Pakistan Economy - News & Updates - Archive

[Neo]

Pakistan, IMF set monthly tax collection targets ​

Thursday, April 09, 2009

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have envisaged monthly targets for the last quarter (April to June) of fiscal year 2008-09 for meeting the annual tax collection target of Rs1,300 billion, which will definitely be missed, it is learnt.

Both the sides had agreed on the revenue collection target of Rs147 billion in March but the FBR netted Rs103 billion. The FBR high-ups expect that the revenue collection for March will be around Rs110 billion when figures are finalised in the next few days.

The country and the IMF have agreed on the tax collection target of Rs98 billion for April, Rs119 billion for May and Rs227.9 billion for June. The FBR is facing a revenue shortfall of Rs43 billion in the first nine months (July-March) of 2008-09 as collection stood at Rs810 billion against the target of Rs853bn.

Sources said the FBR could at best reach Rs1,225 to Rs1,230 billion by the end June, meaning it would face a shortfall of Rs70 to Rs75 billion. But the FBR high-ups say that there was no need to put any revenue collection figure before the IMF, however it should be seen whether the tax authorities are making all-out efforts to reach close to the target.

The FBR needs to collect Rs490 billion in the last three months of FY09 in order to achieve the target of Rs1,300 billion. Even the original target of Rs1,250 billion announced by the government on the eve of the budget 2008-09 cannot be met and tax collection will be around Rs1,220 to Rs1,225 billion by June 30, official sources in the finance ministry said.

The FBR high-ups argue that reduced nominal growth (real GDP growth+ inflation) have resulted in lower tax collection in the current fiscal year. The imports also decreased due to unprecedented decline in prices of POL products as well as government’s efforts to discourage import of luxury items. The FBR had collected over Rs1 trillion in the last fiscal year.

The government had taken tax measures of Rs116bn in budget 2008-09 in order to get its initial annual target of Rs1,250bn. Keeping in view this entire situation, one can ask where are the efforts of the tax collection machinery to maximize its revenue by creating demand up to the desired level.

 

[Neo]

Pakistanis lost heavily in Dubai real estate sector collapse ​

Thursday, April 09, 2009

KARACHI: A recent trip to Dubai has helped me understand the extent to which Pakistani investors have suffered in the country as prospects for the real estate sector not only remain bleak, but it also appears that worse is yet to come.

Having discussed the situation with some experts there during the visit, I was able to conclude that Pakistanis were stuck in the middle of the crisis given their lack of in-depth research on investment prospects, poor planning and greed to make quick profits.

I learnt that Pakistanis had invested up to Rs190 billion in the real estate sector of the United Arab Emirates within a span of a few months. Their aim was to act as middlemen between the developers of a project and ultimate buyers of the property, thereby buying it at the cost price and eventually selling it for hefty profits, as the value of the asset appreciated.

The problem began when recession hit the US and most European countries, leading to an increasing number of defaulters. Foreign investors lost interest in the UAE’s real estate market and pulled out in a hurry. Moreover, those living in Dubai made a quick exit, packing their bags and returning to their countries which left scores of houses occupied by them deserted.

The prices of properties began to crash and the real estate sector faced a dilemma. On the one hand, there were projects which were 80 per cent complete but did not have the cash to move ahead, while on the other hand the 20 per cent complete projects had no buyers.

In fact, here is a little maths for you. One real estate agent informed me that one project had 200 flats in a cluster and the entire project had approximately 156 buildings. This is just one project that we are talking about. Dubai alone has over a hundred building projects, all of which are skyscrapers. And remember, there are other states too.

Pakistanis returned dejected to their homeland as they had invested millions of dirhams in properties in Ajman where freehold was more affordable as compared to Dubai. Also there was the potential of increase in demand.

No one had expected the global financial crunch to come along, destroy major economies and take the UAE along with it too. As Dubai real estate prices dipped by 25 per cent last year, with more drops expected this year, people are even less interested in Ajman, which is yet to develop when compared to Dubai.

The consequence is that there are thousands of super luxury flats waiting for buyers but no one is interested. Most of the money that Pakistanis invested there is probably lost forever as a piece of property worth Dhs3.2 million is now available for Dhs1.4 million. Yet, it has failed to spark interest.

The question is what will eventually happen to all that property? One observer said if the UAE government promised permanent residency visa once again and reassured investors about a concrete policy, then matters may take a turn for the better.

“But till then no one can really predict the future,” he commented. “On the one hand, there are hundreds of flats waiting to be taken up and on the other, people are rapidly moving out of the country as a lack of job security and daily visa cancellations are compelling them to look elsewhere,” he added.

 

[Neo]

Pakistan to approach IMF after FoDP word: official ​

Thursday, April 09, 2009

ISLAMABAD: Pakistan requires additional funding in order to bridge its financing gap within two years and it is yet to see how much financial assistance the Friends of Democratic Pakistan (FoDP) extend in the upcoming meeting on April 17 at Tokyo, a senior official of the IMF said.

“Pakistan has not yet formally approached the IMF for seeking additional funding. It largely depends on the FoDP forum how much the donors are going to fill the gap within a two-year period,” a senior official of the International Monetary Fund (IMF) based in Islamabad said while talking to The News.

Pakistan will have to make fiscal adjustments by maximising its revenues to overcome the FBR’s shortfall or by cutting its expenditures in order to achieve the fiscal deficit target of 4.3 per cent of the GDP.

He said that Pakistan required additional funding over the next fiscal year after obtaining the IMF’s loan. It is yet to be seen how much the FoDP offers to Pakistan in its meeting.

To another query about IMF’s view on reducing the discount rate in the upcoming monetary policy review of the central bank, the IMF says that there were expectations that the inflationary pressure would ease in the months ahead. When core inflation will ease, the discount rate will be reduced, he added.

Regarding FBR’s shortfall in the current fiscal, he said that the revenue shortfall would be compensated through Petroleum Development Levy (PDL). “Either the FBR will have to make extra efforts to maximize its revenues or expenditures will have to be cut down to achieve the envisaged fiscal deficit target of Rs562 billion,” he concluded.

However, the sources said that Pakistan has estimated $4 to $6 billion financing gap till end of the next fiscal year 2009-10 that will be sought from the FoDP forum on April 17 at Tokyo in the second session of Donors’ Conference.

According to Pakistani authorities as well as IMF’s projections for the ongoing fiscal year 2008-09 in accordance with the Fund’s document, Pakistan will receive a total $3.595 billion in shape of total budgetary support for the ongoing fiscal year from multilateral as well as bilateral donors.

The World Bank is projected to provide total $800 million to Pakistan in the ongoing fiscal year. The WB had so far disbursed $500 million while remaining $300 million would be provided before June 30, 2009.

The ADB had so far provided $834 million to Pakistan during the first nine months (July-March) period while another $500 million would be provided in the last quarter (April-June), totaling its assistance up to $1.334 billion for the ongoing fiscal year 2008-09.

The Islamic Development Bank (IDB) is projected to provide $761 million to Pakistan during the ongoing financial year. So far the IDB provided $661 million and the remaining $100 million was expected to be given to Pakistan during the last quarter of the ongoing fiscal year.

Pakistan is projected to receive $500 million from bilateral support, which Islamabad has already received. Pakistan is expecting to receive total $200 million in shape of short-term commercial inflows, which have already been received by Islamabad.

There are projections of total $91 million budgetary grants for the ongoing fiscal year out of which Islamabad has so far received $71 million while remaining $21 million will be received during the last quarter of the ongoing fiscal year.

“There are no projections estimated in shape of privatisation proceeds as well as Global Depository Receipts (GDRs) for the ongoing fiscal year,” the IMF document states.

 

[Neo]

Textile sector posts 23% growth in profits despite declining exports​

KARACHI: Amid declining exports, textile sector posted handsome growth of 23 percent in its profits, which indicates the viability of the sector in current recessionary economic situation.

The growth in the profits of the textile industry has been attributed to substantial growth in the net sales, which reflected that domestic as well as export demand is still buoyant for textile products although economic crisis in the world hit USA and EU markets—major demand drivers of Pakistan textiles.

The depreciation of rupee helped rise in export based revenue. The rupee depreciated by around 21 percent in first quarter of current financial year.

The high financial cost increasing 100 percent in the period under review dented the earnings of the sector, however it managed to record 23 percent growth in the first half of current fiscal.

Financial cost rose on the back of higher borrowing rates as 6-month KIBOR during the period averaged 14.59 percent, up 458 basis points.

Textile exporters said that thought the situation for textile sector is aggravating with the each passing day due to rising cost of production. However, textile exports absorbed these shocks and were able to at least make some profits in such a critical situation.

However, they pointed out that this could not be sustained in the long-run if the rising cost of business persisted in the coming days. Moreover, the dampening demand in developed nations is not a good omen for the sector.

The performance of textile composite sector was impressive as its net profits grew by 61 percent in the period under review.

Due to its rupee orientation, the depreciating rupee boosted revenues of the sector, which reflected 26 percent increase.

However 105 percent growth in its financial cost dented its profits heavily, which could have been much higher.

The weaving sector posted profits in the period under review compared to same period of previous year, which incurred losses. The growth in net sales and gross margins helped the weaving sector’s losses turn into profits.

Spinning sector performed poorly during first six months of current fiscal as it recorded losses during this period against the profits of previous year.

Though, it registered 13 percent growth in its sales, 102 percent increase in the financing cost dented the profitability of the sector.

Analyst pointed out that rupee depreciation made the difference between different sectors of the textile as composite one thrived mainly on account of its export revenue, which rose in rupee terms.

 

[Neo]

Pakistan and Germany to boost bilateral trade​

KARACHI: The government of Pakistan and Germany are maintaining talks on bi-lateral cooperation on mega projects of alternate energy—solar, wind and hydel, Dr Christian Brecht, consul general of Federal Republic of Germany said here on Wednesday.

He expressed that bilateral trade potential between Pakistan and Germany had a better volume in the past, which has been declining since last few years and needs an uplift. He urged that political stability and better law and order situation are mandatory to enhance trade. While talking about travel advisory about Pakistan he stated that law and order situation in Pakistan is better however some foreign channel to some extent broadcast biased reports about law and order in Pakistan. German origin machinery and technology is being used in the Jhimpir Windmill power project, which is being constructed by a Turkish Company.

He focused that a great potential exists between two countries and Pakistan can import state-of-the-art machinery and technology from Germany from textile sector to auto-engineering and industrial equipments. Whereas, he added, Pakistan can export the value-added textile products and fruits to Germany. He invited KCCI to take a delegation and participate in the Annual Agriculture Fair to be held in Germany.

Anjum Nisar, president KCCI drew attention of Consul General of Germany towards exports potential in fruits, fresh juices and agro based products, surgical and sports items.

He asked the Consul General of Germany to motivate other German Companies to invest in the energy sector. He emphasized on joint ventures between German and Pakistan industrial concerns to explore the potential in the industrial sector. He said that removal of anti-dumping duty from European Union will increase the export activities.

He also proposed that German is the largest manufacturer of textile machinery in the world, and German companies may come forward in the value-added textile and outsource their orders from Pakistan as it is already exporting value-added quality textile products to Germany. staff report

 

[Neo]

WPP chief endorses Pakistan’s prospects with expansion plans​

LONDON: Pakistan, currently reeling from a run of deadly terror attacks, has received a strong endorsement of its economic prospects from one of the biggest names in the global advertising industry.

Sir Martin Sorrell, the chief executive of WPP, has said his company intends to expand its business in the south Asian country in spite of a growing Islamist insurgency and a fall in economic growth this year.

“Despite all the political and security issues . . . our businesses in Pakistan continue to grow strongly,” said Sir Martin, chief executive of WPP. “We plan to continue to grow there and develop our industry leading position in the country.”

Sir Martin is not alone. Public and private companies, including Antofagasta, the Chilean mining company, and Abraaj Capital, the Dubai-based private equity group, are seeking opportunities in Pakistan. Some small-scale investments, particularly in the energy and infrastructure sector, show companies taking a cautious approach, however.

Analysts claim that economic stabilisation has been one of the bright spots of a year of civilian rule.

The International Monetary Fund gave Pakistan a $7.6 billion rescue package at the end of 2008 to help it avoid a balance of payments crisis. The government responded to the IMF’s requests to implement prudent economic policy and cut spending over the first quarter - positive signs ahead of a donors meeting in Tokyo this month where Pakistan is seeking $10 billion in assistance over three years.

Last year, a return to civilian rule in Pakistan saw the biggest rise in deals with foreign acquirers in five years. Cross-border activity totalled $8.1 billion over these five years. Telecommunications and financials are the most targeted sectors by foreign investors. The two sectors account for 52 per cent and 35 per cent respectively.

Acquisitions by UAE, Singapore and Malaysian investors account for more than half the cross-border deals of the past five years. Abraaj Capital, the Middle East’s biggest private equity firm, agreed a $361million deal to buy half of KES Power, the holding company of Karachi Electric Supply Company.

“Our focus in Pakistan is to purchase defensive assets, like power, infrastructure, distribution, or downstream oil and gas,” said Omar Lodhi, executive director of Abraaj Capital. “We work with them to develop them for sale to strategic groups.”

CDC Group, the UK state-owned private equity group, invested in Pakistan in 2006, putting $40 million in the debut fund of Karachi-based JS Private Equity. “With its big and young population, and good commercial history, it is still an attractive investment,” said Richard Laing, chief executive of CDC. daily times monitor

 

[Neo]

Rising violence in Pakistan to dissuade foreign investment: Moody’s​

KARACHI: Growing political uncertainty and violence in Pakistan could hamper policymaking and hurt foreign investment, Moody’s Investors Service said Wednesday. In any case, foreign investment is expected to be weak because of the global crisis, Aninda Mitra, sovereign analyst at Moody’s Investors Service, told Dow Jones Newswires. But he noted that Pakistan has made progress in meeting the International Monetary Fund’s key performance criteria in the first review held in March. “The policy framework is responding to the IMF’s recommendations. However, political and business pressures for counter-cyclical policies are growing and social hardship remains high”, he said. Pakistan received $848 million on April 2 in the second installment of a $7.6 billion loan from the International Monetary Fund. It has so far received $3.9 billion under the 23-month standby facility.

Last week, the World Bank gave Pakistan a $500 million interest-free loan. “From a sovereign ratings standpoint, we would like to see sustained progress in lowering inflation, market-based financing of the budget and retirement of treasury instruments from the State Bank of Pakistan and attainment of fiscal targets”, Mitra said.

 

[Neo]

US, Pakistan to collaborate in $24m energy project​

ISLAMABAD: A joint statement of collaboration was signed between the United States Government and the Ministry of Finance of the Government of Pakistan. The signing marked the announcement of the United States Agency for International Development’s 3-year, $24 million Energy Efficiency and Capacity Building project, according to a US Embassy announcement today.

Energy conservation efforts are expanding in Pakistan, resulting in the promotion of energy audits for commercial enterprises, consumer awareness campaigns to highlight the importance of efficiency in household appliances, the introduction of low-energy applications in new building construction, and renewed attention to power losses between transformers and household connections. Recurring power shortages have made energy conservation increasingly important. Some estimates indicate that 1,500MW per year could be saved with an effective national campaign.

The Energy Efficiency and Capacity Building project will improve demand-side management practices in Pakistan’s distribution companies; implement energy efficiency programs; support energy service companies working with Pakistani industries; and increase awareness of energy efficient practices among business and residential users. The project will also support the improvement of human resource management for the energy sector through coordinated training programs and energy partnerships.

 

[Neo]

With India withdrawn, Pakistan to go ahead with gas project​

ISLAMABAD (April 09 2009): The Cabinet on Wednesday decided to go ahead with Iran-Pakistan gas pipeline, bilaterally, and accorded approval for signing of agreement for purchasing 500 to 750 million cubic feet gas from Iran for meeting domestic requirements. The Minister for Information, Qamar Zaman Kaira, giving details of the hours-long meeting, said that the Cabinet meeting, with a heavy agenda of over 32 items, was presided over by Prime Minister Yousaf Raza Gilani, and took important decisions.

He said that the Cabinet decided to go for constructing the pipeline for one billion cubic feet, instead of 2 billion cubic feet, since India, the third partner in the proposed gas pipeline, had withdrawn. The price of the Iran gas would be comparatively higher, but it would mainly be used for power generation by plants that are currently run on furnace oil, he added.

Kaira said that another important decision the Cabinet took was about Karachi Electric Supply Corporation (KESC) for resolving electricity crisis in Karachi and rid the city off load shedding. The Cabinet decided to own debt liability of Rs 31 billion of KESC from total Rs 40 billion, which was owed by KESC at the time of privatisation, he said.

He said that the new management of KESC has pledged an investment of $360 million in power generation and improvement of system in Karachi. A committee comprising Advisor on Finance, Minister for Water and Power, Advisor on Petroleum, and Minister for Overseas Pakistanis, has been constituted to look after KESCs performance, he added.

The meeting also decided to give special incentives to the Export Processing Zone (EPZ) at Gwadar to boost economic activities in Balochistan. A ministerial committee, under Minister for Industries, Advisor on Finance, and Minister for Port and Shipping, was constituted to recommend incentives. The Minister said the government was striving to bring the backward areas of Balochistan at par with other developed parts of the country.

The meeting also accorded approval to a proposal of the Minister of Water and Power to move forward the clocks by an hour from April 15 in a bid to make maximum use of daylight to save energy.

Kaira said the Cabinet decided to impose 25 percent regulatory duty on export of molasses to help meet the needs of the local industry. So far, he said, the export of molasses was over 400,000 tons and its further export would hurt the local industry as sugarcane crop was quite low this year. The meeting also discussed the new educational policy but delayed till next meeting with a decision for taking on board the provincial governments to ensure its implementation. However, it approved to set up a National University of Law and Social Sciences in Islamabad with its campuses in all the four provinces to cater to the higher education for law students.

The Minister said health and education issues were on top priority of the government agenda and the government would seek funding from Friends of Pakistan for the purpose, and would gradually raise the allocations for education and health to 10 percent of GDP.

The meeting also decided to streamline the education system in religious schools, without bringing them under any regulatory control. The education minister said: "We dont want to impose curbs on religious education, but want the Madaris to teach modern education so that the students of these institutions may also become part of other services."

The Cabinet also directed the Ministry of Finance for monthly briefing about economic indicators in the country. The meeting also decided to review Afghan transit trade with the view to meeting the requirements of Afghanistan and, at the same time, warding off any loss to Pakistan. The Minister said it was also decided that legislation would be made through bills and parliament, instead of ordinances.

Meanwhile, a statement said that the Cabinet approved ratification of agreement on co-operation in the field of transportation and transit of goods between the Government of Pakistan and Government of Uzbekistan. The agreement envisages free traffic in transit to the carriers of contracting parties through multi-modal transport system (land, rail, sea) in accordance with the existing national laws and regulations. The main objective is to provide Uzbekistan access for transshipment of its trade cargo to/from Gwadar port.

In pursuance of the International Road Transport Agreement signed between the Governments of Iran and Pakistan in June 2008, Cabinet gave approval for Instrument of Ratification concerning the agreement. This would facilitate international transport of passengers and goods by road between the two countries and in transit through their respective territories. By signing this Agreement, traffic/trucks from Pakistan and Turkey would be able to ply through Iran, while Iran will also have access to China via Pakistan. Besides boosting economic opportunities, the access to other Central Asian Republics and Europe through Iran and Turkey would be an added advantage to Pakistan.

The meeting gave go-ahead to start negotiations on draft agreement on defence co-operation with Hungary. Approval in principle was granted for negotiating an MoU between National Defence University and Institute des Hautes Etudes de Defence National of France. This will be helpful in enhancing the relationship and pave the way for research and co-operative activities. Approval was also granted for initiation of negotiations for signing MoU with Jordan on collaboration in defence equipment/research and development/joint production/sales.

To further cement socio-economic and political relations with Libya, the Cabinet gave ex post facto approval for initiation of negotiations for an MoU on bilateral political consultations. It will provide a forum to take stock of the trajectory of bilateral relations and share views on issues of mutual interest. Ex post facto approval was also granted for entering into negotiations for extradition treaty with Libya. Approval was also granted for an MoU for co-operation in the field of employment. Pakistan was one of the main suppliers of skilled and semi-skilled manpower to Libya during 1970s and 80s. However, due to stagnation in relations and absence of formal arrangements, Pakistans manpower in Libya declined from over 100,000 to 10,000. The proposed MoU would help enhance co-operation in the field of employment/manpower export to Libya.

In order to strengthen co-operation in the areas of labour and occupational training with Bahrain, The Cabinet gave approval to start negotiations for entering into an MoU. Pakistan is a signatory to the Agreement on establishment of South Asian Regional Standards Organisation (Sarso) that is mandated to remove technical barriers on trade to facilitate flow of goods and services in the Saarc region. The Cabinet ratified the Sarso agreement.

Ex post facto approval was also granted for initiation of negotiations and signing of MoU with the Government of Korea for establishing "Garment Technology Training Centre" in Karachi. The project aims to enhance competitiveness of textile and apparel industry by providing skilled work force.

In order to conserve energy and take advantage of the availability of sunlight during summer, the Cabinet approved to introduce daylight saving through advancement of clocks by one hour (GMT +6) from 15 April 2009. This will help to conserve 250-300 MW on average of daily electricity. The Cabinet also approved signing of agreements for abolition of visa for diplomatic and official/special passport holders with Libya, Indonesia, and Ireland. The Cabinet approved ratification of bilateral investment treaty with Kazakistan on reciprocal promotion and protection of investments.

The Cabinet approved Pakistans accession to the International Convention for the Suppression of the Financing of Terrorism. The convention requires parties to take steps to prevent and counteract the financing of terrorism whether direct or indirect through groups claiming to have charitable, social, or cultural goals or which engage in illicit activities.

The Cabinet granted approval to the draft of Pakistan Marine Insurance Bill 2009, draft of Law for Implementation of Convention of International Trade in Endangered Species of Wild Fauna and Flora Convention.

The Cabinet also gave approval, in principle, to start negotiations on MoU between Pakistan and Iran on Library Co-operation. The proposed MoU will provide exchange of books, periodicals and other library materials besides introduction and arrangement of training courses, digitalisation of library materials and exchange of technical information and services. Approval to the Bill to establish NFC Institute of Engineering and Technology at Multan was also granted.

The Cabinet also approved, in principle, the draft bill to provide for establishment of National University of Law and Social Sciences at Islamabad. The Cabinet also approved draft Anti-Money Laundering (Amendment) Bill, 2009. The proposed amendments are necessary to bring the various provisions of Anti-Money Laundering Ordinance 2007, in line with international standards. The cabinet approved to levy 25 percent regulatory duty on export of molasses, the statement said.

 

[Neo]

Textile sector earnings grew 23 percent in first half of fiscal year 2009​

KARACHI (April 09 2009): Textile sector of Pakistan depicted strong earnings growth of 23 percent in the first half of FY09 as compared to the corresponding period last year. The composite sector, which accounts for approximately 67 percent of the entire textile sector market capitalisation, posted remarkable earnings growth of 61 percent.

Moreover, weaving sector came back into profits whereas the spinning sector plunged into losses when compared to the corresponding period last year. In the analysis, 24 companies were taken from the composite sector - six weaving companies and 31 spinning units representing 92 percent, 95 percent and 80 percent market capitalisation of their respective sectors.

Amid rise in export-based revenue due to depreciating rupee (21 percent in the first half of FY09), net sales of the textile sector jumped by 22 percent to Rs 127 billion. This resulted in improved margins, which rose by 377bps despite high cotton prices (up 21 percent) during the period, Atif Zafar, an analyst at JS Global Capital said.

However, a 100 percent increase in financial cost to Rs 12.4 billion brought down earnings to Rs 3.4 billion, still up 23 percent on year-on-year basis. Financial cost rose on the back of higher borrowing rates as 6-month Kibor during the period averaged 14.59 percent up 458bps, Atif added.

The composite sectors impressive earnings growth of 61 percent was largely driven by improving gross margins, which increased by 451bps. Due to its export orientation, depreciating rupee boosted the rupee-based revenue of the sector, which increased by 26 percent to Rs 84 billion. Its impact on the bottomline was however impaired by 105 percent increase in finance cost to Rs 8.5 billion.

Weaving sector, which was in losses in the first half of FY08, recovered to post earnings of Rs 52 million. The sector was benefited the most from jump in gross margins, which rose by 538bps. Financial cost of Rs 485 million, up 43 percent from last year, however diluted the earnings of the weaving sector.

In the first half of FY09, spinning sector plunged into losses of Rs 783 million as against profits of Rs 343 million in the corresponding period last year. Though gross margins rose by 152bps, 102 percent rise in financial cost dragged the earnings of the spinning sector into the red zone, he said.

 

[Neo]

$500 million to combat poverty: friends to be asked for $10 billion​

ISLAMABAD (April 09 2009): Pakistan will request $500 million program loan from the Friends of Pakistan (FOP) to reduce poverty which has surged to over 40 percent, according to Planning Commission Deputy Chairman Aseff Ahmed Ali. Sources told Business Recorder here on Wednesday that the government would seek total $10 billion from the FOP and donors meeting scheduled for April 17 in Tokyo for the current fiscal year.

If the government failed to get this amount from FOP, it would have to seek IMF assistance again to make any shortfall, an official said. Sources told Business Recorder that the government was expected to request for $30 billion assistance from the FOP forum over the next five to ten years, with $20 billion targeted for development projects and $10 bn program loan.

According to data received from the Planning Commission, poverty in 2005 was recorded at 23.9 percent, which increased to 37.5 percent in 2008. In 2000, poverty was recorded at 34.5 percent of GDP, which declined to 23.9 percent in 2005, but again increased to over 40 percent in 2008. Pakistan intends to establish a $1 billion Trust Fund for development of FATA and Balochistan - considered as the most developmentally challenged provinces of Pakistan.

This idea would be floated before the forum of FOP. The Benazir Income Support Program (BISP) was an initiative of the government to strengthen the social safety net targeted to reduce poverty. The total budgetary support earmarked for 2008-09 was Rs 34 billion.

In supplementary LoI issued on March 16, 2009, government has committed to IMF to increase the number of families from 1.5 million to 5 million in 2009-10 using the new score card system implying budgetary expenditure of Rs 65 billion. The number of beneficiary households will be extended to 7 million in 2010-11. Pakistan is expected to increase the allocation for the program in collaboration with the World Bank.

The BISP secretariat has alleged that the money that was to be allocated by the World Bank for this purpose has not yet been released. A senior official of BISP told Business Recorder: "It is true that the World Bank has provided $500 million to the government of Pakistan but this amount would be used for budgetary support and BISP does not have its share in this amount at all".

 

[Neo]

Stabilising border region: Pakistan urges $30 billion Marshal Plan ​

WASHINGTON (April 09 2009): Pakistan has called for a $30 billion Marshal Plan to bolster socio-economic development of people as a way to wipe out al Qaeda threat in the Pak-Afghan border region and help win hearts and minds of the local population. The cost to the West for such a plan in the high-stakes region was negligible compared to that of rescuing failing banks and corporations, Pakistans ambassador to the United States told The Washington Times.

"Despite the economic issues that the world is facing, the cost of a Marshall Plan for Afghanistan and Pakistan is going to be minuscule (compared) to the bailouts being given to American car companies and AIG (American International Group)," Husain Haqqani said. The plan, he advocated, will help bring stability to the region as well as blunt anti-American sentiment.

"And the impact in terms of American security and in longer term stability of the world in a very precarious region will be far greater. Pakistan has the will to fight terrorists, it needs the means and the United States should provide those," he underlined.

Pakistan needs $5 billion a year for the next five years from the United States and its allies to build local law enforcement of about 100,000 men, strengthen counter-insurgency against the Taliban and al Qaeda and persuade average Pakistanis that the US-led war on extremism is Pakistans war and essential for the countrys survival, he argued.

The ambassador denied allegations against Pakistans intelligence organisation, ISI, that it was helping the Taliban. He said the US public diplomacy in the Muslim world had lagged under the Bush administration and praised Obamas efforts to reach out to Muslims.

"We are glad that President Obama has taken the initiative," Haqqani said. "The more President Obama and his team reach out, the easier it will be to mobilise people against the extremists and terrorists."

The envoy cautioned, however, that it would take time to change attitudes as many remember that the US supported Pakistan during the fight against Soviet occupation in Afghanistan, then deserted us. "This is not a switch that can be turned on and off," he said. "It takes a while for the counter-narrative to be accepted."

 

[Neo]

Foreign exchange reserves rise to $11.17 billion ​

Thursday, 09 Apr, 2009

KARACHI: Pakistan's foreign exchange reserves rose by $1.08 billion to $11.17 billion in the week ended April 4, the central bank said on Thursday.

The State Bank of Pakistan's reserves rose to $7.80 billion from $6.63 billion a week earlier while reserves held by commercial banks fell to $3.37 billion from $3.46 billion, the bank said.

Pakistan has recently received $500 million from the World Bank and $848 million from the International Monetary Fund, which is reflected in the data this week, according to Reuters.

Foreign reserves hit a record high of $16.5 billion in October 2007 but fell to $6.6 billion in November, largely because of a soaring import bill.

Pakistan agreed in November to an IMF emergency loan package of $7.6 billion to avert a balance of payments crisis week.

 

[ejaz007]

Commodity Outlook: Rice exports increase to $1.55 billion
By Moonis Ahmed

KARACHI: The country’s rice exports have increased to $1.55 billion during July-April, 2009, Rice Exporters Association of Pakistan (REAP) informed Daily Times on Thursday.

According to the figures given by REAP, Pakistan exported a total of 20.816 million tonnes rice of different varieties to various countries across the globe in this period.

The export of non-basmati rice variety increased to 14.238 million tonnes worth $770 million, while 0.657 million tonnes basmati rice worth $780 million were exported in the first nine months of the current fiscal.

“Despite financial crisis, global economic recession and intense competition in the international markets due to bumper crop in almost all rice growing countries, Pakistan’s rice exports showed a tremendous increase,” traders said.

Pakistan, the world’s fifth-largest rice exporter, was hoping to export up to 4 million tonnes of rice after a bumper crop of 6.2 million tonnes to 6.5 million tonnes, as compared with 5.50 million tonnes the previous year.

Pakistan’s rice exports in the 2008-09 financial year could be less than 3 million tonnes as compared with 3.3 million tonnes last year because of high domestic prices, industry sources said.

But, exports fell during the November-January period following a government’s decision to buy rice from traders and enter the export market, according to exporters. Government’s intervention made rice more expensive, hurting exports, they said.

“We now hope to export approximately 2.8 million to 2.9 million tonnes of rice by the end of the fiscal year,” said Chairman REAP Abdul Rahim Janoo.

He said that the government wants to increase country’s exports to earn more foreign exchange but according to him some bureaucrats are not ready to cooperate with the exporters and usually create hurdles. “We will discuss this issue with the Commerce Minister Makhdoom Amin Fahim in a meeting to be held within the next two days,” he added

Rice accounts for about 8 percent of Pakistani exports and 12 percent of gross domestic product. The government’s decision to buy rice and paddy was aimed at helping farmers and maintaining stability in domestic prices in the face of a bumper crop, but traders said that this move left Pakistan uncompetitive in the international market.

Government data showed rice exports fell nearly 8 percent in the July-February period from a year earlier. Exports fell more than 50 percent in January from the same month in 2008.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Major crops’ targets not achieved: FCA ​

Friday, April 10, 2009

ISLAMABAD: The Federal Committee on Agriculture (FCA) on Thursday admitted that the country has failed to achieve targets of main cash crops, indicating the need of wheat import and a fall in gross domestic product to below 2 per cent.

Except for rice, production targets of all major crops could not be achieved, but the food minister did not give any reason, reveals a press statement distributed among media persons.

It did not provide final figures of Kharif crops including cotton, rice and sugarcane. Also it did not mention the production of oilseed crops, a participant of the meeting told The News.

Briefing the media about Rabi crops for 2008-09 and targets of Kharif crops for 2009-10 at the PID centre, Federal Minister for Food and Agriculture Nazar Muhammad Gondal hoped there would be no need to import wheat to meet local demand. This came despite an estimated shortfall of 1.7 million tonnes compared to the target of 25 million tonnes.

Government estimates showed wheat production would be around 23.3 million tonnes, however there was optimism that the output would cross 24 million tonnes, the minister said.

About Rabi crops in 2008-09, the minister said that all crops including potato, onion, gram and lentils missed production targets. For Kharif crops in 2009-10, the committee, which meets twice a year, fixed ambitious production targets. Cotton production is expected to be 13.36 million bales, rice 6 million tonnes, sugarcane 52.5 million tonnes, maize 2.9 million tonnes, moong 150,000 tonnes, mash 16,000 tonnes and chillies 100,000 tonnes.

About water availability, the Indus River System Authority told the FCA that anticipated availability of water for the season was 70 million acre feet (MAF) against 67 MAF last year. However, “it is 10 MAF short of total consumption for irrigation purposes,” said the statement.

Similarly, fertiliser availability including urea and DAP would be enough to meet local demand and the State Bank of Pakistan had allocated Rs250 billion for the year, it added.

Replying to questions, the minister said the government would have a buffer stock of 200,000 tonnes of fertiliser in the Kharif season.

To a question about ban on wheat movement, Nazar Mohammad Gondal said there was no restriction on inter-district/inter-provincial movement of wheat.