Pakistan Economy - News & Updates - Archive

[Neo]

Islamabad to ask IMF to raise loan to $12.1 billion ​

ISLAMABAD (February 14 2009): Pakistan is to ask the International Monetary Fund (IMF) to raise its approved loan of 7.6 billion dollars to 12.1 billion dollars during talks with the organisation opening in Dubai on Saturday, a official said on Friday.

"Keeping in view our good performance where we have achieved all targets set by the IMF, Pakistan deserves an increase," the prime minister's finance advisor Shaukat Tarin told reporters in Islamabad. "But it's up to the IMF whether they accept our request or not." Officials and the IMF authorities will review financial targets set for the country to qualify for the second tranche of 775 million dollars of the 7.6-billon-dollar programme that was approved in November 2008 to save the country from a default on external payments.

The 23-month standby loan gave Islamabad 3.1 billion dollars immediately, with the rest to be phased in over the course of the period if Islamabad manages to fulfil the IMF's envisioned targets of reducing the deficit and State Bank of Pakistan's financing of the government, among other tight fiscal and monetary measures.

Tarin said that the fiscal deficit was curtailed at 1.9 per cent of the gross domestic product (GDP) against the set target of two per cent for the first half (July-December) period of the fiscal year 2008-09. The current account deficit, which stands at 2 billion dollars per month, is now reduced to 500 million dollars as a result of various measures. The borrowing from the central bank, has been reduced from 258 billion rupees (3.26 billion dollars) to 204 billion rupees (2.59 billion dollars) until the end of December 2008.

"The stabilisation of the economy has slowed down the economic activities and turnaround cannot be achieved overnight. But were doing well and that is why we expect an increase from IMF," Tarin said. Pakistan, a key ally of the West in the war against terrorism, is witnessing deteriorated law and order with growing militancy in its volatile tribal areas, affecting foreign investment. The country approached the IMF last year for a rescue package as it grappled with a 30-year high inflation rate and fast-depleting reserves that held barely enough to cover nine weeks of import bills.

 

[Neo]

EU likely to lift anti-dumping duty from Pakistan's bed linen​

KARACHI (February 14 2009): European Union (EU) is likely to lift the anti-dumping duty on Pakistan's cotton bed linen (cotton type) from March 5 this year, which it had imposed after finding dumped imports of the product in its markets in 2004.

Well-placed sources in Trade Development Authority of Pakistan (TDAP) told Business Recorder that EU had imposed a definitive anti-dumping duty on imports of bed linen originating in Pakistan in line with the council regulations (EC) No 384/96 on March 2, 2004.

The date of anti-dumping duty is expiring on March 5 this year, which is expected to take place, as there are no such objections the EU has so far raised, they said. When contacted the advisor to Chief Minister Sindh on Investment Zubair Motiwala said there are hopes that the duty would on Pakistani bed-linen products would be removed. He said that if the duty is removed the annual exports of home-textile products would increase by some $400-500 million to EU.

He was of the view that EU has erected non-tariff barriers to impede Pakistani products to its markets like the countervailing duty, which is unjustified. He elaborated that the EU had done this to protect its local industries producing the same products from injuries and carried out an audit on every company's product retail price.

Consequently it slapped different scales of penalties on those Pakistani exporting units which it found involved in dumping of products, he added. Motiwala pointed out that import duty is scaling between 13 per cent and 17 per cent in the EU markets, the additional duty from 1 per cent to 13 per cent was a penalty for dumping of the products, which is now likely to be removed from March 5.

The only country of the region Bangladesh is not having such barriers for its exports in the EU because it bears a status of the least developing country (LDC), he added. TDAP sources said that the EU had invited further objections prior to expiry of the date, but so far none of the members of EU has raised any objections to have the EU review its decision.

The EU undertook proceeding on a complaint lodged in November 2002 by the committee of the cotton and allied textile industries of the European Communities on behalf of producers representing a major proportion of the total community production of cotton-type bed linen.

It contained prima facie evidence of dumping of the said product and material injury resulting therefrom, which was considered sufficient to justify the initiation of an anti-dumping proceeding, they said as quoting the EU report. Motiwala said that difference in retail price of the same product in its originating country and the EU markets could not be held justifiable for imposing such harsh duties.

 

[Neo]

Trade volume with UK registers 17 percent increase: Gibson​

SIALKOT (February 14 2009): British Deputy High Commissioner to Pakistan Robert Gibson has said that the trade volume between Britain and Pakistan has increased by 17 percent despite certain hindrances, which is an encouraging sign. Speaking to the members of Sialkot Chamber of Commerce and Industry (SCCI) on Thursday evening here he expressed the confidence that trade between both the countries would be increased further.

The "Trusted Partner Visa" has temporarily been suspended which would hopefully be restored in due course of time to facilitate the visa seekers Robert Gibson revealed. The Deputy High Commissioner further informed the house that we had also reviewed the travel advisory under which Northern areas are still sensitive while other regions of Pakistan are safe. The "Visa Hubs" have been established in various areas to minimise the expenditures as well as to facilitate visa applicants he disclosed.

President SCCI Hassan Ali Bhatti in his address of welcome said that Pakistan and United Kingdom are enjoying highly cordial and friendly relations, which would be further cemented with the passage of time. Bhatti further said that Pakistan's strategic location offers immense potential for Foreign Direct Investment (FDI) adding that Pakistan is a key market having a population of 160 million.

Pakistan has close diplomatic and economic relations with United Kingdom and these ties exist in several socio-economic fields he said. Hassan Bhatti pointed out that British High Commission has changed the system of visa application and under the new system the applicants have to get appointments on telephone which is time consuming and expensive. The SCCI president underscored the need of increasing telephone lines and cost factor calls be taken into account to facilitate especially the business visa applications in getting appointments.

 

[Neo]

'Bilateral trade should not be interlinked with disputes'​

LAHORE (February 14 2009): The President Punjab Economic Forum Engr. Sohail Lashari has said the Indian should not link bilateral trade with the Mumbai attacks. Lashari, in a statement issued here on Friday, said that whenever Pakistan termed the Kashmir dispute as a core issue between the two countries and stressed for its solution according to the UN Resolutions for sustainable bilateral relations and trade, "the Indian authorities rejected the Pakistani stance, saying that Kashmir and bilateral trade should not be inter linked."

In line with the similar approach, the Indian should not link the trade with the Mumbai attacks, he added. He urged the Indian government to consider the common interest of the local as well as regional development and said that bilateral trade should not be inter linked with the disputes rather it should take measures to root out causes of such attacks and mistrust it follows.

The PEF President said the Indian government should realise the ground realities and resume comprehensive dialogue with Pakistan for peace and prosperity of the world as both countries have lot to share to uproot poverty and to provide food for every citizen, which is basic human right and a major challenge. No nation could prosper without having good relationship with its neighbours, he said.

 

[Omar1984]

Buyers remain active at cotton market

KARACHI: The Karachi cotton market witnessed a moderate trading sessions during the week, as buyers remained active in the ring despite higher spot rate and strong physical prices, traders said on Saturday. The local cotton market absorbed the international decline in the commodity price without shaking its posture and witnessed the unabated buying even on slightly higher rates above spot price during the trading session. A senior member of KCA, Ghulam Rabbani said leading buyers purchased lint of all qualities while fine lint fetched slightly higher price around Rs 3,460 per maund and private sector commercial exporters consolidated their long positions during trading sessions. He said a local ginning unit in Shahdadpur made history for selling more than 100,000 bales during June-January 2009. “It shows the market stability and buying spree despite influence of international recession on all commodities.” He said, “The main feature circulating in cotton circles is when the global consumption will eventually bottom. The weak US economic data continued with falling US equity markets gives little indication of any stabilisation in cotton off-take in the near-term.” Rabbani said 2008-09 world mill use is estimated at 112.6 million bales, down 2.6 million bales from January. Similarly, 2008-09 world production is estimated at 109.5 million bales, down 330,000 bales from January. Her said 2008-09 US mill use is at 3.9 million bales, down 300,000 bales from January and down 710,000 bales from the 2007-08 crop. He said 2008-09 China mill use is estimated at 47.0 million bales, down 1.5 million bales from January and 2008-09 China imports are estimated at 6.5 million bales, down 1.0 million bales from January. On Saturday, the spot rate at KCA remained firm and the settlement was declared at Rs 3,400 per maund with fine lint in focus. Trading Corporation of Pakistan is still engaged as the second player in the buying market, but slowed down its buying.

International market: Demand for cotton yarn from Pakistan is relatively low on the international market. A weak level of interest is being reported from the Far East and Europe. Yarn exporters are now being asked to lower their prices although confronted with higher cotton prices on Pakistan’s domestic market. According to USDA, the US exports net sales of 3,000 bales for delivery in 2009-10 were for Mexico (2,100) and South Korea (900). Exports of 162,000 bales were down 17 percent from the previous week and 6 percent from the prior 4-week average. The primary destinations were China (59,00), Mexico (16,400), Indonesia (13,500), Bangladesh (12,600), Pakistan (10,600) and Chile (9,100). Net American PIMA sales of 14,400 bales, a marketing-year high were mainly for India (9,300), China (2,600) and Turkey (900). Exports of 4,900 bales were mainly to Indonesia (2,000) and India (1,800). staff report

Daily Times - Leading News Resource of Pakistan

 

[Omar1984]

SECP’s positive stance keeps KSE buoyant

KARACHI: The Karachi stock market managed to close the week in the positive territory amid intense buying activities as the Securities and Exchange Commission of Pakistan (SECP) relaxed treatment for impairment of capital losses and its direct charge to equity instead of profit and loss account, analysts said on Saturday.

Another major factor that influenced the market was investors’ positive sentiment on the last trading day of the week as improved profitability is likely to be witnessed after amendment made by SECP.

The Karachi Stock Exchange (KSE) 100-share index gained 20.48 points or 0.5 percent to close at 5,625.90 points as compared to 5,597.42 points of the previous week. The average turnover was recorded at 144 million shares as compared with previous week’s 177 million shares, recording a decline of 19 percent.

Analysts said activity at the KSE remained dull during most days of the week as the IAS-39 regulation requiring companies to write down their AFS investment to current market value led to confusion amongst the investors concerning the possible decline in their investment returns. The confusion eased when SECP finally issued a circular granting relaxation in the accounting treatment for AFS securities held by the companies.

Investors’ sentiment remained mostly perplexed as negative news regarding decline in refineries off-take and the country’s oil production as well as the uncertainties regarding IAS-39, clouded the market.

Moreover, increase in the trade deficit of 43 percent led to confusion regarding Pakistan’s ability to meet the targets set by the IMF. On the positive side, inflation eased off by a massive 280 bps in Jan-09 coming down to 20.52 percent.

Analyst at JS Research said Pakistan’s benchmark 100-share index recovered on Friday amid release of SECP’s circular granting relaxation on IAS-39. The market, which had remained largely in the red zone during the week, recovered 227 points on Friday to close at 5,626 points.

Selling pressure from off-shore investors continued during the week as foreigners bought shares worth $14.0 million and sold worth $23.6 million, resulting in net selling of $9.6 million. After a gap of a month, net buying was recorded on Wednesday amounting to $0.4 million. The cumulative net selling after lifting of the price floor has now reached $189 million.

Result announcement of MCB Bank has been deferred to the coming week as clarification of IAS-39 was sought. Along with MCB Bank, HBL and AKBL are other banking announcements next week. Moreover PSO, ICI and Fauji Cement would be announcing their results in the coming week.

Analysts said reduced foreign selling and discounted scrip prices changed investors’ sentiment positively whereby investors took positions in oversold scrips. staff report


Daily Times - Leading News Resource of Pakistan

 

[Omar1984]

R&D support improved textiles quality,but efficiency remains low

Ikhtiar Baig says 30pc material wasted in finishing

Sunday, February 15, 2009
By Shahid Shah

KARACHI: Pakistani textile sector’s efficiency remains low in the region despite Rs20 billion annual Research and Development (R&D) support by the government. The R&D facility was withdrawn in financial year 2008-09, but the support could not achieve its goals set earlier.

The R&D support covered product development, skill development and training, upgrading of information technology and professional consultancy.

In 2005, the government decided to provide Research and Development support to units manufacturing and exporting textile garments at the rate of 6 per cent of the value of the exports to EU and USA.

In June last year, the government decided to withdraw this support. No claims have been approved after June 25, 2008. But the exporters demand it till June 30, 2008 as they say it was according to the legal orders.

The R&D support was given to the sector under agreement in the WTO regime that required high standard of Pakistani goods.

The support was given to textile as well as leather manufacturers and exporters. It was given 6 per cent on the value of export to the US and European Union on garments and 3 percent on fabric export.

The R&D support of Rs12 billion was given to textile garments, Rs8 billion on home textile bed linen and Rs0.7 billion on denim.

Earlier this week, Federal Minister on Textile Industry Rana Muhammad Farooq Saeed Khan told textile exporters that government had agreed to provide claims from June 25 to June 30, 2008, which becomes around Rs4.5 billion. However, the Pakistan People’s Party responsible people remain divided over the role the textile sector has played. Some of them place allegations against the textile exporters that they filed fake claims under R&D and actually no proper research and development took place.

Taj Haider, PPP leader and former senator said that Pakistani textile owners should improve on standards. They sell one T-shirt for a dollar, at the same level some people from Lahore are selling it for 8 dollars, he said.

“Several shipments return because of the low quality.”

Dr Mirza Ikthiar Baig, advisor to federal government on textile industry, said the R&D support was made available for research and to some extent to cut down high cost of doing business, which had increased over the years due to increase in bank mark ups, utility bills and raw material.

Pakistan’s regional competitors Bangladesh, India and China are providing R&D to their industry leaving Pakistan a lead of around 15 percent in the cost of doing business.

After R&D support, quality of Pakistan’s products has improved, but efficiency remains low. “Quality is not issue, efficiency is low - waste percentage has increased,” said Dr Baig.

World’s top brands Nike, Levis, Wal-Mart, Target, JC-Penny, VF, H&M and Marks & Spencer are working in Pakistan for several years. “This shows their trust over Pakistan’s textile and apparel industry.”

Dr Baig said labour productivity was very low in Pakistan. “Our regional competitors took 75 minutes to complete and produce one piece whereas we took 133 minutes for the same work,” he said. “We also waste 30 percent in finishing and 12 percent in washing.”

The countries with more support from their governments have been able to give tough time to their competitors. China topped the US market with a share of 36 percent followed by Bangladesh 21 percent, India 18 percent, Morocco 19 percent, and Pakistan 13 percent. Korea, on the other hand, lost 20 percent USA market share. Similarly, in the European market, China topped to gain 29 percent with Vietnam 28 percent, India 19 percent and Pakistan only 1.5 percent whereas Philippines lost 11 percent.

People in the textile industry say that it was passing through the worst times especially after withdrawal of R&D support. At least 30 percent Textile and made-up industry has faced closure leaving behind a large number of workers jobless. 90 percent of industry is already operating in one shift instead of three shifts previously.

Thousands of workers either have been laid off or are in a queue of lay off. “If serious action is not taken from the Government in the context of release of R&D, it (the textile sector) would die its own death,” said Feroze Alam Lari, Chairman Towel Manufacturers Association of Pakistan.

R&D support improved textiles quality,but efficiency remains low

 

[Neo]

Rs75bn fund in offing to bail out PSO: FBR ​

Sunday, February 15, 2009

KARACHI: Chairman Federal Board of Revenue (FBR) Ahmed Waqar has said that a fund worth Rs75 billion is being set up to bail out Pakistan State Oil (PSO) from the financial crunch.

He was speaking to members of Korangi Association of Trade and Industry (KATI) at a luncheon meeting on Saturday at KATI office.

Chairman FBR said that the fund would be constituted by the end of this month, which would help PSO pay its debts and further make payments to refineries.

Waqar said that efforts are being made to bring wholesale, retail and service sectors into tax net, adding the FBR would be able to collect revenue of Rs1,300 to Rs1,360 billion by the end of this fiscal year.

He said that those who are in the tax net and paying their taxes should not be worried about any of the FBR initiatives. He said the FBR is considering paying surcharge along with sales tax refund if it fails to pay the refund on time.

He announced to establish an FBR help desk on the premises of KATI to help its members. He said that the business community is the most important faction for the FBR as it is paying the precious revenues to run the country and the FBR is all out to help and assist the trade and industry.

Responding to the welcome address by the KATI Chairman, Mian Zahid Husain, the FBR chief said that various measures are being taken in the next federal budget to be announced in June.

The KATI Chief, Mian Zahid Husain while highlighting business community’s woes said that tax slab on turnover for small industries should be levied at the uniform rate of 25 per cent.

He also appealed chairman FBR to withdraw withholding tax on electricity bills with the rate of 10 per cent. He said that this tax is unjustified as business community is already over-burdened due to ever-increasing power rates and unbearable load-shedding.

Hussain said that the tax on rental income should be revised downward at the rate of five per cent. He suggested declaring all areas out of the limits of Municipal Corporation as rural and un-developed areas and allowing depreciation on setting up industries there. He demanded of the FBR chief to empower income tax commissioners to issue exemption certificates on imports as practiced in the past.

He also suggested to reduce deduction of tax on cash withdrawal from bank to 0.1 per cent from 0.3 percent, e-filing of Mandatory NIFT Certificates should be continued through Pin Code, Pass-word and User ID.

He said that Sales Tax department has once again started audit while FBR has suspended the audit of registered persons through a circular, this should also be discontinued. He said that sales tax refund claims should be refunded without delay and revenue collection should be improved through enhancing tax net.

The Patron In-chief, KATI, S M Muneer in his address urged the need of a better relationship between the FBR and the business community so that the taxmen would able to meet the revenue target.

 

[Neo]

Pakistan, IMF start talks in Dubai ​

Macroeconomic targets may be revised​

Sunday, February 15, 2009

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) on Saturday started talks at Dubai for releasing the second tranche worth $775 million for Islamabad, it is learnt.

The macroeconomic targets including the GDP growth rate, inflation, tax collection, foreign direct investment, privatisation proceeds and export and import targets could be re-adjusted downward in the talks keeping in view the changed ground realities.

“Yes, various macroeconomic targets will be part of our discussion because these targets can be adjusted with the changing realities,” said a senior official at the finance ministry while talking to The News here on Saturday night.

Pakistan is all set to seek additional funding of $4.5 billion from the IMF by requesting the fund authorities to increase its quota from five to eight times enabling Islamabad to keep more foreign inflows on track.

Other donors especially the WB is so far not forthcoming for meeting the financing needs of the country by generously providing programme loans.

Pakistan’s delegation comprised Joint Secretary External Wing Mumtaz Malik, Additional Secretary Asif Bajwa and representatives from the SBP as well as from the FBR.

The IMF’s delegation is headed by its head of Middle East and Central Asia Department Masood Ahmed, Assistant Director Middle East and Central Asia Department Adnan Mazarei, IMF’s Resident head in Pakistan Paul Ross and others.

“Secretary Finance Dr Waqar Masood is scheduled to leave for Dubai today (Sunday) and he will head Pakistani delegation from tomorrow (Monday),” official sources confirmed while talking to The News here on Saturday.

Adviser to the PM on Finance Shaukat Tarin is scheduled to visit Dubai on Feb 25 and 26 for holding final round of talks with the fund authorities.

Pakistan and the IMF have the schedule to hold talks from Feb 14 to Feb 26 in Dubai for reviewing second tranche for which the final approval was expected to be granted by the executive board of the fund by March.

Pakistan achieved all envisaged target including fiscal deficit as well as freezing borrowing from the central bank, said the official at finance ministry. The fiscal deficit stands at 1.9 per cent of the GDP for July-Dec period of 2008-09 against envisaged target of 2 per cent. On central bank borrowing, he said, the government had agreed to freeze it at Rs258 billion but they achieved it successfully and it stood at Rs203 billion by Dec 31, 2008.

However, according to another high-level official at the finance ministry, Pakistan and the IMF will discuss revision in envisaged macroeconomic targets including GDP growth rate for the current fiscal year. They (Pakistan and the IMF) have projected the real GDP growth rate of 3.5 per cent for 2008-09. Keeping in view negative growth of 6.5 per cent for manufacturing sector for the first half (July-Dec) period of 2008-09, the country’s growth rate is solely depending upon the performance of agriculture and it is expected to hover around 2 per cent by end June 2009.

Federal Board of Revenue agreed to collect Rs1,362 billion for the ongoing fiscal year on the basis of nominal growth rate of 28 per cent.

“But now the nominal growth rate declines as the GDP growth rate is likely to remain around 3 per cent while inflation is coming down to the annual range of 20 per cent, so our projections for the FBR’s target has also revised downward to Rs1,300 billion approximately,” added the sources.

 

[Neo]

CDNS plan to generate Rs300bn put on hold: official​

Sunday, February 15, 2009

ISLAMABAD: A plan to generate liquidity amounting to Rs250 to Rs300 billion through three products of National Savings Scheme has run into snags because of conflict of interest in the Ministry of Finance, a senior official told The News.

The CDNS two months back when there was a liquidity crunch, had proposed launching papers of three, six and twelve months maturity offering interest rates at par with treasury bills to persons converting their current account deposits into investment in these papers.

“Through the said products, Central Directorate of National Savings (CDNS) could easily generate huge liquidity amounting to Rs250 to Rs300 billion,” the official said.

The proposed plan is still pending as Adviser to Prime Minister on Finance Shaukat Tarin, who is basically a banker, has not taken the action fearing banks would be deprived of the capital on which banks are not giving any incentive to its depositors.

It is pertinent to note that commercial banks do not offer any interest to its consumers on the amounts deposited in the current accounts. “Basically the idea was that the three papers would be launched offering incentives of reasonable interest rates to those depositors who will withdraw their amount from the current accounts of the commercial banks and purchase the said products under the National Saving Schemes.”

“If the chief economic manager of the country gives a nod to the plan, the country would have generated a sizable amount enabling the government not to borrow any penny from the central bank.”

The official said that the conflict of interest has actually ruined the economy of the country either it is agriculture, large-scale manufacturing or banking sector. Now the time has come that economic policies should be formulated in the supreme interests of the country and its masses not in the interest of any cartel.

The plan to launch scheme for expatriates in foreign currency is also in doldrums as no required action has taken by the top economic management of the country so far. Under the proposal the expatriates living in UK and Middle East were to be offered the papers in return government of Pakistan would extend them sizable interest as compared to the interests, which they get hardly 2 to 3 percent on their deposits in foreign banks.

To a question the interest rate were proposed in Pak rupees. In this way the country could have strengthened its foreign reserves a lot, which may provide breathing space to the government. “It could also help the government in avoiding the IMF program even.”

 

[Neo]

UK foresees better economic outlook for Pakistan ​

British deputy high commissioner says UK government is encouraging its companies to invest in Pakistan​

Sunday, February 15, 2009

LAHORE: British Deputy High Commissioner and Director UK Trade and Investment in Pakistan Robert W Gibson has said the UK government is foreseeing better economic and investment outlook in Pakistan and encouraging its companies to make investments here.

Pakistan has great investment potential and the British government is not issuing strict travel advisory for Pakistan to its nationals as compared to other western countries.

“British investors can travel to Pakistan comfortably except a few troubled areas,” Gibson said adding, keeping the importance of Pakistan’s economic and investment outlook in mind the UK government is likely to announce an investment package for Pakistan.

In an interview with The News after a reception hosted by Moody International to the elite of the business community of Pakistan on fostering trade and investment and to acknowledge contribution of British companies in Pakistan, Gibson pointed out that British entrepreneurs working in Pakistan were having continued interest to work and safeguard their businesses and were looking forward to opportunities to further increase their operations by expanding existing projects and explore new avenues for investment.

Responding to a question of future credit rating of Pakistan Gibson said, “It is not my duty to tell about the credit rating of the country but existing economic scenario is showing a positive outlook of Pakistan,” he said adding that so British government recommending the Britain companies for making investments in Pakistan.

Gibson said “Pakistan has excellent regulatory regime for investors and I’m identifying these opportunities for British companies.” He further said that the Britain is determined to retain liberal trade markets. He added that a good number of UK companies are keen to invest in Pakistan in different sectors. Responding to a question on market access for Pakistan in the West, the Director of UK Trade and Investment said the Britain would certainly want to have such an arrangement with Islamabad. However, being part of the European Union (EU), Britain is bound to the decisions of Brussels on any such facility, he added in the same breath.

British envoy proudly disclosed that 100 British companies with an investment portfolio of 1.7 billion dollars are operational in Pakistan over the last four years. According to him, Pakistan, with a population of 170 million, is a market with huge potential and the UK is keen to invest further here.

Similarly, the Britain will provide some 480 million pounds for social uplift with a focus on poverty alleviation in Pakistan during the next three years, Gibson said adding that there is no problem for making investments in Pakistan. “There are only some areas of Pakistan where law and order is a problem while in the rest of the country there is no issue,” he said. The British government has been motivating their business people to make investments in Pakistan, said Robert W Gibson.

Talking about the economic recession, he said a global solution is needed to overcome global recession.

 

[Neo]

PC claims poverty at 37.5pc with no reference to current data ​

Sunday, February 15, 2009

ISLAMABAD: The Planning Commission’s briefing to Prime Minister Syed Yousuf Raza Gilani about increase in poverty up to 37.5 per cent or 66 million people living below the poverty line out of 160 million has raised many eyebrows within official circles because no fresh analysis on poverty has been done to come up with this revelation at the highest level, it is learnt.

The poverty figures remained controversial in the past but the PC’s new disclosure has literally added fuel to the fire. The donors such as the World Bank, Asian Development Bank, Department for International Development, CIDA and others have always asked the government to stick to the methodology for poverty analysis and avoid changing goal posts in order to come up with consistent results on poverty figures.

Official documents such as the Poverty Reduction Strategy Paper (PRSP-II), which was recently released by the Finance Ministry, clearly states by quoting the Planning Commission that the data of Household Income Expenditure Survey (HIES) for 2007-08 would be available for poverty analysis by end-Feb or early March.

This scribe contacted high-ups in the Federal Bureau of Statistics (FBS) on Saturday and they confirmed that they have not yet provided the data of HIES to the PC’s Centre for Poverty Reduction and Social Policy Department (CPRSPD) that is responsible for conducting poverty analysis on the basis of this data.

When PC Member Social Sector Shaukat Hameed was asked about the HIES data for 2007-08, he also confirmed that they would send the data to the PC by March. To a query about capacity of the CPRSPD for conducting poverty analysis when all of its researchers have left the organisation owing to variety of reasons, the PC member conceded that they would have to enhance capacity of the poverty centre.

In the PRSP-II document states in the meantime, “a Panel of Economists set up by the Planning Commission has provided a preliminary estimate of poverty (based on informed judgment) for FY 2008/09,” indicating an, “addition of 6 percentage points to poverty incidence since FY 2004/05.” It means that the poverty level is over 30 per cent.

The Panel of Economist actually used the data of 2005-06 but did their analysis on the basis of the existing inflation in order to come up with the poverty level estimates of 30 per cent.

How the PC has come up with 37.5 per cent poverty figures, is beyond our imagination, a high-level official questioned?

Now the PC has informed the Prime Minister in briefing that the poverty level went up to 37.5 per cent. The claim was made without referring to any data or poverty analysis on the basis of which the PC reached this conclusion.

The official said as long as the growth in private consumption expenditure in nominal terms is higher by the rate of inflation, the poverty by definition is bound to decline.

The inflation stood at 7.8 per cent in 2006-07 and 12 per cent in 2007-08, calculating overall inflation in the range of 19.8 per cent in last two financial years. The private consumption expenditure stood at 27.4 per cent in the last financial year 2007-08.

“So by definition, in the absence of HIES data, the poverty is bound to decline in 2007-08 as well instead of increasing from 23 per cent to 37.5 per cent,” added the official.

But now the Planning Commission has decided to go public on the controversy of poverty figures and come up by distancing itself from both the survey done in 2004-05 and 2005-06.

 

[Omar1984]

Pakistan can attract SWF: ex-WB adviser

KARACHI: Pakistan should try to attract sovereign wealth funds (SWFs), which are grappling to find new investment avenues after financial meltdown in the developed countries, a former advisor of the World Bank (WB) said Saturday.

Chief executive officer of Mecasa Advisory, a US based financial consultancy firm, Adnan Hassan was speaking at the launching ceremony of his book ‘A practical guide to Sovereign Wealth Funds’. He said Pakistan was in a much better position compared with other developing countries. Most states with SWFs are Pakistan’s friends, he added.

The SWFs have an estimated $3.3 trillion under their portfolio and Pakistan’s agricultural sector could attract that money. “SWFs are looking for sustained cash flows and the local agriculture sector can offer that,” he said.

He sought to dispel the impression that investment in strategic sectors by a foreign government could compromise security of a country. He said SWFs made direct investments and, therefore, countries like Pakistan did not need to worry about their international credit ratings. Deputy Governor State Bank of Pakistan, Yaseen Anwar expressed concerns over growing protectionism in developed countries following the financial crisis. staff report

Daily Times - Leading News Resource of Pakistan

 

[Omar1984]

Rebound on Pakistan's main index offers hope for new investors

By Farhan Bokhari, Special to Gulf News
Published: February 14, 2009, 23:12


Islamabad: Friday was a day equity investors battered by the market mayhem of the past few months had long been waiting for in Pakistan.

The Karachi stock exchange (KSE) finally saw a hint of a recovery and hectic activity followed, with the benchmark KSE-100 index rising over four per cent on the day.

The underlying factor behind the optimism was an announcement by the Securities and Exchange Commission of Pakistan (SECP), relaxing some of the standards laid down earlier for accounting practices at the KSE.

Some of the KSE's most sought-after stocks took the cue. Shares in listed stocks such as Bank Alfalah, NIB Bank, Oil and Gas Development Company and Pakistan Telecommunication, all recorded significant gains.


There are other factors driving the optimism at the KSE. The first sign of a possible thaw in tense relations with India has been widely welcomed by equity investors.

Pakistan finally came out with parts of its investigation into the Mumbai terror attacks of November and accepted for the first time that at least part of the plot had been thrashed out on its soil. For India, this marked the honest assessment from Islamabad that it had long been looking for.

There have also been improvements on the domestic political front.

President Asif Ali Zardari's successful handling of the process by which nominations for the forthcoming elections to Pakistan's senate - the upper house of parliament - has won him approval across the political spectrum.

For investors in the stock market, a trouble-free process leading to the senate elections marks a tick mark on the check-list of issues that periodically bedevil them.

Tomorrow, the positive undertone to the KSE index is likely to continue. There might be some adjustments brought about by quick profit-taking, but the positive trend is likely to stay awhile.

For investors, other comforting factors include the relative stability of the Pakistani Rupee against the currencies of the country's major trading partners, notably the US, UK and the Middle East.

After depreciating rapidly during the first ten months of 2008, the Rupee has stabilised and even slightly appreciated.

This followed the successful conclusion of negotiations between Pakistan and the International Monetary Fund (IMF) to clinch a $7.6-billion loan programme to stave off what appeared to be a looming crisis on foreign debt payment defaults.

On the face of it, the environment in Pakistan is gradually but firmly showing some elements of stability for equity investors. For now, the main missing element is the absence of foreign equity investors who once dominated the Karachi scene. They are essentially gone because of market conditions not just in Pakistan but worldwide, too. For the moment, the KSE is likely to remain in positive territory or range-ound.

With the KSE-100 index trading just above its 5,600 level, some equity investors are likely to be disappointed.

They are probably still looking at the KSE's historical peak of over 16,000, achieved in April last year.

Realistically, the KSE is unlikely to return to its historical high, any time soon. However, the trends surrounding the KSE today are far from disappointing, especially for prospective new entrants.

Historical experience has more than once demonstrated the medium to long-term benefits of risk-taking.

In this case, the most likely risk is that of a delayed return to an era of high profits. But then, in a world where market conditions are likely to remain far from easy in 2009 and possibly beyond, the question for investors would be a simple one; how many markets beyond Karachi offer alternatives that are certain to be more attractive.



The writer is a journalist based in Pakistan.

Gulfnews: Rebound on Pakistan's main index offers hope for new investors

 

[Omar1984]

Pakistan urged for reforms in industrial, export sector: ADB

ISLAMABAD: Asian Development Bank (ADB) has stressed upon Pakistan for introducing reforms in the industrial and export sectors for boosting its exports. ADB fact-finding mission in a meeting with the Planning Commission, Deputy Chairman here, underlined the need of Pakistan undertaking extensive reforms in the industrial and export sectors. The mission said that special measures would have to be taken for booting exports from all sectors including textile products for strengthening the country economically. Planning Commission Deputy Chairman, Sardar Asif Ali on this occasion said that Pakistan needs grants more than donors’ loans. He underscored the need of taking recourse to alternative sources instead of taking loans for improving the economy and rescuing the country from financial crisis.—Agency

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