Pakistan Economy - News & Updates - Archive

[Omar1984]

Gilani says growers must get official wheat support price

By Sher Baz Khan

ISLAMABAD, Feb 12: Prime Minister Yousuf Raza Gilani has asked the Ministry of Food and Agriculture to set up monitoring teams to ensure that growers received the official wheat price of Rs950 per 40kg for their new crop.

The government will spend Rs160 billion on procurement of 6.5 million tons of wheat from farmers this season. Last year’s procurement target of five million tons could not be achieved.

During a meeting here on Thursday, the prime minister asked Food and Agriculture Minister Nazar Mohammad Gondal to personally monitor the situation and ensure timely procurement and transparency in the process.

Mr Gilani said the ministry should convene a meeting on food security. It should be attended by all stakeholders and chief ministers of the four provinces.

Mr Gondal briefed the prime minister on efforts to achieve this year’s wheat procurement target through the Pakistan Agricultural Storage and Supplies Corporation (Passco) and provincial food departments. He said that cooperation of the food departments was needed to achieve the target.

He said that 300,000 tons of imported wheat had arrived at the Gwadar port and it would soon be transported to Sindh and other parts of the country. He said other consignments of about 600,000 tons of wheat would soon arrive.

They also discussed the rice situation. Mr Gondal said that because of timely announcement of incentives by the government, production of rice this year had reached 6.5 million tons. The local demand was 2.5 million tons and the remaining four million tons were being exported, he added.

The wheat sowing area has registered a six per cent increase this season and the government hopes to achieve the production target of 25 million tons.

According to provincial crop reporting services, wheat was cultivated on 9.053 million hectares, up from last year’s 8.54 million hectares, and surpassing this year’s target of 8.61 million hectares.

Gilani says growers must get official wheat support price -DAWN - Top Stories; February 13, 2009

 

[Neo]

Car sales drop 44pc year-on-year ​

Friday, February 13, 2009

KARACHI: Passenger car sales surged 190 per cent to 6,441 units in January compared to 2,221 units sold in the previous month, data released by Pakistan Automotive Manufacturers Association (PAMA) showed.

However year-on-year, car sales fell 44 per cent in Jan 2009 compared to 11,588 units in Jan 2008. Cumulatively, in seven months (July 2008 to January 2009) of the current financial year, car sales plunged 48pc at 42,520 units against 81,546 units in the corresponding period of last year.

Kamran Rehmani, an analyst at FCEL Research, said “the present situation is quite worrisome for local car manufacturers. While demand for new vehicles has dropped considerably, there has been a persistent increase in input cost amid depreciating rupee against Japanese yen. The real dilemma for the auto industry is to raise prices at a time when demand is down.”

After depicting a gloomy picture in December 2008, car sales increased by 190pc in Jan 2009 to 6,441 units compared to the previous month, when sales hit the lowest since August 2000 owing to relatively fewer working days and year-end impact.

Almost all major auto assemblers recorded an increase in sales in Jan because of people’s inclination towards buying a car and get it registered in the New Year.

Pak Suzuki Motor Co registered the largest increase of 257pc at 2,573 cars against 720 units in Dec 2008. Indus Motor and Honda Atlas Car sales soared 153pc and 219pc at 3,388 units and 478 units respectively. In Jan, market share of Pak Suzuki expanded by 7.5pc at 40 per cent while Indus Motor lost 7.7pc share at 53pc.

Nonetheless, year-on-year sales fell in Jan 2009 with each assembler posting a double-digit decline. Indus registered the lowest decline of 11pc and became the market leader with a share of 53pc, an increase of 20pc. Pak Suzuki’s market share dropped 15pc with 59pc fall in unit sales.

From July 2008 to Jan 2009, cumulative sales of passenger cars were 48pc lower as compared to the same period last year. Pak Suzuki posted the largest decline of 56pc and sold 20,529 cars during the period. Car sales by Indus and Honda Atlas plunged 36pc and 26pc at 16,099 and 5,763 units.

 

[Neo]

Demand for automobiles to decline sharply this year ​

Friday, February 13, 2009

KARACHI: The ongoing economic downturn has taken its toll on the automobile industry with demand for vehicles decreasing steadily, analysts told The News.

According to an auto analyst, the current fiscal year ending June 2009 will turn out to be much worse for local car assemblers. With weakening economic fundamentals and the credit crunch, automobile demand is expected to go down even further in the coming months.

Political and economic instability, an increase in car financing rates, precautionary measures being taken by banks with regard to auto financing and, most importantly, rising car prices are some of the main reasons for the declining demand. Despite the steady decline in sales and a cut in production of all manufacturers except two, local auto assemblers continued to launch new cars, case in point, Honda and Ghandhara Nissan Limited (GNL). In fact, Nissan Motor Co Ltd recently announced that GNL has restarted production of the Sunny compact sedan at their plant in Karachi. The car’s production was halted in 2001 as a result of which GNL sold imported vehicles from Japan.

Nauman Muhammad Khan, Senior Marketing and Sales Manager, Ghandhara Nissan Ltd, said that the launch of the locally assembled Nissan Sunny, scheduled to take place in March 2008, was delayed owing to the law and order situation, unstable political climate and the economic crisis. “This project had been in the pipeline for the last four years,” he said.

Talking to The News, Khan admitted that the timing of the launch could have been better especially since the demand for automobiles has seen a sharp decline.

Even so, the price of the new Sunny is quite high. The 1.3L EXSM/T costs Rs1,340,000 while the other three versions of 1.6L EXS M/T cost Rs1,380,000, 1.6L SSM/T costs Rs1,560,000 and 1.6L SS A/T costs 1,650,000. CNG models are available in all four versions which means doling out an extra Rs80,000.

Meanwhile, the analyst pointed out that consumer response to this car would fall below expectations. “It can capture the market if its prices are reasonable,” he said. However, since the prices are pretty much the same as other brands that already have a loyal customer base, the new Sunny will face tough competition. Similarly, Honda also launched the Honda City I-VTEC 1300 CC in manual and automatic transmissions. According to a market survey, customer response to this car is reasonable so far, despite the fact that a premium is being charged on the model.

The newly launched Honda City manual version costs Rs1,319,000, while the automatic costs Rs1,439,000. Interestingly enough, in January 2008, the same car cost Rs8,49,000 while on January 31, 2009 the car was priced at Rs1,319,000. This indicates a 55 per cent increase in a year’s time.

A similar situation occurred when Toyota launched its 10th generation Corolla. This trend continues to date, even though a decline in the sales has been noticed of late.

 

[Neo]

All conditions met to get IMF second tranche: Waqar ​

Friday, February 13, 2009

ISLAMABAD: The federal government on Thursday informed the National Assembly Standing Committee on Finance that it has met all performance criteria of the International Monetary Fund (IMF) for getting a second tranche worth $750 million under the 23-month standby arrangement.

Briefing parliamentarians in the NA committee, Finance Secretary Dr Waqar Masood said Pakistan and Ukraine got the IMF programme at the same time but Ukraine had failed to meet its envisaged targets and the Fund was unlikely to release its next tranche for them.

“Unlike Ukraine, we have met all of our envisaged targets,” he said and hoped Pakistan would be able to get the second tranche of IMF loan without getting any waiver on the performance criteria.

Against fiscal deficit target of Rs262 billion equivalent to 2 per cent of gross domestic product (GDP) for the first half of the current fiscal year, Dr Waqar said, the deficit stood at Rs251 billion, which is 1.9pc of GDP.

He said the IMF had frozen borrowing from the central bank at Rs258 billion, which had been brought down to Rs205 billion on December 31, 2008. It meant that the government paid back Rs53 billion to the State Bank.

Pakistan and the IMF are scheduled to hold talks in Dubai from Feb 14 to 26. After deliberations, the Fund will seek approval of its board of directors for releasing second tranche of $750 million by March.

The finance secretary openly admitted in the NA committee meeting that all development partners including the World Bank, Asian Development Bank and others had ‘advised’ the government to get an IMF programme in order to restore confidence of international financial institutions (IFIs).

Terming the last fiscal 2007-08 as the most difficult year for economy, he said oil and commodity shocks hurt the macroeconomic situation and budget deficit hiked to 7.7pc of GDP against the target of 4.4pc. Foreign currency reserves depleted rapidly and owing to non-availability of foreign funds, the reserves had to be utilised, leading to them coming down from $16 billion in October 2007 to $6.6 billion by October 2008. Government borrowing from the central bank also touched new heights in 2007-08.

In these circumstances, he said, the government presented federal budget for 2008-09 with fiscal deficit target of 4.2pc of GDP or Rs562 billion. It actually meant to cut expenditures by Rs400 billion compared to the previous fiscal year and all was to be done by abolishing subsidy on petroleum products, electricity and others.

“Despite presenting this kind of budget, our development partners did not express their confidence mainly because of lack of trust,” he said and added it resulted in non-availability of foreign funds in the first few months of the current fiscal year.

The country’s credit rating was also downgraded, making it impossible to borrow from the international market, he said and added the macroeconomic instability also paved the way for a massive depreciation of the rupee against the dollar and on October 8, 2008 the rupee touched 86 to one dollar.

“In this situation, all the donors advised us to go for the IMF programme,” he said. Pakistan and the IMF signed a deal on November 24, 2008 for $7.6 billion loan package out of which Islamabad had received its first tranche of $3.1 billion.

He said there was no liquidity crunch being faced by banks. Citing an example, he said against the target of Rs130 billion for auction of treasury bills, the government received offers of around Rs380 billion from banks.

On the expenditure side, he admitted that development expenditures were curtailed in the first two quarters of the current fiscal year. For the federal PSDP, the government released Rs91 billion for the first seven months (July-Jan) of 2008-09.

 

[Neo]

EU garment-makers eye Pakistan for joint ventures ​

Friday, February 13, 2009

KARACHI: Federal Textile Adviser Dr Mirza Ikhtiar Baig, on his return from European Union countries, has said EU garment manufacturers are seriously looking to Pakistan to form joint ventures for supplying products to their chain of stores. The interest was prompted by current recession and increasing cost and wages, he said.

According to a spokesman for the adviser, during the visit Baig met Senior Executive Werner International Nice (France) Nicola Monti. It was one of the largest and renowned textile consultants of the world having more than 40 years of experience in dealing with textile and apparel industry of Pakistan, India, China and 65 other countries.

Monti told Baig that EU garment units were moving from the US and Europe to China and India and brand manufacturers were looking for more routes for supplies and were interested to have joint ventures in Pakistan.

Baig said Pakistan had achieved high growth in textiles and apparels but had a low share in the international market. China topped the US market with a share of 36 per cent followed by Bangladesh 21 per cent, India 18 per cent, Morocco 19 per cent and Pakistan 13 per cent. South Korea has lost 20 per cent of the US market.

In the European market, China topped again with a share of 29 per cent, Vietnam 28 per cent, India 19 per cent and Pakistan only 1.5 per cent while the Philippines had lost 11 per cent of the market.

Monti informed Baig that Pakistani garment manufacturers could cut their cost up to 45 per cent in sewing by improving efficiency.

“Labour productivity is very low,” said Baig. “Our regional competitors take 75 minutes to complete and produce one piece of cloth whereas we take 133 minutes for the same work. We also waste 30 per cent in finishing and 12 per cent in washing.”

According to a study of Pakistani textile and apparel sector conducted by Werner International, some of the garment units were over-staffed by 57 per cent. That was an internal negative factor whereas external factors included no duty-free market access to the EU and negative image and perception of Pakistan abroad.

Baig requested Werner to submit a proposal for presenting a better image of the textile industry to global brands for achieving collaboration with them. In that regard, Werner is working on a three-year plan to be submitted shortly.

 

[Neo]

ADB, industry discuss economic transformation ​

Friday, February 13, 2009

LAHORE: The Small and Medium Enterprises Development Authority (SMEDA), on behalf of the Federal Ministry of Industries and Production, arranged a series of meetings between a five-member mission of the Asian Development Bank (ADB) and stakeholders from various potential sectors of the industry to discuss the accelerated economic transformation programme (AETP).

The ADB mission comprised principal economist Jesus Felipe, economist on financial sector Joao Farinha Fernandes, economist on pubic finance Asadullah Khan Sumbal and economic officer of financial sector, public management and trade division for Central and West Asia Department Lyle N Raquipiso.

Shahid Rashid, CEO SMEDA presided over the meetings. Syed Iqbal Anwar Kidwai, GM outreach and a few other officials of SMEDA were also present.

The meetings discussed various proposals to increase productivity and growth by exploring structural transformation of selected industry sub-sectors with a view to promoting value added exports.

Three separate group discussions were held with various stakeholders. The first group included stakeholders from medicinal, pharmaceutical, veterinary, and meat industry. The second group had key representatives from mineral, wood and household equipment industry. Group three comprised of stakeholders from the paper, board and pulp industry.

The ADB’s consultative mission is currently on a visit to Pakistan to initiate discussions with the government for identifying possible reform areas for inclusion in the second phase of the AETP. Based upon the discussions and feedback obtained during the visit, the mission would sketch out a rough roadmap for reforms.

 

[Neo]

IFC provides $121m trade support ​

Friday, February 13, 2009

ISLAMABAD: The IFC, rthe private sector wing of the World Bank Group, announced on Thursday that it provided Pakistani banks with $ 121 million (Rs.9.5 billion), in trade finance guarantees, over the past seven months.

The finance guarantees helped Pakistan increase cross-border trade during the recent economic downturn, besides benefiting many of its important business sectors.

Due to support from the IFC’s Global Trade Finance Programme, Pakistani banks executed trade transactions worth roughly $ 121 million between July, 2008 and January, 2009.

Sectors and products that benefited from this support include, agricultural products and machinery equipment while the IFC supported trade volume of iron and steel increased by $ 20 million compared with last year and Pakistani hospitals imported about $ 6 million of medical equipment this year with the IFC’s` support.

“We are pleased to be part of this programme. This initiative is especially vital in times of international financial crisis and it is enabling us to provide greater services to our clients and expand Pakistan’s trade activities” Zakir Mahmood, CEO of Habib Bank, said.

Irfan Siddiqui, CEO of Meezan Bank, said, “The IFC has helped us increase our reach and coverage of confirming banks.

IFC came at a time when the global financial crisis was knocking on the doors of emerging markets.”

 

[Neo]

Agreement fulfilled with IMF under SBA​

‘Pakistan will not seek any waiver’​

ISLAMABAD: Ministry of Finance said on Thursday that Pakistan would not seek any waiver in any condition as it has already met all the performance benchmarks agreed with International Monetary Fund (IMF) under $7.6 billion Stand By Arrangement (SBA).

A six member Pakistani delegation would leave today for Dubai for participation in the first review of the $7.6 billion SBA scheduled from February 14-24, Secretary Finance told National Assembly Standing Committee on Finance and Revenue here on Thursday at Parliament House. He said that $3.1 billion IMF support was used to increase foreign exchange reserves of the country and this could not be used by the government for any other purpose. By the end of December, Pakistan’s foreign exchange reserves were over and above the benchmark agreed with the IMF. NA committee met under the chairmanship of MNA Fouzia Wahab, which was given a comprehensive briefing on revenue collection and state of the economy, where Secretary Finance and Chairman Federal Board of Revenue (FBR) Dr Waqar Masood Khan briefed the committee.

Dr Khan told the committee that the State Bank of Pakistan’s board that met on January 31 decided not increase interest rate further as the economy has stabilised and there was no need to further increase interest rate. He also informed the committee that against the government’s target of Rs 130 billion, banks have offered investment to the tune of Rs 380 billion against the last Treasury bills offer. This offer was three times oversubscribed and banks have not only offered investment in 3 months and 6 months but also in 12 months T-bills on 120 basis point less than the prevailing interest rates.

He told the committee that the government has been able to cut its expenditures by Rs 47 billion during first half of July to December period to bridge the gap of revenue shortfall witnessed during this period. The government has not increased its expenditures and development expenditures has remained at Rs 125 billion against the target of Rs 135 billion during first half to stabilise the fiscal position, but, now the government has been able to spend more on development and releases for development would improve in the second half. He said that it was for the first time in the history of the country that IMF programme was discussed and approved by the federal cabinet. He also showed willingness to brief the parliament on this programme agreed with IMF.

He also said that the Ministry of Finance has also asked the ministries to cut at least by 20 percent non-development expenditures but this was not obligatory for them. At the end of this fiscal it would be examined that which ministry has reduced its current expenditures. State Minister for Finance and Revenue Hina Rabbani Khar told the committee that the government was taking price issue seriously and is in consultation with provincial departments and provincial transport authorities for reduction in prices of essential items and public as well as goods transport fares. She also informed that proposed US Kerry-Lugar Bill has bipartisan support in US Senate and Pakistan would get support from the new US administration. She also informed that the government is pushing the ROZs issue with US and FTA issue with European Union.

 

[Neo]

Foreign reserves increase by $125 million​

KARACHI: The country’s liquid foreign exchange reserves increased by $125 million during the last week. The State Bank of Pakistan’s statistics on Thursday revealed that overall foreign exchange reserves increased to $10.288 billion on February 7 as compared with $10.163 billion last week. The reserves held by the central bank witnessed a major increase of $124 million to reach $6.916 billion as compared to $6.792 billion during the last week. Reserves held by banks (other than SBP), however, witnessed an increase of just $1 million to reach $3.371 billion as compared with $3.370 billion last week.

 

[Neo]

ADB’s presentation on Pak economic stabilisation plan​

ISLAMABAD: The Asian Development Bank’s (ADB) fact-finding mission led by Jesus Felipe on Thursday gave a presentation on ‘policy implications of structural transformation in Pakistan,’ to the Planning Commission with the purpose of the consultation being ‘accelerating economic transformation programme in Pakistan in the context of country’s fiscal and external problems compounded by the international economic situation’.

The delegation explained that the ADB’s role was to contribute to the development of a programme that led to upgrading and diversification like structural transformation of economic base in partnership with the country’s public and private sector. The delegation focused on the need of structural transformation, particularly in the industrial and export sectors. He emphasised that Pakistan should pay attention to increasing the level of sophistication of exports particularly in textiles.

The deputy chairman Planning Commission has called for better alternatives to debt to ease Pakistan ’s fiscal problems and meeting macroeconomic challenges being faced by the country. He expressed these views while chairing the meeting of ADB representatives, and government officials of the Planning Commission and other relevant ministries.

 

[Neo]

Pakistan hopes to attract $5bn investment by expats​

* Law to protect investments by overseas Pakistanis soon​

LAHORE: A new law protecting investments by overseas Pakistanis may attract as much as $5 billion, Federal Minister Farooq Sattar said on Wednesday.

The minister said in an interview, “If the international corporate sector can get sovereign guarantees, then why not overseas Pakistanis. Once we introduce legislation – within the next four months – it will give them confidence.”

The minister said the investment was needed to revive the economy that had slumped last year after seven years of high growth. Last year, overseas investment dropped by a steep 38 percent.

Waqar Ahmed Khan, the minister for investments, had said in an interview last month, the government planned to raise $10 billion in foreign direct investment by December.

Sattar said the Pakistan government had also planned to reserve four seats for expatriates in the 342-seat National Assembly and a seat each in the four provincial assemblies to ensure direct policy-making input from overseas Pakistanis.

Sattar said Pakistan aimed to double the remittances by overseas residents next year from an estimated $7.5 billion in the 12 months ending June 30, by simplifying banking procedures and allowing cell phone transfers. Overseas investment fell to $5.2 billion in the year ended June 30 from a record $8.4 billion a year ago, he added.

Overseas investors fled the Karachi Stock Exchange after it imposed four-month-long trading curbs to prevent the index from falling below its August 27 level. The index has fallen 42 percent since the curbs were lifted on December 15.

 

[Omar1984]

LSE rises 84 points

Saturday, February 14, 2009
By our correspondent

LAHORE: The Lahore stock market rose above the 1,600-point barrier for the second time in the current week as it added 84 points to close at 1,631 amid a handsome trading volume on Friday.

Out of 111 active shares, prices of 58 increased, two declined and 51 remained unchanged. Earlier, the market opened on a positive note and was still moving up at the time of closure for weekend recess.

Trading volume was 20.8 million shares which was 11.5 million shares higher than Thursday. NIB Bank regained its position as the volume leader recording a turnover of five million shares. All top 10 volume leaders ended the day on a positive note.

Shares of mutual funds rose except for Invest Mutual Fund. Majority of investment banks and securities also gained value. Commercial banks after a long time were under the complete grip of bulls and all large banks added handsome value to their shares.

Except for Dandot Cement, all other cement companies remained positive. The refinery sector was under the complete control of bulls. All companies traded in the oil and gas marketing and exploration sectors closed higher. Heavyweight OGDC rose Rs2.44 to close at Rs51.38.

LSE rises 84 points

 

[Omar1984]

Remittances may help meet dollar demand

Saturday, February 14, 2009
By Saad Hasan

KARACHI: There will no immediate negative implication of the government’s decision to stop State Bank of Pakistan (SBP) from providing dollars for oil imports as remittances by overseas Pakistanis have improved, industry people told The News.

Commercial banks will easily meet the requirement as stability in the rupee-dollar parity has dimmed prospects for speculation which led to a shortage of dollar in the recent past, foreign exchange dealers said.

“We will have to wait and see how the market (banks) manages the dollar supply,” said an oil industry executive. “But I don’t think there will be any severe repercussion.”

The State Bank of Pakistan discontinued provision of dollars for furnace oil imports from Feb 1 as part of an IMF loan requirement which says the market should meet the foreign exchange needs for trade.

The central bank will stop dollar supplies for import of diesel and other refined products from August 1 and by next year payments for crude oil imports will also be the business of commercial banks. This has raised concern that the inter-bank market could come under pressure and the dollar might go up against the rupee, creating problems for oil importers.

The government had assigned the responsibility of making payments to the SBP last year after the market started facing a crunch. Haji Haroon, a foreign exchange dealer said, there is little chance of that happening again. “There is no panic in the open market now and we don’t expect to see that either.”

He said that the dismal performance of the stock market and property sector has made investors skeptical about investing in foreign exchange. Economic indicators have also been improving and the flow of foreign direct investment and remittances will help stabilise the country’s foreign exchange reserves further.

“The central bank projects that the current account deficit will shrink to $3.9 billion in six months (Jan-June 2009) from $7.3 billion in the first half. This will help foreign exchange reserves exceed $13 billion by the end of June, compared to $10.2 billion at the end of January,” a Standard Chartered report said.


Remittances may help meet dollar demand

 

[Neo]

Japan extends $27mln grant to Pakistan ​

ISLAMABAD: The government of Japan has extended an amount of Japanese Yen 2.5 billion or approximately US $ 27 million, as Non Project Grant Aid to Pakistan for support and contribution to the promotion of the economic structural adjustment efforts by the government as well as mitigation of Pakistan's economic difficulties including indebtedness and balance of payments, APP reported.


The official Exchange of Notes (E/N) to this effect were signed by Ambassador of Japan to Pakistan, Chihiro Atsumi on behalf of his country and Farrukh Qayyum, Secretary Economic Affairs Division (EAD) signed the agreement on behalf of the Government of Pakistan.

According to the agreement the grant shall be used by the government of Pakistan for the purchase of products from eligible source countries to be mutually agreed upon between the authorities of the governments and services incidental to such products.

It was agreed that the government of Pakistan and Japan shall consult each other about the details of the utilization of the funds.

The Non Project Grant Aid (NPGA) is an important assistance that can be delivered quickly and is representing the long term commitment of Japanese government for the development of Pakistan as well as to the stability of the region.

Speaking on the occasion Secretary EAD thanked the government of Japan for their timely assistance to the development of Pakistan.

 

[Neo]

Tarin says economic problems easing ​

Friday, 13 Feb, 2009

ISLAMABAD: Economic woes complicating Pakistan’s struggle against militancy are easing owing to a tough rescue plan backed by the International Monetary Fund, but the program needs more than a year to succeed, Tarin said.

The perilous state of Pakistan’s economy - which faced trouble even before the global economic crisis - is raising concern that unemployment and inflation will destabilize the nuclear-armed nation’s pro-Western government and fan Islamist violence.

Tarin told reporters the country’s budget and trade deficits have already narrowed considerably.

The government’s budget deficit will decline from 7.4 percent of gross domestic product in the past fiscal year, to between 4 and 4.2 percent in the current year, Tarin said.

In addition, the nation’s current account deficit will decline from 8.4 percent to 6.5 percent, he said.

The current account deficit had driven Pakistan to the brink of a currency crash and debt default until the IMF stepped in with a $7.6 billion bailout last November.

Inflation, which touched an annual rate of 25 percent in October, is also declining, Tarin said. The cost of imported fuel has dropped sharply in recent months.

‘If you see all the indicators, we have achieved an improvement,’ Tarin said, but added: ‘If you think that turning it around would happen in three months, it will not be in three months. Such turnarounds take 18 months.’
Tarin made no forecast for economic growth, which fell from 6.8 percent in fiscal 2007 to 5.8 percent last year and is expected to decline further this year.

The IMF granted Pakistan the emergency loan only after endorsing drastic government reforms. The government has taken a raft of unpopular steps, including slashing subsidies on food and fuel and raising sales taxes to try to balance its books.

Pakistan has more than 160 million people, most of whom are desperately poor.