Pakistan Economy - News & Updates - Archive

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US House approves $2.3 billion for Pakistan ​

WASHINGTON (May15, 2009) The US House of Representative has approved a $96.7 billion supplemental measure to fund Iraq and Afghanistan wars, with $ 2.3 billion flowing into Pakistan as economic and security assistance as well as financing for enhanced American diplomatic missions in the key anti-terror allied country.

According to the House Appropriations Committee, the $2.3 billion for Pakistan include about $ one billion for socio-economic development, $ 400 million for strengthening counterinsurgency capability of Pakistani forces and some other expenditure like US diplomatic operations, diplomatic security and a new secure embassy and consulates in the country.

The economic assistance for Pakistan will be $ 997 “more than the Obama administration had requested - and help address the economic crisis, including agriculture and food security, assist the displaced population, strengthen national and provincial governance, expand the rule of law, and to improve access and quality of education.”

On the military side, $ 400 million have been allocated for the Pakistan Counterinsurgency Capability Fund (PCCF) to help train and equip the Pakistani security forces for counterinsurgency operations.

The funds for PCCF would be available on September 30, 2009.

Noting the importance of the region to American security the bill affirms support for the democratic Pakistani government, saying “the United States and the international community have welcomed and supported Pakistan’s return to civilian rule after almost nine years with the free and fair elections of February 18, 2008.”

The congressional findings cited in the bill say that “Afghanistan and Pakistan are experiencing a deterioration of their internal security resulting from a growing insurgency fueled by al Qaeda, the Taliban and other extremist networks that continue to operate along the western border of Pakistan, including in the Federally Administered Tribal Areas.”

The bill urges that “the governments of both Afghanistan and Pakistan must expand the writ of the national government across all provinces to secure their borders, protect their population, enforce the rule of law, and tackle the pervasive problem of corruption in order to bring security and stability to their people.”

Meanwhile, the Senate Appropriations Committee has passed its own version of the war supplemental bill. After passage of the measure in the Senate, the versions of the two chambers will be reconciled before the bill is sent to President Barack Obama for his signatures.

 

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EU gives 5.5 million euros for IDPs ​

ISLAMABAD (May 15 2009): The European Union on Thursday gave Pakistan 5.5 million euros ($7.5 million) in aid to help civilians driven from their homes by the country's assault on Taliban. The emergency donation is intended to provide refugees from the fighting in restive Swat Valley and surrounding areas with shelter, food, basic utensils and medical supplies, Aaj TV reported.

In some places, it will also fund clean drinking water and improved sanitation, said the EU's executive, the European Commission. The money will be channelled through relief agencies such as the Red Cross and Red Crescent, the UN's High Commission for Refugees (UNHCR) and the World Food Programme.

 

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Transit trade pact with Afghanistan: no concession given to India: foreign office ​

ISLAMABAD (May 15 2009): Pakistan on Thursday said that it has not given any concession to India while signing Transit Trade Agreement with Afghanistan in Washington last week. During the weekly press briefing, Foreign Office Spokesman Abdul Basit said that Pakistan would not do anything against its national interest and it had not given any anti-Pakistan concession to India under the trade agreement.

He said that the negotiations would be held with Afghan authorities to finalise the terms and conditions of the transit trade by end of this year. To a question Basit said that negotiations between Pakistan and US were underway about transferring of the ownership of US drones to Pakistan. However, he refused to give any details in this regard.

Commenting on the statement of Bangladesh's Foreign Minister, the spokesman said that Pakistan had already regretted in 1974 through a tripartite agreement over its act committed with Bangladeshis in 1971 war. He added that both the countries were enjoying good relations and should move forward without going into the past.

Responding to a question, he said that Pakistan and the US would discuss the additional conditions of the Kerry-Lugar Bill. About the latest status of the Pakistani students in UK, the spokesman said that President Zardari had took up the issue with the UK authorities during his recent visit and the students were undergoing through a legal process and Pakistani High Commission in London was providing legal assistance to them.

To a question, he said that Pakistan would welcome any solution of the burgeoning Jammu and Kashmir issue, which should be according to the wishes of the people of the valley. He added that Pakistan would always welcome solutions of the issues with regional approach. Basit also informed the media that President Asif Ali Zardari would visit France on Friday (today) for talks with his French counterpart on the entire gamut of bilateral relations and regional and international issues.

 

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Ten-year plan requires $8.161bn for meeting energy demand ​

ISLAMABAD: To meet ever-increasing demand for energy and avert any future nightmare for the industry in Pakistan, the energy efficiency investment plan requires $8.161 billion during the span of ten years (2010-2019), the Asian Development Bank (ADB) informed this in a workshop on “3rd Consultative Group of the Planning Commission” here on Thursday.

These amounts were required under Multitranche Financial Facility (MFF). The timeline of the investment is planned: for the year 2010 an investment of $34 million, $266 million in 2011, $464 million in 2012, $1.133 billion in 2013, $1.479 billion in 2014, $1.660 billion in 2015, $1.075 billion in 2016, $1.089 billion in 2017, $700 million in 2018 and $260 million in 2019.

After completion of the plan the government would be able to save 2880 GWh in industrial, residential, and public sector electricity use.

The ADB official expressed the need for integrated approach to tackle the energy issue in Pakistan. All the ministries relating to energy sectors, planning commission and donors agencies involved in this sector should work from a single platform, then the matters would be resolved easily. He also stressed for energy conservation and increase competition in this sector. “The ADB seeks sustainability both in generation and distribution of power so as to get ride of frequent power break down,” he maintained.

The seminar was held under the chairmanship of Member (Energy) Planning Commission Pervaiz Butt and was attended by key government officials including development partners from Asian Development Bank (ADB), French Development Agency (AFD), United States Agency for International Development (USAID), GTZ and the World Bank. The meeting was informed that the Government of Pakistan (GOP) was struggling to resolve the crisis. The CDWP had already cleared the concept for energy efficiency investment plan of $1.15 billion for the next 8-10 years to be financed by ADB, AFD and GOP.

A diagnostics assessment of the energy sector was conducted and found that it had large untapped energy efficiency potential. The past efforts to mainstream and implement energy efficiency projects in Pakistan could not get desired results due to lack of sustainable management, discipline and financing. The government of Pakistan was keen to implement a systemic energy efficiency investment programme and was looking for a flexible public sector financing mechanism and to make a mechanism for private sector financing to (i) scale up the deployment of proven energy efficiency technologies in energy supply and use, and (ii) establish a dynamic energy efficiency market.

Improving energy efficiency and energy productivity were key components of Pakistan’s energy strategy. Reducing unproductive and volatile demand can result in immediate energy savings and lower energy intensity would boost energy access and meet social development goals. “The government is determined to pursue a sustained long-term plan to optimize the energy mix and consumption across all sectors of the economy,” member energy of the Planning Commission maintained.

Pakistan’s energy demand would continue to increase in the next 20 years. The overall cost to the economy, businesses and consumers would be huge unless there is a concerted shift in policy and consumption.

 

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Govt ponders cutting petroleum prices ​

KARACHI: The stakeholders are not ready to share the burden of the likely cut in petroleum prices and have made it clear that the government will have to absorb the load on its own.

The sources in the oil sector were of the view that the only viable option before the government was to take a hit on the revenue collection by reducing the petroleum development levy (PDL) to comply with the Supreme Court’s direction to cut petroleum prices.

They said the making amendments to Sales Tax Act would be difficult for the government.

The apex court has given one week’s deadline to the government to bring down the prices of petrol and gas in line with international rates.

The government is pocketing Rs14.91 in PDL and Rs7.95 in GST on per litre petrol. On April 1, 2009, PDL on petrol was Rs19.54 per litre. On diesel, the PDL is Rs11.86 per litre.

Adviser to Prime Minister on Petroleum Dr Asim Hussain on Thursday told Dawn that the government had been left with few options as the deadline was drawing near. ‘If the PDL is reduced it will increase budget deficit and the finance ministry will be forced to find other ways to bridge the gap,’ the adviser observed.

He added that the government may have to impose new taxes or ponder on other options for generating revenue to offset the impact of cut in revenues from the PDL.

He said he would talk to the prime minister and finance ministry officials shortly to discuss the apex court’s decision in details and find out a solution regarding cut in petroleum prices.

Chairman Pakistan Petroleum and CNG Dealers Association Abdul Sami Khan also said that only PDL could be cut but it may create problems for the government in terms of revenue.

A leading analyst Mohammad Sohail said that the government could reduce the margins of OMCs and dealers and also cut the margins of refineries and it could reduce PDL and GST and check the corruption at the inland freight equivalisation margin.

‘In case the margins of dealers, refineries and OMCs are reduced then it may hurt future investments by these stakeholders. If the PDL and GST are cut, then it will create a revenue crunch,’ he said.

‘The government finds itself now in hot waters as it has to maintain respect of the Supreme Court at one hand and on other it has been striving to encourage future investment and revenue generation,’ Sohail said.

Any cut in PDL and GST may spark anger at the International Monetary Fund (IMF) which has been urging the government for increasing the revenues, he said.

The IMF has given a target of Rs1.3 trillion for revenue collection in the current fiscal year. ‘The government cannot also afford or ignore the IMF conditionalities,’ he added.

If the PDL is reduced, then the issue of price differential claims (PDC) will crop up between the government and OMCs, thus leading to circular debt problems which had intensified few months back.

The government changes the rate of PDL time to time in order to offset the impact of increase/decrease of international crude prices on domestic prices. When global crude oil prices go up the PDL is reduced and when crude oil prices come down the government raises the PDL to keep the oil prices unchanged.

 

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12 Pakistani scrips enter MSCI Frontier Index By Dilawar Hussain ​

KARACHI: Twelve securities traded on the Pakistan capital market were added to the MSCI Frontier Markets Index at the semi-annual index review on May 13. The changes would take effect from the close on May 29.

Following its earlier expulsion from the MSCI Emerging Market Index as a protest against the imposition of ‘floor’ under the KSE-100 index late last year, MSCI Pakistan index was able to find a foothold in the Frontier market index, represented by the following 12 companies: Fauji Fertilizer Company; Hub Power Company; Jahangir Siddiqui & Co; Kot Addu Power Company; MCB Bank; National Bank of Pakistan; NIB Bank; OGDC; Pakistan Oilfields; PSO; PTCL and UBL.

Analyst and stock strategist Mohammad Sohail at the Karachi Stock Exchange observed that the inclusion of Pakistan in the MSCI Frontier Market Index was not a big surprise as index provider had already disclosed those plans in March.

‘However, the country’s index downgrade from emerging market to frontier market will attract lower portfolio investment since global funds tracking Frontier Markets are fewer in number than those watching the emerging markets,’ he said.

A statement released by the MSCI from Geneva on Thursday announced changes to at least seven MSCI Equity Indices, including that of the MSCI Frontier Markets.

The apex index provider recalled that it had already announced on March 23 that Pakistan would be added to the MSCI Frontier Markets Index at the time of the May 2009 Semi-Annual Index Review.

‘In addition, as announced on Feb 18, Argentina will simultaneously be removed from the MSCI Emerging Markets Indices and added to the MSCI Frontier Markets Index at the time of the May 2009 Semi-Annual Index Review.’

Though a special mention was not made, another new entrant in the Frontier Market appeared to be Croatia.

Wrapping up the details, The MSCI Inc observed: ‘Thirty-two securities will be added to and 23 will be deleted from the MSCI Frontier Markets Indices. The three largest additions to the MSCI Frontier Markets Index are Neal & Massy Holdings (Trinidad & Tobago), Telecom Argentina B ADR (Argentina) and MCB Bank (Pakistan).’

MSCI Inc, has been acclaimed as a leading provider of international Equity indices, which include 120,000 indices calculated daily across more than 70 countries.

Headquartered in New York, MSCI Inc maintains research and commercial offices around the world. Morgan Stanley, a global financial services firm, holds the controlling equity in MSCI Barra.

 

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Pakistan, IMF see fiscal deficit at Rs671bn ​

IMF’s Resident Chief in Pakistan, Paul Ross,explains IMF had not calculated 35pc power tariff hike

Saturday, May 16, 2009

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have envisage fiscal deficit target in the range of Rs671.6 billion, equivalent to 4.6 per cent of the GDP, for the next budget.

Additional fiscal space agreed by the Fund will be spent on social sector development, security and Internally Displaced Peoples (IDPs), it is learnt.

Talking to this scribe on telephone on Friday, the IMF’s Resident Chief in Pakistan Paul Ross explained that the calculation of 35 per cent hike in power tariff was not done by the IMF.

“In order to put things in right prospective, it should be explained that it was not the IMF which basically calculated a wrong figure,” he added.

Answering another query about timeframe for concluding the ongoing talks between the two sides, he said that it would be completed in the next few weeks but he did not share any exact timeframe in his conversation.

“The additional funding available to Islamabad authorities will be mainly spent on social sector uplift as vulnerable segments of the society will be protected,” Paul Ross concluded.

However, the official sources said that the IMF has allowed Pakistan to hike its fiscal deficit by 1.2 per cent of the GDP up to 4.6 per cent from earlier envisaged target of 3.4 per cent of the GDP for the next budget, enabling Islamabad to get additional Rs160 to Rs180 billion fiscal space during the next financial year.

“Actually the IMF has relaxed its way of calculating fiscal deficit target and now Pakistan will be able to utilize donors’ money which will be given by the Friends of Democratic Pakistan (FoDP) in the next fiscal year,” said the official.

The IMF is basically concerned about the fiscal deficit target as tax collection figures are not included into the basic performance criteria to gauge the performance of the loan recipient country.

So it depends upon Pakistani authorities either to choose revenue generation or reducing its expenditures in order to achieve its overall fiscal deficit target in line with the IMF program.

Pakistan’s one per cent GDP, calculated by the IMF, will be standing at around Rs146 billion by the next fiscal year so the fiscal deficit in the range of 4.6 per cent of the GDP means that the government will borrow Rs671.6 billion through domestic and external avenues for bridging the gap of fiscal deficit.

After the recent review talks, the IMF states that the additional donor support pledged to Pakistan for 2009/10 and 2011/12 at the Donors’ Conference held last April in Tokyo is welcome and provides scope for counter-cyclical policy.

The mobilization of this support is crucial to support growth and higher social, development, and security expenditure.

Discussions focused on the fiscal program and Pakistan’s financing needs. The slowing economy, additional donor support, and the need to protect priority expenditures call for a relaxation of the fiscal deficit target for 2009-10.

The authorities and the IMF team agreed that the Tokyo package should be regarded as a bridge toward the stronger medium-term revenue effort. In this regard, it is crucial to reinforce efforts to increase the tax revenue-to-GDP ratio through tax policy and administration reforms.

Moreover, the need to manage carefully expenditure was agreed, in particular to contain and eliminate poorly targeted subsidies, including those for electricity, while maintaining the life-line tariff to protect vulnerable groups.

Social protection is a key element of the authorities’ program and in collaboration with the World Bank, the government has developed a plan to strengthen the social safety net and improve targeting to the poor. The rollout of the reformed Benazir Income Support Program (BISP) has started, but will take longer than expected.

 

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Gold finds new way into foreign markets ​

Saturday, May 16, 2009

KARACHI: Gold dealers have found a perfectly tax-free legal way to ship the precious metal into another country with an intention to sell them for a profit. Have women wear them as jewellery and travel to the desired destination.

Gold rates in Pakistan are considerably stable now than few months ago. However, it continues to remain cheaper by Rs300-500 per 10 grams compared to the Dubai bullion market.

Recently, a case was brought to light when a man tried to take around 100 tolas (1.17kg) of gold jewellery out of the country in a very simple way. He had his wife and daughters adorn heavily with gold jewellery, which he had planned to sell in another country.

President of All Pakistan Supreme Council of Jewellers Association, Haroon Rashid Chand said, “this is not an unusual way to ship gold to other countries with the intention of selling them.

“It isn’t illegal for women to wear heavy gold jewellery and carrying the same is not a crime. Taking advantage of this fact, many families and more than often, dealers ship gold and other precious metals and stones out of the country in this way.”

He explained that this was a perfectly legal way to sell precious metals and gems in other markets that were far more lucrative than Pakistan.

Referring to the incident, Chand was of the view that had the man sold all that jewellery in the Dubai market, he could have earned a profit of Rs40,000, keeping the difference between current local and UAE rates in mind.

He continued to say that earlier Customs used to believe that gold was only brought into the country and not exported abroad. However, the practice of smuggling gold to other bullion markets has existed for long and only recently has the Customs taken note of it.

Referring to the variety of gold being sold in Pakistan, Chand said that it was mostly local recycled jewellery. A thin percentage of international gold was brought in the country mostly by women visiting/living abroad, Chand said adding gold imports were now almost negligible of the total volume of local bullion trade.

Chand said that the Pakistani bullion market was cold as an average persons purchasing power continued to decline by the day and hence consumers preferred to stay away from the markets.

Gold was valued at Rs23,657 per ten grams and Rs27,600 per tola on Friday. International bullion rates stood at $923.50 an ounce on Friday.

 

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US House okays $1bn for Pakistan​

WASHINGTON: The United States House of Representatives on Thursday overwhelmingly approved a 96.7-billion-dollar measure to pay for Iraq and Afghanistan, including $1 billion in aid for Pakistan.

Lawmakers passed the bill, which also included $2 billion to prepare for fighting an influenza pandemic, by a lopsided 368-60 margin.

The House bill includes $400 million to help build up the Pakistani security forces’ ability to wage counterinsurgency warfare.

And it includes another $600 million in economic development aid to Pakistan and to improve education and democratic reforms.

It also includes $47.7 billion to cover the wars in Iraq and Afghanistan through October 1, and another $23 billion to replace equipment damaged in the two conflicts. afp

 

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Pakistan may seek additional $4.5 billion from IMF​

ISLAMABAD: Pakistan would seek additional $4.5 billion Stand by Facility from International Monetary Fund (IMF) in June this year in case financial assistance from Friends of Democratic Pakistan (FoDP) is delayed.

Pakistan would receive $2.5 billion by end June 2009. World Bank and Asian Development Bank have sown willingness to finance mega dam projects with increase in annual lending volume for Pakistan. United States has also agreed to start Free Trade Agreement (FTA) negotiations along with finalizing Bilateral Investment Treaty (BIT).

FODP: Shaukat Tareen, Advisor to Prime Minister on Finance and revenues, in a media briefing after a month long foreign tour, termed Tokyo FODP Conference as success and informed that Pakistan has received encouraging response from FODP as against the expectations of $4 billion, $5.28 billion pledges were made in the Tokyo meeting. Explaining the composition of pledges, advisor informed that $600 million would be in the shape of grant and soft loans, $400 million as budget support and $4.3 billion as project financing. Apart from these said pledges, Britain, Norway and Switzerland are in a process of finalising increase in their annual aid for Pakistan and decision would be made soon.

He informed that FODP social sector financial assistance would be used for four interventions like cash support and poverty reduction, skill development, medical insurance for poor and job creation at tehsil level. Remaining assistance would be used for education and health sector development, he added.

IMF: Tareen informed the country achieved all the performance benchmarks set for the period under discussion. He informed that IMF has allowed Pakistan to increase its budget deficit from projected 3.4 percent to 4.3 percent. He said that Pakistan would seek additional loan from IMF on incase the assistance from FODP faced delay and if needed, Pakistan would ask for Stand by Facility that would be 300 percent higher against the allocated quota. IMF has also allowed Pakistan to use this additional loan for financing its initiatives like promotion of agriculture, manufacturing and infrastructure that are required to build sound base for economy.

The International Monetary Fund (IMF) would recommend the release of $840 million to Pakistan, the third tranche of a loan. “Therefore, in a board meeting in mid-June, they will recommend release of a tranche which amounts to about $840 million,” Tareen said.

WB: He informed that World Bank has agreed to enhance its lending under three year lending programme. We have asked World Bank to assist in development of agriculture sector and mega infrastructure projects like big dams and WB authorities have agreed to consider it. WB has also agreed to lend for construction of transmission line from Tajikistan via Afghanistan to Pakistan for import of 700MW power in first phase and low cost 3000MW hydel power in second phase.

Pak-Libya: During the President of Pakistan visit to Libya, both the countries have agreed to enter into Strategic Economic Partnership under which Libya has demanded manpower, help in infrastructure, banking sector and agriculture sector development. Pakistan has invited Libyan companies to invest in oil and gas sector of Pakistan. He said that Pak-Libya holding company would pursue cooperation in these areas for bilateral benefits.

He said that during US visit a remarkable achievement has been achieved and USTR has agreed to start bilateral Free Trade Agreement (FTA) process. We have demanded increase in area of Reconstruction Opportunity Zones (ROZs) with inclusion of Balochistan.

Tareen informed that Pakistan is to receive around $2.5 billion by end June 2009, IMF $840 million from IMF, $800 million from WB, $600 million from ADB, $23 million from IDB and $1 billion from US.

Responding to questions, Tareen informed that the government would not be able to run the country on Petroleum Development Levy (PDL) and the government would soon finalise a transparent mechanism of POL price fixation. He said that inflation might come down to single digit by October 2009 as against earlier projection of July 2009.

Budget 2009-10: Tareen informed that during IMF talks four new sectors have been identified for expansion in tax base. However, he made it clear that only two new sectors would be taxed in the next fiscal year 2009-10. He said focus of the next budget would be on revenue generation for poverty reduction, promotion of agriculture, manufacturing, energy sector development and infrastructure development. “We don’t want to increase tax rates, our focus in to tax new sectors for increased revenue generation”.

 

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Frequent power failures hit industrial production​

KARACHI: The unabated load shedding has jolted the production in different industries in the city, particularly the export-oriented garments industries, industry sources told Daily Times.

Anjum Nisar, President Karachi Chamber of Commerce and Industry said that if the ongoing crisis of power were not resolved, it would have disastrous consequences for the industry and will increase the lay-offs.

According to industry sources, uninterrupted power and water supply is essential for the garments industries but the supply of both are so poor that it has become difficult to ensure shipment of products as per schedule.

The current shortfall of 400MW in the city owes to the tripping of Bin Qasim power plant.

He said the Karachi Electric Supply Corporation (KESC) is not utilising its full production capacity despite a visible fall in international prices of furnace oil.

The government has been reiterating since last 12 months that rental power plants would be installed to deal with the energy problem in the short-term but nothing has been done so far in that regard.

“We request the government to instantaneously bring in rental power plants to feed the industry; if not, then this summer will be devastating for the industrial production,” he said.

An official from All Pakistan Textile Mills Association said that the industrial productivity has remained under pressure across the country as the industries used to run three shifts a day and now are operating with only two shifts. The association strongly protests against unscheduled disruption of power supplies to its member units.

The industrial production in the city could plunge by as much as 30 percent. Sectors like textile, leather and salt appear to be among the worst hit. Industry associations put the loss in production at around Rs 40 billion per month.

Siddique Memon, chairman Karachi Traders Action Committee said that this situation has badly affected the small traders. Giving an ultimatum of 48 hours to Karachi Electric supply corporation (KESC), he warned that if the situation remains unchanged small traders would initiate their protest against the KESC.

“Only 35 percent of the small traders have alternative power supply, while around 600,000 traders from 559 markets of the city have been ruined from this situation,” he lamented.

 

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France offers civilian nuclear technology to Pakistan​

* Qureshi says talks in July, MOU likely in Sept
* France pledges euros 12m aid for IDPs​

PARIS: French President Nicolas Sarkozy told President Asif Ali Zardari on Friday that he wants Pakistan to have a wide-ranging deal to to buy nuclear equipment like the one obtained by its rival India, Foreign Minister Shah Mehmood Qureshi said on Friday.

“France has agreed to transfer civilian nuclear technology to Pakistan ... they have agreed that Pakistan should be treated like India,” Qureshi told reporters after a meeting between Zardari and Sarkozy.

“President Sarkozy said ... ‘what can be done for India can be done for Pakistan as well’,” Qureshi said after the meeting in Paris.

Talks: He said that negotiations over the transfer of technology would be held in July, and a new framework agreement and an MOU were likely to be signed during Sarkozy’s visit to Pakistan in September.

An official in Sarkozy’s office said France wanted Pakistan to improve its nuclear security, but did not comment on the idea of an India-style deal. “The president confirmed that we are prepared ... to cooperate with Pakistan in the area of nuclear safety,” he said.

Qureshi dismissed concerns over the safety of Pakistan’s nuclear arsenal and its proliferation history.

Aid: At the meeting, France pledged to provide Pakistan 12 million euros as aid for internally displaced people.

Sarkozy’s office issued a statement reaffirming France’s support for Pakistan while urging Zardari to fight all terrorist groups threatening his own country and its neighbours from Pakistani territory.

Zardari said the struggle was not just a military operation, but a battle of ideas, and vowed not to give up. agencies

 

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France agrees to transfer of civilian nuclear technology: Pakistan facing 'energy crisis', says Qureshi ​

PARIS (May 16 2009): France and Pakistan have agreed to cooperate in the nuclear field, officials said Friday, with Islamabad claiming an important breakthrough in its bid to be seen as a responsible nuclear power. Following talks between France's President Nicolas Sarkozy and counterpart Asif Ali Zardari, the French leader's office said he had offered to help Pakistan improve its "nuclear safety" capability.

Pakistani Foreign Minister Shah Mahmood Qureshi went further, saying France had agreed to a transfer of civilian nuclear energy technology, despite international concerns over the stability of Pakistan's government. Sarkozy's office would not comment on Qureshi's statements, and any such deal - while a diplomatic coup for Zardari - would need the agreement of other nuclear powers and the United Nations nuclear watchdog, the IAEA.

France is a major exporter of nuclear technology, and in February agreed to supply Pakistan's rival India with between two and six modern reactors. "France has agreed to transfer civilian nuclear technology to Pakistan," Qureshi told reporters, explaining that Pakistan was suffering an "energy crisis" and needed nuclear power to guarantee its electricity supply.

In addition to maintaining a small arsenal of nuclear armed missiles, Pakistan has a civilian nuclear energy programme developed with Chinese aid, with one working power station and another under construction. A spokesman for the French presidency said Sarkozy had "confirmed France was ready, within the framework of its international agreements, to cooperate with Pakistan in the field of nuclear safety."

"This is so the Pakistani programme can develop in the best conditions of safety and security," he added. Qureshi hailed the French offer as an important sign of his government's credibility. "That is a significant development, and we have agreed that Pakistan should be treated like India. President Sarkozy said, and I quote him, 'What can be done for India, can be done for Pakistan as well.'," he said.

"Pakistan has no issues with the IAEA ... Pakistan will give all necessary international guarantees," Qureshi insisted. "The world recognises the steps Pakistan has taken to assure and protect its nuclear assets. Everyone who matters is confident about our arrangements, the three-layer security system that we have put in place."

Asked when French shipments might begin, he said: "Today, in principle, the two countries agreed that there is a necessity that has to be fulfilled. In principle they've agreed, and now the modalities will be worked out."

 

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300 million euro economic assistance announced ​

PARIS (May 16 2009): France on Friday announced a 300 million euro aid in economic assistance and another 12 million Euros for the rehabilitation of Internally Displaced Persons in Pakistan. France also pledged to hammer out a Framework for Co-operation Agreement within the next three months that will comprehensively cover co-operation in the fields of energy including civilian nuclear power plants for peaceful purposes, trade, civil aviation and defence.

In a statement, Spokesperson of the President former Senator Farhatullah Babar said that the assurances of French pledges came during a meeting today in the Elysee Palace in Paris between President Asif Ali Zardari and President Sarkozy. Foreign Minister Shah Mahmood Qureshi, Interior Minister Rehman Malik, Ambassador Asma Anisa and Spokesperson of the President was also present on the occasion.

France deeply admires the determination of the Government of Pakistan to root out militancy from the country, the French President said, adding, "France totally supports you President and it is our determination to see Pakistan succeed". France will not only directly support Pakistan but also seek the support of the international community to the economic and political stability of Pakistan, the French President said.

The Spokesperson said that the French President assured President Zardari that at the forthcoming summit of the EU in Brussels he will seek to persuade the grouping to allow Pakistan greater market access to enable it stabilises its economy and provide jobs to its people.

President Sarkozy said that he looked forward to the interlocutors from Pakistan and France meeting soon to hammer out a comprehensive framework of co-operation agreement before the fall this year. Earlier, President Asif Ali Zardari explained to his French counterpart the steps taken by the government in rooting out militancy and the range of economic and political assistance it needed in this regard.

Pakistan requires massive and immediate assistance in rehabilitating the Internally Displaced Persons (IDPs) displaced from Swat and other areas as a result of the fight against militants. Poverty, lack of education and shelterlessness provided breeding grounds for extremism and the world must come forward in helping Pakistan, President Zardari said. "We need trade and not aid", the President said, adding, "We also need international assistance in broadening and strengthening our educational base".

He said that the over 17,000 madrassahs in Pakistan provided free education, shelter and food to the children of poor families. Some of the political madrassahs had also been imparting lessons in extremism and militancy. To counter it the President said that Pakistan needed to provide free education to its children.

This alone, the President said, had been calculated to cost nearly two billion dollars a year. President Zardari also emphasised the importance of strengthening the civilian law enforcing agencies by providing it with weapons, transport, bomb proof police stations and better pay scales to fight the militants who were better and far better paid by their masters.

 

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Pakistan to receive $2.3 billion by June: Tarin ​

ISLAMABAD (May 16 2009): Pakistan will receive $2.3 billion from US and other donors before end of June, Advisor to Prime Minister on Finance Shaukat Tarin told a news conference here on Friday. Giving details of his meetings at Japan, Libya, US and with International Monetary Fund (IMF) at Dubai, he said.

The World Bank, Asian Development Bank, and US would release $600 million, $800 million and $900 million respectively, whereas International Development Bank (IDB) will give $23 million. He said that Pakistan's delegation had convinced the IMF during the review of March quarter in Dubai for allowing an increase in fiscal deficit by next fiscal year.

This fiscal space was required owing to decline in revenue on account of negative growth by large-scale manufacturing (LSM) and shrinking import as both contributed 60 percent and 40 percent respectively to the revenue. He said that the IMF allowed increment in fiscal deficit by 1.2 percent (from 3.4 to 4.6 percent in the next fiscal year) which would enable Pakistan to use Rs 180 billion as a short-term measure to increase industrial productivity.

He said that IMF was told that Friends of Pakistan (FoP) pledges would not cater Pakistan's urgent need of short-term growth and this could only be possible through increase in fiscal deficit. The advisor said that IMF was satisfied with performance of Pakistan economy and would soon release $840 million tranche.

The board meeting in mid-June will recommend release of the tranche, he said, adding that Pakistan budget figures for next fiscal year were also discussed in the Dubai meeting.

The advisor said Pakistan would seek stand-by facility of $4.5 billion for next three years and the IMF had agreed to this facility for both fiscal space and balance of payments. "We will use this facility in case delayed assistance from FOP."

Tarin said Pakistan received encouraging response from FOP in Tokyo and pledges of $5.28 billion were made against $4 billion gap. Giving details, Advisor said that $600 million was pledged as grant/soft loans and $400 million for budgetary support, whereas $4.3 billion would be for projects financing.

He said that Britain, Norway and Switzerland would also increase their annual aid to Pakistan. The FOP assistance would be used for cash support and poverty reduction, skill development, medical insurance for poor and job creation at tehsil level. Remaining assistance would be used for education and health sectors development, he added.

He said that during FOP meeting talks on security were held and a plan was presented involving $10 billion for setting up special force to counter insurgency. "We have also proposed setting up a trust fund of Rs 2 billion for NWFP and Balochistan and pledges in this regard are expected to be made at next meeting of FOP in Turkey."

The advisor said that Pakistan would need $800 million for the settlement of internally displaced persons (IDPs) in three phases and Donor's Conference is scheduled on next Thursday at Islamabad. He said a special allocation would be made for the IDPs in the 2009-10 budget.

He said that World Bank and Asian Development Bank have agreed to increase Pakistan's financial assistance from next year and wanted the WB help in agriculture and infrastructure sectors particularly. "We have informed FODP member countries that Pakistan has already suffered losses to the tune of $35 billion in eight years due to war on terror and to win this war Pakistan would require immediate help" added Tarin.

Immediate market access would be a best option for helping Pakistan as its economic indicators are exhibiting negative growth due to war against terrorism. Tarin said that Pakistan is expecting $1.5 billion coalition support from United States in next two months. POL prices would be lowered in one week on the directions of Supreme Court.

Sharing details of President's visit to Libya, Tarin said both countries agreed to enter into Strategic Economic Partnership under which Pakistan would give them manpower, help in infrastructure and banking sector and invited Libyan companies to invest in oil and gas sector of Pakistan. He said that Pak-Libya Holding Company would pursue co-operation in these areas. He said President's visit to the US was also successful as the latter had agreed on talks on Free Trade Agreement (FTA).

Tarin said that the government would take decision on petroleum prices within a week. He said that it would be possible to run the country on petroleum development levy (PDL) next year as the oil prices were going up. He said that the PDL procedure would be made transparent in the next budget. The advisor admitted that food inflation should had been at 15 percent by now instead of 17 percent and he had requested the Prime Minister to take up the issue of prices during his meeting with the Chief Ministers as price control was a provincial subject.

He said that new FBR boss would take all stakeholders on board and take reforms process ahead. He cautioned that officers who want to avail leave (as protest on appointment of non-tax man as new chairman) should keep in mind that their seats could be declared vacant. About upcoming budget, he said focus would be on revenue generation for poverty reduction, promotion of agriculture, manufacturing, energy sector and infrastructure development.