Pakistan Economy - News & Updates - Archive

[Neo]

US approves $1.9 billion aid for Pakistan, says Babar​

* President Zardari’s spokesman says UK committed £640 million in next four years, France offered nuclear technology to Islamabad

ISLAMABAD: The US House of Representatives has approved $1.9 billion in aid for Pakistan, President Asif Ali Zardari’s spokesman Farhatullah Babar said.

The president returned to Islamabad on Monday after concluding an official visit to Libya, the UK, the US and France.

“The tour also saw the UK committing £640 million over the next four years and France offering civil nuclear technology to Pakistan after decades of embargo in addition to specific aid for the immediate rehabilitation of IDPs and broadening of the partnership to fight the scourge of extremism and militancy,” Babar said.

He said wide-ranging measures that were announced during the visit would strengthen Pakistan’s economy and garner international support to the country.

Babar said the approval of $1.9 billion was in addition to assistance the Obama administration had requested for Pakistan.

“No less significant was the French president’s offer of a wide ranging civil nuclear deal to Pakistan to help it overcome its energy crisis to make the industries run and create jobs and opportunities,” the spokesman said.

In view of the crisis of the internally displaced population of Pakistan, the UK and France announced 12 million euros each for the IDPs while the US House of Representatives made a special provision for them in the aid bill.

Babar said in a week that saw the National Assembly backing operation against the Taliban, wire services transmitting pictures and TV channels sound bytes of displaced people lining up for food in camps, President Zardari cautioned the international community that it was extremely critical that the IDPs were rehabilitated to prevent them from falling prey to the Taliban propaganda.

The president, he said, also flew to New York from Washington to urge the UN Secretary General Ban Ki-moon for a global appeal to help Pakistan deal with the ‘human catastrophe’ resulting from the action against the Taliban in Swat, a request which the UN chief accepted. The presidential brief included a multi-dimensional plan prepared by the government to defend the country’s democratic system against the Taliban onslaught, Babar said, adding that over half a dozen items in the plan contained details ranging from massive investment in education to strengthening of the civilian law enforcing agencies, from recruitment of another 100,000 special police force to building of bomb-proof police stations, from improving the border security regimen to overcoming the energy crisis and from specific projects in agricultural development to opening of European and US markets to Pakistani products to help regenerate the country’s economy.

“The call for ‘trade, not aid’ was heeded as the British prime minister addressed a letter to the European Union to place this issue on its summit agenda in Brussels on June 17,” he said.

 

[Neo]

PSDP for 2009-10 likely to increase by 20 percent​

* Rs 650 billion programme will include Rs 450 billion federal component and Rs 200 billion provincial component​

ISLAMABAD: Annual Plan Coordination Committee (APCC) is likely to recommend a Rs 650 billion Public Sector Development Programme (PSDP) for the 2009-10 fiscal year – a 20 percent increase from last year’s Rs 541 billion.

The sum includes a Rs 450 billion federal component (compared with last year’s Rs 371 billion that was later reduced to Rs 219 billion) and a Rs 200 billion provincial component (a 17 percent increase from last year’s Rs 170 billion).

The APCC meeting to finalise the proposed PSDP will be held on May 22. The Priorities Committee has already proposed a development budget of Rs 294 billion for the ongoing projects, and will make recommendations to National Economic Council (NEC) for new projects. The NEC meeting will be held soon.

Official documents obtained by Daily Times reveal that the Priorities Committee has made allocations to some discontinued projects on request by the sponsors. The APCC will decide whether the discontinued projects are to be continued as a result of rationalisation exercise during 2009-10 or kept on hold for another two to three years or until the fiscal situation improves, the documents say.

A senior official in the Planning Commission said the Priorities Committee in its meeting on May 2 to 16 had a detailed discussion with the ministries/divisions/project authorities to assess fund requirements for the ongoing projects during 2009-10. The committee made it clear it would only consider ongoing projects for allocation, and that new projects would be considered by the APCC, the official said.

He said total demand by the executing agencies was Rs 851 billion, the federal Planning Commission’s assessment was Rs 473 billion, and the Priorities Committee’s recommendation was Rs 294.4 billion.

 

[Neo]

Illegal flow of remittances continuing, says Tarin ​

Wednesday, 20 May, 2009

ISLAMABAD: Pakistan’s federal budget for 2009-10 will be presented in the first half of June, the country’s economic manager said, although he has not been able to decide on a final date.

Advisor to the prime minister on Finance Shaukat Tarin has said here on Tuesday that the federal budget for 2009-10 will be presented either on June 6 or June 13.

‘Preparations for the budget have almost been completed but the final budget announcement date would be decided soon,’ he said talking to media at the launch of World Bank’s report on ‘Bringing finance to Pakistan’s poor’

The federal budget 2009-10 would be the first budget for Mr Tarin in capacity as the finance manager of the country.

Shaukat Tarin said that illegal channels still contribute to the major inflow of remittances into the country.

He acknowledged that the contents of the WB report that informal supply occurs through the organized hundi / hawala sector and through committees, shopkeepers, moneylenders and transfers through friends and family.

The WB report has called for easier access to finance for poor in Pakistan and added that un-official estimates of remittances to Pakistan are around $16 billion.

Mr Tarin said that though the remittances play a valuable role in supporting the economy by providing foreign exchange and improving financial strength to the individuals.

Responding to the WB report Mr Tarin said that the government has set the target to increase the outreach of the microfinance services to three million borrowers by 2010.

The report said that 14 per cent of Pakistanis were using a financial product or service of a formal financial institution including savings, credit, insurance, payments and remittance services.

While, it said that 40 per cent of adults in the country have no access to formal or informal financial systems, but the report said that if the informal financial access is taken into account around 50.5 per cent of Pakistanis have access to finance.

Shaukat Tarin said that there are 40 Microfinance providers which include seven Microfinance Bank with an overall operating base of 1,550 branches and services centers to serve a clientele of approximately two million.

‘The potential cliental base of microfinance sector is estimated to be around 25-30 million borrowers of whom a significant portion still remains unserved by both regulated and un-regulated sector,’ he added.

The advisor to the PM said that there are potentials for other products such as insurance, payments savings that could be launched through postal services network and mobile phones.

He said that increasing access to finance for the small and medium enterprises (SMEs) could also be facilitated by attracting institutional investors with a track record in SME lending and assisting other banks to go down market.

The Country Director for the World Bank in Pakistan, Yusupha Crookes presented the address of the welcome and highlight the main features of the report ‘Bringing Finance to Pakistan’s Poor.’

The report said that Pakistan microfinance market has much potential for a rapid outreach expansion and faces considerable unsatisfied demand, especially for saving products.

Tatiana Nenova, Senior Economists WB and lead author of the report, said that if appropriately supported, SMEs have the potential to be the growth engine of economy due to their ability to create jobs, foster entrepreneurship and to provide depth to the industrial base.

The SMEs sector get a small share of credit despite having a greater role to play in the economic development.

‘SME lending accounts to only 16 per cent of the total lending volumes.’ Ms Nenova said adding that an aggressive promotion of an enabling environment leading to higher financing for the SME sector was needed to reverse this trend.

The World Bank Country Director Yusupha B Crookes was of the view that despite significant banking sector reforms and efforts to expand financial market coverage over the past few years, outreach has lagged behind the country’s growth and development needs.

He said that this report demonstrates that there is an enormous growth potential for financial services in Pakistan, especially in the rural areas.

According to the report Policy efforts to increase access to finance in Pakistan have taken time to bear fruits, but now access is indeed expanding quickly in certain financial sectors especially the microfinance remittances, but at a very low base.

The WB report also speaks about the rapid growth of Islamic banking in the country but said that it lacked liquidity management instruments.

 

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Cargo handling increased at Karachi Port​

Updated at: 1056 PST, Wednesday, May 20, 2009

KARACHI: The cargo handling at Karachi port has been increased to 10 percent despite economic recession, Chairperson Karachi Port Trust (KPT) said.

Talking to media in Federation of Pakistan Chambers of Commerce and Industries, KPT chairperson Nasreen Haq said this is happened because of increment in cement exports.

On the other hand, according to Federal Statistic department, decline in trade volume of Pakistan has been recorded due to economic crunch.

Analysts said in the backdrop of declining imports and exports, increment in port handling is surprising.

Geo TV Pakistan - Breaking News, World, Business, Sports, Entertainment, & Video News

 

[white_pawn]

Pakistan to send up to 50,000 workers to Libya
​

Wednesday, May 20, 2009
By Salman Siddiqui

KARACHI: Ambassador of Pakistan to Libya, Jamil Ahmed Khan, has said that around 30-50 thousand skilled and semi-skilled labourers would be sent from Pakistan to Libya by the end of the current calendar year.

He was briefing a group of journalists here the other day in the backdrop of President Asif Ali Zardari’s recent visit to Libya. “This was the first official visit from any president to Libya since Zulfiqar Ali Bhutto’s government ended,” he said.

At present, some 12,000 Pakistani employees are working in Libya, out of which 25 are rendering their services at top managerial posts, Khan said in reply to a question.

In 1974, around 0.15 million Pakistanis were working in Libya. However, relationship between the two countries cooled, as the Libyan head of state Colonel Moammar Gaddafi did not support the “governments of two dictators in Pakistan after the end of Bhutto’s government.”

Since President Zardari was a symbol of democracy the relationship between Pakistan and Libya was moving fast on the path of normalisation, he said.

In reply to a query, Khan said that cross-investment between the two counties would amount to $2 billion in the next two years, while Libya has shown interest to invest in the windmill sector.

The Joint Ministerial Committee (JMC) of the two countries would meet at the end of July this year. It would also discuss the feasibility study of the windmill project. “This study would probably be conducted between July and September,” he said.

Some 300 companies from across the world, mostly from China, India and the West, have arrived in Libya and are exploiting investment opportunities, he said, adding that most of these companies were investing in energy and infrastructure development.

“Libya (also) has great potential in sectors like textile, agriculture (dairy), construction, and plastic goods,” he explained.

He told that Pak-Libya Holding Company would open a bank in Libya very soon, adding that Pakistan can greatly help Libya in the development of its banking system, as the Libyan banking system was still passing though its infantry period.

Libya has allocated about $100 billion to be invested in various projects during the next five years. Moreover, it holds sovereign liquidity of $200 billion, he disclosed.

Ambassador of Pakistan to Libya further said that Pakistan International Airline (PIA) would review its decision of resuming its flights to Libya, and in case it does not find flights profitable, then the government of Pakistan would ask private airlines to exploit the available opportunity.

“Therefore, hundreds of thousands of Chinese and Philippines working in Libya would use our airline services if PIA or any other airline resume flights, as I have already talked to concerned officials in China in this regard,” he added.

Pakistan would also hold a single country exhibition in Libya in September and would participate in its Revolutionary Day and cultural shows, he further told the media.

During President Zardari’s visit, the two countries signed six MoUs and one agreement, ie, Extradition Treaty.


Pakistan to send up to 50,000 workers to Libya

 

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Trade balance improves by Rs1.5bn ​

Wednesday, May 20, 2009
By Jawwad Rizvi

LAHORE: Pakistan’s balance of trade has improved in the first ten months of fiscal year 2008-09 (July-April) by Rs1.519 billion due to decline in imports of industrial raw materials and services while imports of petroleum products and luxury items are still on rise.

The official data released by the central bank showed that the net imports of the goods and services in the country during the July-April stood at Rs26.775 billion and exports at Rs15.981 billion showing a trade deficit of Rs10.794 billion.

The imports of the goods and services in corresponding period of last year were Rs28.715 billion and export Rs16.402 billion with a trade deficit of Rs12.313 billion.

Thus a decline of Rs1.519 billion in trade deficit was recorded in the ten months of the fiscal year 2008-09.

However, the decline in trade deficit was not the result of increase in exports or decline in imports of luxury items and petroleum products. The exports of the country in the first ten months have decline by Rs421 million.

The import of raw material declined due to economic recession and energy crisis in the country. Large number industrial units shutdown their operations or reduced the production by curtailing the working shifts.

Imports of food group have increased by Rs134 million despite being an agrarian country. The imports of various agri products including tea, dry fruits, chocolates, tin foods and beverages were Rs3.155 billion in the ten months of fiscal year 2008-09 as compared to the corresponding period of Rs3.021 billion.

Similarly, imports of petroleum products were up by Rs741 million and so far Rs8.680 billion had been spent on it as compared to the last year’s bill of Rs7.939 billion.

On the other hand imports of machinery has dropped by Rs44 million to Rs4.236 billion as compared to Rs4.676 billion last year. The experts said that the industrial growth had stopped in the country following the high mark-up rates, economic recession and energy crisis. No new industry is being setting up in the country then the import of machinery would automatically decline.

The imports of transport group declined by Rs146 million and recorded at Rs813 million from the last year Rs959 million. The decline was recorded after reduction in car sales, which sharply reduced the sales of automobiles in the country and the auto manufacturers cut back the imports of Completely Built Unit (CBU), Completely Knocked Down (CKD) kits and other spare parts.

The imports of textile group had registered a decline of Rs521 million as the imports of raw material down following energy crisis, which forced the textile units for closure. Textile group imports were recorded at Rs1.070 billion against Rs1.591 billion seen during the similar period last year.

The government had focused on the agriculture sector but the imports of agriculture raw material including worth, fertilizers, pesticide, insecticides and other items fell by Rs184 million to Rs4.103 billion during the period under review against Rs4.287 billion recoded during similar period last year.

The import of metal group dropped Rs228 million to Rs1.633 billion as compared Rs1.861 billion last year due to decline in international steel products which benefited the country.

The import of other industrial raw material including rubber and tyres industries, paper and papers boards and others reduced by Rs125 million and Rs495 million were spent on it as compared to the last year Rs620 million.

This decline was also depicted the decline in the use of industrial raw material.

The question rises that the import of countries had reduced in industrial raw material heads which are due to economic recession. http://www.thenews.com.pk/daily_detail.asp?id=178436Thus the government had not curtailed the imports of luxury and unnecessary items and petroleum products.

http://www.thenews.com.pk/daily_detail.asp?id=178436

 

[Neo]

US unveils $110m in emergency aid for IDPs​

* Hillary says she senses a ‘national mood change’ in Pakistan against Taliban​

WASHINGTON: US Secretary of State Hillary Clinton unveiled on Tuesday $110 million in emergency aid for civilians fleeing the military operation against Taliban in Swat, Buner and Lower Dir.

“We’re doing this because the future of Pakistan is extremely important to the United States,” Clinton told a press conference at the White House. “The advance of extremism is a threat to our security,” she added.

But the top US diplomat said she sensed a “national mood change” against the Taliban in Pakistan, and heaped praise on the military offensive against the Taliban.

“There is a real national mood change on the part of the Pakistani people that we are watching and obviously are encouraged by,” Clinton said.

The aid from the State Department and Pentagon will be sent to Pakistan to help ease the plight of two million people who have fled the fighting in northwest Pakistan, a White House statement said.

The funds will be used to deliver tents, halal meats, water trucks, generators and other supplies, Clinton said, adding some of the money would be used to buy Pakistani wheat to boost the local economy. “Pakistan is facing a major humanitarian crisis,” she said.

Pakistan can succeed in coping with the crisis but only if the international community and the US do its share, Hillary said.

“Providing this assistance is not only the right thing to do but essential” to ensuring global security, she added. afp

 

[Neo]

World Bank report: Pakistan’s poor still cannot access finance​

ISLAMABAD: Despite significant growth of Pakistan’s financial system, access to finance remains elusive for most Pakistanis, especially among poor people, women, and small businesses in rural areas, says a new World Bank report launched Tuesday.

The report, titled “Bringing Finance to Pakistan’s Poor: A Study on Access to Finance for the Underserved and Small Enterprises,” says the average Pakistani household remains outside the formal financial system, saving at home and borrowing from family or friends in cases of dire need. In fact, only 14 percent of adults have access to a formal financial institution and about 40 percent have no financial access to formal or informal financial systems.

Policy efforts to increase access to finance in Pakistan have taken time to bear fruit, the report says, but now access is expanding quickly in certain financial sectors such as microfinance and remittances albeit from a very low base. The report says the major constraints to financial access arise from high levels of poverty, combined with low awareness of and information about available financial services, as well as gender bias. In addition, financial institutions’ efforts to expand access have been discouraged by slow technological advances, weak legal foundations, and unsuitable financial processes, and products.
“Despite significant banking sector reforms and efforts to expand financial market coverage over the past few years, outreach has lagged behind the country’s growth and development needs,” said Yusupha B Crookes, World bank Country Director for Pakistan “This report demonstrates that there is an enormous growth potential for financial services in Pakistan, especially in rural areas. Around one-third of the population borrows, but only three percent use formal services to do so.”

The report says the formal financial sector could learn from and cooperate with informal arrangements to increase coverage. Financial services provided by the informal sector are perceived as being more geographically accessible, less complex, with fewer requirements, and easier to understand. For one, formal financial institutions could differentiate their products more, attuning them to the specific needs of various population segments, such as women.

Micro and small enterprises have seen a worsening of access to finance, while medium-size enterprises have seen improvements, the report says. Enterprises do not seem to be excluded from financial markets due to poor performance. Instead, an incomplete legal and regulatory framework and non-SME-friendly products and procedures hamper increased SME lending.

“If appropriately supported, SMEs have the potential to be the growth engine of the economy due to their ability to create jobs, foster entrepreneurship, and to provide depth to the industrial base of the economy,” said Tatiana Nenova, World Bank Senior Economist and lead author of the report. “However, SMEs get a disproportionately small share of credit relative to their economic importance. In fact, SME lending accounts for only 16 percent of total lending volume. Aggressive promotion of an enabling environment for SME lending is vital to reverse this trend.”

The report says Pakistan’s microfinance sector has considerable growth potential. The formal microfinance sector reaches less than 2 percent of the poor, as opposed to over a quarter in Bangladesh, India, and Sri Lanka.

Remittance flows can play a valuable role in providing foreign exchange, but more importantly also offer significant potential to support incomes of poor and vulnerable groups, the report says. International remittance inflows were at $5.7 billion over the period of July 2008 to March 2009. In Pakistan, however, formal remittances have not been a major part of income for poorer households, and have not reached the poor, women, and rural areas, where service is mostly informal. The State Bank of Pakistan (SBP) has taken various measures that have significantly increased remittances through formal channels, though a large share of domestic remittances remains informally transferred.

 

[Neo]

Power shortfall rises to 3000 MW: PEPCO ​

KARACHI ( May 20, 2009): The electricity shortfall has risen to 3000 MW due to which load shedding of up to 10 hours is being observed in various parts of the country, Aaj News reported on Wednesday.

According to the channel, PEPCO officials confirmed that unscheduled load shedding was underway due to overloaded power usage especially in late hours.

Power production stood at 12690 MW while its current demand is 15193 MW.

An apparent contradiction in figures provided by the ministry of water and electricity, and that of PEPCO, caused confusion among the masses.

The Islamabad Electric Supply Corporation, meanwhile, said consumers were being provided 925 MW of electricity against demand of 1323 MW.

The IESCO spokesman said load shedding of up to 4 hours was being carried out in urban areas, while power outage of up to 6 hours was being observed in rural areas.

 

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World Bank will shortly approve around $1.9 billion for Pakistan: $300 million to be disbursed immediately​

ISLAMABAD (May 20 2009): The World Bank Country Director Yusupha Crookes on Tuesday said that the bank would shortly approve around $1.9 billion for Pakistan of which $300 million will be disbursed immediately. He said that $200 million was earmarked for the safety net to protect poor while $100 million for Higher Education Commission (HEC). This amount will be disbursed before June 30, he added.

Talking to reporters after attending the ceremony to launch the WB report "Bringing Finance to Pakistan Poor: A study on access to finance for the undeserved and small enterprises," Crookes said that around $650 million was ready for disbursement to Pakistan for the education programmes in Sindh and Punjab. "If Punjab and Sindh showed their performance in universalising education, the amount could be released immediately," he said.

Primarily these programmes are aimed at increasing the students' enrolment. For quite some time, the education departments are reluctant to show their performance due to which the disbursements were stopped.

The WB country said that $350 million could be released to Punjab and $300 million for Sindh. "These amounts could be released once we see the performance of the concerned authorities over the implementation of the projects," he added. He praised the government decision of increasing the power tariff.

"This was one of the toughest decisions taken by the present political government," he added. Crookes said that power sector reforms such as establishment of power distribution companies (Discos), etc, is having very limited impact on improving the power distribution system and reducing the sector's losses.

"Despite having established Discos, Wapda is still all in all. Wapda's role is still the same," he added. There is need to give more powers and responsibility to Discos. They should have autonomy in their spheres. They should maintain their own balance sheets. This will have far reaching consequences to improve the power sector, he added.

The WB country director admitted that poverty had increased in Pakistan. However, there is safety net available to protect the poor electricity consumers. The international aid agencies, he said, are pleased after they learnt that subsidies are being withdrawn in power sector.

The WB report called for easier access to finance for Pakistan poor. The report said that average Pakistani household remains outside the formal financial system, saving at home and borrowing from family or friends in cases of dire need.

Only 14 percent of Pakistanis are using a financial product or service of banks and other financial institution compared to 32 percent of the population having access to formal financial system in Bangladesh. This figure amounts to 48 percent in India and 59 percent in Sri Lanka, the report said.

Over half of the population saves, but only 8 percent entrust their money to banks or any other financial institution. One-third of the population borrows, but only 3 percent use formal financial institutions. As a result of banking sector reforms, the private sector credit touched the figure of Rs 2,523 billion on May 2008, as compared with Rs 356.3 billion a year earlier. The SME credit increased from Rs 18 billion in fiscal year 2000 to Rs 403 billion till March, 2008.

 

[Neo]

ADB provides $5.3 billion for 60 ongoing projects​

KARACHI (May 20 2009): The Asian Development Bank (ADB) has approved $5.3 billion for 60 on-going development projects for Pakistan as of July 2008, which included financing of $2.166 billion for energy projects. This was stated by ADB country director Rune Stroem at the 5th Pogee conference at Karachi Expo Centre here on Tuesday.

He said that ADB had provided $1.8 billion in 2007, $1.2 billion in 2008 and $1.5 billion for 2009 to Pakistan, "and stands as the largest development partner of this country". He said that these projects were in key infrastructure sectors including energy, transportation, water resources and reforms. Rune said that ADB was also the largest development partner in energy sector and across the power supply chain.

The ongoing loans included $510 million for renewable energy, $800 million for power transmission, $810 million for power distribution enhancement, he added. Similarly, ADB will provide $350 million for sustainable energy efficiency, $800 million for power transmission enhancement and $500 million for energy infrastructure under its future loan programme.

Rune said that the ongoing technical assistance programme included gas sector restructuring, establishment of central power purchase agency, renewable energy policy formulation and capacity building, power distribution enhancement and energy efficiency.

He said that ADB has recently concluded technical assistance programme for the development of Thar coal fields and provision of technical support to office of energy advisor to Prime Minister. He said that future technical assistance programme included Nepra institutional capacity building and energy infrastructure.

In addition, ADB is also investing in private sector energy projects including Fauji Kabirwala, Dharki Power, New Bong Hydro, Rajdhani, Winpower and LNG projects. Earlier, Hydrocarbon Development Institute Director General Hilal Raza said that Pakistan's energy demand would reach over 360 million tons of oil equivalent in 2030 which is six times the present needs.

Former SSGC managing director Muwanar Baseer Ahmad talked about Pakistan's new energy plan 2010-2030. He said it was unfortunate that Thar coal was discovered 20 years ago but not a single bankable feasibility was available for the project. PPIB Executive Director N A Zuberi discussed opportunities and challenges for private power generation in Pakistan, while Aqeel Ahmed of ABB Ltd gave suggestions for energy efficiency to avoid power shortages.

 

[muse]

Pakistan, one step forward, two steps back.


Agriculture, real estate, bourses to come under tax net




Thursday, May 21, 2009
Cabinet approves five per cent quota for minorities in govt jobs

By our correspondent

ISLAMABAD: Information Minister Qamar Zaman Kaira on Wednesday hinted that the government may bring the real estate, stock exchange, services and agriculture sectors under the tax net in the coming budget for the fiscal year 2009-10.

Briefing newsmen here after the cabinet meeting that was chaired by Prime Minister Syed Yousuf Raza Gilani, the minister said the cabinet appreciated improvement in the economic conditions of the country despite internal and external challenges, approved five per cent quota for minorities in government jobs and addition of security features in Rs500 note. Though the minister hinted that the four new sectors may be brought gradually under the tax net, he did not give any further details in this regard.

However, when questioned specifically whether the cabinet has taken a final decision to bring the agriculture sector into the tax net in the coming budget, he said the question of bringing the agriculture income into the tax net arises when this sector sustains itself.

He said due to government’s good fiscal policies various economic indicators, including the current account deficit, the fiscal deficit and the inflation rate, have improved significantly. Kaira said the country could not be run only on foreign aid and the government would impose taxes on new sections of the society. However, the number of taxes would be reduced, he added.

He said five per cent quota for minorities in all government and semi-autonomous departments would be strictly maintained, as minorities, too, have equal rights over resources of the country.

He said additional security features for five-hundred-rupee note have been approved in view of some complaints. He said the security features adopted by the Security Printing Press are being recognised the world over and many countries get their currencies printed from Pakistan. The information minister said during the meeting Adviser on Finance Shaukat Tareen gave a detailed briefing on the economy and informed the cabinet that the economic conditions have improved significantly despite global recession and war on terror.

He said the adviser told the cabinet that it was because of the bitter and difficult decisions taken by the elected government that fiscal deficit has come down from 7.4 to 4.3 per cent, current account deficit from 8.4 to 5.3 per cent of the GDP and inflation has reduced from 25 per cent in August last year to 19.1 per cent in March this year.

He said the foreign exchange reserves that stood at $3.4 billion in October last year have increased to $7 billion and the target of $12 billion is expected to be achieved by the end of the current fiscal year.

The cabinet was informed that the tax collection is expected to be around Rs1.25 trillion this year in view of reduction in imports that resulted into revenue losses.Kaira said the GDP growth rate is likely to be around 2.5 per cent this year because of global recession and internal challenges.

He, however, noted that the country’s agricultural sector performed well this year. “The country had a bumper wheat crop and in a few days support price for cotton would be announced which would help increase its production,” he added.

The minister said the World Bank and the Asian Development Bank have made financing commitments for Bhasha dam and other projects. He said allocations for the Benazir Income Support Programme would hopefully be doubled from the existing Rs34 billion to alleviate poverty. He said the cabinet also decided to extend lease of Uch gas filed to the Oil and Gas Development Company Limited.

 

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Credit to farm sector up 11pc in July-April ​

By Our Staff Reporter
Thursday, 21 May, 2009 | 05:37 AM PST |

KARACHI: Banks improved their lending to agriculture sector but remained far behind the target during the first ten months of the current fiscal year.

Despite strong agriculture output in this season the credit flows remained restricted to just Rs174.8 billion during July-April, 2008-09, against Rs250 billion target fixed for the current year. Last year, the credit to agriculture sector exceeded by Rs12 billion from its original target of Rs200 billion. The State Bank set an increased target of Rs250 billion or 25 per cent higher than the last year.

The State Bank reported on Wednesday that the disbursement of credit to the agriculture sector by commercial and specialised banks increased by 10.92 per cent to Rs174.8 billion during the first ten months of the current fiscal year.

Agricultural credit disbursement, in absolute terms, rose by over Rs17.21 billion in July-April, 2009, when compared with disbursement of Rs157.566 billion during the same period of the last year.

Overall credit disbursements by five major commercial banks, including Allied Bank, Habib Bank, MCB Bank, National Bank of Pakistan and United Bank Ltd stood at Rs86.552 billion during the period under review compared with Rs74.328 billion same period last fiscal year, depicting an increase of over Rs12.22 billion or 16.45 per cent.

Zarai Taraqiati Bank Limited, the largest specialised bank, has disbursed Rs52.505 billion during the ten months up 14.71 per cent when compared with Rs45.773 billion of the corresponding period of last year.

The disbursement by Punjab Provincial Co-operative Bank stood at Rs3.610 billion compared with Rs3.983 billion. Besides, 14 domestic private banks also loaned a combined Rs32.111 billion compared with Rs33.482 billion disbursed in July-April, 2008 period.

DAWN.COM | Business | Credit to farm sector up 11pc in July-April

 

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Single digit poverty target set for 2015 ​

Thursday, 21 May, 2009 | 06:00 AM PST |

KARACHI: The State Bank and the federal government have been actively promoting financial inclusion to help achieve the target of reducing the level of poverty to a single digit by 2015, said Yaseen Anwar, deputy governor SBP on Wednesday.

Delivering a keynote address at the launch of World Bank’s study on ‘Access to Finance for the Underserved and Small Enterprises’ at a local hotel he said the financial inclusion was the core component of State Bank’s financial sector development strategy, which envisages transforming the financial market into an equitable system with efficient market-based financial services to the otherwise excluded poor and marginalised population, including women and young people.

He said the central bank’s efforts to promote financial inclusion had been recognised by the World Bank’s Consultative Group to Assist the Poor (CGAP). The group said that the State Bank had one of the most conducive policy and regulatory frameworks, which encourage access to financial services.

He said the number of corporate borrowers increased by 83 per cent, SME borrowers by 134 per cent; agricultural borrowers by 44 per cent; consumer finance borrowers tripled over 5 years; whereas mortgage loans over the same period have risen by 78 per cent and microfinance outreach is at 1.7 million by Dec 2008, which is five times the level of Dec 2003, when the country had only 330,000 clients.

Anwar said that the SBP had established a Development Finance group comprising of sector specific departments promoting microfinance, SMEs finance, agriculture finance, and housing & infrastructure finance.

He said that under the Branch Licensing policy commercial banks with 100 or more branches are required to open at least 20 per cent of their branches outside big cities and have branches in Tehsil headquarters where no branch of any bank existed.

Of the 555 new bank branches opened during 2008, 20 per cent i.e. 111 are now in rural areas. Moreover, banks are encouraged to establish low-cost sub-branches, booths and service centres for performing limited banking functions, he added.

Anwar said the State Bank has encouraged partnerships for innovation to create synergies and achieve scale and recently a partnership between Pakistan Post and the First Microfinance Bank resulted in 35,000 microfinance loans disbursed through 68 post offices in little over one year.

He said that under the State Bank’s expanding microfinance outreach strategy Pakistan will have 3 million microfinance borrowers by 2010 and 10 million by 2015.

He also talked about SBP’s partnership with the UK Department for International Development, which has given a grant of 50 million pounds for the Financial Inclusion Programme (FIP) that will be implemented in five years targeting poor, small entrepreneurs, women and marginalised communities.

He said a microfinance credit guarantee facility has also been launched with GBP 10 million in Dec, 2008 to encourage commercial banks to provide wholesale funds to microfinance banks and institutions for onward lending to the poor and marginalised groups to improve financial outreach.

DAWN.COM | Business | Single digit poverty target set for 2015

 

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Growth estimated at 3.3pc for next fiscal year ​

By Kalbe Ali
Thursday, 21 May, 2009 | 05:15 AM PST |

ISLAMABAD: A plan prepared by the Planning Commission for the 2009-10 fiscal year suggests a growth target of 3.3 per cent. It will be considered by the Annual Planning Coordination Committee at a meeting on Friday.

However, official documents say that the actual growth will depend on the performance of three major sectors — agriculture, manufacturing and services.

The documents say that the monetary expansion will be in line with the projected growth of 3.3 per cent. The government has also set CPI inflation target at 9 per cent, less than half of the 20 per cent in the current fiscal.

The trade deficit for the next fiscal year is estimated at $8.8 billion with exports of $19.9 billion and imports declining to $28.7 billion from $30.2 billion in the current fiscal.

The current account deficit has been projected at $9.5 billion which is close to $9.4 billion of the current fiscal. The remittances are expected to stand at $7 billion next year.

The documents estimate that the growth in agriculture would be 3.8 per cent, in manufacturing sector 1.8 per cent and in services sector 3.9 per cent.

The Planning Commission estimates that the GDP at the current market prices would increase by 10 per cent.

The documents say that the real challenge will be to revive the manufacturing sector that has shown a negative growth of more than 7.7 per cent during the first nine months of the current fiscal year. The growth in manufacturing sector is estimated at 1.8 per cent, but it will be possible only with smooth supply of energy to industries and adequate incentives for export competitiveness.

The large scale manufacturing is estimated to grow by 1 per cent against the negative growth in the current fiscal.

The services sector is likely to grow by 3.9 per cent with wholesale and retail trade growing by 3.3 per cent and finance and insurance by 3 per cent.

The total investment in the next fiscal is expected to be 20 per cent of the GDP. The national saving is projected to be 14.7 per cent, implying that it would be used to finance almost 74 per cent of investments. The remaining 26 per cent will be financed by other sources.

The total public sector investment is expected at 4.7 per cent of GDP.

DAWN.COM | Business | Growth estimated at 3.3pc for next fiscal year