by the Ministry of Finance. A comparison of tax-to-GDP ratio, based on total revenue, federal taxes and the CBR revenue, depicts a decline of 0.4 percent. Analysts believe that CBR needs to emulate the tax models of Turkey and Korea, as these countries have achieved a double-digit growth in their tax-to-GDP ratio. (It is said that the ratio is 20 percent in US and around 34 percent in UK.)
Secondly, there is a need to rationalise property and vehicle taxes. It is not possible for the provinces to increase their revenues unless the federal government rethinks the existing fiscal policy, given the limited fiscal base of provincial taxes due to a lack of fiscal autonomy, pre-empted provincial fiscal bases by the federal government and the retention of highly buoyant sources of local origin by the federal government.
Further, in view of the large fiscal gap in revenue generation powers and expenditure responsibilities of provincial governments, it is no longer possible for the provinces to heavily depend on federal transfers.
Experts have suggested that the federal government retain two-thirds of the sales tax, and allow the provinces to levy the remaining third or alternatively to distribute one-third of the total sales tax on the basis of origin. Sales tax should be the exclusive provincial domain, and the revenue generated from GST on services should not be part of the divisible pool.
It is noteworthy that Pakistan has progressively reduced tariffs since 1998. The effort culminated in 2002 with the establishment of four maximum import tariff bands of 25%, 20%, 10% and 5%. The weighted average applied tariff is 16.7%, down from 56% in 1994.
Further, the classified areas have been put in the final tax liability. In fact, we will have to move away from the presumptive tax, and focus instead on actual income. In its summary, the Finance Ministry has set targets that will go a long way towards bringing about structural activation of the economy.
The leadership needs to worry about the "slow improvement" in the tax-to-GDP ratio at federal and provincial levels. The ratio at federal level at 10.1 percent is the lowest among developing countries. And, for several years provinces' own receipts have stagnated at 0.9 percent of the GDP. The Finance Ministry's summary submitted to the government contends that only significant and equitable increase in the tax receipts will ensure sustainability of expenditures.
And it exhorts the provinces to launch a serious endeavour to improve the tax receipts instead of depending on the federal government for their growing needs. Lower dependence of provinces will allow the federal government to focus on national infrastructure projects, including construction of mega dams.
The summary proposes that various subsidies be carefully targeted and reviewed on the basis of needs. It also calls for strict adherence to the deadlines set for privatisation of various public sector units.
The medium term budgetary framework commits the government to improvement of the tax to GDP ratio to 11 percent by 2008-09. This modest improvement in itself is a challenge as constitutional hurdles regarding taxing of income from agriculture, imposing GST on services, capital gains tax on properties lie outside of the purview of the Central Board of Revenue.
As identified by CBR, causes of a low tax-GDP ratio include a mismatch between sectoral shares, a narrow tax base, poor compliance by taxpayers, too many exemptions (for instance, agriculture), the presence of a large underground economy, leakage due to administrative weaknesses etc CBR itself has been working at cross purposes. Sometimes it feels that the presumptive tax regime (PTR) inhibits its ability to collect actual tax due on profits. At the same time, it continues to enlarge the scope (PTR) and keeps on pushing more and more categories of taxpayers into the Final Tax Regime, while treating withholding tax deduction as final tax payment.
The recent decline in tax-GDP ratio is believed to be due to debasing by the Ministry of Finance. A comparison of tax-to-GDP ratio, based on total revenue, federal taxes and the CBR revenue, depicts a decline of 0.4 percent. Analysts believe that CBR needs to emulate the tax models of Turkey and Korea, as these countries have achieved a double-digit growth in their tax-to-GDP ratio. (It is said that the ratio is 20 percent in US and around 34 percent in UK.)
Secondly, there is a need to rationalise property and vehicle taxes. It is not possible for the provinces to increase their revenues unless the federal government rethinks the existing fiscal policy, given the limited fiscal base of provincial taxes due to a lack of fiscal autonomy, pre-empted provincial fiscal bases by the federal government and the retention of highly buoyant sources of local origin by the federal government.
Further, in view of the large fiscal gap in revenue generation powers and expenditure responsibilities of provincial governments, it is no longer possible for the provinces to heavily depend on federal transfers.
Experts have suggested that the federal government retain two-thirds of the sales tax, and allow the provinces to levy the remaining third or alternatively to distribute one-third of the total sales tax on the basis of origin. Sales tax should be the exclusive provincial domain, and the revenue generated from GST on services should not be part of the divisible pool.
It is noteworthy that Pakistan has progressively reduced tariffs since 1998. The effort culminated in 2002 with the establishment of four maximum import tariff bands of 25%, 20%, 10% and 5%. The weighted average applied tariff is 16.7%, down from 56% in 1994.
Further, the classified areas have been put in the final tax liability. In fact, we will have to move away from the presumptive tax, and focus instead on actual income. In its summary, the Finance Ministry has set targets that will go a long way towards bringing about structural activation of the economy.
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